As filed with the Securities and Exchange Commission on November
26, 1996
Registration No. 333-_____
811-4797
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
PRE-EFFECTIVE AMENDMENT NO. ___ / /
POST-EFFECTIVE AMENDMENT NO. __ / /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 / X /
Amendment No. 9 / X /
QUEST FOR VALUE DUAL PURPOSE FUND, INC.*
- -------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Oppenheimer Tower, One World Financial Center,
New York, New York 10281
- -------------------------------------------------------------------
(Address of Principal Executive Offices)
(212) 667-7000
- -------------------------------------------------------------------
(Registrant's Telephone Number)
Thomas Duggan, Esq.
OpCap Advisors
Oppenheimer Tower, One World Financial Center,
New York, New York 10281
- -------------------------------------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
Approximate Date of Proposed Offering: As soon as practicable
after the effective date of this Registration Statement and
thereafter from day to day.
/ / Immediately upon filing pursuant to paragraph (b)
/ / On ______________, pursuant to paragraph (b)
/ / 60 days after filing, pursuant to paragraph (a)(1)
/ / On ___________, pursuant to paragraph (a)(1)
/ / 75 days after filing, pursuant to paragraph (a)(2)
/ / On ____________, pursuant to paragraph (a)(2) of Rule 485.
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
Proposed
Title of Maximum Amount
Securities Amount Offering of
Being Being Price Per Registration
Registered Registered Unit Fee
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Class A,**
Class B and
Class C
Shares of Indefinite*** $_________ N/A
Common Stock
(par value
$0.0001 per
share)
* On the effective date of this Registration Statement, the
Registrant will change its name to Oppenheimer Quest Capital Value
Fund, Inc.
** Previously registered under the Securities Act of 1933 (Reg. No.
33-7967)
*** An indefinite number of Class A, Class B and Class C Shares of
Common Stock of the Registrant is being registered by this
Registration Statement pursuant to Rule 24f-2 under the Investment
Company Act of 1940.
The Registrant hereby amends the Registration Statement on such
date or dates as may be necessary to delay its effective date until
the Registrant shall file a further amendment which specifically
states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of
1933 or until the Registration Statement shall become effective on
such date as the Commission, acting pursuant to Section 8(a), shall
determine.
<PAGE>
CROSS REFERENCE SHEET
Part A of
Form N-1A
Item No. Prospectus Heading
1 Front Cover Page
2 Expenses; A Brief Overview of the Fund
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; Investment Objective and Policies;
How the Fund is Managed--Organization and History
5 How the Fund is Managed; Expenses; Back Cover
5A Performance of the Fund
6 How the Fund is Managed--Organization and History; The
Transfer Agent; Dividends, Capital Gains and Taxes
7 How to Buy Shares; How to Exchange Shares; Special
Investor Services; Service Plan for Class A Shares;
Distribution and Service Plans for Class B and Class
C Shares; How to Sell Shares; Shareholder Account
Rules and Policies
8 How to Sell Shares; How to Exchange Shares; Special
Investor Services
9 *
Part B of
Form N-1A Heading in Statement of
Item No. Additional Information
10 Cover Page
11 Cover Page
12 *
13 Investment Objective and Policies; Other Investment
Techniques and Strategies; Other
Investment Restrictions
14 How the Fund is Managed - Directors and Officers of
the Fund
15 How the Fund is Managed - Major Shareholders
16 How the Fund is Managed; Distribution and Service
Plans; Additional Information About the Fund; Back
Cover
17 Brokerage Policies of the Fund
18 Additional Information about the Fund
19 About Your Investment Account-How to Buy Shares; How
to Sell Shares; How to Exchange Shares
20 Dividends, Capital Gains and Taxes
21 How the Fund is Managed; Brokerage Policies of the
Fund; Additional Information About the Fund - The
Distributor; Distribution and Service Plans
22 Performance of the Fund
23 Financial Statements
______________________________________
* Not applicable or negative answer.
<PAGE>
Oppenheimer Quest Capital Value Fund, Inc.
Prospectus dated ___________, 1997
Oppenheimer Quest Capital Value Fund, Inc. is a mutual
fund that seeks capital appreciation as its investment objective.
The Fund invests in securities (primarily equity securities) of
companies believed by the Manager to be undervalued in the
marketplace in relation to factors such as the companies' assets,
earnings, growth potential and cash flows. The Fund may invest its
assets in equity securities of companies without limit as to market
capitalization. The Fund may invest up to 25% of its net assets in
high-yield, lower-grade bonds rated below Baa3 by Moody's Investors
Service, Inc. or BBB- by Standard & Poor's Corporation (commonly
known as "high yield" or "junk bonds"). Please refer to
"Investment Objective and Policies" for more information about the
types of securities in which the Fund invests and refer to
"Investment Risks" for a discussion of the risks of investing in
the Fund.
This Prospectus explains concisely what you should know
before investing in the Fund. Please read this Prospectus
carefully and keep it for future reference. You can find more
detailed information about the Fund in the ________________, 1997
Statement of Additional Information. For a free copy, call
OppenheimerFunds Services, the Fund's Transfer Agent, at 1-800-525-7048,
or write to the Transfer Agent at the address on the back
cover. The Statement of Additional Information has been filed with
the Securities and Exchange Commission and is incorporated into
this Prospectus by reference (which means that it is legally part
of this Prospectus).
(OppenheimerFunds logo)
Shares of the Fund are not deposits or obligations of any bank, are
not guaranteed by any bank, are not insured by the F.D.I.C. or any
other agency, and involve investment risks, including the possible
loss of the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
Contents
ABOUT THE FUND
Expenses
A Brief Overview of the Fund
Financial Highlights
Investment Objective and Policies
Investment Risks
Investment Techniques and Strategies
How the Fund is Managed
Performance of the Fund
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Appendix A: Special Sales Charge Arrangements for
Shareholders of the Former Quest for Value Funds
Appendix B: Description of Ratings
<PAGE>
ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for
management of its assets, administration, distribution of its
shares and other services, and those expenses are subtracted from
the Fund's assets to calculate the Fund's net asset value per
share. All shareholders therefore pay those expenses indirectly.
Shareholders pay other expenses directly, such as sales charges and
account transaction charges. The following tables are provided to
help you understand your direct expenses of investing in the Fund
and your share of the Fund's business operating expenses that you
will bear indirectly, based on the Fund's fees and expenses in
effect as of the date of this Prospectus.
Background. The Fund is a diversified, open-end
management investment company. Prior to the date of this
Prospectus, the Fund was organized as a closed-end investment
company with a dual purpose structure, a dual investment objective
of (a) long-term capital appreciation and preservation of capital
and (b) current income and long-term growth of income, and had
common stock (the "Capital Shares") and preferred stock (the
"Income Shares") outstanding. Under the Fund's prior dual purpose
structure, the Capital Shares were entitled to all gains and losses
on all of the assets of the Fund and no expenses were allocated to
such shares; the Income Shares were entitled to receive all of the
Fund's income and bore all of the operating expenses of the Fund.
The Income Shares were redeemed by the Fund on January 31, 1997 and
The Fund's dual purpose structure terminated. With respect to the
Capital Shares, the Fund's Board of Directors (the "Board of
Directors") determined that it was in the best interests of the
holders of the Capital Shares to convert the Fund to an open-end
investment company and approved the submission of this proposal to
such shareholders. Pursuant to shareholder approval received on
___________, 1996, effective as of the date of this Prospectus, the
Fund was converted to an open-end investment company with a single
investment objective of capital appreciation. The outstanding
Capital Shares of the Fund became Class A shares of common stock
and will now bear their allocable share of the Fund's expenses.
Other changes to the Fund, including a change in investment adviser
to OppenheimerFunds, Inc., are described below in "How The Fund is
Managed".
Shareholder Transaction Expenses are charges you pay
when you buy or sell shares of the Fund. Please refer to "About
Your Account," starting on page ___, for an explanation of how and
when these charges apply.
<PAGE>
<TABLE>
<CAPTION>
Class Class Class
A Shares B Shares C Shares
<S> <C> <C> <C>
Maximum Sales Charge
on Purchases (as a %
of offering price) 5.75% None None
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _
_ _
Maximum Deferred Sales
Charge (as a % of
the lower of the
original purchase
price or redemption
proceeds) None(1) 5% in the first 1% if redeemed
year, declining within 12
to 1% in the months of
Sixth year purchase(2)
and eliminated
thereafter(2)
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Maximum Sale Charge on
Reinvested Dividends None None None
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Exchange Fee None None None
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
</TABLE>
(1) If you invest $1 million or more ($500,000 or more for
purchases by "Retirement Plans," as defined in "Class A
Contingent Deferred Sales Charge" on page __) in Class A
shares, you may have to pay a sales charge of up to 1% if
you sell your shares within 18 calendar months from the
end of the calendar month during which you purchased
those shares, depending upon when you purchased such
shares. See "How to Buy Shares - Buying Class A Shares,"
below.
(2) See "How to Buy Shares - Buying Class B Shares" and "How
to Buy Shares - Buying Class C Shares" below, for more
information on the contingent deferred sales charges.
Annual Fund Operating Expenses are paid out of the Fund's assets
and represent the Fund's expenses of operating its business. For
example, the Fund pays management fees to its investment adviser,
OppenheimerFunds, Inc. (referred to in this Prospectus as the
"Manager"). The rates of the Manager's fees are set forth in "How
the Fund is Managed," below. The Fund has other regular expenses
for services, such as transfer agent fees, custodial fees paid to
the bank that holds the Fund's portfolio securities, audit fees and
legal expenses. Those expenses are detailed in the Fund's
Financial Statements in the Statement of Additional Information.
Annual Fund Operating Expenses
(as a Percentage of Average Net Assets)
Class A Class B Class C
Shares Shares Shares
------- ------- -------
Management Fees % % %
(after waiver)
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _
12b-1 Distribution % % %
Plan Fees
(after waiver)
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _
Other Expenses % % %
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _
Total Fund
Operating Expenses % % %
(after waiver)
The Annual Fund Operating Expenses, including "Other
Expenses," shown above are based on amounts estimated to be paid
through the end of the Fund's first fiscal year as an open-end
investment company as if the Fund had operated as an open-end
investment company during the entire fiscal year. These amounts
are shown as a percentage of the average net assets of each class
of the Fund's shares for such year. The 12b-1 Distribution Plan
Fees for Class A shares are Service Plan Fees (the maximum fee is
0.25% of average annual net assets of that class), plus the asset-based
sales charge of 0.25% of the average annual net assets of
that class. For Class B and Class C shares, the 12b-1 Distribution
and Service Plan Fees are service fees (the maximum fee is 0.25% of
average annual net assets of that class) plus an asset-based sales
charge of 0.75%. These plans are described in greater detail in
"How to Buy Shares." The "Management Fees", "12b-1 Distribution
Plan Fees" and "Total Fund Operating Expenses" in the table above
reflect fee waivers by the Manager and the Distributor (as defined
below). These fee waivers lowered the Fund's overall expense ratio.
Without such fee waivers, the "Management Fees," "12b-1
Distribution Plan Fees" and "Total Fund Operating Expenses" for
Class A shares would have been ___%, ___% and ___%, respectively;
and for Class B and Class C shares would have been ___%, ___% and
___%, respectively. The fee waivers are described in "How the Fund
is Managed - Fees and Expenses" and "Buying Class A Shares -
Distribution and Service Plan for Class A Shares," and the
Statement of Additional Information.
The actual expenses for each class of shares in future
years may be more or less, depending on a number of factors,
including changes in the actual amount of assets represented by
each class of shares.
Examples. To try to show the effect of these expenses
on an investment over time, we have created the hypothetical
examples shown below. Assume that you make a $1,000 investment in
each class of shares of the Fund, and that the Fund's annual return
is 5%, and that its operating expenses for each class are the ones
shown in the Annual Fund Operating Expenses table above. If you
were to redeem your shares at the end of each period shown below,
your investment would incur the following expenses by the end of 1,
3, 5 and 10 years:
1 year 3 years 5 years 10 years(*)
Class A Shares $ $ $ $
Class B Shares $ $ $ $
Class C Shares $ $ $ $
If you did not redeem your investment, it would incur the
following expenses:
1 year 3 years 5 years 10 years(*)
Class A Shares $ $ $ $
Class B Shares $ $ $ $
Class C Shares $ $ $ $
_________________________
* The expenses set forth in the examples above are based upon
expenses of the Fund that are expected to be incurred during the
Fund's first fiscal year as an open-end investment company on an
annualized basis. In the first example, expenses include the Class
A initial sales charge and the applicable Class B or Class C
contingent deferred sales charge. In the second example, Class A
expenses include the initial sales charge, but Class B and Class C
expenses do not include contingent deferred sales charges. The
Class B expenses in years 7 through 10 are based on the Class A
expenses shown above, because the Fund automatically converts your
Class B shares into Class A shares after 6 years. Because of the
effect of the higher asset-based sales charge and the contingent
deferred sales charge imposed on Class B and Class C shares, long-term
holders of Class B and Class C shares could pay the economic
equivalent of more than the maximum front-end sales charge allowed
under applicable regulations. For Class B shareholders, the
automatic conversion of Class B shares to Class A shares is
designed to minimize the likelihood that this will occur. Please
refer to "How to Buy Shares -- Buying Class B Shares" for more
information.
These examples show the effect of expenses on an investment, but
are not meant to state or predict actual or expected costs or
investment returns of the Fund, all of which may be more or less
than those shown.
<PAGE>
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized
below, with references to the section of this Prospectus where more
complete information can be found. You should carefully read the
entire Prospectus before making a decision about investing in the
Fund. Keep the Prospectus for reference after you invest,
particularly for information about your account, such as how to
sell or exchange shares.
What is the Fund's Investment Objective? The Fund's
investment objective is to seek capital appreciation.
What Does the Fund Invest In? The Fund invests in
securities (primarily equity securities) of companies believed by
the Manager to be undervalued in the marketplace in relation to
factors such as the companies' assets, earnings, growth potential
and cash flows. The Fund invests primarily in equity securities
including common stocks and preferred stocks; bonds, debentures and
notes convertible into common stock; and depository receipts for
such securities. The Fund may invest its assets in equity
securities of companies with no limit as to market capitalization.
The Fund may invest up to 25% of its net assets in high-yield,
lower-grade bonds rated below Baa3 by Moody's Investors Service,
Inc. ("Moody's") or BBB- by Standard & Poor's Corporation
("S&P")(commonly known as "junk bonds"). To provide liquidity, the
Fund typically invests a part of its assets in various types of
U.S. government securities and money market instruments. For
temporary defensive purposes, the Fund may invest up to 100% of its
assets in such securities. These investments are more fully
explained in "Investment Policies and Strategies," starting on page
_.
Who Manages the Fund? The Manager supervises the
Fund's investment program and handles its day-to-day business.
The Manager (including a subsidiary) manages investment company
portfolios having over $__ billion in assets as of December 31,
1996. The Manager is paid an advisory fee by the Fund, based on
its net assets. The Fund's sub-adviser is OpCap Advisors (the
"Sub-Adviser"), which is paid a fee by the Manager, not the Fund.
The Sub-Adviser provides day-to-day portfolio management of the
Fund. The Fund's portfolio manager is employed by the Sub-Adviser
and is primarily responsible for the selection of the Fund's
securities. The Board of Directors, elected by shareholders,
oversees the Manager, the Sub-Adviser and the portfolio manager.
Please refer to "How the Fund is Managed," starting on page __ for
more information about the Manager, the Sub-Adviser and their fees.
How Risky is the Fund? All investments carry risks to
some degree. It is important to remember that the Fund is designed
for long-term investors. The Fund's investments in stocks and
bonds are subject to changes in their value from a number of
factors such as changes in general stock and bond market movements,
the change in value of particular stocks because of an event
affecting the issuer or changes in interest rates that can affect
bond prices. These changes affect the value of the Fund's
investments and its price per share. Investments in foreign
securities involve additional risks not associated with investments
in domestic securities, including risks associated with changes in
currency rates.
While the Manager tries to reduce risks by diversifying
investments, by carefully researching securities before they are
purchased for the Fund's portfolio, and in some cases by using
hedging techniques, there is no guarantee of success in achieving
the Fund's objective, and your shares may be worth more or less
than their original cost when you redeem them. Please refer to
"Investment Risks" starting on page _ for a more complete
discussion of the Fund's investment risks.
How Can I Buy Shares? You can buy shares through your
dealer or financial institution, or you can purchase shares
directly through OppenheimerFunds Distributor, Inc. (the
"Distributor") by completing an Application or by using an
Automatic Investment Plan under AccountLink. Please refer to "How
To Buy Shares" on page __ for more details.
Will I Pay a Sales Charge to Buy Shares? The Fund
offers Class A, Class B and Class C shares. All classes have the
same investment portfolio but have different expenses. Class A
shares are offered with a front-end sales charge, starting at
5.75%, and reduced for larger purchases. Class B and Class C shares
are offered without a front-end sales charge, but may be subject to
a contingent deferred sales charge if redeemed within six years or
12 months, respectively, of buying them. There is also an annual
asset-based sales charge which is higher on Class B and Class C
shares. Please review "How To Buy Shares" starting on page __ for
more details, including a discussion about factors you and your
financial advisor should consider in determining which class may be
appropriate for you.
How Can I Sell My Shares? Shares can be redeemed by
mail or by telephone call to the Transfer Agent on any business
day, or through your dealer. Please refer to "How To Sell Shares"
on page __. The Fund also offers exchange privileges to other
Oppenheimer funds, described in "How to Exchange Shares" on page
__.
How Has the Fund Performed? The Fund measures its
performance by quoting its average annual total return and
cumulative total return, which measure historical performance.
Prior to the date of this Prospectus, the Fund operated as a
closed-end investment company with a dual-purpose structure and
with dual investment objectives. See "About the Fund - Expenses -
Background." [To indicate historical performance of the Class A
shares of the Fund (formerly, the Capital Shares), the Fund
____________.] The Fund's total returns can be compared to the
returns (over similar periods) of other funds. Of course, other
funds may have different objectives, investments, and levels of
risk. The Fund's performance can also be compared to a broad-based
market index, which we have done on page __. Please remember that
past performance does not guarantee future results.
<PAGE>
Financial Highlights
The table on the following page presents selected
financial information about the Fund, including per share data,
expense ratios and other data based on the Fund's average net
assets. This information has been audited by Price Waterhouse LLP,
the Fund's independent accountants, whose report on the Fund's
financial statements for the fiscal year ended December 31, 1996 is
included in the Statement of Additional Information.
The financial information below reflects the Fund's
performance as a closed-end investment company with a dual purpose
structure and with Income Shares and Capital Shares outstanding.
The Income Shares were redeemed on January 31, 1997 after the end
of the Fund's fiscal year. Accordingly, the financial information
below may not be indicative of the Fund's performance as an open-end
investment company. Capital Shares of the Fund existing at the
time of its conversion to an open-end investment company have been
classified as Class A shares. Class B and Class C shares were not
offered during the fiscal year ended December 31, 1996;
accordingly, financial information for such shares is not set forth
below. See "About the Fund - Expenses - Background" for additional
information about the background of the Fund.
<PAGE>
Investment Objective and Policies
Objective. The Fund seeks capital appreciation.
Investment Policies and Strategies. The Fund invests in securities
(primarily equity securities) of companies believed by the Manager
to be undervalued in the marketplace in relation to factors such as
the companies' assets, earnings, growth potential and cash flows.
The Fund may invest its assets in equity securities of companies
with no limit as to market capitalization. The Fund may invest up
to 25% of its net assets in high-yield, lower-grade bonds (or
high-yielding unrated bonds)rated below Baa3 by Moody's or BBB- by
S&P(commonly known as "junk bonds"). For the purposes of this
Prospectus the term equity securities is defined as common stocks
and preferred stocks; bonds, debentures and notes convertible into
common stocks; and depository receipts for such securities.
To provide liquidity for the purchase of new instruments
and to effect redemptions of shares, the Fund typically invests a
part of its assets in various types of U.S. government securities
and high quality, short-term debt securities with remaining
maturities of one year or less such as government obligations,
certificates of deposit, bankers' acceptances, commercial paper,
short-term corporate securities and repurchase agreements ("money
market instruments").
For temporary defensive purposes, the Fund may invest up
to 100% of its assets in money market instruments. At any time
that the Fund for temporary defensive purposes invests in such
securities, to the extent of such investments, it is not pursuing
its investment objective.
Can the Fund's Investment Objective and Policies
Change? The Fund has an investment objective, which is described
above, as well as investment policies it follows to try to achieve
its objective. Additionally, the Fund uses certain investment
techniques and strategies in carrying out those investment
policies. The Fund's investment policies and practices are not
"fundamental" unless this Prospectus or the Statement of Additional
Information says that a particular policy is "fundamental". The
Fund's investment objective is a fundamental policy.
Fundamental policies are those that cannot be changed
without the approval of a "majority" of the Fund's outstanding
voting shares. The term "majority" is defined in the Investment
Company Act of 1940 to be a particular percentage of outstanding
voting shares (and this term is explained in the Statement of
Additional Information). The Board of Directors may change
non-fundamental policies without shareholder approval, although
significant changes will be described in amendments to this
Prospectus.
Foreign Securities. The Fund may purchase foreign
securities that are listed on a domestic or foreign securities
exchange, traded in domestic or foreign over-the-counter markets or
represented by American Depository Receipts, European Depository
Receipts or Global Depository Receipts. There is no limit to the
amount of foreign securities the Fund may acquire. The Fund will
hold foreign currency only in connection with the purchase or sale
of foreign securities.
Warrants. A warrant is an option to purchase an equity
security at a specific price which is valid for a specific period
of time. As a non-fundamental policy the Fund may invest up to 5%
of its total assets at the time of purchase in warrants (other than
those that have been acquired in units or attached to other
securities). For further details about this type of investment,
please refer to "Warrants" in the Statement of Additional
Information.
Portfolio Turnover. A change in the securities held by
the Fund is known as "portfolio turnover." The Fund ordinarily does
not engage in short-term trading to try to achieve its objective.
As a result, the Fund's portfolio turnover (excluding turnover of
securities having a maturity of one year or less) is not expected
to be more than 100% each year.
Portfolio turnover affects brokerage costs, dealer
markups and other transaction costs, and results in the Fund's
realization of capital gains or losses for tax purposes. It may
also affect the Fund's ability to qualify as a "regulated
investment company" under the Internal Revenue Code for tax
deductions for dividends and capital gains distributions the Fund
pays to shareholders. The Fund qualified in its last fiscal year
and intends to do so in the coming year, although there is no
guarantee that it will qualify.
Investment Risks
All investments carry risks to some degree, whether they are risks
that market prices of the investment will fluctuate (this is known
as "market risk") or that the underlying issuer will experience
financial difficulties and may default on its obligation under a
fixed-income investment to pay interest and repay principal (this
is referred to as "credit risk"). These general investment risks
and the special risks of certain types of investments that the Fund
may hold are described below. They affect the value of the Fund's
investments, its investment performance and the prices of its
shares. These risks collectively form the risk profile of the Fund.
Because of the types of securities the Fund invests in
and the investment techniques the Fund uses, the Fund is designed
for investors who are investing for the long term. It is not
intended for investors seeking assured income or preservation of
capital. While the Manager tries to reduce risks by diversifying
investments, by carefully researching securities before they are
purchased, and in some case by using hedging techniques, changes in
overall market prices can occur at any time, and because the income
earned on securities is subject to change, there is no assurance
that the Fund will achieve its investment objective. When you
redeem your shares, they may be worth more or less than what you
paid for them.
Stock Investment Risks. Because the Fund may invest
a substantial portion of its assets in stocks, the value of the
Fund's portfolio will be affected by changes in the stock markets.
At times, the stock markets can be volatile and stock prices can
change substantially. This market risk will affect the Fund's net
asset values per share, which will fluctuate as the values of the
Fund's portfolio securities change. Not all stock prices change
uniformly or at the same time and not all stock markets move in the
same direction at the same time. Other factors can affect a
particular stock's prices, for example, poor earnings reports by an
issuer, loss of major customers, major litigation against an
issuer, or changes in government regulations affecting an industry.
Not all of these factors can be predicted. Because changes in
market prices can occur at any time, there is no assurance that the
Fund will achieve its investment objective, and when you redeem
your shares, they may be worth more or less than what you paid for
them.
Foreign Securities Have Special Risks. For
example, foreign issuers are not subject to the same accounting and
disclosure requirements as U.S. companies. The value of foreign
investments may be affected by changes in foreign currency rates,
exchange control regulations, expropriation or nationalization of
a company's assets, foreign taxes, delays in settlement of
transactions, changes in governmental economic or monetary policy
in the U.S. or abroad, or other political and economic factors. The
Fund may invest in emerging market countries; such countries may
have relatively unstable governments, economies based on only a few
industries that are dependent upon international trade and reduced
secondary market liquidity. More information about the risks and
potential rewards of investing in foreign securities is contained
in the Statement of Additional Information.
Risks of Fixed-Income Securities. In addition to
credit risks, described above, debt securities are subject to
changes in their value due to changes in prevailing interest rates.
When prevailing interest rates fall, the value 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 the 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.
The Fund may invest up to 25% of its net assets in high-yield,
"lower-grade" bonds (or high-yielding unrated bonds),
commonly known as "junk bonds." The Fund is not obligated to
dispose of securities that are downgraded below investment grade
after the Fund buys them. "Lower-grade" debt securities are those
rated below "investment grade," which means they have a rating
lower than "Baa3" by Moody's or lower than "BBB-" by S&P. Appendix
B to this Prospectus describes these rating categories. If a debt
security is rated below investment grade by one rating agency and
as investment grade by a different rating agency, the Sub-Adviser
will make a determination as to the debt security's investment
grade quality. High yield, lower-grade securities, whether rated
or unrated, often have speculative characteristics and special
risks that make them riskier investments than investment grade
securities. Generally, higher yielding lower-grade bonds are
subject to credit risks to a greater extent than lower yielding,
investment grade bonds. They may be subject to greater market
fluctuations and risk of loss of income and principal than lower
yielding, investment grade securities. There may be less of a
market for them and therefore they may be harder to sell at an
acceptable price. There is a relatively greater possibility that
the issuer's earnings may be insufficient to make the payments of
interest due on the bonds. The issuer's low creditworthiness may
increase the potential for its insolvency. More information about
investment in fixed-income securities, including convertible
securities, is contained in the Statement of Additional
Information.
Hedging instruments can be volatile investments and may
involve special risks. As discussed below, the Fund may invest in
certain hedging instruments. The use of hedging instruments
requires special skills and knowledge of investment techniques that
are different than what is required for normal portfolio
management. If the Manager uses a hedging instrument at the wrong
time or judges market conditions incorrectly, hedging strategies
may reduce the Fund's return. The Fund could also experience losses
if the prices of its futures, forwards 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 or receipt 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 the Fund is exercised on an investment that has
increased in value, the 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. In writing a put, there is a risk that the Fund may be
required to buy the underlying security at a disadvantageous price.
The use of forward contracts may reduce the gain that would
otherwise result from a change in the relationship between the U.S.
dollar and a foreign currency. These risks are described in
greater detail in the Statement of Additional Information.
Investment Techniques and Strategies
The Fund may also use the investment techniques and strategies
described below. These techniques involve certain risks. The
Statement of Additional Information contains more information about
these practices, including limitations on their use that may help
to reduce some of the risks.
Investing in Small, Unseasoned Companies. The Fund may
invest in securities of small, unseasoned companies. These are
companies that have been in continuous operation for less than
three years, counting the operations of any predecessors.
Securities of these companies may have limited liquidity (which
means that the Fund may have difficulty selling them at an
acceptable price when it wants to) and the prices of these
securities may be volatile. See "Investing in Small, Unseasoned
Companies" in the Statement of Additional Information for a further
discussion of the risks involved in such investments.
Hedging. As described below, the Fund may purchase and
sell certain kinds of futures contracts, forward contracts, and
options on securities, futures and broadly-based stock indices.
These are all referred to as "hedging instruments." The Fund does
not use hedging instruments for speculative purposes, and has
limits on the use of them, described below. The hedging
instruments the Fund may use are described below and in greater
detail in "Other Investment Techniques and Strategies" in the
Statement of Additional Information.
The Fund may buy and sell options, futures and forward
contracts for a number of purposes. It may do so to try to manage
its exposure to the possibility that the prices of its portfolio
securities may decline, or to establish a position in the
securities market as a temporary substitute for purchasing
individual securities. It may do so to try to manage its exposure
to changing interest rates. Some of these strategies, such as
selling futures, buying puts and writing covered calls, hedge the
Fund's portfolio against price fluctuations. Other hedging
strategies, such as buying futures and call options, tend to
increase the Fund's exposure to the securities market.
Forward contracts are used to try to manage foreign
currency risks on the Fund's foreign investments. Foreign currency
options are used to try to protect against declines in the dollar
value of foreign securities the Fund owns, or to protect against an
increase in the dollar cost of buying foreign securities.
Futures. The Fund may buy and sell futures contracts
that relate to broadly-based stock indices (these are referred to
as Stock Index Futures) or foreign currencies (these are called
Forward Contracts and are discussed below).
Put and Call Options. The Fund may buy and sell put
options (puts) and call options (calls) on broadly-based stock
indices, foreign currencies or on Stock Index Futures. The Fund
may also purchase call options on securities it intends to purchase
and may purchase put options on securities it owns. All options
purchased or sold by the Fund will be traded on a U.S. or foreign
commodities exchange or will result from separate, privately
negotiated transactions with a primary government securities dealer
recognized by the Board of Governors of the Federal Reserve System
or with other broker-dealers approved by the Board of Directors.
When the Fund writes (that is, sells) a call, it receives
cash (called a premium). The call gives the buyer the ability to
buy the investment on which the call was written from the Fund at
the call price during the period in which the call may be
exercised. If the value of the investment does not rise above the
call price, it is likely that the call will lapse without being
exercised, while the Fund keeps the cash premium (and the
investment). Each call the Fund writes must be "covered" while it
is outstanding. That means the Fund owns the investment on which
the call was written or the Fund owns and segregates liquid assets
to satisfy its obligations if the call is exercised.
The Fund may purchase and sell put options. Buying a put
on an investment gives the Fund the right to sell the investment at
a set price to a seller of a put on that investment. The Fund can
buy only those puts that relate to securities it owns, broadly-based
stock indices, foreign currencies or Stock Index Futures.
The Fund can buy a put on a Stock Index Future whether or not the
Fund owns the particular Stock Index Future in its portfolio. The
Fund may write puts on broadly-based stock indices, foreign
currencies or Stock Index Futures, but only if those puts are
covered by segregated liquid assets. The Fund will not write a put
if it will require more than 25% of the Fund's total assets to be
segregated.
Forward Contracts. Forward contracts are foreign
currency exchange contracts. They are used to buy or sell foreign
currency for future delivery at a fixed price. The Fund uses them
to try to "lock in" the U.S. dollar price of a security denominated
in a foreign currency that the Fund has bought or sold, or to
protect against possible losses from changes in the relative values
of the U.S. dollar and foreign currency. The Fund limits its
exposure in foreign currency exchange contracts in a particular
foreign currency to the amount of its assets denominated in that
currency or in a closely-correlated currency.
Illiquid and Restricted Securities. Under the policies
and procedures established by the Board of Directors, the Manager
determines the liquidity of certain of the Fund's investments.
Investments may be illiquid because of the absence of an active
trading market, making it difficult to value them or dispose of
them promptly at an acceptable price. A restricted security is one
that has a contractual restriction on its resale or which cannot be
sold publicly until it is registered under the Securities Act of
1933. The Fund will not invest more than 15% 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. The
Fund's percentage limitation on illiquid and restricted investments
does not apply to certain restricted securities that are eligible
for resale to qualified institutional purchasers.
Loans of Portfolio Securities. To attempt to raise
cash for liquidity purposes, the Fund may lend its portfolio
securities to brokers, dealers and other financial institutions.
The Fund must receive collateral for a loan. After any loan, the
value of the securities loaned, is not expected to exceed 33-1/3%
of the value of the total assets of the Fund. Other conditions to
which loans are subject are described in the Statement of
Additional Information. There are some risks in connection with
securities lending. The Fund might experience a delay in receiving
additional collateral to secure a loan or a delay in recovery of
the loaned securities.
Repurchase Agreements. The Fund may enter into
repurchase agreements to generate income for liquidity purposes to
meet anticipated redemptions, or pending the investment of proceeds
from sales of Fund shares or settlement of purchases of portfolio
investments. In a repurchase transaction, the Fund buys a security
and simultaneously sells it to the vendor for delivery at a future
date. Repurchase agreements must be fully collateralized. However,
if the vendor fails to pay the resale price on the delivery date,
the Fund may incur costs in disposing of the collateral and may
experience losses if there is any delay in its ability to do so.
The Fund may enter into reverse repurchase agreements.
Under a reverse repurchase agreement, the Fund sells securities and
agrees to repurchase them at a mutually agreed upon date and price.
Reverse repurchase agreements involve the risk that the market
value of the securities retained in lieu of sale by the Fund may
decline more than or appreciate less than the securities the Fund
has sold but is obligated to repurchase. In the event the buyer of
securities under a reverse repurchase agreement files for
bankruptcy or becomes insolvent, such buyer or its trustee or
receiver may receive an extension of time to determine whether to
enforce the Fund's obligation to repurchase the securities and the
Fund's use of the proceeds of the reverse repurchase agreements may
effectively be restricted pending such decisions. Reverse
repurchase agreements create leverage, a speculative factor, and
will be considered borrowings by the Fund for purposes of the
percentage limitations set forth in "Borrowing" below.
Investment in repurchase agreements having a maturity
beyond seven days is subject to the limitations set forth above
under "Illiquid and Restricted Securities." There is no limit on
the amount of the Fund's net assets that may be subject to
repurchase agreements of seven days or less.
"When-Issued" and Delayed Delivery Transactions. The
Fund may purchase securities on a "when-issued" basis, and may
purchase or sell such securities on a "delayed delivery" basis or
on a "firm commitment" basis. These terms refer to securities that
have been created and for which a market exists, but which are not
available for immediate delivery. The Fund does not intend to make
such purchases for speculative purposes. During the period between
the purchase and settlement, the underlying securities are subject
to market fluctuations and no interest accrues prior to delivery of
the securities.
Borrowing. As a non-fundamental policy, the Fund
may borrow money from banks on an unsecured basis as a temporary
measure for extraordinary or emergency purposes. The Fund may not
borrow money in excess of 33-1/3% of the value of its total assets,
and will make no additional investment while such borrowings exceed
5% of its total assets. Borrowing for investment purposes is a
speculative investment technique known as "leveraging". This
investment technique may subject the Fund to greater risks and
costs, including the burden of interest expense, an expense the
Fund would not otherwise incur. The Fund can borrow only if it
maintains a 300% ratio of assets to borrowings at all times in the
manner set forth in the Investment Company Act.
Short Sales "Against-the-Box." In a short sale,
the seller does not own the security that is sold, but normally
borrows the security to fulfill its delivery obligation. The seller
later buys the security to repay the loan, in the expectation that
the price of the security will be lower when the purchase is made,
resulting in a gain. The Fund may not sell securities short except
in collateralized transactions referred to as "short sales
against-the-box," where the Fund owns an equivalent amount of the
securities sold short. No more than 15% of the Fund's net assets
will be held as collateral for such short sales at any one time.
Other Investment Restrictions. The Fund has other investment
restrictions which are fundamental policies. Under these
fundamental policies, the Fund cannot:
Invest more than 25% of the value of its total assets
(valued at the time of investment) in any one industry.
With respect to 75% of its total assets, invest more
than 5% of the value of its total assets (taken at market value at
time of purchase) in the outstanding securities of any one issuer,
excluding obligations issued or guaranteed by the U.S. Government
or any agency or instrumentality thereof or own more than 10% of
the outstanding voting securities of any one issuer (other than
securities issued or guaranteed by the U.S. Government or any
agency of instrumentality thereof).
Unless this Prospectus states that a percentage
restriction applies on an ongoing basis, it applies only at the
time the Fund makes an investment, and the Fund need not sell
securities to meet the percentage limits if the value of the
investment increases in proportion to the size of the Fund. Other
investment restrictions are listed in "Investment Restrictions" in
the Statement of Additional Information.
How the Fund is Managed
Organization and History. The Fund is a diversified, open-end
management investment company. The Fund was incorporated as "QFV
Dual Purpose Fund, Inc." on August 4, 1986 as a Maryland
corporation (and later renamed "Quest for Value Dual Purpose Fund,
Inc.") and originally commenced operations on February 13, 1987 as
a closed-end investment company with a dual purpose structure and
with Capital Shares and Income Shares. On ___________, 1996, the
shareholders of the Fund voted to, among other things, convert the
Fund to an open-end investment company. Effective as of the date
of this Prospectus, the Fund converted to an open-end investment
company with a single investment objective of capital appreciation
and with shares of stock designated as common stock (formerly,
Capital Shares), and was renamed "Oppenheimer Quest Capital Value
Fund, Inc." See "About the Fund - Expenses -Background" for
additional information.
The shares of common stock are divided into three classes
designated Class A, Class B and Class C, consisting of 300,000,000
Class A shares, and 100,000,000 each of Class B and Class C shares.
The remaining 500,000,000 shares of authorized common stock have
not been classified. The Board of Directors has the power, without
shareholder approval, to issue additional classes of shares of the
Fund. All classes invest in the same investment portfolio. Each
class has its own dividends and distributions and pays certain
expenses which may be different for the different classes. Each
class may have a different net asset value. Each share entitles a
shareholder to one vote on matters submitted to the shareholders to
vote on with fractional shares voting proportionally. Only shares
of a particular class vote as a class on matters that affect that
class alone. Shares are freely transferrable. Please refer to
"How the Fund is Managed" in the Statement of Additional
Information for more information on the voting of shares.
The Fund is governed by a Board of Directors, which is
responsible for protecting the interests of shareholders under
Maryland law. The Directors meet periodically throughout the year
to oversee the Fund's activities, review its performance, and
review the actions of the Manager and the Sub-Adviser. "Directors
and Officers of the Fund" in the Statement of Additional
Information names the Directors and officers of the Fund and
provides more information about them. Although the Fund is not
required by law to hold annual meetings, it may hold shareholder
meetings from time to time on important matters, and shareholders
have the right under certain circumstances to call a meeting to
remove a Director or to take other action described in the Fund's
Amended and Restated Articles of Incorporation.
The Manager. The Fund is managed by the Manager, OppenheimerFunds,
Inc., which supervises the Fund's investment program and handles
its day-to-day business. The Manager carries out its duties,
subject to the policies established by the Board of Directors,
under an Investment Advisory Agreement with the Fund which states
the Manager's responsibilities. The Agreement sets forth the fees
paid by the Fund to the Manager and describes the expenses that the
Fund is responsible to pay to conduct its business.
The Manager has operated as an investment adviser since
1959. The Manager (including a subsidiary) currently manages
investment companies, including other Oppenheimer funds, with
assets of more than $__ billion as of December 31, 1996, and with
more than ____ million shareholder accounts. The Manager is owned
by Oppenheimer Acquisition Corp., a holding company that is owned
in part by senior officers of the Manager and controlled by
Massachusetts Mutual Life Insurance Company.
The Sub-Adviser. The Manager has retained the Sub-Adviser to
provide day-to-day portfolio management of the Fund. Prior to the
date of this Prospectus, the Sub-Adviser was the investment adviser
to the Fund. Effective on such date, at the time of the conversion
of the Fund to an open-end management investment company, the
Manager acquired the investment advisory and other contracts and
business relationships and certain assets and liabilities of the
Sub-Adviser, OCC Distributors and Oppenheimer Capital relating to
the Fund. Pursuant to this acquisition and Fund shareholder
approval received on ___________, 1996, the Fund entered into the
following agreements, effective as of the date of this Prospectus:
the Investment Advisory Agreement between the Fund and the Manager,
and the Class A Distribution and Service Plan between the Fund and
the Distributor. Further, as of such date, the Manager entered
into a subadvisory agreement with the Sub-Adviser for the benefit
of the Fund and the Fund entered into the Class B and Class C
Distribution and Service Plans with the Distributor. The
agreements and plans are described below.
The Sub-Adviser is a majority-owned subsidiary of
Oppenheimer Capital, a registered investment advisor, whose
employees perform all investment advisory services provided to the
Fund by the Sub-Adviser. Oppenheimer Financial Corp., a holding
company, holds a 33% interest in Oppenheimer Capital, a registered
investment advisor. Oppenheimer Capital, L.P., a Delaware limited
partnership whose units are traded on The New York Stock Exchange
and of which Oppenheimer Financial Corp. is the sole general
partner, owns the remaining 67% interest. Oppenheimer Capital has
operated as an investment advisor since 1968.
Portfolio Manager. The Fund's portfolio manager,
Jeffrey C. Whittington, is employed by the Sub-Adviser and is
primarily responsible for the selection of the Fund's securities.
Mr. Whittington, who is also a Senior Vice President of Oppenheimer
Capital, was the Fund's portfolio manager from 1987 to September
1991, and from January 1996 to the present. From October 1991 to
July 1993, Mr. Whittington was a portfolio manager with Oppenheimer
& Co., Inc., from August 1993 to July 1994 was a portfolio manager
with Neuberger & Berman and since August 1994 has been a portfolio
manager at Oppenheimer Capital.
The Sub-Adviser's equity investment policy is overseen by
George Long, President and Chief Investment Officer for Oppenheimer
Capital, the parent of the Sub-Adviser. Mr. Long has been with
Oppenheimer Capital since 1981.
Fees and Expenses. Under the Investment Advisory
Agreement, the Fund has agreed to pay the Manager a monthly fee at
the following annual rates, which decline on additional assets as
the Fund grows: 1.00% of the first $400 million of average daily
net assets, 0.90% of the next $400 million, and 0.85% of average
daily net assets over $800 million. This management fee is higher
than that paid by most other investment companies. Pursuant to the
Agreement, for a period of two years from the date thereof the
Manager will waive the following portion of the advisory fee: 0.15%
of the first $200 million of average annual net assets, 0.40% of
the next $200 million, 0.30% of the next $400 million and 0.25% of
average annual net assets over $800 million. The Fund pays expenses
related to its daily operations, such as custodian fees, Directors'
fees, transfer agency fees and legal and auditing costs. Those
expenses are paid out of the Fund's assets and are not paid
directly by shareholders. However, those expenses reduce the net
asset value of shares, and therefore are indirectly borne by
shareholders through their investment. More information about the
Investment Advisory Agreement and the other expenses paid by the
Fund is contained in the Statement of Additional Information.
The Manager has agreed to pay the Sub-Adviser an annual
fee payable monthly based on the average daily net assets of the
Fund equal to 40% of the net advisory fee collected by the Manager
based on the total net assets of the Fund as of __________, 1997
and remaining 120 days later (the "Base Amount") plus 30% of the
investment advisory fee collected by the Manager based on the total
net assets of the Fund that exceed the Base Amount, in each case
calculated after any waivers, voluntary or otherwise.
The Sub-Adviser may select its affiliate, Oppenheimer &
Co., Inc. ("Opco"), a registered broker-dealer, to execute
transactions for the Fund, provided that the commissions, fees or
other remuneration received by Opco are reasonable and fair
compared to those paid to other brokers in connection with
comparable transactions. When selecting broker-dealers other than
Opco, the Sub-Adviser may consider their record of sales of shares
of the Fund. Further information about the Fund's brokerage
policies and practices is set forth in "Brokerage Policies of the
Fund" in the Statement of Additional Information.
The Distributor. The Fund's shares are sold through
dealers, brokers and other financial institutions that have a sales
agreement with OppenheimerFunds Distributor, Inc., a subsidiary of
the Manager that acts as the Fund's Distributor. The Distributor
also distributes the shares of the other Oppenheimer funds managed
by the Manager and is sub-distributor for funds managed by a
subsidiary of the Manager.
The Transfer Agent and Shareholder Servicing Agent.
The transfer agent and shareholder servicing agent for the Fund is
OppenheimerFunds Services, a division of the Manager. It also acts
as the shareholder servicing agent for certain other Oppenheimer
funds. Shareholders should direct inquiries about their accounts
to the Transfer Agent at the address and toll-free number shown
below in this Prospectus and on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms
"total return" and "average annual total return" to illustrate its
performance. The performance of each class of shares is shown
separately, because the performance of each class of shares will
usually be different as a result of the different kinds of expenses
each class bears. These returns measure the performance of a
hypothetical account in the Fund over various periods, and do not
show the performance of each shareholder's investment (which will
vary if dividends are received in cash, or shares are sold or
additional shares are purchased). The Fund's performance
information may help you see how well your investment in the Fund
has done over time and to compare market indices.
Prior to the date of this Prospectus, the Fund operated
as a closed-end investment company with a dual-purpose structure
and with dual investment objectives. See "About the Fund -
Expenses - Background." [To indicate historical performance of the
Class A shares of the Fund (formerly, the Capital Shares), the Fund
_______. It is important to understand that the Fund's total
returns represent past performance, as adjusted, and should not be
considered to be predictions of future returns or performance.]
More detailed information about how total returns are calculated is
contained in the Statement of Additional Information, which also
contains information about other ways to measure and compare the
Fund's performance. The Fund's investment performance will vary
over time, depending on market conditions, the composition of the
portfolio, expenses and which class of shares you purchase.
Total Returns. There are different types of total
returns used to measure the Fund's performance. Total return is
the change in value of a hypothetical investment in the Fund over
a given period, assuming that all dividends and capital gains
distributions are reinvested in additional shares. The cumulative
total return measures the change in value over the entire period
(for example, ten years). An average annual total return shows the
average rate of return for each year in a period that would produce
the cumulative total return over the entire period. However,
average annual total returns do not show the Fund's actual year-by-year
performance.
When total returns are quoted for Class A shares,
normally the current maximum initial sales charge has been
deducted. When total returns are shown for Class B or Class C
shares, normally the contingent deferred sales charge that applies
to the period for which the total return is shown has been
deducted. However, returns may also be quoted at "net asset
value", without including total the sales charge, and those returns
would be less if sales charges were deducted.
How Has the Fund Performed? Below is a discussion by the Manager of
the Fund's performance during its last fiscal year ended December
31, 1996, followed by a graphical comparison of the Fund's
performance to an appropriate broad-based market index. Prior to
the date of this Prospectus, the Fund was known as Quest for Value
Dual Purpose Fund, Inc. and the Sub-Adviser was the Fund's
investment adviser.
Management's Discussion of Performance. [ TO BE
SUPPLIED]
[ Comparing the Fund's Performance to the Market. The
graph below shows the performance of a hypothetical $10,000
investment in Class A shares of the Fund (formerly, Capital Shares)
held from inception (February 13, 1987) until December 31, 1996.
Class B and C shares were not publicly offered during the fiscal
year ended December 31, 1996; therefore no performance information
is presented on Class B and Class C shares in the graph below. The
Fund's performance reflects the deduction of the 5.75% current
maximum initial sales charge on Class A shares, the reinvestment of
all dividends and capital gains distributions and the following
adjustments: _________________.]
[The Fund's performance is compared to the performance of
the Standard & Poor's ("S&P")500 Index, a broad-based index of
equity securities widely regarded as the general measure of the
performance of the U.S. equity securities market. Index
performance reflects the reinvestment of dividends but does not
consider the effect of capital gains or transaction costs, and none
of the data below shows the effect of taxes. Also, the Fund's
performance reflects the effect of Fund business and operating
expenses. While index comparisons may be useful to provide a
benchmark for the Fund's performance, it must be noted that the
Fund's investments are not limited to the securities in the S&P 500
index. Moreover, the index performance data does not reflect any
assessment of the risk of the investments included in the index.]
Class A Shares
Comparison of Change in Value
of $10,000 Hypothetical Investment in:
Oppenheimer Quest Capital Value Fund, Inc.
and the Standard & Poor's 500 Index
[Graph]
Average Annual Total Return of the Fund at 12/31/96
1 Year 5 Years Life1
Class A : % % %
Total returns and ending account values in the graph reflect
reinvestment of all dividends and capital gains distributions
[1 The commencement of operations of the Fund (Class A
shares) was 2/13/87. Class A returns are shown net of the current
applicable 5.75% maximum initial sales charge and reflect the
following adjustments ________________. Past performance is not
predictive of future performance.]
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors three different
classes of shares. The different classes of shares represent
investments in the same portfolio of securities but may be subject
to different expenses and will likely have different share prices.
Upon the conversion of the Fund to open-end status, the Fund's
outstanding shares were designated Class A shares. No sales
charge was due as a result of the conversion.
Class A Shares. If you buy Class A shares, you may pay an
initial sales charge on investments up to $1 million (up to
$500,000 for purchases by "Retirement Plans" as defined in "Class
A Contingent Deferred Sales Charge" on page __). If you purchase
Class A shares as part of an investment of at least $1 million
($500,000 for Retirement Plans) in shares of one or more
Oppenheimer funds you will not pay an initial sales charge, but if
you sell any of those shares within 18 months after your purchase,
you may pay a contingent deferred sales charge. The amount of that
sales charge will vary depending on the amount you invested. Sales
charge rates are described in "Buying Class A Shares" below.
Class B Shares. If you buy Class B shares, you pay no
sales charge at the time of purchase, but if you sell your shares
within six years of buying them you will normally pay a contingent
deferred sales charge that varies, depending on how long you have
owned your shares as described in "Buying Class B Shares" below.
Class C Shares. If you buy Class C shares, you pay no
sales charge at the time of purchase, but if you sell your shares
within 12 months of buying them, you will normally pay a contingent
deferred sales charge of 1% as described in "Buying Class C Shares"
below.
Which Class of Shares Should You Choose? Once you decide that the
Fund is an appropriate investment for you, the decision as to which
class of shares is better suited to your needs depends on a number
of factors which you should discuss with your financial advisor.
The Fund's operating costs that apply to a class of shares and the
effect of the different types of sales charges on your investment
will vary your investment results over time. The most important
factors to consider are how much you plan to invest and how long
you plan to hold your investment. If your goals and objectives
change over time and you plan to purchase additional shares, you
should re-evaluate those factors to see if you should consider
another class of shares.
In the following discussion, to help provide you and your
financial advisor with a framework in which to choose a class, we
have made some assumptions using a hypothetical investment in the
Fund. We used the sales charge rates that apply to each class, and
considered the effect of the higher asset-based sales charges on
Class B and Class C expenses (which, like all expenses, will affect
your investment return). For the sake of comparison, we have
assumed that there is a 10% rate of appreciation in the investment
each year. Of course, the actual performance of your investment
cannot be predicted and will vary, based on the Fund's actual
investment returns and the operating expenses borne by each class
of shares, and which class of shares you invest in.
The factors discussed below are not intended to be investment
advice or recommendations, because each investor's financial
considerations are different. The discussion below of the factors
to consider in purchasing a particular class of shares assumes that
you will purchase only one class of shares and not a combination of
shares of different classes.
How Long Do You Expect to Hold Your Investment? While
future financial needs cannot be predicted with certainty, knowing
how long you expect to hold your investment will assist you in
selecting the appropriate class of shares. The effect of the sales
charge, over time, using our assumptions will generally depend on
the amount invested. Because of the effect of class-based
expenses, your choice will also depend on how much you plan to
invest. For example, the reduced sales charges available for
larger purchases of Class A shares may, over time, offset the
effect of paying an initial sales charge on your investment (which
reduces the amount of your investment dollars used to buy shares
for your account), compared to the effect over time of higher
class-based expenses on Class B or Class C shares for which no
initial sales charge is paid.
Investing for the Short Term. If you have a short-term
investment horizon (that is, you plan to hold your shares for not
more than six years), you should probably consider purchasing Class
A or Class C shares rather than Class B shares, because of the
effect of the Class B contingent deferred sales charge if you
redeem within 6 years, as well as the effect of the higher Class B
asset-based sales charge on the investment return for that class in
the short-term. Class C shares might be the appropriate choice
(especially for investments of less than $100,000), because there
is no initial sales charge on Class C Shares, and the contingent
deferred sales charge does not apply to amounts you sell after
holding them one year.
However, if you plan to invest more than $100,000 for the
shorter term, then the more you invest and the more your investment
horizon increases toward six years, Class C shares might not be as
advantageous as Class A shares. That is because the higher annual
asset-based sales charge on Class C shares will have a greater
economic impact on your account over the longer term than the
reduced front-end sales charge available for larger purchases of
Class A shares. For example, Class A might be more advantageous
than Class C (as well as Class B) for investments of more than
$100,000 expected to be held for 5 or 6 years (or more). For
investments over $250,000 expected to be held 4 to 6 years (or
more), Class A shares may become more advantageous than Class C
(and Class B). If investing $500,000 or more, Class A may be more
advantageous as your investment horizon approaches 3 years or more.
And for most investors who invest $1 million or more, in most
cases Class A shares will be the most advantageous choice, no
matter how long you intend to hold your shares. For that reason,
the Distributor normally will not accept purchase orders of
$500,000 or more Class B shares or $1 million or more of Class C
shares from a single investor.
Investing for the Longer Term. If you are investing for
the longer-term, for example, for retirement, and do not expect to
need access to your money for seven years or more, Class B shares
may be an appropriate consideration, if you plan to invest less
than $100,000. If you plan to invest more than $100,000 over the
long term, Class A shares will likely be more advantageous than
Class B shares or Class C shares, as discussed above, because of
the effect of the expected lower expenses for Class A shares and
the reduced initial sales charges available for larger investments
in Class A shares under the Fund's Right of Accumulation.
Of course, these examples are based on approximations of the
effect of current sales charges and expenses on a hypothetical
investment over time, using the assumed annual performance return
stated above, and therefore you should analyze your options
carefully.
Are There Differences in Account Features That Matter to
You? Because some account features may not be available for Class
B or Class C shareholders, or other features (such as Automatic
Withdrawal Plans) may not be advisable (because of the effect of
the contingent deferred sales charge in non-retirement accounts)
for Class B or Class C shareholders, you should carefully review
how you plan to use your investment account before deciding which
class of shares is better for you. For example, share certificates
are not available for Class B or Class C shares, and if you are
considering using your shares as collateral for a loan, that may be
a factor to consider. Additionally, dividends payable to Class B
and Class C shareholders will be reduced by the additional expenses
borne solely by those classes or higher expenses, such as the
asset-based sales charges to which Class B and Class C shares are
subject, as described below and in the Statement of Additional
Information.
How Does It Affect Payments to My Broker? A salesperson,
such as a broker, or any other person who is entitled to receive
compensation for selling Fund shares may receive different
compensation for selling one class of shares than for selling
another class. It is important that investors understand that the
purpose of the Class B and Class C contingent deferred sales
charges and asset-based sales charges is the same as the purpose of
the front-end sales charge on sales of Class A shares: that is to
compensate the Distributor for commissions it pays to dealers and
financial institutions for selling shares.
How Much Must You Invest? You can open a Fund account with a
minimum initial investment of $1,000 and make additional
investments at any time with as little as $25. There are reduced
minimum investments under special investment plans:
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7)
custodial plans and military allotment plans, you can make initial
and subsequent investments of as little as $25; and subsequent
purchases of at least $25 can be made by telephone through
AccountLink.
Under pension, profit-sharing plans and 401(k) plans and
Individual Retirement Accounts (IRAs), you can make an initial
investment of as little as $250 (if your IRA is established under
an Asset Builder Plan, the $25 minimum applies), and subsequent
investments may be as little as $25.
There is no minimum investment requirement if you are buying
shares by reinvesting dividends from the Fund or other Oppenheimer
funds (a list of them appears in the Statement of Additional
Information, or you can ask your dealer or call the Transfer
Agent), or by reinvesting distributions from unit investment trusts
that have made arrangements with the Distributor.
How Are Shares Purchased? You can buy shares several ways:
through any dealer, broker or financial institution that has a
sales agreement with the Distributor, directly through the
Distributor, or automatically from your bank account through an
Asset Builder Plan under the OppenheimerFunds AccountLink service.
The Distributor may appoint certain servicing agents as the
Distributor's agent to accept purchase (and redemption) orders.
When you buy shares, be sure to specify Class A, Class B or Class
C shares. If you do not choose, your investment will be made in
Class A shares.
Buying Shares Through Your Dealer. Your dealer will place
your order with the Distributor on your behalf.
Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "OppenheimerFunds Distributor, Inc." Mail it to P.O. Box
5270, Denver, Colorado 80217. If you don't list a dealer on the
application, the Distributor will act as your agent in buying the
shares. However, we recommend that you discuss your investment
first with a financial advisor, to be sure it is appropriate for
you.
Buying Shares Through OppenheimerFunds AccountLink. You
can use AccountLink to link your Fund account with an account at a
U.S. bank or other financial institution that is an Automated
Clearing House (ACH) member, to transmit funds electronically to
purchase shares, to have the Transfer Agent send redemption
proceeds, or to transmit dividends and distributions to your
account.
Shares are purchased for your account on AccountLink on the
regular business day the Distributor is instructed by you to
initiate the ACH transfer to buy shares. You can provide those
instructions automatically, under an Asset Builder Plan, described
below, or by telephone instructions using OppenheimerFunds
PhoneLink, also described below. You should request AccountLink
privileges on the application or dealer settlement instructions
used to establish your account. Please refer to "AccountLink" below
for more details.
Asset Builder Plans. You may purchase shares of the Fund
(and up to four other Oppenheimer funds) automatically each month
from your account at a bank or other financial institution under an
Asset Builder Plan with AccountLink. Details are on the Application
and in the Statement of Additional Information.
At What Price Are Shares Sold? Shares are sold at the
public offering price based on the net asset value (and any initial
sales charge that applies) that is next determined after the
Distributor receives the purchase order in Denver, Colorado. In
most cases, to enable you to receive that day's offering price, the
Distributor or its designated agent must receive your order by the
time of day The New York Stock Exchange closes, which is normally
4:00 P.M., New York time, but may be earlier on some days (all
references to time in this Prospectus mean "New York time"). The
net asset value of each class of shares is determined as of that
time on each day The New York Stock Exchange is open (which is a
"regular business day").
If you buy shares through a dealer, the dealer must receive
your order by the regular close of business of the New York Stock
Exchange on a regular business day and transmit it to the
Distributor so that it is received before the Distributor's close
of business that day, which is normally 5:00 P.M. The Distributor,
in its sole discretion, may reject any purchase order for the
Fund's shares.
Special Sales Charge Arrangements for Certain Persons. Appendix A
to this Prospectus sets forth conditions for the waiver of, or
exemption from, sales charges or the special sales charge rates
that apply to shareholders of the Former Quest for Value Funds (as
defined in that Appendix).
Buying Class A Shares. Class A shares are sold at their offering
price, which is normally net asset value plus an initial sales
charge. However, in some cases, described below, purchases are not
subject to an initial sales charge, and the offering price will be
the net asset value. In some cases, reduced sales charges may be
available, as described below. Out of the amount you invest, the
Fund receives the net asset value to invest for your account. The
sales charge varies depending on the amount of your purchase. A
portion of the sales charge may be retained by the Distributor and
allocated to your dealer as commission. The current initial sales
charge rates and commissions paid to dealers and brokers are as
follows:
<TABLE>
<CAPTION>
Front-End Sales Charge Commission
As a Percentage of as Percentage
Offering Amount of Offering
Amount of Purchase Price Invested Price
- ------------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
</TABLE>
The Distributor reserves the right to reallow the entire commission
to dealers. If that occurs, the dealer may be considered an
"underwriter" under Federal securities laws.
Class A Contingent Deferred Sales Charge. There is no
initial sales charge on purchases of Class A shares of any one or
more of the Oppenheimer funds in the following cases:
Purchases aggregating $1 million or more.
Purchases by a retirement plan qualified under sections
401(a) or 401(k) of the Internal Revenue Code, by a non-qualified
deferred compensation plan (not including Section 457 plans),
employee benefit plan, group retirement plan (see "How to Buy
Shares - Retirement Plans" in the Statement of Additional
Information for further details), an employee's 403(b)(7) custodial
plan account, SEP IRA, SARSEP, or SIMPLE plan (all of these plans
are collectively referred to as "Retirement Plans") that: (1) buy
shares costing $500,000 or more or (2) has, at the time of
purchase, 100 or more eligible participants, or (3) certifies that
it projects to have annual plan purchases of $200,000 or more.
Purchases by an OppenheimerFunds Rollover IRA if the
purchases are made (1) through a broker, dealer, bank or registered
investment adviser that has made special arrangements with the
Distributor for these purchases, or (2) by a direct rollover of a
distribution from a qualified retirement plan if the administrator
of that plan has made special arrangements with the Distributor for
those purchases.
The Distributor pays dealers of record commissions on those
purchases in an amount equal to (i) 1.0% for non-Retirement Plan
accounts, and (ii)for Retirement Plan accounts, 1.0% of the first
$2.5 million, plus 0.50% of the next $2.5 million, plus 0.25% of
purchases over $5 million. That commission will be paid only on
those purchases that were not previously subject to a front-end
sales charge and dealer commission. No sales commission will be
paid to the dealer, broker or financial institution on sales of
Class A shares purchased with the redemption proceeds of shares of
a mutual fund offered as an investment option in a Retirement Plan
in which Oppenheimer funds are also offered as investment options
under a special arrangement with the Distributor if the purchase
occurs more than 30 days after the addition of the Oppenheimer
funds as an investment option to the Retirement Plan.
If you redeem any of those shares within 18 months of the end
of the calendar month of their purchase, a contingent deferred
sales charge (called the "Class A contingent deferred sales
charge") will be deducted from the redemption proceeds. That sales
charge may be equal to 1.0% of the lesser of (1) the aggregate net
asset value of the redeemed shares (not including shares purchased
by reinvestment of dividends or capital gain distributions) or (2)
the original offering price which is the original net asset value
of the redeemed shares. However, the Class A contingent deferred
sales charge will not exceed the aggregate amount of the
commissions the Distributor paid to your dealer on all Class A
shares of all Oppenheimer funds you purchased subject to the Class
A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is
payable, the Fund will first redeem shares that are not subject to
the sales charge, including shares purchased by reinvestment of
dividends and capital gains, and then will redeem other shares in
the order that you purchased them. The Class A contingent deferred
sales charge is waived in certain cases described in "Waivers of
Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on
exchanges of shares under the Fund's exchange privilege (described
below). However, if the shares acquired by exchange are redeemed
within 18 months of the end of the calendar month of the purchase
of the exchanged shares, the contingent deferred sales charge will
apply.
Special Arrangements With Dealers. The Distributor may
advance up to 13 months' commissions to dealers that have
established special arrangements with the Distributor for Asset
Builder Plans for their clients.
Reduced Sales Charges for Class A Share Purchases. You may be
eligible to buy Class A shares at reduced sales charge rates in one
or more of the following ways:
Right of Accumulation. To qualify for the lower sales
charge rates that apply to larger purchases of Class A shares, you
and your spouse can add together Class A and Class B shares you
purchase for your individual accounts, or jointly, or for trust or
custodial accounts on behalf of your children who are minors. A
fiduciary can count all shares purchased for a trust, estate or
other fiduciary account (including one or more employee benefit
plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class
A and Class B shares of the Fund and other Oppenheimer funds to
reduce the sales charge rate that applies to current purchases of
Class A shares. You can also count Class A and Class B shares of
Oppenheimer funds you previously purchased subject to an initial or
contingent deferred sales charge to reduce the sales charge rate
for current purchases of Class A shares, provided that you still
hold your investment in one of the Oppenheimer funds. The value of
those shares will be based on the greater of the amount you paid
for the shares or their current value (at offering price). The
Oppenheimer funds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from
the Transfer Agent. The reduced sales charge will apply only to
current purchases and must be requested when you buy your shares.
Letter of Intent. Under a Letter of Intent, if you purchase
Class A shares or Class A and Class B shares of the Fund and other
Oppenheimer funds during a 13-month period, you can reduce the
sales charge rate that applies to your purchases of Class A shares.
The total amount of your intended purchases of both Class A and
Class B shares will determine the reduced sales charge rate for the
Class A shares purchased during that period. This can include
purchases made up to 90 days before the date of the Letter. More
information is contained in the Application and in "Reduced Sales
Charges" in the Statement of Additional Information.
Waivers of Class A Sales Charges. The Class A sales charges
are not imposed in the circumstances described below. There is an
explanation of this policy in "Reduced Sales Charges" in the
Statement of Additional Information.
Waivers of Initial and Contingent Deferred Sales Charges for
Certain Purchasers. Class A shares purchased by the following
investors are not subject to any Class A sales charges:
the Manager or its affiliates;
present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced
Sales Charges" in the Statement of Additional Information) of the
Fund, the Manager and its affiliates, and retirement plans
established by them for their employees;
registered management investment companies, or separate
accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose;
dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
employees and registered representatives (and their spouses)
of dealers or brokers described above or financial institutions
that have entered into sales arrangements with such dealers or
brokers (and are identified to the Distributor) or with the
Distributor; the purchaser must certify to the Distributor at the
time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor
children);
dealers, brokers or registered investment advisers that have
entered into an agreement with the Distributor providing
specifically for the use of shares of the Fund in particular
investment products made available to their clients (those clients
may be charged a transaction fee by their dealer, broker or adviser
for the purchase or sale of Fund shares).
(1) investment advisors and financial planners who charge
an advisory, consulting or other fee for their services and buy
shares for their own accounts or the accounts of their clients, (2)
Retirement Plans and deferred compensation plans and trusts used to
fund those Plans (including, for example, plans qualified or
created under sections 401(a), 403(b) or 457 of the Internal
Revenue Code), and "rabbi trusts" that buy shares for their own
accounts, in each case if those purchases are made through a broker
or agent or other financial intermediary that has made special
arrangements with the Distributor for those purchases; and (3)
clients of such investment advisors or financial planners who buy
shares for their own accounts may also purchase shares without
sales charge but only if their accounts are linked to a master
account of their investment advisor or financial planner on the
books and records of the broker, agent or financial intermediary
with which the Distributor has made such special arrangements (each
of these investors may be charged a fee by the broker, agent or
financial intermediary for purchasing shares).
employee benefit plans purchasing shares through a
shareholder servicing agent which the Distributor has appointed as
agent to accept those purchase orders;
directors, trustees, officers or full time employees of the
Sub-Adviser or its affiliates, their relatives or any trust,
pension, profit sharing or other benefit plan which beneficially
owns shares for those persons;
accounts for which Oppenheimer Capital is the investment
adviser (the Distributor must be advised of this arrangement) and
persons who are directors or trustees of the company or trust which
is the beneficial owner of such accounts;
any unit investment trust that has entered into an
appropriate agreement with the Distributor;
a TRAC-2000 401(k) plan (sponsored by the former Quest for
Value Advisors) whose Class B or Class C shares of a Former Quest
for Value Fund were exchanged for Class A shares of that Fund due
to the termination of the Class B and Class C TRAC-2000 program on
November 24, 1995; or
qualified retirement plans that had agreed with the former
Quest for Value Advisors to purchase shares of any of the Former
Quest for Value Funds at net asset value, with such shares to be
held through DCXchange, a sub-transfer agency mutual fund
clearinghouse, provided that such arrangements are consummated and
share purchases commence by December 31, 1996.
Waivers of Initial and Contingent Deferred Sales Charges in
Certain Transactions. Class A shares issued or purchased in the
following transactions are not subject to Class A sales charges:
shares issued in plans of reorganization, such as mergers,
asset acquisitions and exchange offers, to which the Fund is a
party;
shares purchased by the reinvestment of loan repayments by
a participant in a retirement plan for which the Manager or its
affiliates acts as sponsor;
shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds
(other than Oppenheimer Cash Reserves) or unit investment trusts
for which reinvestment arrangements have been made with the
Distributor;
shares purchased and paid for with the proceeds of shares
redeemed in the past 12 months from a mutual fund (other than a
fund managed by the Manager or any of its subsidiaries) on which an
initial sales charge or contingent deferred sales charge was paid
(this waiver also applies to shares purchased by exchange of shares
of Oppenheimer Money Market Fund, Inc. that were purchased and paid
for in this manner); this waiver must be requested when the
purchase order is placed for your shares of the Fund, and the
Distributor may require evidence of your qualification for this
waiver; or
shares purchased with the proceeds of maturing principal of
units of any Qualified Unit Investment Liquid Trust Series.
Waivers of the Class A Contingent Deferred Sales Charge for
Certain Redemptions. The Class A contingent deferred sales charge
is also waived if shares that would otherwise be subject to the
contingent deferred sales charge are redeemed in the following
cases:
to make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the original account value;
involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see "Shareholder Account
Rules and Policies," below);
if, at the time a purchase order is placed for Class A
shares that would otherwise be subject to the Class A contingent
deferred sales charge, the dealer agrees in writing to accept the
dealer's portion of the commission payable on the sale in
installments of 1/18th of the commission per month (and no further
commission will be payable if the shares are redeemed within 18
months of purchase);
for distributions from a TRAC-2000 401(k) plan sponsored by
the Distributor due to the termination of the TRAC-2000 program;
for distributions from Retirement Plans, deferred
compensation plans or other employee benefit plans for any of the
following purposes: (1) following the death or disability (as
defined in the Internal Revenue Code) of the participant or
beneficiary (the death or disability must occur after the
participant's account was established); (2) to return excess
contributions; (3) to return contributions made due to a mistake of
fact; (4) hardship withdrawals, as defined in the plan; (5) under
a Qualified Domestic Relations Order, as defined in the Internal
Revenue Code; (6) to meet the minimum distribution requirements of
the Internal Revenue Code; (7) to establish "substantially equal
periodic payments" as described in Section 72(t) of the Internal
Revenue Code; (8) for retirement distributions or loans to
participants or beneficiaries; (9) separation from service; (10)
participant-directed redemptions to purchase shares of a mutual
fund (other than a fund managed by the Manager or its subsidiary)
offered as an investment option in a Retirement Plan in which
Oppenheimer funds are also offered as investment options under a
special arrangement with the Distributor; or (11) plan termination
or "in-service distributions", if the redemption proceeds are
rolled over directly to an OppenheimerFunds IRA.
Distribution and Service Plan for Class A Shares. In
connection with its conversion to an open-end investment company,
the Fund has adopted a Distribution and Service Plan for Class A
shares to reimburse the Distributor for a portion of its costs
incurred in connection with the personal service and maintenance of
shareholder accounts that hold Class A shares. Under the Plan, the
Fund pays an annual asset-based sales charge to the Distributor of
0.25% of the average annual net assets of the class. The Fund also
pays a service fee to the Distributor at an annual rate of 0.25% of
the average annual net assets of the class. For the first two
years after the effective date of the Plan, the Distributor has
voluntarily agreed to waive 0.15% of the distribution fee payable
under the Plan and has agreed that all fees paid to the Distributor
will be paid to dealers, brokers, banks and other financial
institutions quarterly for providing personal service and
maintenance of accounts of their customers that hold Class A shares
and will not be retained by the Distributor.
Services to be provided include, among others, answering
customer inquiries about the Fund, assisting in establishing and
maintaining accounts in the Fund, making the Fund's investment
plans available and providing other services at the request of the
Fund or the Distributor. The payments under the Plan increase the
annual expenses of Class A shares. For more details, please refer
to "Distribution and Service Plans" in the Statement of Additional
Information.
Buying Class B Shares. Class B shares are sold at net asset value
per share without an initial sales charge. However, if Class B
shares are redeemed within 6 years of their purchase, a contingent
deferred sales charge will be deducted from the redemption
proceeds. That sales charge will not apply to shares purchased by
the reinvestment of dividends or capital gains distributions. The
contingent deferred sales charge will be based on the lesser of the
net asset value of the redeemed shares at the time of redemption or
the original offering price (which is the original net asset
value). The contingent deferred sales charge is not imposed on the
amount of your account value represented by the increase in net
asset value over the initial purchase price. The Class B contingent
deferred sales charge is paid to the Distributor to reimburse its
expenses of providing distribution-related services to the Fund in
connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 6 years, and (3)
shares held the longest during the 6-year period. The contingent
deferred sales charge is not imposed in the circumstances described
in "Waivers of Class B and Class C Sales Charges" below.
The amount of the contingent deferred sales charge will depend
on the number of years since you invested and the dollar amount
being redeemed, according to the following schedule:
Years Since Beginning Contingent Deferred Sales Charge
of Month In Which Purchase on Redemptions in that Year
Order was Accepted (As % of Amount Subject to Charge)
0 - 1 5.0%
1 - 2 4.0%
2 - 3 3.0%
3 - 4 3.0%
4 - 5 2.0%
5 - 6 1.0%
6 and following None
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of
the month in which the purchase was made.
Automatic Conversion of Class B Shares. 72 months after you
purchase Class B shares, those shares will automatically convert to
Class A shares. This conversion feature relieves Class B
shareholders of the asset-based sales charge that applies to Class
B shares under the Class B Distribution and Service Plan, described
below. The conversion is based on the relative net asset value of
the two classes, and no sales load or other charge is imposed. When
Class B shares convert, any other Class B shares that were acquired
by the reinvestment of dividends and distributions on the converted
shares will also convert to Class A shares. The conversion feature
is subject to the continued availability of a tax ruling described
in "Alternative Sales Arrangements - Class A, Class B and Class C
Shares" in the Statement of Additional Information.
Distribution and Service Plan for Class B shares. The Fund
has adopted a Distribution and Service Plan for Class B shares to
compensate the Distributor for distributing Class B shares and
servicing accounts. This Plan is described below under "Buying
Class C Shares - Distribution and Service Plans for Class B and
Class C shares."
<PAGE>
Waivers of Class B Sales Charges. The Class B contingent
deferred sales charge will not apply to shares purchased in certain
types of transactions, nor will it apply to shares redeemed in
certain circumstances, as described below under "Buying Class C
Shares Waivers of Class B and Class C Sales Charges."
Buying Class C Shares. Class C shares are sold at net asset value
per share without an initial sales charge. However, if Class C
shares are redeemed within 12 months of their purchase, a
contingent deferred sales charge of 1.0% will be deducted from the
redemption proceeds. That sales charge will not apply to shares
purchased by the reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge will be based
on the lesser of the net asset value of the redeemed shares at the
time of redemption or the original offering price (which is the
original net asset value). The contingent deferred sales charge is
not imposed on the amount of your account value represented by the
increase in net asset value over the initial purchase price. The
Class C contingent deferred sales charge is paid to compensate the
Distributor for its expenses of providing distribution-related
services to the Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 12 months, and (3)
shares held the longest during the 12-month period.
Distribution and Service Plan for Class B and Class C
Shares. In connection with its conversion to an open-end
investment company, the Fund has adopted Distribution and Service
Plans for Class B and Class C shares to compensate the Distributor
for its services and costs in distributing Class B and Class C
shares and servicing accounts. Under the Plans, the Fund pays the
Distributor an annual "asset-based sales charge" of 0.75% per year
on Class B shares that are outstanding for 6 years or less and on
Class C shares. The Distributor also receives a service fee of
0.25% per year under each plan.
Under each Plan, both fees are computed on the average of the
net asset value of shares in the respective class, determined as of
the close of each regular business day during the period. The
asset-based sales charge and service fees increase Class B and
Class C expenses by up to 1.00% of the net assets per year of the
respective class.
The Distributor uses the service fees to compensate dealers
for providing personal services for accounts that hold Class B or
Class C shares. Those services are similar to those provided under
the Class A Service Plan, described above. The Distributor pays
the 0.25% service fees to dealers in advance for the first year
after Class B or Class C shares have been sold by the dealer.
After the shares have been held for a year, the Distributor pays
the service fees to dealers on a quarterly basis.
The asset-based sales charge allows investors to buy Class B
or Class C shares without a front-end sales charge while allowing
the Distributor to compensate dealers that sell those shares. The
Fund pays the asset-based sales charges to the Distributor for its
services rendered in distributing Class B and Class C shares.
Those payments are at a fixed rate that is not related to the
Distributor's expenses. The services rendered by the Distributor
include paying and financing the payment of sales commissions,
service fees and other costs of distributing and selling Class B
and Class C shares.
The Distributor currently pays sales commissions of 3.75% of
the purchase price of Class B shares to dealers from its own
resources at the time of sale. Including the advance of the
service fee, the total amount paid by the Distributor to the dealer
at the time of sale of Class B shares is 4.00% of the purchase
price. The Distributor retains the Class B asset-based sales
charge.
The Distributor currently pays sales commissions of 0.75% of
the purchase price of Class C shares to dealers from its own
resources at the time of sale. Including the advance of the
service fee, the total amount paid by the Distributor to the dealer
at the time of sale of Class C shares is 1.00% of the purchase
price. The Distributor plans to pay the asset-based sales charge as
an ongoing commission to the dealer on Class C shares that have
been outstanding for a year or more.
The Distributor's actual expenses in selling Class B and Class
C shares may be more than the payments it receives from contingent
deferred sales charges collected on redeemed shares and from the
Fund under the Distribution and Service Plans for Class B and Class
C shares. If either Plan is terminated by the Fund, the Board of
Directors may allow the Fund to continue payments of the asset-based
sales charge to the Distributor for distributing shares
before the Plan was terminated.
Waivers of Class B and Class C Sales Charges. The Class B
and Class C contingent deferred sales charges will not be applied
to shares purchased in certain types of transactions nor will it
apply to Class B or Class C shares redeemed in certain
circumstances as described below. The reasons for this policy are
in "Reduced Sales Charges" in the Statement of Additional
Information.
Waivers for Redemptions in Certain Cases. The Class B and
Class C contingent deferred sales charges will be waived for
redemptions of shares in the following cases if the Transfer Agent
is notified that those conditions apply at redemption:
to make distributions to participants or beneficiaries from
Retirement Plans, if the distributions are made (a) under an
Automatic Withdrawal Plan after the participant reaches age 59-1/2,
as long as the payments are no more than 10% of the account value
annually (measured from the date the Transfer Agent receives the
request), or (b) following the death or disability (as defined in
the Internal Revenue Code ("IRC")) of the participant or
beneficiary (the death or disability must have occurred after the
account was established);
redemptions from accounts other than Retirement Plans
following the death or disability of the last surviving
shareholder, including a trustee of a "grantor" trust or revocable
living trust for which the trustee is also the sole beneficiary
(the death or disability must have occurred after the account was
established, and for disability you must provide evidence of a
determination of disability by the Social Security Administration);
returns of excess contributions to Retirement Plans;
distributions from retirement plans to make "substantially
equal periodic payments" under Section 72(t) of the Internal
Revenue Code that do not exceed 10% of the account value annually,
measured from the date the Transfer Agent receives the request;
shares redeemed involuntarily, as described in "Shareholder
Account Rules and Policies," below; or
distributions from OppenheimerFunds prototype 401(k) plans:
(1) for hardship withdrawals; (2) under a Qualified Domestic
Relations Order, as defined in the IRC; (3) to meet minimum
distribution requirements as defined in the IRC; (4) to make
"substantially equal periodic payments" as described in Section
72(t) of the IRC; or (5) for separation from service.
Waivers for Shares Sold or Issued in Certain Transactions.
The contingent deferred sales charge is also waived on Class B and
Class C shares sold or issued in the following cases:
shares sold to the Manager or its affiliates;
shares sold to registered management investment companies
or separate accounts of insurance companies having an agreement
with the Manager or the Distributor for that purpose; or
shares issued in plans of reorganization to which the Fund
is a party.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account
to your account at your bank or other financial institution to
enable you to send money electronically between those accounts to
perform a number of types of account transactions. These include
purchases of shares by telephone (either through a service
representative or by PhoneLink, described below), automatic
investments under Asset Builder Plans, and sending dividends and
distributions or Automatic Withdrawal Plan payments directly to
your bank account. Please refer to the Application for details or
call the Transfer Agent for more information.
AccountLink privileges should be requested on the Application
you use to buy shares, or on your dealer's settlement instructions
if you buy your shares through your dealer. After your account is
established, you can request AccountLink privileges by sending
signature-guaranteed instructions to the Transfer Agent.
AccountLink privileges will apply to each shareholder listed in the
registration on your account as well as to your dealer
representative of record unless and until the Transfer Agent
receives written instructions terminating or changing those
privileges. After you establish AccountLink for your account, any
change of bank account information must be made by signature-guaranteed
instructions to the Transfer Agent signed by all
shareholders who own the account.
Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase
shares in amounts up to $250,000 through a telephone
representative, call the Distributor at 1-800-852-8457. The
purchase payment will be debited from your bank account.
PhoneLink. PhoneLink is the OppenheimerFunds automated
telephone system that enables shareholders to perform a number of
account transactions automatically using a touch-tone phone.
PhoneLink may be used on already-established Fund accounts after
you obtain a Personal Identification Number (PIN), by calling the
special PhoneLink number: 1-800-533-3310.
Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have
established AccountLink privileges to link your bank account with
the Fund, to pay for these purchases.
Exchanging Shares. With the OppenheimerFunds exchange
privilege, described below, you can exchange shares automatically
by phone from your Fund account to another Oppenheimer funds
account you have already established by calling the special
PhoneLink number. Please refer to "How to Exchange Shares," below,
for details.
Selling Shares. You can redeem shares by telephone
automatically by calling the PhoneLink number and the Fund will
send the proceeds directly to your AccountLink bank account.
Please refer to "How to Sell Shares," below, for details.
Automatic Withdrawal and Exchange Plans. The Fund has several plans
that enable you to sell shares automatically or exchange them to
another Oppenheimer funds account on a regular basis:
Automatic Withdrawal Plans. If your Fund account is worth
$5,000 or more, you can establish an Automatic Withdrawal Plan to
receive payments of at least $50 on a monthly, quarterly, semi-annual
or annual basis. The checks may be sent to you or sent
automatically to your bank account on AccountLink. You may even set
up certain types of withdrawals of up to $1,500 per month by
telephone. You should consult the Application and Statement of
Additional Information for more details.
Automatic Exchange Plans. You can authorize the Transfer
Agent to exchange an amount you establish in advance automatically
for shares of up to five other Oppenheimer funds on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange
Plan. The minimum purchase for each other Oppenheimer funds
account is $25. These exchanges are subject to the terms of the
Exchange Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class A
or Class B shares of the Fund, you have up to 6 months to reinvest
all or part of the redemption proceeds in Class A shares of the
Fund or other Oppenheimer funds without paying a sales charge.
This privilege applies to Class A shares that you purchased subject
to an initial sales charge and to Class A or Class B shares on
which you paid a contingent deferred sales charge when you redeemed
them. This privilege does not apply to Class C shares. You must
be sure to ask the Distributor for this privilege when you send
your payment. Please consult the Statement of Additional
Information for more details.
Retirement Plans. Fund shares are available as an investment for
your retirement plans. If you participate in a plan sponsored by
your employer, the plan trustee or administrator must make the
purchase of shares for your retirement plan account. The
Distributor offers a number of different retirement plans that can
be used by individuals and employers:
Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable
organizations
SEP-IRAs (Simplified Employee Pension Plans) for small
business owners or people with income from self-employment,
including SAR/SEP IRAs
Pension and Profit-Sharing Plans for self-employed persons
and other employers
401(k) prototype retirement plans for businesses
Please call the Distributor for the OppenheimerFunds plan
documents, which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account on any
regular business day by selling (redeeming) some or all of your
shares. Your shares will be sold at the next net asset value
calculated after your order is received and accepted by the
Transfer Agent. The Fund offers you a number of ways to sell your
shares: in writing or by telephone. You can also set up Automatic
Withdrawal Plans to redeem shares on a regular basis, as described
above. If you have questions about any of these procedures, and
especially if you are redeeming shares in a special situation, such
as due to the death of the owner, or from a retirement plan, please
call the Transfer Agent first, at 1-800-525-7048, for assistance.
Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must
submit a withholding form with your request to avoid delay. If your
retirement plan account is held for you by your employer, you must
arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the
Statement of Additional Information.
Certain Requests Require A Signature Guarantee. To protect
you and each Fund from fraud, certain redemption requests must be
in writing and must include a signature guarantee in the following
situations (there may be other situations also requiring a
signature guarantee):
You wish to redeem more than $50,000 worth of shares and
receive a check
The redemption check is not payable to all shareholders
listed on the account statement
The redemption check is not sent to the address of record
on your account statement
Shares are being transferred to a Fund account with a
different owner or name
Shares are redeemed by someone other than the owners (such
as an Executor)
Where Can I Have My Signature Guaranteed? The Transfer
Agent will accept a guarantee of your signature by a number of
financial institutions, including: a U.S. bank, trust company,
credit union or savings association, or by a foreign bank that has
a U.S. correspondent bank, or by a U.S. registered dealer or broker
in securities, municipal securities or government securities, or by
a U.S. national securities exchange, a registered securities
association or a clearing agency. If you are signing as a fiduciary
or on behalf of a corporation, partnership or other business, you
must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that
includes:
Your name
The Fund's name
Your Fund account number (from your account statement)
The dollar amount or number of shares to be redeemed
Any special payment instructions
Any share certificates for the shares you are selling,
The signatures of all registered owners exactly as the
account is registered, and
Any special requirements or documents requested by the
Transfer Agent to assure proper authorization of the person asking
to sell shares.
Use the following address for Send courier or Express Mail
request by mail: requests to:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Ave.,
Denver, Colorado 80217 Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of
record may also sell your shares by telephone. To receive the
redemption price on a regular business day, your call must be
received by the Transfer Agent by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M. but may be earlier
on some days. Shares held in an OppenheimerFunds retirement plan
or under a share certificate may not be redeemed by telephone.
To redeem shares through a service representative, call 1-800-852-8457
To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the
address on the account statement, or, if you have linked your Fund
account to your bank account on AccountLink, you may have the
proceeds wired to that bank account.
Telephone Redemptions Paid by Check. Up to $50,000 may be
redeemed by telephone, in any 7-day period. The check must be
payable to all owners of record of the shares and must be sent to
the address on the account statement. This service is not
available within 30 days of changing the address on an account.
Telephone Redemptions Through AccountLink. There are no
dollar limits on telephone redemption proceeds sent to a bank
account designated when you establish AccountLink. Normally the ACH
transfer to your bank is initiated on the business day after the
redemption. You do not receive dividends on the proceeds of the
shares you redeemed while they are waiting to be transferred.
Selling Shares Through Your Dealer. The Distributor has made
arrangements to repurchase Fund shares from dealers and brokers on
behalf of their customers. Brokers or dealers may charge for that
service. Please refer to "Special Arrangements for Repurchase of
Shares from Dealers and Brokers" in the Statement of Additional
Information for more details.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain
Oppenheimer funds at net asset value per share at the time of
exchange, without sales charge. To exchange shares, you must meet
several conditions:
Shares of the fund selected for exchange must be available
for sale in your state of residence
The prospectuses of this Fund and the fund whose shares you
want to buy must offer the exchange privilege
You must hold the shares you buy when you establish your
account for at least 7 days before you can exchange them; after the
account is open 7 days, you can exchange shares every regular
business day
You must meet the minimum purchase requirements for the fund
you purchase by exchange
Before exchanging into a fund, you should obtain and read
its prospectus
Shares of a particular class of the Fund may be exchanged only
for shares of the same class in the other Oppenheimer funds. For
example, you can exchange Class A shares of this Fund only for
Class A shares of another fund. At present, Oppenheimer Money
Market Fund, Inc. offers only one class of shares, which are
considered to be Class A shares for this purpose. In some cases,
sales charges may be imposed on exchange transactions. Please
refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.
Exchanges may be requested in writing or by telephone:
Written Exchange Requests. Submit an OppenheimerFunds
Exchange Request form, signed by all owners of the account. Send
it to the Transfer Agent at the addresses listed in "How to Sell
Shares."
Telephone Exchange Requests. Telephone exchange requests may
be made either by calling a service representative at 1-800-852-8457
or by using PhoneLink for automated exchanges, by calling 1-800-533-3310.
Telephone exchanges may be made only between accounts
that are registered with the same name(s) and address. Shares held
under certificates may not be exchanged by telephone.
You can find a list of Oppenheimer funds currently available
for exchanges in the Statement of Additional Information or obtain
one by calling a service representative at 1-800-525-7048. That
list can change from time to time.
There are certain exchange policies you should be aware of:
Shares are normally redeemed from one fund and purchased
from the other fund in the exchange transaction on the same regular
business day on which the Transfer Agent receives an exchange
request that is in proper form by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M. but may be earlier
on some days. However, either fund may delay the purchase of
shares of the fund you are exchanging into up to 7 days if it
determines it would be disadvantaged by a same-day transfer of the
proceeds to buy shares. For example, the receipt of multiple
exchange requests from a dealer in a "market-timing" strategy might
require the sale of portfolio securities at a time or price
disadvantageous to the Fund.
Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange
request that will disadvantage it, or to refuse multiple exchange
requests submitted by a shareholder or dealer.
The Fund may amend, suspend or terminate the exchange
privilege at any time. Although the Fund will attempt to provide
you notice whenever it is reasonably able to do so, it may impose
these changes at any time.
For tax purposes, exchanges of shares involve a redemption
of the shares of the Fund you own and a purchase of the shares of
the other fund, which may result in a capital gain or loss. For
more information about the taxes affecting exchanges, please refer
to "How to Exchange Shares" in the Statement of Additional
Information.
If the Transfer Agent cannot exchange all the shares you
request because of a restriction cited above, only the shares
eligible for exchange will be exchanged.
Shareholder Account Rules and Policies
Net Asset Value Per Share is determined for each class of
shares as of the close of The New York Stock Exchange that day,
which is normally 4:00 P.M. but may be earlier on some days, on
each day the Exchange is open by dividing the value of the Fund's
net assets attributable to a class by the number of shares of that
class that are outstanding. The Fund's Board of Directors has
established procedures to value the Fund's securities to determine
net asset value. In general, securities values are based on market
value. There are special procedures for valuing illiquid and
restricted securities and obligations for which market values
cannot be readily obtained. These procedures are described more
completely in the Statement of Additional Information.
The offering of shares may be suspended during any period
in which the determination of net asset value is suspended, and the
offering may be suspended by the Board of Directors at any time the
Board believes it is in the Fund's best interest to do so.
Telephone Transaction Privileges for purchases, redemptions
or exchanges may be modified, suspended or terminated by the Fund
at any time. If an account has more than one owner, the Fund and
the Transfer Agent may rely on the instructions of any one owner.
Telephone privileges apply to each owner of the account and the
dealer representative of record for the account unless and until
the Transfer Agent receives cancellation instructions from an owner
of the account.
The Transfer Agent will record any telephone calls to verify
data concerning transactions and has adopted other procedures to
confirm that telephone instructions are genuine, by requiring
callers to provide tax identification numbers and other account
data or by using PINs, and by confirming such transactions in
writing. If the Transfer Agent does not use reasonable procedures
it may be liable for losses due to unauthorized transactions, but
otherwise neither the Transfer Agent nor the Fund will be liable
for losses or expenses arising out of telephone instructions
reasonably believed to be genuine. If you are unable to reach the
Transfer Agent during periods of unusual market activity, you may
not be able to complete a telephone transaction and should consider
placing your order by mail.
Redemption or transfer requests will not be honored until
the Transfer Agent receives all required documents in proper form.
From time to time, the Transfer Agent in its discretion may waive
certain of the requirements for redemptions stated in this
Prospectus.
Dealers that can perform account transactions for their
clients by participating in NETWORKING through the National
Securities Clearing Corporation are responsible for obtaining their
clients' permission to perform those transactions and are
responsible to their clients who are shareholders of the Fund if
the dealer performs any transaction erroneously or improperly.
The redemption price for shares will vary from day to day
because the value of the securities in the Fund's portfolio
fluctuates, and the redemption price, which is the net asset value
per share, will normally be different for Class A, Class B and
Class C shares. Therefore, the redemption value of your shares may
be more or less than their original cost.
Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the
shareholder under the redemption procedures described above) within
7 days after the Transfer Agent receives redemption instructions in
proper form, except under unusual circumstances determined by the
Securities and Exchange Commission delaying or suspending such
payments. For accounts registered in the name of a broker-dealer,
payment will be forwarded within 3 business days. The Transfer
Agent may delay forwarding a check or processing a payment via
AccountLink for recently purchased shares, but only until the
purchase payment has cleared. That delay may be as much as 10 days
from the date the shares were purchased. That delay may be avoided
if you purchase shares by certified check or arrange to have your
bank to provide telephone or written assurance to the Transfer
Agent that your purchase payment has cleared.
Involuntary redemptions of small accounts may be made by the
Fund if the account value has fallen below $500 (or such other
amount as may be fixed by the Board of Directors) for reasons other
than the fact that the market value of shares has dropped, and in
some cases involuntary redemptions may be made to repay the
Distributor for losses from the cancellation of share purchase
orders.
Under unusual circumstances, shares of the Fund may be
redeemed "in kind", which means that the redemption proceeds will
be paid with securities from the Fund's portfolio. Please refer to
"How to Sell Shares" in the Statement of Additional Information for
more details.
"Backup Withholding" of Federal income tax may be applied
at the rate of 31% from dividends, distributions and redemption
proceeds (including exchanges) if you fail to furnish the Fund a
certified Social Security or taxpayer identification number when
you sign your application, or if you violate Internal Revenue
Service regulations on tax reporting of dividends.
The Fund does not charge a redemption fee, but if your
dealer or broker handles your redemption, they may charge a fee.
That fee can be avoided by redeeming your Fund shares directly
through the Transfer Agent. Under the circumstances described in
"How To Buy Shares," you may be subject to a contingent deferred
sales charges when redeeming certain Class A, Class B and Class C
shares.
To avoid sending duplicate copies of materials to
households, the Fund will mail only one copy of each annual and
semi-annual report to shareholders having the same last name and
address on the Fund's records. However, each shareholder may call
the Transfer Agent at 1-800-525-7048 to ask that copies of those
materials be sent personally to that shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class
A, Class B and Class C shares from net investment income on an
annual basis and normally pays those dividends to shareholders
following the end of its fiscal year, which is December 31.
Dividends paid on Class A shares generally are expected to be
higher than for Class B and Class C shares because expenses
allocable to Class B and Class C shares will generally be higher
than for Class A shares. There is no fixed dividend rate and there
can be no assurance as to the payment of any dividends or the
realization of any gains.
Capital Gains. The Fund may make distributions annually in December
out of any net short-term or long-term capital gains, and the Fund
may make supplemental distributions of dividends and capital gains
following its fiscal year which ended December 31. Short-term
capital gains are treated as dividends for tax purposes. Long-term
capital gains will be separately identified in the tax information
the Fund sends you after the end of the calendar year. There can
be no assurances that the Fund will pay any capital gains
distributions in a particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are
reinvested. For other accounts, you have four options:
Reinvest All Distributions in the Fund. You can elect to
reinvest all dividends and long-term capital gains distributions in
additional shares of the Fund.
Reinvest Long-Term Capital Gains Only. You can elect to
reinvest long-term capital gains in the Fund while receiving
dividends by check or sent to your bank account on AccountLink.
Receive All Distributions in Cash. You can elect to receive
a check for all dividends and long-term capital gains distributions
or have them sent to your bank on AccountLink.
Reinvest Your Distributions in Another Oppenheimer Fund
Account. You can reinvest all distributions in another Oppenheimer
fund account you have established.
Taxes. If your account is not a tax-deferred retirement account,
you should be aware of the following tax implications of investing
in the Fund. Long-term capital gains are taxable as long-term
capital gains when distributed to shareholders. It does not matter
how long you have held your shares. Dividends paid from short-term
capital gains and net investment income are taxable as ordinary
income. Distributions are subject to federal income tax and may be
subject to state or local taxes. Your distributions are taxable
when paid, whether you reinvest them in additional shares or take
them in cash. Every year the Fund will send you and the IRS a
statement showing the amount of each taxable distribution you
received in the previous year.
"Buying a Dividend": When a Fund goes ex-dividend, its
share price is reduced by the amount of the distribution. If you
buy shares on or just before the ex-dividend date, or just before
the Fund declares a capital gains distribution, you will pay the
full price for the shares and then receive a portion of the price
back as a taxable dividend or capital gain.
Taxes on Transactions: Share redemptions, including
redemptions for exchanges, are subject to capital gains tax.
Generally speaking a capital gain or loss is the difference
between the price you paid for the shares and the price you receive
when you sell them.
Returns of Capital: In certain cases distributions made by
the Fund may be considered a non-taxable return of capital to
shareholders. If that occurs, it will be identified in notices to
shareholders. A non-taxable return of capital may reduce your tax
basis in your Fund shares.
This information is only a summary of certain federal tax
information about your investment. More information is contained
in the Statement of Additional Information, and in addition you
should consult with your tax adviser about the effect of an
investment in the Fund on your particular tax situation.
<PAGE>
APPENDIX A
Special Sales Charge Arrangements for Shareholders of the Fund Who
Were Shareholders of the Former Quest for Value Funds
The initial and contingent deferred sales charge rates and waivers
for Class A, Class B and Class C shares of the Fund described
elsewhere in this Prospectus are modified as described below for
those shareholders of (i) Oppenheimer Quest Value Fund, Inc.,
Oppenheimer Quest Growth and Income Value Fund, Oppenheimer Quest
Opportunity Value Fund, Oppenheimer Quest Small Cap Value Fund and
Oppenheimer Quest Global Value Fund, Inc. on November 24, 1995,
when OppenheimerFunds, Inc. became the investment adviser to those
funds, and (ii) Quest for Value U.S. Government Income Fund, Quest
for Value Investment Quality Income Fund, Quest for Global Income
Fund, Quest for Value New York Tax-Exempt Fund, Quest for Value
National Tax-Exempt Fund and Quest for Value California Tax-Exempt
Fund when those funds merged into various Oppenheimer funds on
November 24, 1995. The funds listed above are referred to in this
Prospectus as the "Former Quest for Value Funds." The waivers of
initial and contingent deferred sales charges described in this
Appendix apply to shares of the Fund acquired by such shareholder
pursuant to an exchange of shares of one of the Oppenheimer funds
that was one of the Former Quest for Value Funds.
Class A Sales Charges
Reduced Class A Initial Sales Charge Rates for Certain Former
Quest Shareholders
Purchases by Groups, Associations and Certain Qualified
Retirement Plans. The following table sets forth the initial sales
charge rates for Class A shares purchased by a "Qualified
Retirement Plan" through a single broker, dealer or financial
institution, or by members of "Associations" formed for any purpose
other than the purchase of securities if that Qualified Retirement
Plan or that Association purchased shares of any of the Former
Quest for Value Funds or received a proposal to purchase such
shares from OCC Distributors prior to November 24, 1995. For this
purpose only, a "Qualified Retirement Plan" includes any 401(k)
plan, 403(b) plan, and SEP/IRA or IRA plan for employees of a
single employer.
Front-End Front-End Commission
Sales Charge Sales Charge as
as a as a Percentage
Number of Percentage Percentage of
Eligible Employees of Offering of Amount Offering
or Members Price Invested Price
9 or fewer 2.50% 2.56% 2.00%
At least 10 but not
more than 49 2.00% 2.04% 1.60%
For purchases by Qualified Retirement plans and Associations
having 50 or more eligible employees or members, there is no
initial sales charge on purchases of Class A shares, but those
shares are subject to the Class A contingent deferred sales charge
described on pages __ and __ of this Prospectus.
Purchases made under this arrangement qualify for the lower of
the sales charge rate in the table based on the number of eligible
employees in a Qualified Retirement Plan or members of an
Association or the sales charge rate that applies under the Rights
of Accumulation described above in the Prospectus. In addition,
purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they
qualified to purchase shares of any of the Former Quest For Value
Funds by virtue of projected contributions or investments of $1
million or more each year. Individuals who qualify under this
arrangement for reduced sales charge rates as members of
Associations, or as eligible employees in Qualified Retirement
Plans also may purchase shares for their individual or custodial
accounts at these reduced sales charge rates, upon request to the
Fund's Distributor.
Special Class A Contingent Deferred Sales Charge Rates
Class A shares of the Fund purchased by exchange of shares of
other Oppenheimer funds that were acquired as a result of the
merger of Former Quest for Value Funds into those Oppenheimer
funds, and which shares were subject to a Class A contingent
deferred sales charge prior to November 24, 1995 will be subject to
a contingent deferred sales charge at the following rates: if they
are redeemed within 18 months of the end of the calendar month in
which they were purchased, at a rate equal to 1.0% if the
redemption occurs within 12 months of their initial purchase and at
a rate of 0.50 of 1.0% if the redemption occurs in the subsequent
six months. Class A shares of any of the Former Quest for Value
Funds purchased without an initial sales charge on or before
November 22, 1995 will continue to be subject to the applicable
contingent deferred sales charge in effect as of that date as set
forth in the then-current prospectus for such Fund.
Waiver of Class A Sales Charges for Certain Shareholders
Class A shares of the Fund purchased by the following
investors are not subject to any Class A initial or contingent
deferred sales charges:
Shareholders of the Fund who were shareholders of the AMA
Family of Funds on February 28, 1991 and who acquired shares of any
of the Former Quest for Value Funds by merger of a portfolio of the
AMA Family of Funds.
Shareholders of the Fund who acquired shares of any Former
Quest for Value Fund by merger of any of the portfolios of the
Unified Funds.
Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions
The Class A contingent deferred sales charge will not apply to
redemptions of Class A shares of the Fund purchased by the
following investors who were shareholders of any Former Quest for
Value Fund:
Investors who purchased Class A shares from a dealer that
is not or was not permitted to receive a sales load or redemption
fee imposed on a shareholder with whom that dealer has a fiduciary
relationship under the Employee Retirement Income Security Act of
1974 and regulations adopted under that law.
Participants in Qualified Retirement Plans that purchased
shares of any of the Former Quest For Value Funds pursuant to a
special "strategic alliance" with the distributor of those funds.
The Fund's Distributor will pay a commission to the dealer for
purchases of Fund shares as described above in "Class A Contingent
Deferred Sales Charge."
Class A, Class B and Class C Contingent Deferred Sales Charge
Waivers
Waivers for Redemptions of Shares Purchased Prior to March 6,
1995
In the following cases, the contingent deferred sales charge
will be waived for redemptions of Class A, B or C shares of the
Fund acquired by exchange from an Oppenheimer Fund that was a
Former Quest for Value Fund or into which such Fund merged, if
those shares were purchased prior to March 6, 1995: in connection
with (i) distributions to participants or beneficiaries of plans
qualified under Section 401(a) of the Internal Revenue Code or from
custodial accounts under Section 403(b)(7) of the Code, Individual
Retirement Accounts, deferred compensation plans under Section 457
of the Code, and other employee benefit plans, and returns of
excess contributions made to each type of plan, (ii) withdrawals
under an automatic withdrawal plan holding only either Class B or
C shares if the annual withdrawal does not exceed 10% of the
initial value of the account, and (iii) liquidation of a
shareholder's account if the aggregate net asset value of shares
held in the account is less than the required minimum value of such
accounts.
Waivers for Redemptions of Shares Purchased on or After March 6,
1995 but Prior to November 24, 1995.
In the following cases, the contingent deferred sales charge
will be waived for redemptions of Class A, B or C shares of the
Fund acquired by exchange from an Oppenheimer Fund that was a
Former Quest For Value Fund or into which such Fund merged, if
those shares were purchased on or after March 6, 1995, but prior to
November 24, 1995: (1) distributions to participants or
beneficiaries from Individual Retirement Accounts under
Section 408(a) of the Internal Revenue Code or retirement plans
under Section 401(a), 401(k), 403(b) and 457 of the Code, if those
distributions are made either (a) to an individual participant as
a result of separation from service or (b) following the death or
disability (as defined in the Code) of the participant or
beneficiary; (2) returns of excess contributions to such retirement
plans; (3) redemptions other than from retirement plans following
the death or disability of the shareholder(s) (as evidenced by a
determination of total disability by the U.S. Social Security
Administration); (4) withdrawals under an automatic withdrawal plan
(but only for Class B or C shares) where the annual withdrawals do
not exceed 10% of the initial value of the account; and
(5) liquidation of a shareholder's account if the aggregate net
asset value of shares held in the account is less than the required
minimum account value. A shareholder's account will be credited
with the amount of any contingent deferred sales charge paid on the
redemption of any Class A, B or C shares of the Fund described in
this section if within 90 days after that redemption, the proceeds
are invested in the same Class of shares in this Fund or another
Oppenheimer Fund.
Special Dealer Arrangements
Dealers who sold Class B shares of a Former Quest for Value
Fund to Quest for Value prototype 401(k) plans that were maintained
on the TRAC-2000 recordkeeping system and that were transferred to
an OppenheimerFunds prototype 401(k) plan shall be eligible for an
additional one-time payment by the Distributor of 1% of the value
of the plan assets transferred, but that payment may not exceed
$5,000 as to any one plan.
Dealers who sold Class C shares of a Former Quest for Value
Fund to Quest for Value prototype 401(k) plans that were maintained
on the TRAC-2000 recordkeeping system and (i) the shares held by
those plans were exchanged for Class A shares, or (ii) the plan
assets were transferred to an OppenheimerFunds prototype 401(k)
plan, shall be eligible for an additional one-time payment by the
Distributor of 1% of the value of the plan assets transferred, but
that payment may not exceed $5,000.
<PAGE>
Appendix B
DESCRIPTION OF RATINGS
Bond Ratings
Moody's Investors Service, Inc.
Aaa: Bonds which are rated "Aaa" are judged to be the best quality
and to carry the smallest degree of investment risk. Interest
payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective
elements are likely to change, the changes that can be expected are
most unlikely to impair the fundamentally strong position of such
issues.
Aa: Bonds which are rated "Aa" are judged to be of high quality by
all standards. Together with the "Aaa" group, they comprise what
are generally known as "high-grade" bonds. They are rated lower
than the best bonds because margins of protection may not be as
large as with "Aaa" securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than
those of "Aaa" securities.
A: Bonds which are rated "A" possess many favorable investment
attributes and are to be considered as upper-medium grade
obligations. Factors giving security to principal and interest are
considered adequate but elements may be present which suggest a
susceptibility to impairment sometime in the future.
Baa: Bonds which are rated "Baa" are considered medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and have
speculative characteristics as well.
Ba: Bonds which are rated "Ba" are judged to have speculative
elements; their future cannot be considered well-assured. Often
the protection of interest and principal payments may be very
moderate and not well safeguarded during both good and bad times
over the future. Uncertainty of position characterizes bonds in
this class.
B: Bonds which are rated "B" generally lack characteristics of
desirable investment. Assurance of interest and principal payments
or of maintenance of other terms of the contract over any long
period of time may be small.
Caa: Bonds which are rated "Caa" are of poor standing and may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca: Bonds which are rated "Ca" represent obligations which are
speculative in a high degree and are often in default or have other
marked shortcomings.
C: Bonds which are rated "C" can be regarded as having extremely
poor prospects of ever retaining any real investment standing.
Standard & Poor's Corporation
AAA: "AAA" is the highest rating assigned to a debt obligation and
indicates an extremely strong capacity to pay principal and
interest.
AA: Bonds rated "AA" also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the
majority of instances they differ from "AAA" issues only in small
degree.
A: Bonds rated "A" have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to adverse
effects of change in circumstances and economic conditions.
BBB: Bonds rated "BBB" are regarded as having an adequate capacity
to pay principal and interest. Whereas they normally exhibit
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
principal and interest for bonds in this category than for bonds in
the "A" category.
BB, B, CCC, CC: Bonds rated "BB," "B," "CCC" and "CC" 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. "BB" indicates the lowest degree
of speculation and "CC" the highest degree. While such bonds will
likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to
adverse conditions.
C, D: Bonds on which no interest is being paid are rated "C."
Bonds rated "D" are in default and payment of interest and/or
repayment of principal is in arrears.
Fitch Investors Service, Inc.
AAA Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected
by reasonably foreseeable events.
AA Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated "AAA."
Because bonds rated in the "AAA" and "AA" categories are not
significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated "F-1+."
A Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal
is considered to be strong, but may be more vulnerable to adverse
changes in economic conditions and circumstances than bonds with
higher ratings.
BBB Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in
economic conditions and circumstances, however, are more likely to
have adverse impact on these bonds, and therefore impair timely
payment. The likelihood that the ratings of these bonds will fall
below investment grade is higher than for bonds with higher
ratings.
BB Bonds are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can
be identified which could assist the obligor in satisfying its debt
service requirements.
B Bonds are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the
probability of continued timely payment of principal and interest
reflects the obligor's limited margin of safety and the need for
reasonable business and economic activity through the life of the
issue.
CCC Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.
CC Bonds are minimally protected. Default in payment of interest
and/or principal seems probable over time.
C Bonds are in imminent default in payment of interest or
principal.
DDD, DD, and D Bonds are in default on interest and/or principal
payments. Such bonds are extremely speculative and should be
valued on the basis of their ultimate recovery value in liquidation
or reorganization of the obligor. "DDD" represents the highest
potential for recovery of these bonds, and "D" represents the
lowest potential for recovery.
Plus (+) Minus (-) Plus and minus signs are used with a rating
symbol to indicate the relative position of a credit within the
rating category. Plus and minus signs, however, are not used in
the "DDD," "DD," or "D" categories.
Short-Term Debt Ratings.
Moody's Investors Service, Inc. The following rating
designations for commercial paper (defined by Moody's as promissory
obligations not having original maturity in excess of nine months),
are judged by Moody's to be investment grade, and indicate the
relative repayment capacity of rated issuers:
Prime-1: Superior capacity for repayment. Capacity will normally
be evidenced by the following characteristics: (a) leveling market
positions in well-established industries; (b) high rates of return
on funds employed; (c) conservative capitalization structures with
moderate reliance on debt and ample asset protection; (d) broad
margins in earning coverage of fixed financial charges and high
internal cash generation; and (e) well established access to a
range of financial markets and assured sources of alternate
liquidity.
Prime-2: Strong capacity for repayment. This will normally be
evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound,
will be more subject to variation. Capitalization characteristics,
while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
Moody's ratings for state and municipal short-term obligations are
designated "Moody's Investment Grade" ("MIG"). Short-term notes
which have demand features may also be designated as "VMIG". These
rating categories are as follows:
MIG1/VMIG1: Best quality. There is present strong protection by
established cash flows, superior liquidity support or demonstrated
broadbased access to the market for refinancing.
MIG2/VMIG2: High quality. Margins of protection are ample
although not so large as in the preceding group.
Standard & Poor's Corporation ("S&P"): The following ratings by
S&P for commercial paper (defined by S&P as debt having an original
maturity of no more than 365 days) assess the likelihood of
payment:
A-1: Strong capacity for timely payment. Those issues determined
to possess extremely strong safety characteristics are denoted with
a plus sign (+) designation.
A-2: Satisfactory capacity for timely payment. However, the
relative degree of safety is not as high as for issues designated
"A-1".
S&P's ratings for Municipal Notes due in three years or less are:
SP-1: Very strong or strong capacity to pay principal and
interest. Those issues determined to possess overwhelming safety
characteristics will be given a plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest.
S&P assigns "dual ratings" to all municipal debt issues that have
a demand or double feature as part of their provisions. The first
rating addresses the likelihood of repayment of principal and
interest as due, and the second rating addresses only the demand
feature. With short-term demand debt, S&P's note rating symbols
are used with the commercial paper symbols (for example, "SP-1+/A-1+").
Fitch Investors Service, Inc. Fitch assigns the following short-term
ratings to debt obligations that are payable on demand or have
original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and
municipal and investment notes:
F-1+: Exceptionally strong credit quality; the strongest degree of
assurance for timely payment.
F-1: Very strong credit quality; assurance of timely payment is
only slightly less in degree than issues rated "F-1+".
F-2: Good credit quality; satisfactory degree of assurance for
timely payment, but the margin of safety is not as great as for
issues assigned "F-1+" or "F-1" ratings.
Duff & Phelps, Inc. The following ratings are for commercial
paper (defined by Duff & Phelps as obligations with maturities,
when issued, of under one year), asset-backed commercial paper, and
certificates of deposit (the ratings cover all obligations of the
institution with maturities, when issued, of under one year,
including bankers' acceptance and letters of credit):
Duff 1+: Highest certainty of timely payment. Short-term
liquidity, including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is just
below risk-free U.S. Treasury short-term obligations.
Duff 1: Very high certainty of timely payment. Liquidity factors
are excellent and supported by good fundamental protection factors.
Risk factors are minor.
Duff 1-: High certainty of timely payment. Liquidity factors are
strong and supported by good fundamental protection factors. Risk
factors are very small.
Duff 2: Good certainty of timely payment. Liquidity factors and
company fundamentals are sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital markets is
good. Risk factors are small.
IBCA Limited or its affiliate IBCA Inc. Short-term ratings,
including commercial paper (with maturities up to 12 months), are
as follows:
A1+: Obligations supported by the highest capacity for timely
repayment.
A1: Obligations supported by a very strong capacity for timely
repayment.
A2: Obligations supported by a strong capacity for timely
repayment, although such capacity may be susceptible to adverse
changes in business, economic, or financial conditions.
Thomson BankWatch, Inc. The following short-term ratings apply
to commercial paper, certificates of deposit, unsecured notes, and
other securities having a maturity of one year or less.
TBW-1: The highest category; indicates the degree of safety
regarding timely repayment of principal and interest is very
strong.
TBW-2: The second highest rating category; while the degree of
safety regarding timely repayment of principal and interest is
strong, the relative degree of safety is not as high as for issues
rated "TBW-1".
<PAGE>
Oppenheimer Quest Capital Value Fund, Inc.
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Sub-Adviser
OpCap Advisors
One World Financial Center
New York, New York 10281
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Accountants
Price Waterhouse LLP
950 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, broker, salesperson or any other person has been
authorized to give any information or to make any representations
other than those contained in this Prospectus or the Statement of
Additional Information, and if given or made, such information and
representations must not be relied upon as having been authorized
by the Fund, OppenheimerFunds, Inc., OppenheimerFunds Distributor,
Inc. or any affiliate thereof. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any state to any person to whom it is
unlawful to make such an offer in such state.
APPENDIX TO PROSPECTUS OF
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
Graphic material included in Prospectus of Oppenheimer Quest
Capital Value Fund, Inc.: "Comparison of Total Return of
Oppenheimer Quest Capital Value Fund, Inc. with the S&P 500 Index -
Change in Value of $10,000 Hypothetical Investment".
A linear graph will be included in the Prospectus of
Oppenheimer Quest Capital Value Fund, Inc. (the "Fund") depicting
the initial account value and subsequent account value of a
hypothetical $10,000 investment in the Fund. That graph will cover
the performance of the Fund's Class A shares since inception
(2/13/87)(formerly, the Capital Shares), through 12/31/96. Class
B and Class shares are not included as such shares were not
outstanding during the fiscal year ended 12/31/96.]
Fiscal
Period Oppenheimer Quest S&P 500
Ended Capital Value Fund, Inc. Index
02/13/87 $ $
12/31/87 $ $
12/31/88 $ $
12/31/89 $ $
12/31/90 $ $
12/31/91 $ $
12/31/92 $ $
12/31/93 $ $
12/31/94 $ $
12/31/95 $ $
12/31/96 $ $
<PAGE>
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
Two World Trade Center, New York, New York 10048
1-800-525-7048
Statement of Additional Information dated , 1997
This Statement of Additional Information of Oppenheimer Quest
Capital Value Fund, Inc. is not a Prospectus. This document
contains additional information about the Fund and supplements
information in the Prospectus dated , 1997.
It should be read together with the Prospectus, which may be
obtained upon written request to the Fund's Transfer Agent,
OppenheimerFunds Services at P.O. Box 5270, Denver, Colorado 80217,
or by calling the Transfer Agent at the toll-free number shown
above.
Contents
Page
About the Fund
Investment Objective and Policies. . . . . . . . . . . . . . . . . .
Investment Policies and Strategies . . . . . . . . . . . . . . .
Other Investment Techniques and Strategies . . . . . . . . . . .
Other Investment Restrictions. . . . . . . . . . . . . . . . . . .
How the Fund is Managed . . . . . . . . . . . . . . . . . . . . . .
Organization and History . . . . . . . . . . . . . . . . . . . .
Directors and Officers of the Fund . . . . . . . . . . . . . . . .
The Manager and Its Affiliates . . . . . . . . . . . . . . . . . . .
Brokerage Policies of the Fund . . . . . . . . . . . . . . . . . . .
Performance of the Fund. . . . . . . . . . . . . . . . . . . . . . .
Distribution and Service Plans . . . . . . . . . . . . . . . . . . .
About Your Account
How To Buy Shares. . . . . . . . . . . . . . . . . . . . . . . . .
How To Sell Shares . . . . . . . . . . . . . . . . . . . . . . . .
How To Exchange Shares . . . . . . . . . . . . . . . . . . . . . .
Dividends, Capital Gains and Taxes . . . . . . . . . . . . . . . .
Additional Information About the Fund. . . . . . . . . . . . . . . .
Financial Information About the Fund
Independent Auditors' Report . . . . . . . . . . . . . . . . . . .
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . .
Appendix A: Corporate Industry Classifications . . . . . . . . . A-1
<PAGE>
ABOUT THE FUND
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and
policies of the Fund are described in the Prospectus. Set forth
below is supplemental information about those policies and the
types of securities in which the Fund may invest, as well as the
strategies the Fund may use to try to achieve its objective.
Capitalized terms used in this Statement of Additional Information
have the same meaning as those terms have in the Prospectus.
Foreign Securities. "Foreign securities" include equity and
debt securities of companies organized under the laws of countries
other than the United States and debt securities of foreign
governments that are traded on foreign securities exchanges or in
the foreign over-the-counter markets. Securities of foreign
issuers that are represented by American Depository Receipts or
that are listed on a U.S. securities exchange or traded in the U.S.
over-the-counter markets are not considered "foreign securities",
because they are not subject to many of the special considerations
and risks, discussed below, that apply to foreign securities traded
and held abroad. In connection with purchases on foreign securities
exchanges, although the Fund may purchase securities issued by
companies in any country, developed or underdeveloped, the Fund
does not presently intend to purchase securities issued by
companies in underdeveloped countries.
Investing in foreign securities offers the Fund potential
benefits not available from investing solely in securities of
domestic issuers, including the opportunity to invest in foreign
issuers that appear to offer growth potential, or in foreign
countries with economic policies or business cycles different from
those of the U.S., or to reduce fluctuations in portfolio value by
taking advantage of foreign stock markets that do not move in a
manner parallel to U.S. markets. If the Fund's portfolio securities
are held abroad, the countries in which such securities may be held
and the sub-custodians or depositories holding them must be
approved by the Fund's Board of Directors to the extent that
approval is required under applicable rules of the Securities and
Exchange Commission (the "SEC"). In buying foreign securities, the
Fund may convert U.S. dollars into foreign currency, but only to
effect securities transactions on foreign securities exchanges and
not to hold such foreign currency as an investment.
Risks of Foreign Investing. Investing in foreign securities
involves special additional risks and considerations not typically
associated with investing in securities of issuers traded in the
U.S. These include: reduction of income by foreign taxes;
fluctuation in value of foreign portfolio investments due to
changes in currency rates and control regulations (e.g., currency
blockage); transaction charges for currency exchange; lack of
public information about foreign issuers; lack of uniform
accounting, auditing and financial reporting standards comparable
to those applicable to domestic issuers; less volume on foreign
exchanges than on U.S. exchanges; greater volatility and less
liquidity on foreign markets than in the U.S.; less regulation of
foreign issuers, stock exchanges and brokers than in the U.S.;
greater difficulties in commencing lawsuits and obtaining judgments
in foreign courts; higher brokerage commission rates than in the
U.S.; increased risks of delays in settlement of portfolio
transactions or loss of certificates for portfolio securities;
possibilities in some countries of expropriation or nationalization
of assets, confiscatory taxation, political, financial or social
instability or adverse diplomatic developments; and unfavorable
differences between the U.S. economy and foreign economies. In the
past, U.S. Government policies have discouraged certain
investments abroad by U.S. investors, through taxation or other
restrictions, and it is possible that such restrictions could be
re-imposed.
Emerging Market Countries: Certain developing countries may
have relatively unstable governments, economies based on only a few
industries that are dependent upon international trade, and reduced
secondary market liquidity. Foreign investment in certain emerging
market countries is restricted or controlled in varying degrees.
In the past, securities in these countries have experienced greater
price movement, both positive and negative, than securities of
companies located in developed countries. Lower-rated high-yielding
emerging market securities may be considered to have
speculative elements.
U.S. Government Securities. Obligations of U.S. Government
agencies or instrumentalities (including mortgage-backed
securities) may or may not be guaranteed or supported by the "full
faith and credit" of the United States. Some are backed by the
right of the issuer to borrow from the U.S. Treasury; others, by
discretionary authority of the U.S. Government to purchase the
agencies' obligations; while others are supported only by the
credit of the instrumentality. All U.S. Treasury obligations are
backed by the full faith and credit of the United States. If the
securities are not backed by the full faith and credit of the
United States, the owner of the securities must look principally to
the agency issuing the obligation for repayment and may not be able
to assert a claim against the United States in the event that the
agency or instrumentality does not meet its commitment. The Fund
will invest in U.S. Government Securities of such agencies and
instrumentalities only when the Manager is satisfied that the
credit risk with respect to such instrumentality is minimal.
Money Market Securities. As stated in the Prospectus, the
Fund typically invests a part of its assets in money market
securities, and may invest up to 100% of its total assets in money
market securities for temporary defensive purposes. Money market
securities in which the Fund may invest include the following:
Time Deposits and Variable Rate Notes. The Fund may invest
in fixed time deposits, whether or not subject to withdrawal
penalties. However, investment in such deposits which are subject
to withdrawal penalties, other than overnight deposits, are subject
to the 15% limit on illiquid investments set forth in the
Prospectus for the Fund.
The commercial paper obligations which the Fund may buy are
unsecured and may include variable rate notes. The nature and
terms of a variable rate note (i.e., a "Master Note") permit the
Fund to invest fluctuating amounts at varying rates of interest
pursuant to a direct arrangement between the Fund as lender, and
the issuer, as borrower. It permits daily changes in the amounts
borrowed. The Fund has the right at any time to increase, up to
the full amount stated in the note agreement, or to decrease the
amount outstanding under the note. The issuer may prepay at any
time and without penalty any part or the full amount of the note.
The note may or may not be backed by one or more bank letters of
credit. Because these notes are direct lending arrangements
between the Fund and the issuer, it is not generally contemplated
that they will be traded; moreover, there is currently no secondary
market for them. Except as specifically provided in the Prospectus
for the Fund, there is no limitation on the type of issuer from
whom these notes will be purchased. However, in connection with
such purchase and on an ongoing basis, OpCap Advisors (the "Sub-Adviser")
will consider the earning power, cash flow and other
liquidity ratios of the issuer, and its ability to pay principal
and interest on demand, including a situation in which all holders
of such notes made demand simultaneously. The Fund will not invest
more than 5% of its total assets in variable rate notes. Variable
rate notes are subject to the Fund's investment restriction on
illiquid securities unless such notes can be put back to the issuer
on demand within seven days.
Insured Bank Obligations. The Federal Deposit Insurance
Corporation ("FDIC") insures the deposits of federally insured
banks and savings and loan associations (collectively referred to
as "banks") up to $100,000. The Fund may, within the limits set
forth in the Prospectus, purchase bank obligations which are fully
insured as to principal by the FDIC. Currently, to remain fully
insured as to principal, these investments must be limited to
$100,000 per bank. If the principal amount and accrued interest
together exceed $100,000, the excess principal and accrued interest
will not be insured. Insured bank obligations may have limited
marketability. Unless the Board of Directors determines that a
readily available market exists for such obligations, the Fund will
treat such obligations as subject to the 15% limit for illiquid
investments set forth in the Prospectus for the Fund unless such
obligations are payable at principal amount plus accrued interest
on demand or within seven days after demand.
Convertible Securities. The Fund may invest in fixed-income
securities which are convertible into common stock.
Convertible securities rank senior to common stocks in a
corporation's capital structure and, therefore, entail less risk
than the corporation's common stock. The value of a convertible
security is a function of its "investment value" (its value as if
it did not have a conversion privilege), and its "conversion value"
(the security's worth if it were to be exchanged for the underlying
security, at market value, pursuant to its conversion privilege).
To the extent that a convertible security's investment value
is greater than its conversion value, its price will be primarily
a reflection of such investment value and its price will be likely
to increase when interest rates fall and decrease when interest
rates rise, as with a fixed-income security (the credit standing of
the issuer and other factors may also have an effect on the
convertible security's value). If the conversion value exceeds the
investment value, the price of the convertible security will rise
above its investment value and, in addition, will sell at some
premium over its conversion value. (This premium represents the
price investors are willing to pay for the privilege of purchasing
a fixed-income security with a possibility of capital appreciation
due to the conversion privilege.) At such times the price of the
convertible security will tend to fluctuate directly with the price
of the underlying equity security. Convertible securities may be
purchased by the Fund at varying price levels above their
investment values and/or their conversion values in keeping with
the Fund's objectives.
Investment Risks of Fixed-Income Securities. All fixed-income
securities are subject to two types of risks: credit risk
and interest rate risk. Credit risk relates to the ability of the
issuer to meet interest or principal payments on a security as they
become due. Generally, higher yielding lower-grade bonds are
subject to credit risk to a greater extent than lower yielding,
investment grade bonds. Interest rate risk refers to the
fluctuations in value of fixed-income securities resulting solely
from the inverse relationship between price and yield of
outstanding fixed-income securities. An increase in prevailing
interest rates will generally reduce the market value of already-issued
fixed-income investments, and a decline in interest rates
will tend to increase their value. In addition, debt securities
with longer maturities, which tend to produce higher yields, are
subject to potentially greater changes in their prices from changes
in interest rates than obligations with shorter maturities.
Fluctuations in the market value of fixed-income securities after
the Fund buys them will not affect the interest payable on those
securities, nor the cash income from such securities. However,
those price fluctuations will be reflected in the valuations of
these securities and therefore the Fund's net asset values.
Lower-Grade Securities. As stated in the Prospectus, the
Fund may invest up to 25% of its net assets in bonds rated below
Baa3 by Moody's or BBB- by Standard & Poor's (commonly known as
"high yield" or "junk bonds"). The Manager will not rely solely on
the ratings assigned by rating services and may invest, without
limit, in unrated securities which offer, in the opinion of the
Manager, yields and risks comparable to those of rated securities
in which the Fund may invest.
Some of the principal risks of high yield securities include:
(i) limited liquidity and secondary market support, (ii)
substantial market price volatility resulting from changes in
prevailing interest rates, (iii) subordination of the holder's
claims to the prior claims of banks and other senior lenders in
bankruptcy proceedings, (iv) the operation of mandatory sinking
fund or call/redemption provisions during periods of declining
interest rates, whereby the holder might receive redemption
proceeds at times when only lower-yielding portfolio securities are
available for investment, (v) the possibility that earnings of the
issuer may be insufficient to meet its debt service, and (vi) the
issuer's low creditworthiness and potential for insolvency during
periods of rising interest rates and economic downturn. Some high
yield bonds pay interest in kind rather than in cash and tend to be
more volatile than securities that pay interest in cash.
As a result of the limited liquidity of high yield securities,
their prices have at times experienced significant and rapid
decline when a significant number of holders of high yield
securities simultaneously decided to sell them. A decline is also
likely in the high yield bond market during an economic downturn.
An economic downturn or an increase in interest rates could
severely disrupt the market for high yield securities and adversely
affect the value of outstanding securities and the ability of the
issuers to repay principal and interest. In addition, in recent
years there have been several Congressional attempts to limit the
use or limit tax and other advantages of high yield bonds. If
enacted, such proposals could adversely affect the value of these
securities and consequently the Fund's net asset value per share.
For example, federally insured savings and loan associations have
been required to divest their investments in high yield securities.
Warrants. The Fund may not invest more than 5% of its total
assets at the time of purchase in warrants (other than those that
have been acquired in units or attached to other securities).
Warrants basically are options to purchase equity securities at
specific prices valid for a specific period of time. Their prices
do not necessarily move parallel to the prices of the underlying
securities. Warrants have no voting rights, receive no dividends
and have no rights with respect to the assets of the issuer.
Investing in Small, Unseasoned Companies. The securities
of small, unseasoned companies may have a limited trading market,
which may adversely affect the Fund's ability to dispose of them
and can reduce the price the Fund might be able to obtain for them.
If other investment companies and investors that invest in this
type of securities trade the same securities when the Fund attempts
to dispose of its holdings, the Fund may receive lower prices than
might otherwise be obtained, because of the thinner market for such
securities.
Borrowing. The Fund may increase its ownership of
securities by borrowing from banks on a unsecured basis as a
temporary measure for extraordinary or emergency purposes and
investing the borrowed funds, subject to the restrictions stated in
the Prospectus. Any such borrowing will be made only from banks,
and pursuant to the requirements of the Investment Company Act of
1940, as amended (the "1940 Act") will be made only to the extent
that the value of that Fund's assets, less its liabilities other
than borrowings, is equal to at least 300% of all borrowings
including the proposed borrowing and amounts covering the Fund's
obligations under "forward roll" transactions. If the value of the
Fund's assets so computed should fail to meet the 300% asset
coverage requirement, the Fund is required within three days to
reduce its bank debt to the extent necessary to meet such
requirement and may have to sell a portion of its investments at a
time when independent investment judgment would not dictate such
sale. Since substantially all of the Fund's assets fluctuate in
value, but borrowing obligations are fixed, when the Fund has
outstanding borrowings, its net asset value per share
correspondingly will tend to increase and decrease more when
portfolio assets fluctuate in value than otherwise would be the
case.
Other Investment Techniques and Strategies
When-Issued Securities. The Fund may take advantage of
offerings of eligible portfolio securities on a "when-issued" basis
where delivery of and payment for such securities takes place
sometime after the transaction date on terms established on such
date. Normally, settlement on U.S. Government securities takes
place within ten days. The Fund only will make when-issued
commitments on eligible securities with the intention of actually
acquiring the securities. If the Fund chooses to dispose of the
right to acquire a when-issued security prior to its acquisition,
it could, as with the disposition of any other portfolio
obligation, incur a gain or loss due to market fluctuation.
When-issued commitments will not be made if, as a result, more than 15%
of the net assets of the Fund would be so committed.
Repurchase Agreements. The Fund may purchase securities
subject to repurchase agreements for liquidity purposes to meet
anticipated redemptions, or pending the investment of the proceeds
from sales of Fund shares, or pending the settlement of purchases
of portfolio securities. In a repurchase transaction, the Fund
purchases a security from, and simultaneously resells it to, an
approved vendor (a U.S. commercial bank or the U.S. branch of a
foreign bank having total domestic assets of at least $1 billion or
a broker-dealer with a net worth of at least $50 million and which
that has been designated a primary dealer in government securities)
that must meet credit requirements set by the Fund's Board of
Directors from time to time for delivery on an agreed-on future
date. The resale price exceeds the purchase price by an amount
that reflects an agreed-upon interest rate effective for the period
during which the repurchase agreement is in effect. The majority
of these transactions run from day to day, and delivery pursuant to
the resale typically will occur within one to five days of the
purchase. Repurchase agreements are considered "loans" under the
Investment Company Act, collateralized by the underlying security.
The Fund's repurchase agreements require that at all times while
the repurchase agreement is in effect, the value of the collateral
must equal or exceed the repurchase price to fully collateralize
the repayment obligation. Additionally, the Manager will impose
creditworthiness requirements to confirm that the vendor is
financially sound and will continuously monitor the collateral's
value.
The Fund may enter into reverse repurchase agreements. Under
a reverse repurchase agreement, the Fund sells securities and
agrees to repurchase them at a mutually agreed upon date and price.
At the time the Fund enters into a reverse repurchase agreement, it
will establish and maintain a segregated account with an approved
custodian containing liquid securities having a value not less than
the repurchase price (including accrued interest). Reverse
repurchase agreements involve the risk that the market value of the
securities retained in lieu of sale by the Fund may decline more
than or appreciate less than the securities the Fund has sold but
is obligated to repurchase. In the event the buyer of securities
under a reverse repurchase agreement files for bankruptcy or
becomes insolvent, such buyer or its trustee or receiver may
receive an extension of time to determine whether to enforce the
Fund's obligation to repurchase the securities and the Fund's use
of the proceeds of the reverse repurchase agreements may
effectively be restricted pending such decisions. Reverse
repurchase agreements create leverage, a speculative factor, and
will be considered borrowings for purposes of the Fund's limitation
on borrowing.
Illiquid and Restricted Securities. To enable the Fund to
sell restricted securities not registered under the Securities Act
of 1933, the Fund may have to cause those securities to be
registered. The expenses of registration of restricted securities
may be negotiated by the Fund with the issuer at the time such
securities are purchased by the Fund, if such registration is
required before such securities may be sold publicly. When
registration must be arranged because the Fund wishes to sell the
security, a considerable period may elapse between the time the
decision is made to sell the securities and the time the Fund would
be permitted to sell them. The Fund would bear the risks of any
downward price fluctuation during that period. The Fund may also
acquire, through private placements, securities having contractual
restrictions on their resale, which might limit the Fund's ability
to dispose of such securities and might lower the amount realizable
upon the sale of such securities.
The Fund has percentage limitations that apply to purchases of
restricted securities, as stated in the Prospectus. Those
percentage restrictions do not limit purchases of restricted
securities that are eligible for sale to qualified institutional
purchasers pursuant to Rule 144A under the Securities Act of 1933,
provided that those securities have been determined to be liquid by
the Board of Directors of the Fund or by the Sub-Adviser under
Board-approved guidelines. Those guidelines take into account the
trading activity for such securities and the availability of
reliable pricing information, among other factors. If there is a
lack of trading interest in a particular Rule 144A security, the
Fund's holding of that security may be deemed to be illiquid.
Loans of Portfolio Securities. The Fund may lend its
portfolio securities subject to the restrictions stated in the
Prospectus. Under applicable regulatory requirements (which are
subject to change), the loan collateral on each business day must
at least equal the value of the loaned securities and must consist
of cash, bank letters of credit or securities of the U.S.
Government (or its agencies or instrumentalities). To be
acceptable as collateral, letters of credit must obligate a bank to
pay amounts demanded by the Fund if the demand meets the terms of
the letter. Such terms and the issuing bank must be satisfactory
to the Fund. When it lends securities, the Fund receives amounts
equal to the dividends or interest on loaned securities and also
receives one or more of (a) negotiated loan fees, (b) interest on
securities used as collateral, and (c) interest on short-term debt
securities purchased with such loan collateral. Either type of
interest may be shared with the borrower. The Fund may also pay
reasonable finder's, custodian and administrative fees. The terms
of the Fund's loans must meet applicable tests under the Internal
Revenue Code and must permit the Fund to reacquire loaned
securities on five days' notice or in time to vote on any important
matter.
Short Sales Against-the-Box. In this type of short sale,
while the short position is open, the Fund must own an equal amount
of the securities sold short, or by virtue of ownership of other
securities have the right, without payment of further
consideration, to obtain an equal amount of the securities sold
short. Short sales against-the-box may be made to defer, for
Federal income tax purposes, recognition of gain or loss on the
sale of securities "in the box" until the short position is closed
out. They may also be used to protect a gain on the security
"in-the-box" when the Fund does not want to sell it and recognize a
capital gain.
Hedging With Options and Futures Contracts. The Fund may
employ one or more types of Hedging Instruments for the purposes
described in the Prospectus. When hedging to attempt to protect
against declines in the market value of the Fund's portfolio, or to
permit the Fund to retain unrealized gains in the value of
portfolio securities which have appreciated, or to facilitate
selling securities for investment reasons, the Fund may: (i) sell
Stock Index Futures, (ii) buy puts, or (iii) write covered calls
(as described in the Prospectus). When hedging to establish a
position in the equity securities markets as a temporary substitute
for the purchase of individual equity securities the Fund may: (i)
buy Stock Index Futures, or (ii) buy calls on Stock Index Futures.
Normally, the Fund would then purchase the equity securities and
terminate the hedging portion.
The Fund's strategy of hedging with Futures and options on
Futures will be incidental to the Fund's investment activities in
the underlying cash market. In the future, the Fund may employ
hedging instruments and strategies that are not presently
contemplated but which may be subsequently developed, to the extent
such investment methods are consistent with the Fund's investment
objective, and are legally permissible and disclosed in the
Prospectus. Additional information about the hedging instruments
the Fund may use is provided below.
Writing Call Options. As described in the Prospectus, the
Fund may write covered calls. When the Fund writes a call on an
investment, it receives a premium and agrees to sell the callable
investment to a purchaser of a corresponding call during the call
period (usually not more than 9 months) at a fixed exercise price
(which may differ from the market price of the underlying
investment) regardless of market price changes during the call
period. To terminate its obligation on a call it has written, the
Fund may purchase a corresponding call in a "closing purchase
transaction." A profit or loss will be realized, depending upon
whether the net of the amount of option transaction costs and the
premium received on the call the Fund has written is more or less
than the price of the call the Fund subsequently purchased. A
profit may also be realized if the call lapses unexercised because
the Fund retains the underlying investment and the premium
received. Those profits are considered short-term capital gains
for Federal income tax purposes, as are premiums on lapsed calls,
and when distributed by the Fund are taxable as ordinary income.
If the Fund could not effect a closing purchase transaction due to
the lack of a market, it would have to hold the callable investment
until the call lapsed or was exercised.
The Fund may also write calls on Futures without owning a
futures contract or deliverable securities, provided that at the
time the call is written, the Fund covers the call by segregating
in escrow an equivalent dollar value of deliverable securities or
liquid assets. The Fund will segregate additional liquid assets if
the value of the escrowed assets drops below 100% of the current
value of the Future. In no circumstances would an exercise notice
as to a Future put the Fund in a short futures position.
Writing Put Options. A put option on securities gives the
purchaser the right to sell, and the writer the obligation to buy,
the underlying investment at the exercise price during the option
period. Writing a put covered by segregated liquid assets equal to
the exercise price of the put has the same economic effect to the
Fund as writing a covered call. The premium the Fund receives from
writing a put option represents a profit, as long as the price of
the underlying investment remains above the exercise price.
However, the Fund has also assumed the obligation during the option
period to buy the underlying investment from the buyer of the put
at the exercise price, even though the value of the investment may
fall below the exercise price. If the put expires unexercised, the
Fund (as the writer of the put) realizes a gain in the amount of
the premium less transaction costs. If the put is exercised, the
Fund must fulfill its obligation to purchase the underlying
investment at the exercise price, which will usually exceed the
market value of the investment at that time. In that case, the
Fund may incur a loss, equal to the sum of the current market value
of the underlying investment and the premium received minus the sum
of the exercise price and any transaction costs incurred.
When writing put options on securities, to secure its
obligation to pay for the underlying security, the Fund will
deposit in escrow liquid assets with a value equal to or greater
than the exercise price of the underlying securities. The Fund
therefore forgoes the opportunity of investing the segregated
assets or writing calls against those assets. As long as the
obligation of the Fund as the put writer continues, it may be
assigned an exercise notice by the exchange or broker-dealer
through whom such option was sold, requiring the Fund to exchange
currency at the specified rate of exchange or to take delivery of
the underlying security against payment of the exercise price. The
Fund may have no control over when it may be required to purchase
the underlying security, since it may be assigned an exercise
notice at any time prior to the termination of its obligation as
the writer of the put. This obligation terminates upon expiration
of the put, or such earlier time at which the Fund effects a
closing purchase transaction by purchasing a put of the same series
as that previously sold. Once the Fund has been assigned an
exercise notice, it is thereafter not allowed to effect a closing
purchase transaction.
The Fund may effect a closing purchase transaction to realize
a profit on an outstanding put option it has written or to prevent
an underlying security from being put. Furthermore, effecting such
a closing purchase transaction will permit the Fund to write
another put option to the extent that the exercise price thereof is
secured by the deposited assets, or to utilize the proceeds from
the sale of such assets for other investments by the Fund. The
Fund will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the
premium received from writing the option. As above for writing
covered calls, any and all such profits described herein from
writing puts are considered short-term capital gains for Federal
tax purposes, and when distributed by the Fund, are taxable as
ordinary income.
Purchasing Puts and Calls. The Fund may purchase calls to
protect against the possibility that the Fund's portfolio will not
participate in an anticipated rise in the securities market. When
the Fund purchases a call (other than in a closing purchase
transaction), it pays a premium and, except as to calls on stock
indices, has the right to buy the underlying investment from a
seller of a corresponding call on the same investment during the
call period at a fixed exercise price. In purchasing a call, the
Fund benefits only if the call is sold at a profit or if, during
the call period, the market price of the underlying investment is
above the sum of the exercise price, transaction costs, and the
premium paid, and the call is exercised. If the call is not
exercised or sold (whether or not at a profit), it will become
worthless at its expiration date and the Fund will lose its premium
payment and the right to purchase the underlying investment. When
the Fund purchases a call on a stock index, it pays a premium, but
settlement is in cash rather than by delivery of the underlying
investment to the Fund.
When the Fund purchases a put, it pays a premium and, except
as to puts on stock indices, has the right to sell the underlying
investment to a seller of a corresponding put on the same
investment during the put period at a fixed exercise price. Buying
a put on an investment the Fund owns (a "protective put") enables
the Fund to attempt to protect itself during the put period against
a decline in the value of the underlying investment below the
exercise price by selling the underlying investment at the exercise
price to a seller of a corresponding put. If the market price of
the underlying investment is equal to or above the exercise price
and as a result the put is not exercised or resold, the put will
become worthless at its expiration and the Fund will lose the
premium payment and the right to sell the underlying investment.
However, the put may be sold prior to expiration (whether or not at
a profit).
Buying a put on an investment it does not own, either a put on
an index or a put on a Stock Index Future not held by the Fund,
permits the Fund either to resell the put or buy the underlying
investment and sell it at the exercise price. The resale price of
the put will vary inversely with the price of the underlying
investment. If the market price of the underlying investment is
above the exercise price and as a result the put is not exercised,
the put will become worthless on its expiration date. In the event
of a decline in the stock market, the Fund could exercise or sell
the put at a profit to attempt to offset some or all of its loss on
its portfolio securities. When the Fund purchases a put on an
index, or on a Future not held by it, the put protects the Fund to
the extent that the index or Future moves in a similar pattern to
the securities held. In the case of a put on an index or Future,
settlement is in cash rather than by delivery by the Fund of the
underlying investment.
Puts and calls on broadly-based stock indices or Stock Index
Futures are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss
depends on changes in the index in question (and thus on price
movements in the stock market generally) rather than on price
movements of individual securities or futures contracts. When the
Fund buys a call on a stock index or Stock Index Future, it pays a
premium. If the Fund exercises the call during the call period, a
seller of a corresponding call on the same investment will pay the
Fund an amount of cash to settle the call if the closing level of
the stock index or Future upon which the call is based is greater
than the exercise price of the call. That cash payment is equal to
the difference between the closing price of the call and the
exercise price of the call times a specified multiple (the
"multiplier") which determines the total dollar value for each
point of difference. When the Fund buys a put on a stock index or
Stock Index Future, it pays a premium and has the right during the
put period to require a seller of a corresponding put, upon the
Fund's exercise of its put, to deliver cash to the Fund to settle
the put if the closing level of the stock index or Stock Index
Future upon which the put is based is less than the exercise price
of the put. That cash payment is determined by the multiplier, in
the same manner as described above as to calls.
When the Fund purchases a put on a stock index, or on a Stock
Index Future not owned by it, the put protects the Fund to the
extent that the index moves in a similar pattern to the securities,
the Fund holds. The Fund can either resell the put or, in the case
of a put on a Stock Index Future, buy the underlying investment and
sell it at the exercise price. The resale price of the put will
vary inversely with the price of the underlying investment. If the
market price of the underlying investment is above the exercise
price, and as a result the put is not exercised, the put will
become worthless on the expiration date. In the event of a decline
in price of the underlying investment, the Fund could exercise or
sell the put at a profit to attempt to offset some or all of its
loss on its portfolio securities.
The Fund's option activities may affect its portfolio turnover
rate and brokerage commissions. The exercise of calls written by
the Fund may cause the Fund to sell related portfolio securities,
thus increasing its turnover rate. The exercise by the Fund of
puts on securities will cause the sale of underlying investments,
increasing portfolio turnover. Although the decision whether to
exercise a put it holds is within the Fund's control, holding a put
might cause the Fund to sell the related investments for reasons
that would not exist in the absence of the put. The Fund will pay
a brokerage commission each time it buys or sells a call, put or an
underlying investment in connection with the exercise of a put or
call. Those commissions may be higher than the commissions for
direct purchases or sales of the underlying investments.
Premiums paid for options are small in relation to the market
value of the underlying investments and, consequently, put and call
options offer large amounts of leverage. The leverage offered by
trading in options could result in the Fund's net asset value being
more sensitive to changes in the value of the underlying
investments.
Stock Index Futures. As described in the Prospectus, the
Fund may invest in Stock Index Futures only if they relate to
broadly-based stock indices. A stock index is considered to be
broadly-based if it includes stocks that are not limited to issuers
in any particular industry or group of industries. A stock index
assigns relative values to the common stocks included in the index
and fluctuates with the changes in the market value of those
stocks. Stock indices cannot be purchased or sold directly.
Stock index futures are contracts based on the future value of
the basket of securities that comprise the underlying stock index.
The contracts obligate the seller to deliver, and the purchaser to
take, cash to settle the futures transaction or to enter into an
offsetting contract. No physical delivery of the securities
underlying the index is made on settling the futures obligation. No
monetary amount is paid or received by the Fund on the purchase or
sale of a Stock Index Future. Upon entering into a Futures
transaction, the Fund will be required to deposit an initial margin
payment, in cash or U.S. Treasury bills, with the futures
commission merchant (the "futures broker"). Initial margin
payments will be deposited with the Fund's Custodian in an account
registered in the futures broker's name; however, the futures
broker can gain access to that account only under certain specified
conditions. As the Future is marked to market (that is, its value
on the Fund's books is changed) to reflect changes in its market
value, subsequent margin payments, called variation margin, will be
paid to or by the futures broker on a daily basis.
At any time prior to the expiration of the Future, the Fund
may elect to close out its position by taking an opposite position,
at which time a final determination of variation margin is made and
additional cash is required to be paid by or released to the Fund.
Any gain or loss is then realized by the Fund on the Future for tax
purposes. Although Stock Index Futures by their terms call for
settlement by the delivery of cash, in most cases the settlement
obligation is fulfilled without such delivery by entering into an
offsetting transaction. All futures transactions are effected
through a clearing house associated with the exchange on which the
contracts are traded.
Regulatory Aspects of Hedging Instruments. The Fund is
required to operate within certain guidelines and restrictions with
respect to its use of futures and options thereon as established by
the Commodities Futures Trading Commission ("CFTC"). In
particular, the Fund is excluded from registration as a "commodity
pool operator" if it complies with the requirements of Rule 4.5
adopted by the CFTC. Under this Rule, the Fund is not limited
regarding the percentage of its assets committed to futures margins
and related options premiums subject to a hedge position. However,
aggregate initial futures margins and related options premiums are
limited to 5% or less of the Fund's net asset value for other than
bona fide hedging strategies employed by the Fund within the
meaning and intent of applicable provisions of the Commodity
Exchange Act and CFTC regulations thereunder.
Transactions in options by the Fund are subject to limitations
established by option exchanges governing the maximum number of
options that may be written or held by a single investor or group
of investors acting in concert, regardless of whether the options
were written or purchased on the same or different exchanges or are
held in one or more accounts or through one or more different
exchanges or through one or more brokers. Thus the number of
options which the Fund may write or hold may be affected by options
written or held by other entities, including other investment
companies having the same adviser as the Fund (or an adviser that
is an affiliate of the Fund's adviser). The exchanges also impose
position limits on Futures transactions. An exchange may order the
liquidation of positions found to be in violation of those limits
and may impose certain other sanctions.
Due to requirements under the Investment Company Act, when the
Fund purchases a Stock Index Future, the Fund will maintain, in a
segregated account or accounts with its custodian, cash or
readily-marketable, short-term (maturing in one year or less) debt
instruments in an amount equal to the market value of the
securities underlying such Future, less the margin deposit
applicable to it.
Additional Information About Hedging Instruments and Their
Use. The Fund's Custodian, or a securities depository acting for
the Custodian, will act as the Fund's escrow agent, through the
facilities of the Options Clearing Corporation ("OCC"), as to the
investments on which the Fund has written options traded on
exchanges or as to other acceptable escrow securities, so that no
margin will be required for such transactions. OCC will release
the securities on the expiration of the option or upon the Fund's
entering into a closing transaction. An option position may be
closed out only on a market which provides secondary trading for
options of the same series, and there is no assurance that a liquid
secondary market will exist for any particular option.
When the Fund writes an over-the-counter("OTC") option, it
will enter into an arrangement with a primary U.S. Government
securities dealer, which would establish a formula price at which
the Fund would have the absolute right to repurchase that OTC
option. That formula price would generally be based on a multiple
of the premium received for the option, plus the amount by which
the option is exercisable below the market price of the underlying
security (that is, the extent to which the option is "in-the-money").
When the Fund writes an OTC option, it will treat as
illiquid (for purposes of the limit on its assets that may be
invested in the illiquid securities, stated in the Prospectus) the
mark-to-market value of any OTC option held by it. The Securities
and Exchange Commission ("SEC") is evaluating whether OTC options
should be considered liquid securities, and the procedure described
above could be affected by the outcome of that evaluation.
The Fund's option activities may affect its turnover rate and
brokerage commissions. The exercise of calls written by the Fund
may cause the Fund to sell related portfolio securities, thus
increasing its turnover rate in a manner beyond the Fund's control.
The exercise by the Fund of puts on securities will cause the sale
of related investments, increasing portfolio turnover. Although
such exercise is within the Fund's control, holding a put might
cause the Fund to sell the related investments for reasons which
would not exist in the absence of the put. The Fund will pay a
brokerage commission each time it buys a put or call, sells a call,
or buys or sells an underlying investment in connection with the
exercise of a put or call. Such commissions may be higher than
those which would apply to direct purchases or sales of such
underlying investments. Premiums paid for options are small in
relation to the market value of the related investments, and
consequently, put and call options offer large amounts of leverage.
The leverage offered by trading options could result in the Fund's
net asset value being more sensitive to changes in the value of the
underlying investments.
Tax Aspects of Covered Calls and Hedging Instruments. The
Fund intends to qualify as a "regulated investment company" under
the Internal Revenue Code (although it reserves the right not to
qualify). That qualification enables the Fund to "pass through"
its income and realized capital gains to shareholders without the
Fund having to pay tax on them. This avoids a "double tax" on that
income and capital gains, since shareholders normally will be taxed
on the dividends and capital gains they receive from the Fund
(unless the Fund's shares are held in a retirement account or the
shareholder is otherwise exempt from tax). One of the tests for
the Fund's qualification as a regulated investment company is that
less than 30% of its gross income must be derived from gains
realized on the sale of securities held for less than three months.
To comply with this 30% cap, the Fund will limit the extent to
which it engages in the following activities, but will not be
precluded from them: (i) selling investments, including Stock Index
Futures, held for less than three months, whether or not they were
purchased on the exercise of a call held by the Fund; (ii)
purchasing options which expire in less than three months; (iii)
effecting closing transactions with respect to calls or puts
written or purchased less than three months previously; (iv)
exercising puts or calls held by the Fund for less than three
months; or (v) writing calls on investments held less than three
months.
Certain foreign currency exchange contracts ("Forward
Contracts") in which the Fund may invest are treated as "section
1256 contracts." Gains or losses relating to section 1256
contracts generally are characterized under the Internal Revenue
Code as 60% long-term and 40% short-term capital gains or losses.
However, foreign currency gains or losses arising from certain
section 1256 contracts (including Forward Contracts) generally are
treated as ordinary income or loss. In addition, section 1256
contracts held by the Fund at the end of each taxable year are
"marked-to-market" with the result that unrealized gains or losses
are treated as though they were realized. These contracts also may
be marked-to-market for purposes of the excise tax applicable to
investment company distributions and for other purposes under rules
prescribed pursuant to the Internal Revenue Code. An election can
be made by the Fund to exempt these transactions from this
marked-to-market treatment.
Certain Forward Contracts entered into by the Fund may result
in "straddles" for Federal income tax purposes. The straddle rules
may affect the character of gains (or losses) realized by the Fund
on straddle positions. Generally, a loss sustained on the
disposition of a position making up a straddle is allowed only to
the extent such loss exceeds any unrecognized gain in the
offsetting positions making up the straddle. Disallowed loss is
generally allowed at the point where there is no unrecognized gain
in the offsetting positions making up the straddle, or the
offsetting position is disposed of.
Under the Internal Revenue Code, gains or losses attributable
to fluctuations in exchange rates that occur between the time the
Fund accrues interest or other receivables or accrues expenses or
other liabilities denominated in a foreign currency and the time
the Fund actually collects such receivables or pays such
liabilities generally are treated as ordinary income or ordinary
loss. Similarly, on disposition of debt securities denominated in
a foreign currency and on disposition foreign currency forward
contracts, gains or losses attributable to fluctuations in the
value of a foreign currency between the date of acquisition of the
security or contract and the date of the disposition also are
treated as an ordinary gain or loss. Currency gains and losses are
offset against market gains and losses on each trade before
determining a net "section 988" gain or loss under the Internal
Revenue Code, which may ultimately increase or decrease the amount
of the Fund's investment company income available for distribution
to its shareholders.
Additional Risk Factors in Hedging. An option position may
be closed out only on a market that provides secondary trading for
options of the same series, and there is no assurance that a liquid
secondary market will exist for any particular option. An option
position may be closed out only on a market that provides secondary
trading for options of the same series, and there is no assurance
that a liquid secondary market will exist for any particular
option. In addition to the risks with respect to options discussed
in the Prospectus and above, there is a risk in using short hedging
by (i) selling Stock Index Futures or (ii) purchasing puts on stock
indices or Stock Index Futures to attempt to protect against
declines in the value of the Fund's equity securities. The risk is
that the prices of Stock Index Futures will correlate imperfectly
with the behavior of the cash (i.e., market value) prices of the
Fund's equity securities. The ordinary spreads between prices in
the cash and futures markets are subject to distortions, due to
differences in the natures of those markets. First, all
participants in the futures markets are subject to margin deposit
and maintenance requirements. Rather than meeting additional
margin deposit requirements, investors may close out futures
contracts through offsetting transactions which could distort the
normal relationship between the cash and futures markets. Second,
the liquidity of the futures markets depends on participants
entering into offsetting transactions rather than making or taking
delivery. To the extent participants decide to make or take
delivery, liquidity in the futures markets could be reduced, thus
producing distortion. Third, from the point of view of
speculators, the deposit requirements in the futures markets are
less onerous than margin requirements in the securities markets.
Therefore, increased participation by speculators in the futures
markets may cause temporary price distortions.
The risk of imperfect correlation increases as the composition
of the Fund's portfolio diverges from the securities included in
the applicable index. To compensate for the imperfect correlation
of movements in the price of the equity securities being hedged and
movements in the price of the hedging instruments, the Fund may use
hedging instruments in a greater dollar amount than the dollar
amount of equity securities being hedged if the historical
volatility of the prices of the equity securities being hedged is
more than the historical volatility of the applicable index. It is
also possible that if the Fund has used hedging instruments in a
short hedge, the market may advance and the value of equity
securities held in the Fund's portfolio may decline. If that
occurred, the Fund would lose money on the hedging instruments and
also experience a decline in value in its portfolio securities.
However, while this could occur for a very brief period or to a
very small degree, over time the value of a diversified portfolio
of equity securities will tend to move in the same direction as the
indices upon which the hedging instruments are based.
If the Fund uses hedging instruments to establish a position
in the equities markets as a temporary substitute for the purchase
of individual equity securities (long hedging) by buying Stock
Index Futures and/or calls on such Futures, on securities or on
stock indices, it is possible that the market may decline. If the
Fund then concludes not to invest in equity securities at that time
because of concerns as to a possible further market decline or for
other reasons, the Fund will realize a loss on the hedging
instruments that is not offset by a reduction in the price of the
equity securities purchased.
Other Investment Restrictions
The Fund's most significant investment restrictions are set
forth in the Prospectus. There are additional investment
restrictions that the Fund must follow that are also fundamental
policies. Fundamental policies and the Fund's investment objective
cannot be changed without the vote of a "majority" of the Fund's
outstanding voting securities. Under the Investment Company Act,
such a majority vote is defined as the vote of the holders of the
lesser of: (i) 67% or more of the shares present or represented by
proxy at a shareholder meeting, if the holders of more than 50% of
the outstanding shares are present or represented by proxy, or (ii)
more than 50% of the outstanding shares.
Under these additional restrictions, the Fund cannot:
Purchase shares of other investment companies in an
amount exceeding the limitations set forth in Section 12(d) of the
1940 Act and the rules thereunder, except as part of a plan of
reorganization, merger, consolidation or an offer of exchange;
Purchase securities on margin, except such short-term
credits as may be necessary for the clearance of transactions;
Invest for the purpose of exercising control over
management of any company;
Purchase or retain securities of any company if, to the
knowledge of the Fund, any officer or director of the Fund and/or
the Sub-Adviser owns more than 1/2 of 1% of the outstanding
securities of such company and such offices or directors who own
1/2 of 1% in the aggregate own more than 5% of the outstanding
securities;
Make loans of money or property to any person, except
through loans of portfolio securities and the purchase of fixed
income securities consistent with the Fund's investment objective
and policies and by entering into repurchase agreements (for the
purpose of this restriction, collateral arrangements with respect
to stock options, options on securities and stock indices, stock
index futures and securities and options on such futures are not
deemed to be loans of assets);
Underwrite the securities of other issuers, except to the
extent that in connection with the disposition of portfolio
securities or the sale of its own shares the Fund may be deemed to
be an underwriter;
Purchase real estate or interests therein, although the
Fund may purchase or sell securities of companies which deal in
real estate or interests therein;
Purchase or sell commodities or commodity futures
contracts except stock index futures and options on such futures
under policies adopted by the Fund's board of directors and
disclosed to shareholders;
Mortgage, hypothecate or pledge any of its assets, except
to the extent that the Fund may pledge assets to secure permitted
borrowings and in connection with collateral arrangements with
respect to options or futures; and
Issue senior securities, as defined in the 1940 Act,
except that the Fund may enter into repurchase agreements, lend its
portfolio securities and borrow money from banks for temporary or
emergency purposes.
As a non-fundamental policy, the Fund may not (i) purchase
oil, gas or other mineral leases, rights or royalty contracts or
exploration or development programs except that the Fund may invest
in the securities of companies which invest in or sponsor such
programs and (ii) make short sales of securities except short sales
"against-the-box". For purposes of the Fund's policy not to invest
more than 25% of its assets in any one industry as described in the
Prospectus, the Fund has adopted, as a matter of non-fundamental
policy, the corporate industry classifications set forth in
Appendix A to this Statement of Additional Information.
How the Fund is Managed
Organization and History. The Fund is organized as a Maryland
corporation which currently operates as a diversified open-end
management investment company. The Fund originally commenced
operations as a closed-end investment company. Pursuant to
shareholder approval received on ___________, 1996, the Fund
converted to an open-end investment company effective as of the
date of this Statement of Additional Information.
As a Maryland corporation, the Fund is not required to hold,
and does not plan to hold, regular annual meetings of shareholders.
The Fund will hold meetings when required to do so by the
Investment Company Act or other applicable law, or when a
shareholder meeting is called by the Trustees or upon proper
request of the shareholders. Each share of the Fund represents an
interest in the 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 their vote at shareholders' meetings. Shareholders of
the Fund vote together in the aggregate on certain matters at
shareholders' meetings, such as the election of Directors and
ratification of appointment of auditors for the Fund. Shareholders
of a particular class vote separately on proposals which affect
that class, and shareholders of a class which is not affected by
that matter are not entitled to vote on the proposal. For example,
only shareholders of a class of a series vote on certain amendments
to the Distribution and/or Service Plans if the amendments affect
that class.
Directors and Officers of the Fund. The Fund's Directors and
officers, and the Fund's portfolio manager (who is not an officer),
are listed below, together with principal occupations and business
affiliations during the past five years. The address of each is
Two World Trade Center, New York, New York 10048, except as noted.
All of the Directors are also trustees of Oppenheimer Quest for
Value Funds (consisting of the following series: Oppenheimer Quest
Growth & Income Value Fund, Oppenheimer Quest Officers Value Fund,
Oppenheimer Quest Opportunity Value Fund, Oppenheimer Quest Small
Cap Value Fund), Oppenheimer Quest Global Value Fund, Inc. and
Oppenheimer Quest Value Fund, Inc. (the "Oppenheimer Quest Funds"),
and Rochester Fund Municipals, Rochester Portfolio Series and Bond
Fund Series (the "Oppenheimer Rochester Funds"). As of
, 1997, the Directors and officers of the Fund as a group
owned less than 1% of the Fund's issued and outstanding shares.
The foregoing does not include shares held of record by an employee
benefit plan for employees of the Manager (for which one of the
officers listed below, Mr. Donohue, is a trustee), other than the
shares beneficially owned under that plan by officers of the Fund
listed below.
Bridget A. Macaskill, Chairman of the Board of Directors and
President*; Age: 48.
President, Chief Executive Officer and a Director of the Manager
and HarbourView Asset Management Corporation ("HarbourView"), a
subsidiary of the Manager; President and a Director of Oppenheimer
Acquisition Corp. ("OAC"), the Manager's parent holding company,
and Oppenheimer Partnership Holdings, Inc.; Chairman and a Director
of Shareholder Services, Inc. ("SSI"), a transfer agent subsidiary
of the Manager and Shareholder Financial Services, Inc. ("SFSI");
and a director of Oppenheimer Real Asset Management, Inc.
Paul Y. Clinton, Director; Age: 65
39 Blossom Avenue, Osterville, Massachusetts 02655
Principal of Clinton Management Associates, a financial and venture
capital consulting firm; Trustee of Capital Cash Management Trust,
a money-market fund and Narraganssett Tax-Free Fund, a tax-exempt
bond fund; Director of OCC Cash Reserves, Inc. and Trustee of OCC
Accumulation Trust, all of which are open-end investment companies.
Formerly: Director, External Affairs, Kravco Corporation, a
national real estate owner and property management corporation;
President of Essex Management Corporation, a management consulting
company; a general partner of Capital Growth Fund, a venture
capital partnership; a general partner of Essex Limited
Partnership, an investment partnership; President of Geneve Corp.,
a venture capital fund; Chairman of Woodland Capital Corp., a small
business investment company; and Vice President of W.R. Grace & Co.
Thomas W, Courtney, Director; Age: 63
P.O. Box 580, Sewickley, Pennsylvania 15143
Principal of Courtney Associates, Inc. (venture capital firm);
former General Partner of Trivest Venture Fund (private venture
capital fund); former President of Investment Counseling Federated
Investors, Inc.; Trustee of Cash Assets Trust, a money market fund;
Director of OCC Cash Reserves, Inc., and Trustee of OCC
Accumulation Trust, all of which are open-end investment companies;
former President of Boston Company Institutional Investors; Trustee
of Hawaiian Tax-Free Trust and Tax Free Trust of Arizona,
tax-exempt bond funds; Director of several privately owned corpora-
tions; former Director of Financial Analysts Federation.
Lacy B. Herrmann, Director; Age: 67
380 Madison Avenue, Suite 2300, New York, New York 10017
President and Chairman of the Board of Aquila Management
Corporation, the sponsoring organization and Administrator and/or
Sub-Adviser to the following open-end investment companies, and
Chairman of the Board of Trustees and President of each: Churchill
Cash Reserves Trust, Short Term Asset Reserves, Pacific Capital
Cash Assets Trust, Pacific Capital U.S. Treasuries Cash Assets
Trust, Pacific Capital Tax-Free Cash Assets Trust, Prime Cash Fund,
Narragansett Insured Tax-Free Income Fund, Tax-Free Fund For Utah,
Churchill Tax-Free Fund of Kentucky, Tax-Free Fund of Colorado,
Tax-Free Trust of Oregon, Tax-Free Trust of Arizona, Hawaiian Tax-Free
Trust, and Aquila Rocky Mountain Equity Fund; Vice President,
Director, Secretary, and formerly Treasurer of Aquila Distributors,
Inc., distributor of the above funds; President and Chairman of the
Board of Trustees of Capital Cash Management Trust ("CCMT"), and an
Officer and Trustee/Director of its predecessors; President and
Director of STCM Management Company, Inc., sponsor and adviser to
CCMT; Chairman, President and a Director of InCap Management
Corporation, formerly sub-adviser and administrator of Prime Cash
Fund and Short Term Asset Reserves; Director of OCC Cash Reserves,
Inc., and Trustee of OCC Accumulation Trust and The Saratoga
Advantage Trust, each of which is an open-end investment company;
Trustee of Brown University.
George Loft, Director; Age: 82
51 Herrick Road, Sharon, Connecticut 06069
Private Investor; Director of Quest Cash Reserves, Inc., and
Trustee of Quest for Value Accumulation Trust and The Saratoga
Advantage Trust, all of which are open-end investment companies.
Robert C. Doll, Jr., Vice President; Age: 42
Executive Vice President and Director of Equity Investments of the
Manager; a Vice President and director of OAC an officer and
Portfolio Manager of other Oppenheimer funds.
Jeffrey C. Whittington, Portfolio Manager; Age 38
One World Financial Center, 200 Liberty Street, New York, New York
10281
Senior Vice President of Oppenheimer Capital; formerly a portfolio
manager at Neuberger & Berman and prior thereto, a portfolio
manager at Oppenheimer & Co., Inc.
Andrew J. Donohue, Secretary; Age: 46
Executive Vice President and General Counsel of the Manager and
OppenheimerFunds Distributor, Inc. (the "Distributor"); President
and a director of Centennial; Executive Vice President, General
Counsel and a director of HarbourView, SFSI, SSI and Oppenheimer
Partnership Holdings Inc.; President and a director of Oppenheimer
Real Asset Management, Inc.; General Counsel of OAC; Executive Vice
President, Chief Legal Officer and a director of MultiSource
Services, Inc. (a broker-dealer) an officer of other Oppenheimer
funds; formerly Senior Vice President and Associate General Counsel
of the Manager and the Distributor, partner in Kraft & McManimon (a
law firm), an officer of First Investors Corporation (a broker-dealer)
and First Investors Management Company, Inc. (broker-dealer
and investment adviser), and a director and an officer of First
Investors Family of Funds and First Investors Life Insurance
Company.
George C. Bowen, Treasurer; Age: 60
3410 South Galena Street Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President
and Treasurer of the Distributor and HarbourView; Senior Vice
President, Treasurer, Assistant Secretary and a director of
Centennial Asset Management Corporation, an investment advisory
subsidiary of the Manager; Vice President, Treasurer and Secretary
of Shareholder Financial Services, Inc. ("SFSI"), a transfer agent
subsidiary of the Manager; Senior Vice President and Secretary of
SSI, Vice President and Treasurer of Oppenheimer Real Asset
Management, Inc.; Chief Executive Officer, Treasurer and a director
of MultiSource Services, Inc. (a broker-dealer); an officer of
other Oppenheimer funds.
_________________________
* A Director who is an "interested person" as defined in the 1940 Act.
Robert G. Zack, Assistant Secretary; Age: 48
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; an officer of other
Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer; Age: 38
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly a Fund Controller for the
Manager, prior to which he was an Accountant for Yale & Seffinger,
P.C., an accounting firm, and previously an Accountant and
Commissions Supervisor for Stuart James Company Inc., a broker-dealer.
Scott Farrar, Assistant Treasurer; Age: 31
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager/Mutual Fund Accounting, an officer of
other Oppenheimer funds; previously a Fund Controller for the
Manager, prior to which he was an International Mutual Fund
Supervisor for Brown Brothers Harriman & Co. (a bank) and
previously a Senior Fund Accountant for State Street Bank & Trust
Company.
Remuneration of Directors. All officers of the Fund and
Ms. Macaskill, a Director, are officers or directors of the Manager
and receive no salary or fee from the Fund. The remaining
Directors of the Fund received the total amounts shown below from
(i) the Fund during its fiscal year ended December 31, 1996 and
(ii) other investment companies (or series thereof) managed by the
Manager and the Sub-Adviser during the calendar year ended December
31, 1996. The Sub-Adviser served as an investment adviser to the
Fund from its inception to the date hereof; effective as of such
date, the Manager acquired the investment advisory and other
contracts and business relationships and certain assets and
liabilities of the Sub-Adviser, OCC Distributors and Oppenheimer
Capital relating to the Fund.
<TABLE>
<CAPTION>
Pension or
Retirement
Aggregate Benefits Estimated Total
Compensation Accrued as Annual Compensation
from the Part of Fund Benefits Upon From Fund
Name of Person Fund(1) Expenses Retirement Complex(2)
<S> <C> <C> <C> <C>
Paul Y. Clinton None None None $
Thomas W. Courtney None None None $
Lacy B. Herrmann None None None $
George Loft $ None None $
</TABLE>
(1) Messrs. Clinton, Courtney and Herrmann were not directors of
the Fund during the fiscal year ended December 31, 1996.
(2) For the purpose of the chart above, "Fund Complex" includes
the Fund, the Oppenheimer Quest Funds, the Oppenheimer Rochester
Funds and two funds advised by the Sub-Adviser. For these purposes
each series constitutes a separate fund.
Major Shareholders. As of , 1997, no person
owned of record or was known by the Fund to own beneficially 5% or
more of the Fund's outstanding Class A, Class B or Class C shares
except:[ ].
The Manager and its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled
by Massachusetts Mutual Life Insurance Company. OAC is also owned
in part by certain of the Manager s directors and officers, some of
whom also serve as officers of the Fund and one of whom (Ms.
Macaskill) also serves as a Director of the Fund.
The Manager and the Fund have a Code of Ethics. In addition
to having its own Code of Ethics, the Sub-Adviser is obligated to
report to the Manager any violations of the Sub-Adviser's Code of
Ethics relating to the Fund. The Code of Ethics is designed to
detect and prevent improper personal trading by certain employees,
including the Fund's portfolio manager, who is an employee of the
Sub-Adviser, that would compete with or take advantage of the
Funds portfolio transactions. Compliance with the Code of Ethics
is carefully monitored and strictly enforced by the Manager.
The Investment Advisory Agreement. The Manager acts as
investment adviser to the Fund pursuant to the terms of an
Investment Advisory Agreement dated ___________, 1997. The Sub-Adviser
previously served as the Fund's investment adviser from the
Fund's inception (February 13, 1987) through to and including
____________, 1997. The Investment Advisory Agreement was approved
by the Board of Directors, including a majority of the Directors
who are not "interested persons" of the Fund (as defined in the
1940 Act) and who have no direct or indirect financial interest in
such agreement, on September 17, 1996 and by the shareholders of
the Fund at a meeting held for that purpose on ___________, 1996.
Under the Investment Advisory Agreement, the Manager acts as
the investment adviser for the Fund and supervises the investment
program of the Fund. The Investment Advisory Agreement provides
that the Manager will provide administrative services for the Fund,
including completion and maintenance of records, preparation and
filing of reports required by the Securities and Exchange
Commission, reports to shareholders, and composition of proxy
statements and registration statements required by Federal laws.
The Manager will furnish the Fund with office space, facilities and
equipment and arrange for its employees to serve as officers of the
Fund. The administrative services to be provided by the Manager
under the Investment Advisory Agreement will be at its own expense.
Expenses not assumed by the Manager under the Investment
Advisory Agreement or paid by the Distributor under the General
Distributor's Agreement will be paid by the Fund. Certain expenses
are further allocated to certain classes of shares of a series as
explained in the Prospectus and under "How to Buy Shares," below.
The Investment Advisory Agreement lists examples of expenses paid
by the Fund, including interest, taxes, brokerage commissions,
insurance premiums, fees of non-interested Directors, legal and
audit expenses, transfer agent and custodian expenses, share
issuance costs, certain printing and registration costs, and
non-recurring expenses, including litigation.
The Investment Advisory Agreement provides that for a period
of two years from the date thereof, the Manager will waive the
following portion of the advisory fee: 0.15% of the first $200
million of average daily net assets, 0.40% of the next $200
million, 0.30% of the next $400 million and 0.25% of average daily
net assets over $800 million. Pursuant to the foregoing, the
Manager's fee at the end of any month will be reduced or eliminated
such that there will not be any accrued but unpaid liability under
this fee waiver. Any waiver of fees would lower the Fund's overall
expense ratio and increase its total return during any period in
which they are in effect.
The Investment Advisory Agreement provides that in the absence
of willful misfeasance, bad faith, or gross negligence in the
performance of its duty, or reckless disregard for its obligations
and duties under the advisory agreement, the Manager is not liable
for any loss resulting from good faith errors or omissions on its
part with respect to any of its duties thereunder. The Investment
Advisory Agreement permits the Fund to use the name "Oppenheimer"
or "Quest For Value" in the name of the Fund for the duration of
the Agreement. Pursuant to the Investment Advisory Agreement, the
Manager may act as investment adviser for any other person, firm or
corporation and may use the name "Oppenheimer" and "Quest For
Value" in connection with its other investment companies for which
it may act as an investment adviser or general distributor. If the
Manager shall no longer act as investment adviser to a Fund, the
right of the Fund to use "Oppenheimer" or "Quest For Value" as part
of its name may be withdrawn.
The Investment Advisory Agreement provides that the Manager
may enter into sub-advisory agreements with other affiliated or
unaffiliated registered investment advisers in order to obtain
specialized services for the Funds provided that the Fund is not
required to pay any additional fees for such services. The Manager
has retained the Sub-Adviser pursuant to a separate Subadvisory
Agreement, dated as of ____________ , 1997, with respect to the
Fund.
Fees Paid Under the Prior Investment Advisory Agreement and
Administration Agreement. The Sub-Adviser served as investment
adviser to the Fund from its inception until ______________, 1997.
Under the prior Investment Advisory Agreement, the total advisory
fees accrued or paid by the Fund were $_____, $_______, and $____
for the fiscal years ended December 31, 1994, 1995 and 1996,
respectively.
For the fiscal years ended December 31, 1994, 1995 and 1996,
the Fund paid or accrued administration fees to Oppenheimer Capital
in the amounts of $ , $____ and $ ,
respectively. The Administration Agreement between the Fund and
Oppenheimer Capital was terminated as of the date hereof; the
services previously provided thereunder will be provided by the
Manager under the Investment Advisory Agreement.
The Subadvisory Agreement. The Subadvisory Agreement provides
that the Sub-Adviser shall regularly provide investment advice with
respect to the Fund and invest and reinvest cash, securities and
the property comprising the assets of the Fund. Under the
Subadvisory Agreement, the Sub-Adviser agrees to use its reasonable
best efforts to retain the services of the Portfolio Manager and
agrees not to change the Portfolio Manager of the Fund without the
written approval of the Manager. In addition the Portfolio Manager
will provide assistance in the distribution and marketing of the
Fund. The Subadvisory Agreement was approved by the Board of
Directors, including a majority of the Directors who are not
"interested persons" of the Fund (as defined in the 1940 Act) and
who have no direct or indirect financial interest in such
agreement, on September 17, 1996 and by the shareholders of the
Fund at a meeting held for that purpose on ___________, 1996.
Under the Subadvisory Agreement, the Manager will pay the
Sub-Adviser an annual fee payable monthly, based on the average daily
net assets of the Fund, equal to 40% of the investment advisory fee
collected by the Manager from the Fund based on the total net
assets of the Fund as of the effective date of the Subadvisory
Agreement and remaining 120 days later (the "base amount") plus 30%
of the investment advisory fee collected by the Manager based on
the total net assets of the Fund that exceed the base amount, in
each case calculated after any waivers, voluntary or otherwise.
The Subadvisory Agreement provides that in the absence of
willful misfeasance, bad faith, negligence or reckless disregard of
its duties or obligations, the Sub-Adviser shall not be liable to
the Manager for any act or omission in the course of or connected
with rendering services under the Subadvisory Agreement or for any
losses that may be sustained in the purchase, holding or sale of
any security.
The Distributor. Under a General Distributor s Agreement
with the Fund dated as of ___________,1997, the Distributor acts as
the Fund s principal underwriter in the continuous public offering
of its Class A, Class B and Class C shares of the Fund but is not
obligated to sell a specific number of shares. Expenses normally
attributable to sales, including advertising and the cost of
printing and mailing prospectuses, other than those furnished to
existing shareholders, are borne by the Distributor. For
additional information about distribution of the Fund's shares and
the expenses connected with such activities, please refer to
"Distribution and Service Plans" below.
The Transfer Agent. OppenheimerFunds Services, a division
of the Manager, acts as the Fund's Transfer Agent pursuant to a
Transfer Agency and Service Agency Agreement dated _______, 1997.
Pursuant to the Agreement, the Transfer Agent is responsible for
maintaining the Fund's shareholder registry and shareholder
accounting records and for shareholder servicing and administrative
functions. As compensation therefor, the Fund is obligated to pay
the Transfer Agent an annual maintenance fee for each Fund
shareholder account and reimburse the Transfer Agent for its out of
pocket expenses.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory and Subadvisory
Agreement. The Investment Advisory Agreement contains provisions
relating to the selection of broker-dealers ("brokers") for the
Fund's portfolio transactions. The Manager and the Sub-Adviser may
use such brokers as may, in their best judgment based on all
relevant factors, implement the policy of the Fund to achieve best
execution of portfolio transactions. While the Manager need not
seek advance competitive bidding or base its selection on posted
rates, it is expected to be aware of the current rates of most
eligible brokers and to minimize the commissions paid to the extent
consistent with the interests and policies of the Fund as
established by its Board and the provisions of the Investment
Advisory Agreement.
The Investment Advisory Agreement also provides that,
consistent with obtaining the best execution of the Fund's
portfolio transactions, the Manager and the Sub-Adviser, in the
interest of the Fund, may select brokers other than affiliated
brokers, because they provide brokerage and/or research services to
the Fund and/or other accounts of the Manager or the Sub-Adviser.
The commissions paid to such brokers may be higher than another
qualified broker would have charged if a good faith determination
is made by the Manager or the Sub-Adviser that the commissions are
reasonable in relation to the services provided, viewed either in
terms of that transaction or the Manager s or the Sub-Adviser s
overall responsibilities to all its accounts. No specific dollar
value need be put on the services, some of which may or may not be
used by the Manager or the Sub-Adviser for the benefit of the Fund
or other of its advisory clients. To show that the determinations
were made in good faith, the Manager or any Sub-Adviser must be
prepared to show that the amount of such commissions paid over a
representative period selected by the Board was reasonable in
relation to the benefits to the Fund. The Investment Advisory
Agreement recognizes that an affiliated broker-dealer may act as
one of the regular brokers for the Fund provided that any
commissions paid to such broker are calculated in accordance with
procedures adopted by the Fund s Board under applicable rules of
the SEC.
In addition, the Subadvisory Agreement permits the Sub-Adviser
to enter into soft dollar arrangements through the agency of third
parties to obtain services for the Fund. Pursuant to these
arrangements, the Sub-Adviser will undertake to place brokerage
business with broker-dealers who pay third parties that provide
services. Any such soft dollar arrangements will be made in
accordance with policies adopted by the Board of the Fund and in
compliance with applicable law.
Description of Brokerage Practices. Portfolio decisions are based
upon recommendations of the portfolio manager and the judgment of
the portfolio managers. The Fund will pay brokerage commissions on
transactions in listed options and equity securities. Prices of
portfolio securities purchased from underwriters of new issues
include a commission or concession paid by the issuer to the
underwriter, and prices of debt securities purchased from dealers
include a spread between the bid and asked prices.
Transactions may be directed to dealers during the course of
an underwriting in return for their brokerage and research
services, which are intangible and on which no dollar value can be
placed. There is no formula for such allocation. The research
information may or may not be useful to one or more of the Fund
and/or other accounts of the Manager or the Sub-Adviser;
information received in connection with directed orders of other
accounts managed by the Manager or the Sub-Adviser or its
affiliates may or may not be useful to one or more of the Funds.
Such information may be in written or oral form and includes
information on particular companies and industries as well as
market, economic or institutional activity areas. It serves to
broaden the scope and supplement the research activities of the
Manager or the Sub-Adviser, to make available additional views for
consideration and comparison, and to enable the Manager or the
Sub-Adviser to obtain market information for the valuation of
securities held in the Fund's assets.
Sales of shares of the Fund, subject to applicable rules
covering the Distributor's activities in this area, will also be
considered as a factor in the direction of portfolio transactions
to dealers, but only in conformity with the price, execution and
other considerations and practices discussed above. The Fund will
not purchase any securities from or sell any securities to an
affiliated broker-dealer including Oppenheimer & Co., Inc.
("Opco"), an affiliate of the Sub-Adviser, acting as principal for
its own account.
The Sub-Adviser currently serves as investment manager to a
number of clients, including other investment companies, and may in
the future act as investment manager or advisor to others. It is
the practice of the Sub-Adviser to cause purchase or sale
transactions to be allocated among the Fund and others whose assets
it manages in such manner as it deems equitable. In making such
allocations among the Fund and other client accounts, the main
factors considered are the respective investment objectives, the
relative size of portfolio holdings of the same or comparable
securities, the availability of cash for investment, the size of
investment commitments generally held and the opinions of the
persons responsible for managing the portfolios of each Fund and
other client accounts. When orders to purchase or sell the same
security on identical terms are placed by more than one of the
funds and/or other advisory accounts managed by the Sub-Adviser or
its affiliates, the transactions are generally executed as
received, although a fund or advisory account that does not direct
trades to a specific broker ("free trades") usually will have its
order executed first. Purchases are combined where possible for
the purpose of negotiating brokerage commissions, which in some
cases might have a detrimental effect on the price or volume of the
security in a particular transaction as far as the Fund is
concerned. Orders placed by accounts that direct trades to a
specific broker will generally be executed after the free trades.
All orders placed on behalf of the Fund are considered free trades.
However, having an order placed first in the market does not
necessarily guarantee the most favorable price.
The following table presents information as to the allocation
of brokerage commissions paid by the Fund for the fiscal years
ended December 31, 1994, 1995 and 1996:
<TABLE>
<CAPTION>
Total Amount of
Total Brokerage Transactions Where
For the Brokerage Commissions Brokerage Commissions
Fiscal Year Commissions Paid to Opco Paid to Opco
Ended December 31 Paid Dollar Amount % Dollar Amount %
<S> <C> <C> <C> <C> <C>
1994 $ $ % $ %
1995 $ $ % $ %
1996 $ $ % $ %
</TABLE>
During the Fund's fiscal year ended December 31, 1996, $
was paid by the Fund to brokers as commissions in
return for research services; the aggregate dollar amount of those
transactions was $ .
Performance of the Fund
Total Return Information. As described in the Prospectus, from
time to time the "average annual total return," "cumulative total
return" and "total return at net asset value" of an investment in
a class of shares of the Fund may be advertised. An explanation of
how these total returns are calculated for each class and the
components of those calculations is set forth below.
The Fund's advertisements of its performance data must, under
applicable rules of the SEC, include the average annual total
returns for each advertised class of shares of the Fund for the 1,
5, and 10-year periods (or the life of the class, if less) ending
as of the most recently-ended calendar quarter prior to the
publication of the advertisement. This enables an investor to
compare the Fund's performance to the performance of other funds
for the same periods. However, a number of factors should be
considered before using such information as a basis for comparison
with other investments. An investment in the Fund is not insured;
its returns and share prices are not guaranteed and normally will
fluctuate on a daily basis. When redeemed, an investor's shares
may be worth more or less than their original cost. Returns for
any given past period are not a prediction or representation by the
Fund of future returns. The returns of Class A, Class B and Class
C shares of the Fund are affected by portfolio quality, the type of
investments the Fund holds and its operating expenses allocated to
the particular class. Class B and Class C shares were not publicly
offered during the Fund's fiscal year ended December 31, 1996;
accordingly, no performance information for such classes of shares
is set forth below. Prior to the date of this Statement of
Additional Information, the Fund operated as a closed-end
investment company with a dual purpose structure and with dual
investment objectives of (a) long-term capital appreciation and
preservation of capital and (b) current income and long-term growth
of income, and had common stock (the "Capital Shares") and
preferred stock (the "Income Shares") outstanding. The Income
Shares were redeemed by the Fund on January 31, 1997 and the Fund's
dual purpose structure terminated. With respect to the Capital
Shares, the Fund's Board of Directors determined that it was in the
best interests of the holders of the Capital Shares to convert the
Fund to an open-end investment company and approved the submission
of this proposal to such shareholders. Pursuant to shareholder
approval received on ___________, 1996, effective as of the date of
this Prospectus, the Fund was converted to an open-end investment
company with a single investment objective of capital appreciation.
The outstanding Capital Shares of the Fund became Class A shares of
common stock and will now bear their allocable share of the Fund's
expenses. [To indicate historical performance of the Class A shares
of the Fund, the Fund ____________.]
Average Annual Total Returns. The "average annual total
return" of each class is an average annual compounded rate of
return for each year in a specified number of years. It is the
rate of return based on the change in value of a hypothetical
initial investment of $1,000 ("P" in the formula below) held for a
number of years ("n") to achieve an Ending Redeemable Value ("ERV")
of that investment, according to the following formula:
1/n
(ERV)
(---) -1 = Average Annual Total Return
( P )
Cumulative Total Returns. The cumulative "total return"
calculation measures the change in value of a hypothetical
investment of $1,000 over an entire period of years. Its
calculation uses some of the same factors as average annual total
return, but it does not average the rate of return on an annual
basis. Cumulative total return is determined as follows:
ERV - P
------- = Total Return
P
In calculating total returns for Class A shares, the current
maximum sales charge of 5.75% (as a percentage of the offering
price) is deducted from the initial investment ("P") (unless the
return is shown at net asset value, as described below). Prior to
the date hereof, the Fund operated as a closed-end investment
company and no initial sales charge was imposed on Fund shares.
Total returns also assume that all dividends and capital gains
distributions during the period are reinvested to buy additional
shares at net asset value per share, and that the investment is
redeemed at the end of the period. [As discussed above, total
returns have been adjusted to reflect __________.]
[The "average annual total returns" on an investment in Class
A shares of the Fund (using the method described above) for the one
year and five year periods ended December 31, 1996 and for the
period from February 13, 1987 (commencement of operations) to
December 31, 1996 (all of which preceded the open-end conversion)
were _____%, _____% and _____%, respectively.]
[The "cumulative total return" on Class A shares for the
period from February 13, 1987 (commencement of operations) to
December 31, 1996 was %. ]
Total Returns at Net Asset Value. From time to time the
Fund may also quote an "average annual total return at net asset
value" or a "cumulative total return at net asset value" for Class
A, Class B or Class C shares. Each is based on the difference in
net asset value per share at the beginning and the end of the
period for a hypothetical investment in that class of shares
(without considering front-end or contingent deferred sales
charges) and takes into consideration the reinvestment of dividends
and capital gains distributions.
[The cumulative total return at net asset value on the Fund's
Class A shares for the period from February 13, 1987 (commencement
of operations) to December 31, 1996 was %. The
average annual total return at net asset value for Class A shares
for the one and five year periods ended December 31, 1996 and for
the period from February 13, 1987 through December 31, 1996 were
%, _____% and %, respectively.]
Other Performance Comparisons. From time to time the Fund may
publish the ranking of its Class A, Class B or Class C shares by
Lipper Analytical Services, Inc. ("Lipper"), a widely-recognized
independent mutual fund monitoring service. Lipper monitors the
performance of regulated investment companies, including the Fund,
and ranks their performance for various periods based on categories
relating to investment objectives. The performance of the Fund is
ranked against (i) all other funds and (ii) all other capital
appreciation funds. The Lipper performance rankings are based on
total returns that include the reinvestment of capital gain
distributions and income dividends but do not take sales charges or
taxes into consideration.
From time to time the Fund may publish the ranking of the
performance of its Class A, Class B or Class C shares by
Morningstar, Inc., an independent mutual fund monitoring service
that ranks mutual funds, including the Fund, monthly in broad
investment categories (domestic stock, international stock, taxable
bond, municipal bond and hybrid) based on risk-adjusted investment
return. Investment return measures a fund's three, five and ten-year
average annual total returns (when available) in excess of 90-day
U.S. Treasury bill returns after considering sales charges and
expenses. Risk measures fund performance below 90-day U.S.
Treasury bill monthly returns. Risk and investment return are
combined to produce star rankings reflecting performance relative
to the average fund in a fund's category. Five stars is the
"highest" ranking (top 10%), four stars is "above average" (next
22.5%), three stars is "average" (next 35%), two stars is "below
average" (next 22.5%) and one star is "lowest" (bottom 10%).
Morningstar ranks the Fund in relation to other rated capital
appreciation funds. Rankings are subject to change. From time to
time, the Fund may include in its advertisements and sales
literature performance information about the Fund cited in
newspapers and other periodicals, such as The New York Times, which
may include performance quotations from other services, including
Lipper.
From time to time, the Fund's performance also may be compared
to other mutual funds tracked by financial or business publications
and periodicals. For example, the Fund may quote Morningstar, Inc.
in its advertising materials. Morningstar, Inc. is a mutual fund
rating service that rates mutual funds on the basis of risk-adjusted
performance.
The total return on an investment in the Fund's Class A, Class
B and Class C shares may be compared with performance for the same
period of the S&P 500 Index as described in the Prospectus. The
performance of the index includes a factor for the reinvestment of
income dividends, but does not reflect reinvestment of capital
gains, expenses or taxes.
The performance of the Fund's Class A, Class B, or Class C
shares may also be compared in publications to (i) the performance
of various market indices or to other investments for which
reliable performance data is available, and (ii) to averages,
performance rankings or other benchmarks prepared by recognized
mutual fund statistical services.
Total return information, may be useful to investors in
reviewing the performance of the Fund's Class A, Class B or Class
C shares. However, when comparing total return of an investment in
Class A, Class B and Class C shares of the Fund, a number of
factors should be considered before using such information as a
basis for comparison with other investments. For example, an
investor may also wish to compare the Fund's Class A, Class B or
Class C shares may also wish to compare the Fund's Class A, Class
B or Class C return to the returns on fixed income investments
available from banks and thrift institutions, such as certificates
of deposit, ordinary interest-paying checking and savings accounts,
and other forms of fixed or variable time deposits, and various
other instruments such as Treasury bills. However, the Fund's
returns and share price are not guaranteed or insured by the FDIC
or any other agency and will fluctuate daily, while bank depository
obligations may be insured by the FDIC and may provide fixed rates
of return, and Treasury bills are guaranteed as to principal and
interest by the U.S. government.
From time to time, the Fund's Manager may publish rankings or
ratings of the Manager (or Transfer Agent) or the investor services
provided by them to shareholders of the Oppenheimer funds, other
than performance rankings of the Oppenheimer funds themselves.
Those ratings or rankings of shareholder/investor services by third
parties may compare the Oppenheimer funds' services to those of
other mutual fund families selected by the rating or ranking
services and may be based upon the opinions of the rating or
ranking service itself, based on its research or judgment, or based
upon surveys of investors, brokers, shareholders or others.
Distribution and Service Plans
The Fund has adopted separate Distribution and Service Plans
and Agreements for Class A, Class B and Class C shares of the Fund
under Rule 12b-1 of the Investment Company Act pursuant to which
the Fund will compensate the Distributor for all or a portion of
its costs incurred in connection with the distribution and/or
servicing of the shares of that class, as described in the
Prospectus. Each Plan has been approved by a vote of (i) the Board
of Directors of the Fund, including a majority of the Directors
who are not "interested persons" (as defined in the Investment
Company Act) of the Fund and who have no direct or indirect
financial interest in the operation of the Fund's 12b-1 plans or in
any related agreement ("Independent Directors"), cast in person at
a meeting on September 17, 1996 called for the purpose, among
others, of voting on that Plan, and (ii) the holders of a
"majority" (as defined in the 1940 Act) of the shares of each
class. For the Class A Plan Fund, shareholder approval was
received on _________,1996; for the Class B and Class C Plans, the
vote was cast by the Manager as the sole initial holder of Class B
and Class C shares of the Fund. Prior to the date of this
Statement of Additional Information the Fund operated as a closed-end
investment company and did not have Distribution and Service
Plans and Agreements.
In addition, under the Plans the Manager and the Distributor,
in their sole discretion, from time to time may use their own
resources (which, in the case of the Manager, may include profits
from the advisory fee it receives from the Fund) to make payments
to brokers, dealers or other financial institutions (each is
referred to as a "Recipient" under the Plans) for distribution and
administrative services they perform at no cost to the fund. The
Distributor and the Manager may, in their sole discretion, increase
or decrease the amount of payments they make from their own
resources to Recipients.
Unless terminated as described below, each plan continues in
effect from year to year but only as long as such continuance is
specifically approved at least annually by the Fund's Board of
Directors and its "Independent Directors" by a vote cast in person
at a meeting called for the purpose of voting on such continuance.
Any Plan may be terminated at any time by the vote of a majority of
the Independent Directors or by the vote of the holders of a
"majority" (as defined in the Investment Company Act) of the
outstanding shares of that class. No Plan may be amended to
increase materially the amount of payments to be made unless such
amendment is approved by shareholders of the class affected by the
amendment. In addition, because Class B shares of the Fund
automatically convert into Class A shares after six years, the Fund
is required to obtain the approval of Class B as well as Class A
shareholders for a proposed material amendment to the Class A Plan
that would materially increase payments under the Plan. Such
approval must be by a "majority" of the Class A and Class B shares
(as defined in the Investment Company Act), voting separately by
class. All material amendments must be approved by the Board of
Directors and the Independent Directors.
While the Plans are in effect, the Treasurer of the Fund shall
provide separate written reports to the Fund's Board of Directors
at least quarterly on the amount of all payments made pursuant to
each Plan, the purpose for which the payments were made and the
identity of each Recipient that received any such payment. The
reports shall also include the distribution costs for that quarter,
and such costs for previous fiscal periods that are carried
forward, as explained in the Prospectus and below. Those reports,
including the allocations on which they are based, will be subject
to the review and approval of the Independent Directors in the
exercise of their fiduciary duty. Each Plan further provides that
while it is in effect, the selection and nomination of those
Directors of the Fund who are not "interested persons" of the Fund
is committed to the discretion of the Independent Directors. This
does not prevent the involvement of others in such selection and
nomination if the final decision on any such selection or
nomination is approved by a majority of the Independent Directors.
Under the Plans, no payment will be made to any Recipient in
any quarter if the aggregate net asset value of all Fund shares
held by the Recipient for itself and its customers did not exceed
a minimum amount, if any, that may be determined from time to time
by a majority of the Fund's Independent Directors. Initially, the
Board of Directors has set the fee at the maximum rate and set no
requirement for a minimum amount.
The Plans allow the service fee payments to be paid by the
Distributor to Recipients in advance for the first year Class A,
Class B and Class C shares are outstanding, and thereafter on a
quarterly basis, as described in the Prospectus. The advance
payment is based on the net assets of the Class A, Class B and
Class C shares sold. An exchange of shares does not entitle the
Recipient to an advance service fee payment. In the event Class A,
Class B or Class C shares are redeemed during the first year such
shares are outstanding, the Recipient will be obligated to repay a
pro rata portion of such advance payment to the Distributor.
Although the Plans permit the Distributor to retain both the
asset-based sales charge and the service fee, or to pay Recipients
the service fee on a quarterly basis, without payment in advance,
the Distributor presently intends to pay the service fee to
Recipients in the manner described above. A minimum holding period
may be established from time to time under the Plans by the Board.
Initially, the Board has set no minimum holding period. All
payments under the Plans are subject to the limitations imposed by
the National Association of Securities Dealers, Inc. Conduct Rules
on payments of asset-based sales charges and service fees.
The Plans provide for the Distributor to be compensated at a
flat rate, whether the Distributor's expenses are more or less than
the amounts paid by the Fund during that period. The asset-based
sales charges paid to the Distributor by the Fund under the Plans
are intended to allow the Distributor to recoup the cost of sales
commissions paid to authorized brokers and dealers at the time of
sale, plus financing costs, as described in the Prospectus. Such
payments may also be used to pay for the following expenses in
connection with the distribution of shares: (i) financing the
advance of the service fee payment to Recipients under the Plan,
(ii) compensation and expenses of personnel employed by the
Distributor to support distribution of shares, and (iii) costs of
sales literature, advertising and prospectuses (other than those
furnished to current shareholders).
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A, Class B and Class C
Shares. The Fund is authorized to issue three different classes of
shares. The availability of three classes of shares permits the
individual investor to choose the method of purchasing shares that
is more beneficial to the investor depending on the amount of the
purchase, the length of time the investor expects to hold shares
and other relevant circumstances. Investors should understand that
the purpose and function of the deferred sales charge and asset-based
sales charge with respect to Class B and Class C shares are
the same as those of the initial sales charge with respect to Class
A shares. Any salesperson or other person entitled to receive
compensation for selling Fund shares may receive different
compensation with respect to one class of shares than another. The
Distributor will not accept any order for $500,000 or more of Class
B shares or $1 million or more of Class C shares on behalf of a
single investor (not including dealer "street name" or omnibus
accounts) because generally it will be more advantageous for that
investor to purchase Class A shares of the Fund instead.
The three classes of shares each represent an interest in the
same portfolio investments of the Fund. However, each class has
different shareholder privileges and features. The net income
attributable to Class B and Class C shares and the dividends
payable on Class B and Class C shares will be reduced by
incremental expenses borne solely by that class, respectively,
including the asset-based sales charges to which Class B and Class
C shares are subject.
The conversion of Class B shares to Class A shares after six
years is subject to the continuing availability of a private letter
ruling from the Internal Revenue Service, or an opinion of counsel
or tax adviser, to the effect that the conversion of Class B shares
does not constitute a taxable event for the holder under Federal
income tax law. If such a revenue ruling or opinion is no longer
available, the automatic conversion feature may be suspended, in
which event no further conversions of Class B shares would occur
while such suspension remained in effect. Although Class B shares
could then be exchanged for Class A shares on the basis of relative
net asset value of the two classes, without the imposition of a
sales charge or fee, such exchange could constitute a taxable event
for the holder, and absent such exchange, Class B shares might
continue to be subject to the asset-based sales charge for longer
than six years.
The methodology for calculating the net asset value, dividends
and distributions of the Fund's Class A, Class B and Class C shares
recognizes two types of expenses. General expenses that do not
pertain specifically to any class are allocated pro rata to the
shares of each class, based on the percentage of the net assets of
such class to the Fund's total net assets, and then equally to each
outstanding share within a given class. Such general expenses
include (i) management fees, (ii) legal, bookkeeping and audit
fees, (iii) printing and mailing costs of shareholder reports,
Prospectuses, Statements of Additional Information and other
materials for current shareholders, (iv) fees to Independent
Directors, (v) custodian expenses, (vi) share issuance costs, (vii)
organization and start-up costs, (viii) interest, taxes and
brokerage commissions, and ( ix) non-recurring expenses, such as
litigation costs. Other expenses that are directly attributable to
a class are allocated equally to each outstanding share within that
class. Such expenses include (a) Distribution Plan fees, (b)
incremental transfer and shareholder servicing agent fees and
expenses, (c) registration fees and (d) shareholder meeting
expenses, to the extent that such expenses pertain to a specific
class rather than to the Fund as a whole.
Determination of Net Asset Values Per Share. The net asset values
per share of Class A, Class B and Class C shares of the Fund are
determined as of the close of business of The New York Stock
Exchange (the "Exchange") on each day that the Exchange is open, by
dividing the value of the Fund's net assets attributable to that
class by the total number of Fund shares of that class outstanding.
The Exchange normally closes at 4:00 P.M. New York time, but may
close earlier on some other days (for example, in case of weather
emergencies or on days falling before a holiday). The Exchange's
most recent annual announcement (which is subject to change) states
that it will close on New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. It may also close on other days. The Fund may
invest a substantial portion of its assets in foreign securities
primarily listed on foreign exchanges which may trade on Saturdays
or customary U.S. business holidays on which the Exchange is
closed. Because the Fund's net asset values will not be calculated
on those days, the Fund's net asset value per share may be
significantly affected on such days when shareholders may not
purchase or redeem shares.
The Fund's Board of Directors has established procedures for
the valuation of the Fund's securities, generally as follows: (i)
equity securities traded on a U.S. securities exchange or on the
Automated Quotation System (" NASDAQ") of the Nasdaq Stock Market,
Inc. for which last sale information is regularly reported are
valued at the last reported sale price on their primary exchange or
NASDAQ that day (or, in the absence of sales that day, at values
based on the last sale prices of the preceding trading day, or
closing "bid" prices that day); (ii) securities traded on a foreign
securities generally exchange are valued at the last sale price
available to the pricing service approved by the Fund's Board of
Directors or to the Manager as reported by the principal exchange
on which the security is traded; or at the mean between "bid" and
"asked" prices obtained from the principal exchange or two active
market makers in the security on the basis of reasonable inquiry;
(iii) long-term debt securities having a remaining maturity in
excess of 60 days are valued based on the mean between the "bid"
and "asked" prices determined by a portfolio pricing service
approved by the Fund's Board of Directors or obtained by the
Manager from two active market makers in the security on the basis
of reasonable inquiry; (iv) debt instruments that had a maturity of
more than 397 days or less when issued, and non-money market type
instruments having a maturity of 397 days or less when issued,
which have a remaining maturity of 60 days or less are valued at
the mean between the "bid" and "asked" prices determined by a
pricing service approved by the Fund's Board of Directors or
obtained from active market makers in the security on the basis of
reasonable inquiry; (v) money market debt securities that had a
maturity of less than 397 days when issued that having a remaining
maturity of 60 days or less are valued at cost, adjusted for
amortization of premiums and accretion of discounts; and (vi)
securities (including restricted securities) not having readily-available
market quotations are valued at fair value determined
under the Board's procedures. If the Manager is unable to locate
two market makers willing to give quotes (see (ii) (iii) and (iv)
above), the security may be priced at the mean between the "bid"
and "asked" prices provided by a single active market maker (which
in certain cases may be the "bid" price if no "ask" price is
available).
In the case of U.S. Government securities and mortgage-backed
securities, where last sale information is not generally available,
such pricing procedures may include a "matrix" comparison to the
prices for comparable instruments on the basis of quality, yield,
maturity and other special factors involved. The Manager may use
pricing services approved by the Board of Directors to price any of
the types of securities described above to price U.S. Government
securities, mortgage-backed securities, foreign government
securities and corporate bonds. The Manager will monitor the
accuracy of such pricing services, which may include comparing
prices used for portfolio evaluation to actual prices of selected
securities.
Trading in securities on European and Asian exchanges and
over-the-counter markets is normally completed before the close of
the Exchange. Events affecting the values of foreign securities
traded in such securities markets that occur between the time their
prices are determined and the close of the Exchange will not be
reflected in the Fund's calculation of its net asset value unless
the Board of Directors or the Manager, under procedures established
by the Board, determines that the particular event is likely to
effect a material change in the value of such security. Foreign
currency, including forward contracts, will be valued at the
closing price in the London foreign exchange market that day as
provided by a reliable bank, dealer or pricing service. The values
of securities denominated in foreign currency will be converted to
U.S. dollars at the closing price in the London foreign exchange
market that day as provided by a reliable bank, dealer or pricing
service.
Puts, calls and Futures are valued at the last sales price on
the principal exchanges on which they are traded or on NASDAQ, as
applicable, as determined by a pricing service approved by the
Board of Directors or by the Manager. If were no sales that day,
value shall be the last sale price on the preceding trading day if
it is within the spread of the closing bid and asked prices on the
principal exchange or on NASDAQ on the valuation date, or, if not,
value shall be the closing bid price on the principal exchange or
on NASDAQ on the valuation date. If the put, call or future is not
traded on an exchange or on NASDAQ, it shall be valued at the mean
between bid and asked prices obtained by the Manager from two
active market makers (which in certain cases may be the bid price
if no asked price is available).
When the Fund writes an option, an amount equal to the premium
received is included in the Fund's Statement of Assets and
Liabilities as an asset, and an equivalent credit is included in
the liability section. Credit is adjusted ("marked-to-market") to
reflect the current market value of the option. In determining the
Fund's gain on investments, if a call or put written by the Fund is
exercised, the proceeds are increased by the premium received. If
a call or put written by the Fund expires, the Fund has a gain in
the amount of the premium; if the Fund enters into a closing
purchase transaction, it will have a gain or loss depending on
whether the premium received was more or less than the cost of the
closing transaction. If the Fund exercises a put it holds, the
amount the Fund receives on its sale of the underlying investment
is reduced by the amount of premium paid by the Fund.
AccountLink. When shares are purchased through AccountLink, each
purchase must be at least $25.00. Shares will be purchased on the
regular business day the Distributor is instructed to initiate the
Automated Clearing House ("ACH") transfer to buy the shares.
Dividends will begin to accrue on shares purchased by the proceeds
of ACH transfers on the business day the Fund receives Federal
Funds for the purchase through the ACH system before the close of
The New York Stock Exchange. The Exchange normally closes at 4:00
P.M., but may close earlier on certain days. If Federal Funds are
received on a business day after the close of the Exchange, the
shares will be purchased and dividends will begin to accrue on the
next regular business day. The proceeds of ACH transfers are
normally received by the Fund 3 days after the transfers are
initiated. The Distributor and the Fund are not responsible for
any delays in purchasing shares resulting from delays in ACH
transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced
sales charge rate may be obtained for Class A shares under Rights
of Accumulation and Letters of Intent because of the economies of
sales efforts and reduction in expenses realized by the
Distributor, dealers and brokers making such sales. No sales
charge is imposed in certain other circumstances described in the
Prospectus because the Distributor incurs little or no selling
expenses. The term "immediate family" refers to one's spouse,
children, grandchildren, parents, grandparents, parents-in-law,
sons- and daughters-in-law, aunt, uncle, niece, nephew, siblings,
a sibling's spouse and a spouse's siblings.
The Oppenheimer Funds. The Oppenheimer funds are those
mutual funds for which the Distributor acts as the distributor or
the sub-distributor and include the following:
Oppenheimer Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer California Municipal Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer Insured Municipal Fund
Oppenheimer Main Street California Municipal Fund
Oppenheimer Florida Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion Income Fund
Oppenheimer Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer International Bond Fund
Oppenheimer Enterprise Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Bond Fund Series - Oppenheimer Bond Fund For Growth
Rochester Portfolio Series - Limited Term New York Municipal Fund*
Rochester Fund Municipals*
Oppenheimer Disciplined Value Fund
Oppenheimer Disciplined Allocation Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Income Fund
Oppenheimer LifeSpan Growth Fund
Oppenheimer International Growth Fund
Oppenheimer Developing Markets Fund
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
________
* Shares of the Fund are not presently exchangeable for shares
of these funds.
There is an initial sales charge on the purchase of Class A
shares of each of the Oppenheimer funds except Money Market Funds
(under certain circumstances described herein, redemption proceeds
of Money Market Fund shares may be subject to a contingent
deferred sales charge).
Letters of Intent. A Letter of Intent ("Letter") is the
investor's statement in writing to the Distributor of the intention
to purchase Class A shares or Class A and Class B shares (or shares
of either class) of the Fund (and other eligible Oppenheimer funds)
during the 13-month period from the investor's first purchase
pursuant to the Letter (the "Letter of Intent period"), which may,
at the investor's request, include purchases made up to 90 days
prior to the date of the Letter. The Letter states the investor's
intention to make the aggregate amount of purchases (excluding any
purchases made by reinvestment of dividends or distributions or
purchases made at net asset value without sales charge), which
together with the investor's holdings of such funds (calculated at
their respective public offering prices calculated on the date of
the Letter) will equal or exceed the amount specified in the
Letter. This enables the investor to count the shares to be
purchased under the Letter of Intent to obtain the reduced sales
charge rate on purchases of Class A shares of the Fund (and other
Oppenheimer funds) that applies under the Right of Accumulation to
current purchases of Class A shares. Each purchase of Class A
shares under the Letter will be made at the public offering price
(including the sales charge) that applies to a single lump-sum
purchase of shares in the amount intended to be purchased under the
Letter.
In submitting a Letter, the investor makes no commitment to
purchase shares, but if the investor's purchases of shares within
the Letter of Intent period, when added to the value (at offering
price) of the investor's holdings of shares on the last day of that
period, do not equal or exceed the intended purchase amount, the
investor agrees to pay the additional amount of sales charge
applicable to such purchases, as set forth in "Terms of Escrow,"
below (as those terms may be amended from time to time). The
investor agrees that shares equal in value to 5% of the intended
purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be
bound by the terms of the Prospectus, this Statement of Additional
Information and the Application used for such Letter of Intent, and
if such terms are amended, as they may be from time to time by the
Fund, that those amendments will apply automatically to existing
Letters of Intent.
For purchases of shares of the Fund and other Oppenheimer
funds by OppenheimerFunds prototype 401(k) plans under a Letter of
Intent, the Transfer Agent will not hold shares in escrow. If the
intended purchase amount under the Letter entered into by an
OppenheimerFunds prototype 401(k) plan is not purchased by the plan
by the end of the Letter of Intent period, there will be no
adjustment of commissions paid to the broker-dealer or financial
institution of record for accounts held in the name of that plan.
If the total eligible purchases made during the Letter of
Intent period do not equal or exceed the intended purchase amount,
the commissions previously paid to the dealer of record for the
account and the amount of sales charge retained by the Distributor
will be adjusted to the rates applicable to actual total purchases.
If total eligible purchases during the Letter of Intent period
exceed the intended purchase amount and exceed the amount needed to
qualify for the next sales charge rate reduction set forth in the
applicable prospectus, the sales charges paid will be adjusted to
the lower rate, but only if and when the dealer returns to the
Distributor the excess of the amount of commissions allowed or paid
to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the
Distributor will be used to purchase additional shares for the
investor's account at the net asset value per share in effect on
the date of such purchase, promptly after the Distributor's receipt
thereof.
In determining the total amount of purchases made under a
Letter, shares redeemed by the investor prior to the termination of
the Letter of Intent period will be deducted. It is the
responsibility of the dealer of record and/or the investor to
advise the Distributor about the Letter in placing any purchase
orders for the investor during the Letter of Intent period. All
of such purchases must be made through the Distributor.
Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in
value up to 5% of the intended purchase amount specified in the
Letter shall be held in escrow by the Transfer Agent. For example,
if the intended purchase amount is $50,000, the escrow shall be
shares valued in the amount of $2,500 (computed at the public
offering price adjusted for a $50,000 purchase). Any dividends and
capital gains distributions on the escrowed shares will be credited
to the investor's account.
2. If the total minimum investment purchase amount specified
under the Letter is completed within the thirteen-month Letter of
Intent period, the escrowed shares will be promptly released to the
investor.
3. If, at the end of the thirteen-month Letter of Intent
period the total purchases pursuant to the Letter are less than the
intended purchase amount specified in the Letter, the investor must
remit to the Distributor an amount equal to the difference between
the dollar amount of sales charges actually paid and the amount of
sales charges which would have been paid if the total amount
purchased had been made at a single time. Such sales charge
adjustment will apply to any shares redeemed prior to the
completion of the Letter. If such difference in sales charges is
not paid within twenty days after a request from the Distributor or
the dealer, the Distributor will, within sixty days of the
expiration of the Letter, redeem the number of escrowed shares
necessary to realize such difference in sales charges. Full and
fractional shares remaining after such redemption will be released
from escrow. If a request is received to redeem escrowed shares
prior to the payment of such additional sales charge, the sales
charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably
constitutes and appoints the Transfer Agent as attorney-in-fact to
surrender for redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the
holding of which may be counted toward completion of a Letter)
include (a) Class A shares sold with a front-end sales charge or
subject to a Class A contingent deferred sales charge, (b) Class B
shares of other Oppenheimer funds acquired subject to a contingent
deferred sales charge, and (c) Class A shares or Class B shares
acquired in exchange for either (i) Class A shares of one of the
other Oppenheimer funds that were acquired subject to a Class A
initial or contingent deferred sales charge or (ii) Class B shares
of one of the other Oppenheimer funds that were acquired subject to
a contingent deferred sales charge.
6. Shares held in escrow hereunder will automatically be
exchanged for shares of another fund to which an exchange is
requested, as described in the section of the Prospectus entitled
"How to Exchange Shares," and the escrow will be transferred to
that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a
bank account, a check (minimum $25) for the initial purchase must
accompany the application. Shares purchased by Asset Builder Plan
payments from bank accounts are subject to the redemption
restrictions for recent purchases described in "Shareholder Account
Rules and Policies," in the Prospectus. Asset Builder Plans also
enable shareholders of Oppenheimer Cash Reserves to use those
accounts for monthly automatic purchases of shares of up to four
other Oppenheimer funds.
There is a front-end sales charge on the purchase of certain
Oppenheimer funds, or a contingent deferred sales charge may apply
to shares purchased by Asset Builder payments. An application
should be obtained from the Distributor, completed and returned,
and a prospectus of the selected fund(s) should be obtained from
the Distributor or your financial advisor before initiating Asset
Builder payments. The amount of the Asset Builder investment may
be changed or the automatic investments may be terminated at any
time by writing to the Transfer Agent. A reasonable period
(approximately 15 days) is required after the Transfer Agent's
receipt of such instructions to implement them. The Fund reserves
the right to amend, suspend, or discontinue offering such plans at
any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders
for the Fund's shares (for example, when a purchase check is
returned to the Fund unpaid) causes a loss to be incurred when the
net asset value of the Fund's shares on the cancellation date is
less than on the purchase date. That loss is equal to the amount
of the decline in the net asset value per share multiplied by the
number of shares in the purchase order. The investor is
responsible for that loss. If the investor fails to compensate the
Fund for the loss, the Distributor will do so. The Fund may
reimburse the Distributor for that amount by redeeming shares from
any account registered in that investor's name, or the Fund or the
Distributor may seek other redress.
Retirement Plans. In describing certain types of employee benefit
plans that may purchase Class A shares without being subject to the
Class A contingent differed sales charge, the term "employee
benefit plan" means any plan or arrangement, whether or not
"qualified" under the Internal Revenue Code, including, medical
savings accounts, payroll deduction plans, or similar plans in
which Class A shares are purchased by a fiduciary or other person
for the account of participants who are employees of a single
employer or of affiliated employers, if the Fund account is
registered in the name of the fiduciary or other person for the
benefit of participants in the plan.
The term "group retirement plan" means any qualified or
non-qualified retirement plan (including 457 plans, SEPs, SARSEPs,
403(b) plans, and SIMPLE plans) for employees of a corporation or
a sole proprietorship, members and employees of a partnership or
association or other organized group of person (the members of
which may include other groups), if the group has made special
arrangements with the Distributor and all members of the group
participating in the plan purchase Class A shares of the Fund
through a single investment dealer, broker or other financial
institution designated by the group.
How To Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and
conditions for redemptions set forth in the Prospectus.
Involuntary Redemptions. The Fund's Board of Directors has
the right to cause the involuntary redemption of the shares held in
any Fund account if the aggregate net asset value of those shares
is less than $500 or such other amount as the Board may fix. The
Board of Directors will not cause the involuntary redemption of
shares in an account if the aggregate net asset value of the shares
has fallen below the stated minimum solely as a result of market
fluctuations. Should the Board elect to exercise this right, it
may also fix, in accordance with the 1940 Act, and the provisions
of Maryland law, the requirements for any notice to be given to the
shareholders in question (not less than 30 days), or the Board may
set requirements for granting permission to the Shareholder to
increase the investment, and set other terms and conditions so that
the shares would not be involuntarily redeemed.
Reinvestment Privilege. Within six months of a redemption, a
shareholder may reinvest all or part of the redemption proceeds of
(i) Class A shares that you purchased subject to an initial sales
charge or a Class A contingent deferred sales charge, or (ii) Class
B shares on which you paid a contingent deferred sales charge when
you redeemed them. This privilege does not apply to Class C
shares. The reinvestment may be made without sales charge only in
Class A shares of the Fund or any of the other Oppenheimer funds
into which shares of the Fund are exchangeable as described in "How
to Exchange Shares" below, at the net asset value next computed
after the Transfer Agent receives the reinvestment order. The
shareholder must ask the Distributor for that privilege at the time
of reinvestment. Any capital gain that was realized when the
shares were redeemed is taxable, and reinvestment will not alter
any capital gains tax payable on that gain. If there has been a
capital loss on the redemption, some or all of the loss may not be
tax deductible, depending on the timing and amount of the
reinvestment. Under the Internal Revenue Code, if the redemption
proceeds of Fund shares on which a sales charge was paid are
reinvested in shares of the Fund or another of the Oppenheimer
funds within 90 days of payment of the sales charge, the
shareholder's basis in the shares of the Fund that were redeemed
may not include the amount of the sales charge paid. That would
reduce the loss or increase the gain recognized from the
redemption. However, in that case the sales charge would be added
to the basis of the shares acquired by the reinvestment of the
redemption proceeds. The Fund may amend, suspend or cease offering
this reinvestment privilege at any time as to shares redeemed after
the date of such amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of any class at the time of
transfer to the name of another person or entity (whether the
transfer occurs by absolute assignment, gift or bequest, not
involving, directly or indirectly, a public sale). The transferred
shares will remain subject to the contingent deferred sales charge,
calculated as if the transferee shareholder had acquired the
transferred shares in the same manner and at the same time as the
transferring shareholder. If less than all shares held in an
account are transferred, and some but not all shares in the account
would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus
under "How to Buy Shares" for the imposition of the Class B or
Class C contingent deferred sales charge will be followed in
determining the order in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions
from OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans,
401(k) plans, or pension or profit-sharing plans should be
addressed to "Trustee, OppenheimerFunds Retirement Plans," c/o the
Transfer Agent at its address listed in "How To Sell Shares" in the
Prospectus or on the back cover of the Statement of Additional
Information. The request must: (i) state the reason for the
distribution; (ii) state the owner's awareness of tax penalties if
the distribution is premature; and (iii) conform to the
requirements of the plan and the Fund's other redemption
requirements. Participants, other than self-employed persons
maintaining a plan account in their own name, in OppenheimerFunds-sponsored
prototype pension or profit-sharing or 401(k) plans may
not directly redeem or exchange shares held for their account under
those plans. The employer or plan administrator must sign the
request. Distributions from pension plans, 401(k) or profit
sharing plans are subject to special requirements under the
Internal Revenue Code and certain documents (available from the
Transfer Agent) must be completed before the distribution may be
made. Distributions from retirement plans are subject to
withholding requirements under the Internal Revenue Code, and IRS
Form W-4P (available from the Transfer Agent) must be submitted to
the Transfer Agent with the distribution request, or the
distribution may be delayed. Unless the shareholder has provided
the Transfer Agent with a certified tax identification number, the
Internal Revenue Code requires that tax be withheld from any
distribution even if the shareholder elects not to have tax
withheld. The Fund, the Manager, the Distributor, the Trustee and
the Transfer Agent assume no responsibility to determine whether a
distribution satisfies the conditions of applicable tax laws and
will not be responsible for any tax penalties assessed in
connection with a distribution.
Special Arrangements for Repurchase of Shares from Dealers and
Brokers. The Distributor is the Fund's agent to repurchase its
shares from authorized dealers or brokers on behalf of their
customers. The shareholder should contact the broker or dealer to
arrange this type of redemption. The repurchase price per share
will be the net asset value next computed after the Distributor
receives the order placed by the dealer or broker, except that if
the Distributor receives a repurchase order from the dealer or
broker after the close of The New York Stock Exchange on a regular
business day, it will be processed at that day's net asset value,
if the order was received by the dealer or broker from its customer
prior to the time the Exchange closes (normally, that is 4:00 P.M.,
but may be earlier on some days) and the order was transmitted to
and received by the Distributor prior to its close of business that
day (normally 5:00 P.M.). Ordinarily, for accounts redeemed by a
broker-dealer under this procedure, payment will be made within
three business days after the shares have been redeemed upon the
Distributor's receipt of the required redemption documents in
proper form, with the signature(s) of the registered owners
guaranteed on the redemption document as described in the
Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares
of the Fund valued at $5,000 or more can authorize the Transfer
Agent to redeem shares (minimum $50) automatically on a monthly,
quarterly, semi-annual or annual basis under an Automatic
Withdrawal Plan. Shares will be redeemed three business days prior
to the date requested by the shareholder for receipt of the
payment. Automatic withdrawals of up to $1,500 per month may be
requested by telephone if payments are to be made by check payable
to all shareholders of record and sent to the address of record for
the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on
this basis. Payments are normally made by check, but shareholders
having AccountLink privileges (see "How To Buy Shares") may arrange
to have Automatic Withdrawal Plan payments transferred to the bank
account designated on the OppenheimerFunds New Account Application
or signature-guaranteed instructions. The Fund cannot guarantee
receipt of a payment on the date requested and reserves the right
to amend, suspend or discontinue offering such plans at any time
without prior notice. Because of the sales charge assessed on
Class A share purchases, shareholders should not make regular
additional Class A share purchases while participating in an
Automatic Withdrawal Plan. Class B and Class C shareholders should
not establish withdrawal plans because of the imposition of the
contingent deferred sales charges on such withdrawals (except where
the Class B and Class C contingent deferred sales charges are
waived as described in the Prospectus under "Waivers of Class B and
Class C Sales Charges").
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such
plans, as stated below and in the provisions of the
OppenheimerFunds Application relating to such Plans, as well as the
Prospectus. These provisions may be amended from time to time by
the Fund and/or the Distributor. When adopted, such amendments
will automatically apply to existing Plans.
Automatic Exchange Plans. Shareholders can authorize the
Transfer Agent (on the OppenheimerFunds Application or signature-guaranteed
instructions) to exchange a pre-determined amount of
shares of the Fund for shares (of the same class) of other
Oppenheimer funds automatically on a monthly, quarterly, semi-annual or
annual basis under an Automatic Exchange Plan. The
minimum amount that may be exchanged to each other fund account is
$25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "How to
Exchange Shares" in the Prospectus and below in this Statement of
Additional Information.
Automatic Withdrawal Plans. Fund shares will be redeemed
as necessary to meet withdrawal payments. Shares acquired without
a sales charge will be redeemed first and shares acquired with
reinvested dividends and capital gains distributions will be
redeemed next, followed by shares acquired with a sales charge, to
the extent necessary to make withdrawal payments. Depending upon
the amount withdrawn, the investor's principal may be depleted.
Payments made under withdrawal plans should not be considered as a
yield or income on your investment. It may not be desirable to
purchase additional Class A shares while making automatic
withdrawals because of the sales charges that apply to purchases
when made. Accordingly, a shareholder normally may not maintain an
Automatic Withdrawal Plan while simultaneously making regular
purchases of Class A shares.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the
"Planholder") who executed the Plan authorization and application
submitted to the Transfer Agent. Neither Transfer Agent nor the
Fund shall incur any liability to the Planholder for any action
taken or omitted by the Transfer Agent in good faith to administer
the Plan. Certificates will not be issued for shares of the Fund
purchased for and held under the Plan, but the Transfer Agent will
credit all such shares to the account of the Planholder on the
records of the Fund. Any share certificates held by a Planholder
may be surrendered unendorsed to the Transfer Agent with the Plan
application so that the shares represented by the certificate may
be held under the Plan.
For accounts subject to Automatic Withdrawal Plans,
distributions of capital gains must be reinvested in shares of the
Fund, which will be done at net asset value without a sales charge.
Dividends on shares held in the account may be paid in cash or
reinvested.
Redemptions of shares needed to make withdrawal payments will
be made at the net asset value per share determined on the
redemption date. Checks or ACH transfer payments of the proceeds
of Plan withdrawals will normally be transmitted three business
days prior to the date selected for receipt of the payment (receipt
of payment on the date selected cannot be guaranteed), according to
the choice specified in writing by the Planholder.
The amount and the interval of disbursement payments and the
address to which checks are to be mailed or AccountLink payments
are to be sent may be changed at any time by the Planholder by
writing to the Transfer Agent. The Planholder should allow at
least two weeks' time in mailing such notification for the
requested change to be put in effect. The Planholder may, at any
time, instruct the Transfer Agent by written notice (in proper form
in accordance with the requirements of the then-current Prospectus
of the Fund) to redeem all, or any part of, the shares held under
the Plan. In that case, the Transfer Agent will redeem the number
of shares requested at the net asset value per share in effect in
accordance with the Fund's usual redemption procedures and will
mail a check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by
writing to the Transfer Agent. A Plan may also be terminated at
any time by the Transfer Agent upon receiving directions to that
effect from the Fund. The Transfer Agent will also terminate a
Plan upon receipt of evidence satisfactory to it of the death or
legal incapacity of the Planholder. Upon termination of a Plan by
the Transfer Agent or the Fund, shares that have not been redeemed
from the account will be held in uncertificated form in the name of
the Planholder, and the account will continue as a dividend-reinvestment,
uncertificated account unless and until proper
instructions are received from the Planholder or his or her
executor or guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt,
the Planholder may request issuance of a portion of the shares in
certificated form. Upon written request from the Planholder, the
Transfer Agent will determine the number of shares for which a
certificate may be issued without causing the withdrawal checks to
stop because of exhaustion of uncertificated shares needed to
continue payments. However, should such uncertificated shares
become exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the
Fund, the Planholder will be deemed to have appointed any successor
transfer agent to act as agent in administering the Plan.
How To Exchange Shares
As stated in the Prospectus, shares of a particular class of
Oppenheimer funds having more than one class of shares may be
exchanged only for shares of the same class of other Oppenheimer
funds. Please see their prospectuses for additional information.
Shares of the Oppenheimer funds that have a single class without a
class designation are deemed "Class A" shares for this purpose.
All of the Oppenheimer funds offer Class A, Class B and Class C
shares except Oppenheimer Money Market Fund, Inc., Centennial Money
Market Trust, Centennial Tax-Exempt Trust, Centennial Money Market
Trust, Centennial Government Trust, Centennial New York Tax Exempt
Trust, Centennial California Tax-Exempt Trust, Centennial America
Fund, L.P., and Daily Cash Accumulation Fund, Inc., which only
offer Class A shares and Oppenheimer Main Street California
Municipal Fund which only offers Class A and Class B shares (Class
B and Class C shares of Oppenheimer Cash Reserves are generally
available only by exchange from the same class of shares of other
Oppenheimer funds or through OppenheimerFunds sponsored 401(k)
plans). A current list showing which funds offer which classes can
be obtained by calling the distributor at 1-800-525-7048.
For accounts established on or before March 8, 1996 holding
Class M shares of Oppenheimer Bond Fund for Growth, Class M shares
can be exchanged only for Class A shares of other Oppenheimer
funds, including Rochester Fund Municipals and Limited Term New
York Municipal Fund. Class A shares of Rochester Fund Municipals
or Limited Term New York Municipal Fund acquired on the exchange of
Class M shares of Oppenheimer Bond Fund for Growth may be exchanged
for Class M shares of that fund. For accounts of Oppenheimer Bond
Fund for Growth established after March 8, 1996, Class M shares may
be exchanged for Class A shares of other Oppenheimer funds except
Rochester Fund Municipals and Limited-Term New York Municipals.
Exchanges to Class M shares of Oppenheimer Bond Fund for Growth are
permitted from Class A shares of Oppenheimer Money Market Fund,
Inc. or Oppenheimer Cash Reserves that were acquired by exchange
from Class M shares. Otherwise no exchanges of any class of any
Oppenheimer fund into Class M shares are permitted.
Class A shares of Oppenheimer funds may be exchanged at net
asset value for shares of any Money Market Fund. Shares of any
Money Market Fund purchased without a sales charge may be exchanged
for shares of Oppenheimer funds offered with a sales charge upon
payment of the sales charge (or, if applicable, may be used to
purchase shares of Oppenheimer funds subject to a contingent
deferred sales charge). However, shares of Oppenheimer Money
Market Fund, Inc. purchased with the redemption proceeds of shares
of other mutual funds (other than funds managed by the Manager or
its subsidiaries) redeemed within the 12 months prior to that
purchase may subsequently be exchanged for shares of other
Oppenheimer funds without being subject to an initial or contingent
deferred sales charge, whichever is applicable. To qualify for
that privilege, the investor or the investor's dealer must notify
the Distributor of eligibility for this privilege at the time the
shares of Oppenheimer Money Market Fund, Inc. are purchased, and,
if requested, must supply proof of entitlement to this privilege.
Shares of the Fund acquired by reinvestment of dividends or
distributions from any other of the Oppenheimer funds (except
Oppenheimer Cash Reserves) or from any unit investment trust for
which reinvestment arrangements have been made with the Distributor
may be exchanged at net asset value for shares of any of the
Oppenheimer funds. No contingent deferred sales charge is imposed
on exchanges of shares of any class purchased subject to a
contingent deferred sales charge. However, when Class A shares
acquired by exchange of Class A shares of other Oppenheimer funds
purchased subject to a Class A contingent deferred sales charge are
redeemed within 18 months of the end of the calendar month of the
initial purchase of the exchanged Class A shares, the Class A
contingent deferred sales charge is imposed on the redeemed shares
(see "Class A Contingent Deferred Sales Charge" in the Prospectus).
The Class B contingent deferred sales charge is imposed on Class B
shares acquired by exchange if they are redeemed within six years
of the initial purchase of the exchanged Class B shares. The Class
C contingent deferred sales charge is imposed on Class C shares
acquired by exchange if they are redeemed within 12 months of the
initial purchase of the exchanged Class C shares.
When Class B or Class C shares are redeemed to effect an
exchange, the priorities described in "How To Buy Shares" in the
Prospectus for the imposition of the Class B and Class C contingent
deferred sales charges will be followed in determining the order in
which the shares are exchanged. Shareholders should take into
account the effect of any exchange on the applicability and rate of
any contingent deferred sales charge that might be imposed in the
subsequent redemption of remaining shares. Shareholders owning
shares of more than one class must specify whether they intend to
exchange Class A, Class B or Class C shares.
The Fund reserves the right to reject telephone or written
exchange requests submitted in bulk by anyone on behalf of more
than one account. The Fund may accept requests for exchanges of up
to 50 accounts per day from representatives of authorized dealers
that qualify for this privilege. In connection with any exchange
request, the number of shares exchanged may be less than the number
requested if the exchange or the number requested would include
shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information or would include shares covered
by a share certificate that is not tendered with the request. In
those cases, only the shares available for exchange without
restriction will be exchanged.
When exchanging shares by telephone, a shareholder must either
have an existing account in, or obtain and acknowledge receipt of
a prospectus of, the fund to which the exchange is to be made. For
full or partial exchanges of an account made by telephone, any
special account features such as Asset Builder Plans, Automatic
Withdrawal Plans and retirement plan contributions will be switched
to the new account unless the Transfer Agent is instructed
otherwise. If all telephone lines are busy (which might occur, for
example, during periods of substantial market fluctuations),
shareholders might not be able to request exchanges by telephone
and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business
day the Transfer Agent receives an exchange request in proper form
(the "Redemption Date"). Normally, shares of the fund to be
acquired are purchased on the Redemption Date, but such purchases
may be delayed by either fund up to five business days if it
determines that it would be disadvantaged by an immediate transfer
of the redemption proceeds. The Fund reserves the right, in its
discretion, to refuse any exchange request that may disadvantage it
(for example, if the receipt of multiple exchange requests from a
dealer might require the disposition of portfolio securities at a
time or at a price that might be disadvantageous to the Fund).
The different Oppenheimer funds available for exchange have
different investment objectives, policies and risks, and a
shareholder should assure that the Fund selected is appropriate for
his or her investment and should be aware of the tax consequences
of an exchange. For federal income tax purposes, an exchange
transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. "Reinvestment Privilege," above,
discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and
the Transfer Agent are unable to provide investment, tax or legal
advice to a shareholder in connection with an exchange request or
any other investment transaction.
Dividends, Capital Gains and Taxes
Tax Status of the Fund's Dividends and Distributions. The Federal
tax treatment of the Fund's dividends and capital gains
distributions is explained in the Prospectus under the caption
"Dividends, Capital Gains and Taxes." Special provisions of the
Internal Revenue Code govern the eligibility of the Fund's
dividends for the dividends-received deduction for corporate
shareholders. Long-term capital gains distributions are not
eligible for the deduction. In addition, the amount of dividends
paid by the Fund which may qualify for the deduction is limited to
the aggregate amount of qualifying dividends that the Fund derives
from its portfolio investments that the Fund has held for a minimum
period, usually 46 days. A corporate shareholder will not be
eligible for the deduction on dividends paid on Fund shares held
for 45 days or less. To the extent the Fund's dividends are
derived from gross income from option premiums, interest income or
short-term gains from the sale of securities or dividends from
foreign corporations, those dividends will not qualify for the
deduction.
Under the Internal Revenue Code, by December 31 each year, the
Fund must distribute 98% of its taxable investment income earned
from January 1 through December 31 of that year and 98% of its
capital gains realized in the period from November 1 of the prior
year through October 31 of the current year, or else the Fund must
pay an excise tax on the amounts not distributed. While it is
presently anticipated that the Fund will meet those requirements,
the Board of Directors and the Manager might determine in a
particular year that it would be in the best interest of
shareholders for the Fund not to make such distributions at the
required levels and to pay the excise tax on the undistributed
amounts. That would reduce the amount of income or capital gains
available for distribution to shareholders.
If the Fund qualifies as a "regulated investment company"
under the Internal Revenue Code, it will not be liable for Federal
income taxes on amounts paid by it as dividends and distributions.
The Fund qualified during its last fiscal year, and intends to
qualify in current and future years, but reserves the right not to
do so. The Internal Revenue Code contains a number of complex
tests to determine whether the Fund will qualify, and the Fund
might not meet those tests in a particular year. For example, if
the Fund derives 30% or more of its gross income from the sale of
securities held less than three months, it may fail to qualify (see
"Tax Aspects of Covered Calls and Hedging Instruments," above). If
it did not so qualify, the Fund would be treated for tax purposes
as an ordinary corporation and receive no tax deduction for
payments made to shareholders.
The amount of a class's distributions may vary from time to
time depending on market conditions, the composition of the Fund's
portfolio, and expenses borne by the Fund or borne separately by a
class, as described in "Alternative Sales Arrangements -- Class A,
Class B and Class C Shares," above. Dividends are calculated in
the same manner, at the same time and on the same day for shares of
each class. However, dividends on Class B and Class C shares are
expected to be lower as a result of the asset-based sales charge on
Class B and Class C shares, and Class B and Class C dividends will
also differ in amount as a consequence of any difference in net
asset value between the classes.
Dividends, distributions and the proceeds of the redemption of
Fund shares represented by checks returned to the Transfer Agent by
the Postal Service as undeliverable will be invested in shares of
Oppenheimer Money Market Fund, Inc., as promptly as possible after
the return of such checks to the Transfer Agent, to enable the
investor to earn a return on otherwise idle funds.
Dividend Reinvestment in Another Fund. Shareholders of the Fund
may elect to reinvest all dividends and/or capital gains
distributions in shares of the same class of any of the other
Oppenheimer funds listed in "Reduced Sales Charges," above, at net
asset value without sales charge. To elect this option, a
shareholder must notify the Transfer Agent in writing and must
have an existing account in the fund selected for reinvestment or
must obtain a prospectus for that fund and an application from the
Distributor to establish an account. The investment will be made
at the net asset value per share in effect at the close of business
on the payable date of the dividend or distribution. Dividends
and/or distributions from certain of the Oppenheimer funds may be
invested in shares of this Fund on the same basis.
Additional Information About the Fund
The Custodian. The Bank of New York acts as custodian of the
assets of the Fund. The Fund's cash balances in excess of $100,000
are not protected by Federal deposit insurance. Such uninsured
balances may be substantial.
Independent Accountants. Price Waterhouse LLP are the
independent accountants of the Fund. Their services include
examining the annual financial statements of the Fund as well as
other related services.
<PAGE>
Appendix A
Corporate Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
<PAGE>
Food
Gas Transmission*
Gas Utilities*
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking
<PAGE>
_________________
* For purposes of the Fund's investment policy not to concentrate
in securities of issuers in the same industry, gas utilities and
gas transmission utilities each will be considered a separate
industry.
<PAGE>
Oppenheimer Quest Capital Value Fund, Inc.
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Sub-Adviser
OpCap Advisors
One World Financial Center
New York, New York 10281
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Accountants
Price Waterhouse LLP
950 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
<PAGE>
QUEST FOR VALUE DUAL PURPOSE FUND, INC.
Part C
Other Information
Item 24. Financial Statements and Exhibits
- ------- ---------------------------------
(a) Financial Statements:
--------------------
(1) Financial Highlights - See Parts A and B: To be filed
by Amendment.
(2) Independent Accountants' Report - See Part B: To be
filed by Amendment.
(3) Statement of Investments at 12/31/96 (audited)- See Part
B: To be filed by Amendment.
(4) Statement of Assets and Liabilities at 12/31/96
(audited)- See Part B: To be filed by Amendment.
(5) Statement of Operations at 12/31/96 (audited) - See Part
B: To be filed by Amendment.
(6) Statement of Changes in Net Assets at 12/31/96 (audited)
- - See Part B: To be filed by Amendment.
(7) Notes to Financial Statements at 12/31/96 (audited) -
See Part B: To be filed by Amendment.
(8) Independent Accountants' Consent: To be filed by
Amendment.
(b)Exhibits:
--------
(1)Articles of Amendment and Restatement of the Fund: Filed
herewith.
(2)By Laws: Filed herewith.
(3)Not Applicable.
(4)(i)Specimen Class A Share Certificate: Filed herewith.
(ii) Specimen Class B Share Certificate: Filed herewith.
(iii)Specimen Class C Share Certificate:
Filed herewith.
(5)(a)Form of Investment Advisory Agreement: Filed herewith.
(b)Form of Subadvisory Agreement: Filed herewith.
(6)(a) Form of General Distributor s Agreement: Filed herewith.
(b)(1) Form of Dealer Agreement of OppenheimerFunds
Distributor, Inc.: Filed with Post-Effective Amendment No. 14 of
Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850), 9/30/94,
and incorporated herein by reference.
(2) Form of OppenheimerFunds Distributor, Inc. Broker
Agreement: Filed with Post-Effective Amendment No. 14 of
Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850), 9/30/94,
and incorporated herein by reference.
(3) Form of OppenheimerFunds Distributor, Inc. Agency
Agreement: Filed with Post-Effective Amendment No. 14 of
Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850), 9/30/94,
and incorporated herein by reference.
(4)Broker Agreement between OppenheimerFunds Distributor,
Inc. and Newbridge Securities dated 10/1/86: Filed with Post-Effective
Amendment No. 25 of Oppenheimer Special Fund (Reg. No. 2-45272), 11/1/86,
refiled with Post-Effective Amendment No. 45 of
Oppenheimer Special Fund (Reg. No. 2-45272), 8/22/94, pursuant to
Item 102 of Regulation S-T, and incorporated herein by reference.
(7)Not Applicable.
(8)Custody Agreement: To be filed by Amendment.
(9)Not Applicable.
(10)(a) Opinion and consent of counsel as to the legality of the
Capital Shares previously registered, indicating whether they will
when sold be legally issued, fully paid and non-assessable:
Previously filed as Exhibit 10 to Pre-Effective Amendment No.1 and
refiled herewith pursuant to Item 102 of Regulation S-T, and
incorporated herein by reference.
(b) Opinion and consent of counsel as to the legality of the
securities being registered, indicating whether they will when sold
be legally issued, fully-paid and non-assessable: To be filed by
Amendment.
(11)Not Applicable.
(12)Not Applicable.
(13)(a) Investment Letter of Quest for Value Advisors, Inc.:
Previously filed as Exhibit 1 to Post-Effective Amendment No. 1 and
refiled herewith pursuant to Item 102 or Regulation S-T, and
incorporated herein by reference.
(b) Investment Letter of OppenheimerFunds, Inc.: TO be filed
by Amendment.
(14)(i) Form of Individual Retirement Account Trust Agreement:
Filed as Exhibit 14 of Post-Effective Amendment No. 21 of
Oppenheimer U.S. Government Trust (Reg. No. 2-76645), 8/25/93, and
incorporated herein by reference.
(ii) Form of prototype Standardized and Non-Standardized
Profit-Sharing Plan and Money Purchase Pension Plan for self-employed
persons and corporations: Filed with Post-Effective
Amendment No. 3 of Oppenheimer Global Growth & Income Fund (File
No. 33-33799), 1/31/92, and refiled with Post-Effective Amendment
No. 7 to the Registration Statement of Oppenheimer Global Growth &
Income Fund (Reg. No. 33-33799), 12/1/94, pursuant to Item 102 of
Regulation S-T, and incorporated herein by reference.
(iii) Form of Tax-Sheltered Retirement Plan and Custody
Agreement for employees of public schools and tax-exempt
organizations: Filed with Post-Effective Amendment No. 47 to the
Registration Statement of Oppenheimer Growth Fund (Reg. No. 2-45272),
10/21/94, and incorporated herein by reference.
(iv) Form of Simplified Employee Pension IRA: Filed with
Post-Effective Amendment No. 42 to the Registration Statement of
Oppenheimer Equity Income Fund (Reg. No. 2-33043), 10/28/94, and
incorporated herein by reference.
(v) Form of SAR-SEP Simplified Employee Pension IRA: Filed
with Post-Effective Amendment No. 15 to the Registration Statement
of Oppenheimer Mortgage Income Fund, (File No. 33-6614), 2/20/94,
and incorporated herein by reference.
(vi) Form of Prototype 401(k) plan: Filed with Post-Effective
Amendment No. 7 to the Registration Statement of Oppenheimer
Strategic Income & Growth Fund (33-47378), 9/28/95, and
incorporated herein by reference.
(15)(a) Form of Distribution and Service Plan and Agreement with
respect to Class A shares: Filed herewith.
(b) Form of Distribution and Service Plan and Agreement with
respect to Class B shares: Filed herewith.
(c) Form of Distribution and Service Plan and Agreement with
respect to Class C shares: Filed herewith.
(16) Performance Computation Schedule: To be filed by
Amendment.
(17)(1) Financial Data Schedule for Class A shares: To be
filed by Amendment.
(2) Financial Data Schedule for Class B shares: Not
applicable.
(3) Financial Data Schedule for Class C shares: Not
applicable.
(18)Oppenheimer Funds Multiple Class Plan under Rule 18f-3
dated 10/24/95: Filed with Post-Effective Amendment No. 12 to the
Registration Statement of Oppenheimer California Tax-Exempt Fund
(33-23566), 11/1/95, and incorporated herein by reference.
-- Powers of Attorney and Certified Board Resolutions
signed by Registrant's Directors: To be filed by Amendment.
Item 25. Persons Controlled by or Under Common Control with
Registrant
- ------- ---------------------------------------------------
No person is presently controlled by or under common control
with Registrant.
Item 26. Number of Holders of Securities
- ------- -------------------------------
Number of Record
Holders as of
Title of Class __________, 1997
- -------------- -----------------
Shares of Beneficial Interest
Class A _________________
Class B _________________
Class C _________________
Item 27. Indemnification
- ------- ---------------
Reference is made to the provisions of Article SEVEN of
Registrant's Articles of Amendment and Restatement filed as Exhibit
24(b)(1) to this Registration Statement.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of Registrant pursuant to the foregoing
provisions or otherwise, Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by Registrant of expenses incurred or paid
by a director, officer or controlling person of Registrant in the
successful defense of any action, suit or proceeding) is asserted
by such trustee, officer or controlling person, Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933
and will be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment
Adviser
- -------- ---------------------------------------------------
(a) OppenheimerFunds, Inc. is the investment adviser
of the Registrant; it and certain subsidiaries and affiliates act
in the same capacity to other registered investment companies as
described in Parts A and B hereof and listed in Item 28(b) below.
The directors and executive officers of OpCap Advisors, their
positions and their other business affiliations and business
experience for the past two years are listed in Item 28(b) below.
(b) There is set forth below information as to any
other business, profession, vocation or employment of a substantial
nature in which each officer and director of OppenheimerFunds, Inc.
is, or at any time during the past two fiscal years has been,
engaged for his/her own account or in the capacity of director,
officer, employee, partner or trustee.
Name & Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- ------------------------------
Mark J.P. Anson,
Vice President Vice President of Oppenheimer Real Asset
Management, Inc. ("ORAMI"); formerly Vice
President of Equity Derivatives at Salomon
Brothers, Inc.
Peter M. Antos,
Senior Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; a Chartered Financial
Analyst; Senior Vice President of HarbourView;
prior to March, 1996 he was the senior equity
portfolio manager for the Panorama Series Fund,
Inc. (the "Company") and other mutual funds and
pension funds managed by G.R. Phelps & Co. Inc.
("G.R. Phelps"), the Company's former investment
adviser, which was a subsidiary of Connecticut
Mutual Life Insurance Company; was also
responsible for managing the common stock
department and common stock investments of
Connecticut Mutual Life Insurance Co.
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
Bruce Bartlett,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; formerly a Vice President and
Senior Portfolio Manager at First of America
Investment Corp.
Ellen Batt,
Assistant Vice President None
Kathleen Beichert,
Assistant Vice President Formerly employed by Smith Barney, Inc.
David Bernard,
Vice President Previously a Regional Sales Director for
Retirement Plan Services at Charles Schwab &
Co., Inc.
Robert J. Bishop,
Vice President Assistant Treasurer of the Oppenheimer Funds
(listed below); previously a Fund Controller for
OppenheimerFunds, Inc. (the "Manager").
George Bowen,
Senior Vice President &
Treasurer Treasurer of the New York-based Oppenheimer
Funds; Vice President, Assistant Secretary and
Treasurer of the Denver-based Oppenheimer Funds.
Vice President and Treasurer of OppenheimerFunds
Distributor, Inc. (the "Distributor") and
HarbourView Asset Management Corporation
("HarbourView"), an investment adviser
subsidiary of the Manager; Senior Vice
President, Treasurer, Assistant Secretary and a
director of Centennial Asset Management
Corporation ("Centennial"), an investment
adviser subsidiary of the Manager; Vice
President, Treasurer and Secretary of
Shareholder Services, Inc. ("SSI") and
Shareholder Financial Services, Inc. ("SFSI"),
transfer agent subsidiaries of the Manager;
Director, Treasurer and Chief Executive Officer
of MultiSource Services, Inc.; Vice President
and Treasurer of Oppenheimer Real Asset
Management, Inc.; President, Treasurer and
Director of Centennial Capital Corporation; Vice
President and Treasurer of Main Street Advisers.
Scott Brooks,
Assistant Vice President None.
Susan Burton,
Assistant Vice President Previously a Director of Educational Services
for H.D. Vest Investment Securities, Inc.
Michael A. Carbuto,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; Vice President of Centennial.
Ruxandra Chivu,
Assistant Vice President None.
O. Leonard Darling,
Executive Vice President Formerly Co-Director of Fixed Income for State
Street Research & Management Co.
Robert A. Densen,
Senior Vice President None.
Robert Doll, Jr.,
Executive Vice President and
Director An officer and/or portfolio manager of certain
Oppenheimer funds.
John Doney,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds.
Andrew J. Donohue,
Executive Vice President,
General Counsel and Director Secretary of the New York-based Oppenheimer
Funds; Vice President and Secretary of the
Denver-based Oppenheimer Funds; Secretary of the
Oppenheimer Quest and Oppenheimer Rochester
Funds; Executive Vice President, Director and
General Counsel of the Distributor; President
and a Director of Centennial; Chief Legal
Officer and a Director of MultiSource Services,
Inc.; President and a Director of Oppenheimer
Real Asset Management, Inc.; Executive Vice
President, General Counsel and Director of SFSI
and SSI; formerly Senior Vice President and
Associate General Counsel of the Manager and the
Distributor.
George Evans,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds.
Scott Farrar,
Vice President Assistant Treasurer of the New York-based and
Denver-based Oppenheimer funds.
Katherine P. Feld,
Vice President and
Secretary Vice President and Secretary of OppenheimerFunds
Distributor, Inc.; Secretary of HarbourView
Asset Management Corporation, MultiSource
Services, Inc. and Centennial Asset Management
Corporation; Secretary, Vice President and
Director of Centennial Capital Corporation; Vice
President and Secretary of ORAMI.
Ronald H. Fielding,
Senior Vice President;
Chairman:
Rochester Division An officer, Director and/or portfolio manager of
certain Oppenheimer funds. Formerly Chairman of
the Board and Director of Rochester Fund
Distributors, Inc. ("RFD"), President and
Director of Fielding Management Company, Inc.
("FMC"), President and Director of Rochester
Capital Advisors, Inc. ("RCAI"), Managing
Partner of Rochester Capital Advisors, L.P.,
President and Director of Rochester Fund
Services, Inc. ("RFS"), President and Director
of Rochester Tax Managed Fund, Inc.
John Fortuna,
Vice President None.
Jon S. Fossel,
Chairman of the Board Director of OAC, the Manager's parent holding
company; President, CEO and a director of
HarbourView; a director of SSI and SFSI;
President, Director, Trustee, and Managing
General Partner of the Denver-based Oppenheimer
Funds; President and Chairman of the Board of
Main Street Advisers, Inc.; formerly Chief
Executive Officer of the Manager.
Patricia Foster,
Vice President An officer of certain Oppenheimer funds;
Secretary and General Counsel of Rochester
Capital Advisors, L.P. and Secretary of
Rochester Tax Managed Fund, Inc.
Robert G. Galli,
Vice Chairman Trustee of the New York-based
Oppenheimer Funds;
Vice President and Counsel of OAC; formerly he
held the following positions: Vice President and
a director of HarbourView and Centennial, a
director of SFSI and SSI, an officer of other
Oppenheimer Funds.
Linda Gardner,
Assistant Vice President None.
Janelle Gellerman,
Assistant Vice President None.
Jill Glazerman, None.
Assistant Vice President
Ginger Gonzalez,
Vice President, Director of
Marketing Communications Formerly 1st Vice President / Director of
Graphic and Print Communications for Shearson
Lehman Brothers.
Mildred Gottlieb,
Assistant Vice President Formerly served as a Strategy Consultant for the
Private Client Division of Merrill Lynch.
Caryn Halbrecht,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; formerly Vice President of
Fixed Income Portfolio Management at Bankers
Trust.
Barbara Hennigar,
Executive Vice President and
President and Chief Executive
Officer of OppenheimerFunds
Services, a division of
the Manager President and Director of SFSI; President and
Chief Executive Officer of SSI.
Dorothy Hirshman,
Assistant Vice President None.
Alan Hoden,
Vice President None.
Merryl Hoffman,
Vice President None.
Scott T. Huebl,
Assistant Vice President None.
Richard Hymes,
Assistant Vice President None.
Jane Ingalls,
Assistant Vice President Formerly a Senior Associate with Robinson,
Lake/Sawyer Miller.
Ronald Jamison,
Vice President Formerly Vice President and Associate General
Counsel at Prudential Securities, Inc.
Frank Jennings,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds. Formerly a Managing Director
of Global Equities at Paine Webber's Mitchell
Hutchins division.
Heidi Kagan,
Assistant Vice President None.
Thomas W. Keffer,
Vice President Formerly Senior Managing Director of Van Eck
Global.
Avram Kornberg,
Vice President Formerly a Vice President with Bankers Trust.
Paul LaRocco,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds. Formerly a Securities Analyst
for Columbus Circle Investors.
Michael Levine,
Assistant Vice President None.
Stephen F. Libera,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; a Chartered Financial
Analyst; a Vice President of HarbourView; prior
to March, 1996 he was the senior bond portfolio
manager for Panorama Series Fund, Inc., other
mutual funds and pension accounts managed by
G.R. Phelps; was also responsible for managing
the public fixed-income securities department at
Connecticut Mutual Life Insurance Co.
Mitchell J. Lindauer,
Vice President None.
Loretta McCarthy,
Executive Vice President None.
Bridget Macaskill,
President, Chief Executive
Officer
and Director President, Director and Trustee of the New York-based
and the Denver-based Oppenheimer funds;
President and a Director of OAC, HarbourView and
Oppenheimer Partnership Holdings, Inc.; Director
of ORAMI; Chairman and Director of SSI; a
Director of Oppenheimer Real Asset Management,
Inc.
Timothy Martin,
Assistant Vice President Formerly Vice President, Mortgage Trading, at
S.N. Phelps & Co., Salomon Brothers, and Kidder
Peabody.
Sally Marzouk,
Vice President None.
Lisa Migan,
Assistant Vice President, None.
Robert J. Milnamow,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds. Formerly a Portfolio Manager
with Phoenix Securities Group.
Denis R. Molleur,
Vice President None.
Kenneth Nadler,
Vice President None.
David Negri,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds.
Barbara Niederbrach,
Assistant Vice President None.
Robert A. Nowaczyk,
Vice President None.
Robert E. Patterson,
Senior Vice President An officer and/or portfolio manager of certain
Oppenheimer funds.
John Pirie,
Assistant Vice President Formerly a Vice President with Cohane Rafferty
Securities, Inc.
Tilghman G. Pitts III,
Executive Vice President Chairman and Director of the Distributor.
Jane Putnam,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds. Formerly Senior Investment
Officer and Portfolio Manager with Chemical
Bank.
Russell Read,
Vice President Consultant for Prudential Insurance on behalf of
the General Motors Pension Plan.
Thomas Reedy,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds. Formerly a Securities Analyst
for the Manager.
David Robertson,
Vice President None.
Adam Rochlin,
Vice President Formerly a Product Manager for Metropolitan Life
Insurance Company.
Michael S. Rosen
Vice President; President:
Rochester Division An officer and/or portfolio manager of certain
Oppenheimer funds. Formerly Vice President of
RFS, President and Director of RFD, Vice
President and Director of FMC, Vice President
and director of RCAI, General Partner of RCA, an
officer and/or portfolio manager of certain
Oppenheimer funds.
David Rosenberg,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds.
Richard H. Rubinstein,
Senior Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; formerly Vice President and
Portfolio Manager/Security Analyst for
Oppenheimer Capital Corp., an investment
adviser.
Lawrence Rudnick,
Assistant Vice President Formerly Vice President of Dollar Dry Dock Bank.
James Ruff,
Executive Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Stephanie Seminara,
Vice President Formerly Vice President of Citicorp Investment
Services.
Diane Sobin,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; formerly a Vice President and
Senior Portfolio Manager for Dean Witter
InterCapital, Inc.
Richard A. Soper, None.
Assistant Vice President
Nancy Sperte,
Executive Vice President None.
Donald W. Spiro,
Chairman Emeritus Vice Chairman and Trustee of the New York-based
Oppenheimer Funds; formerly Chairman of the
Manager and the Distributor.
Arthur Steinmetz,
Senior Vice President An officer and/or portfolio manager of certain
Oppenheimer funds.
Ralph Stellmacher,
Senior Vice President An officer and/or portfolio manager of certain
Oppenheimer funds.
John Stoma,
Senior Vice President,
Director Retirement Plans Formerly Vice President of U.S. Group Pension
Strategy and Marketing for Manulife Financial.
Michael C. Strathearn,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; a Chartered Financial
Analyst; a Vice President of HarbourView; prior
to March, 1996 he was an equity portfolio
manager for Panorama Series Fund, Inc. and other
mutual funds and pension accounts managed by
G.R. Phelps.
James C. Swain,
Vice Chairman of the Board
Chairman, CEO and Trustee, Director or Managing
Partner of the Denver-based Oppenheimer Funds;
President and a Director of Centennial; formerly
President and Director of OAMC, and Chairman of
the Board of SSI.
James Tobin,
Vice President None.
Jay Tracey,
Vice President Vice President of the Manager; Vice President
and Portfolio Manager of Oppenheimer Discovery
Fund, Oppenheimer Global Emerging Growth Fund
and Oppenheimer Enterprise Fund. Formerly
Managing Director of Buckingham Capital
Management.
Gary Tyc,
Vice President, Assistant
Secretary and Assistant
Treasurer Assistant Treasurer of the Distributor and SFSI.
Ashwin Vasan,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds.
Valerie Victorson,
Vice President None.
Dorothy Warmack,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds.
Jerry A. Webman,
Senior Vice President Director of New York-based tax-exempt fixed
income Oppenheimer Funds; Formerly Managing
Director and Chief Fixed Income Strategist at
Prudential Mutual Funds.
Christine Wells,
Vice President None.
Kenneth B. White,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; a Chartered Financial
Analyst; Vice President of HarbourView; prior to
March, 1996 he was an equity portfolio manager
for Panorama Series Fund, Inc. and other mutual
funds and pension funds managed by G.R. Phelps.
William L. Wilby,
Senior Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; Vice President of
HarbourView.
Carol Wolf,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; Vice President of Centennial;
Vice President, Finance and Accounting and
member of the Board of Directors of the Junior
League of Denver, Inc.
Robert G. Zack,
Senior Vice President and
Assistant Secretary Associate General Counsel of the Manager;
Assistant Secretary of the Oppenheimer Funds;
Assistant Secretary of SSI, SFSI; an officer of
other Oppenheimer Funds.
Arthur J. Zimmer,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; Vice President of Centennial.
The Oppenheimer Funds include the New York-based Oppenheimer Funds,
Oppenheimer Quest Funds, the Denver-based Oppenheimer Funds, and
the Rochester-based Oppenheimer Funds, set forth below:
New York-based Oppenheimer Funds
- --------------------------------
Oppenheimer Asset Allocation Fund
Oppenheimer California Municipal Fund
Oppenheimer Discovery Fund
Oppenheimer Developing Markets Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Municipal Trust
Oppenheimer New York Municipal Fund
Oppenheimer Fund
Oppenheimer Series Fund, Inc.
Oppenheimer Target Fund
Oppenheimer Municipal Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer World Bond Fund
Oppenheimer Quest Funds
- -------------------------
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest For Value Funds
Denver-based Oppenheimer Funds
- ------------------------------
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Municipal Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Rochester-based Oppenheimer Funds
- ---------------------------------
Bond Fund Series - Oppenheimer Bond Fund For
Growth
Rochester Fund Municipals
Rochester Portfolio Series - Limited Term
New York Municipal Fund
The address of OppenheimerFunds, Inc., the New York-based
Oppenheimer Funds, the Oppenheimer Quest Funds, OppenheimerFunds
Distributor, Inc., HarbourView Asset Management Corp., Oppenheimer
Partnership Holdings, Inc., and Oppenheimer Acquisition Corp. is
Two World Trade Center, New York, New York 10048-0203.
The address of the Denver-based Oppenheimer Funds, Shareholder
Financial Services, Inc., Shareholder Services, Inc.,
OppenheimerFunds Services, Centennial Asset Management Corporation,
Centennial Capital Corp., Oppenheimer Real Asset Management, Inc.,
MultiSource Services, Inc. and Oppenheimer Real Asset Management,
Inc. is 3410 South Galena Street, Denver, Colorado 80231.
The address of the Rochester-based funds is 350 Linden Oaks,
Rochester, New York 14625-2807.
Name & Current Position with Other Business and Connections
OpCap Advisors During the Past Two Years
- ------------------------ ------------------------------
Robert J. Bluestone,
Director of Fixed Income
Management Managing Director of Oppenheimer Capital;
Director of Oppenheimer Capital Trust Company.
Pierre Dariron,
Portfolio Manager President, Oppenheimer Capital International
Division.
Thomas E. Duggan,
General Counsel & Secretary
Managing Director & General Counsel of
Oppenheimer Capital; Assistant Secretary of
Oppenheimer Financial Corp; General Counsel of
Oppenheimer Capital Limited.
Linda S. Ferrante,
Portfolio Manager Managing Director of Oppen-heimer Capital.
Bernard H. Garil,
President Senior Vice President of Oppen-heimer Capital
and Oppenheimer & Co., Inc; Director of
Oppenheimer Capital Trust Company.
John Giusio,
Portfolio Manager Vice President of Oppenheimer Capital.
<PAGE>
Richard J. Glasebrook, II,
Portfolio Manager Managing Director of Oppenheimer Capital.
Colin Glinsman,
Portfolio Manager Senior Vice President of Oppen-heimer Capital.
Louis Goldstein,
Assistant Portfolio Manager Senior Vice President of Oppen-heimer Capital.
Matthew Greenwald,
Portfolio Manager Vice President of Oppenheimer Capital.
Vikki Y. Hanges,
Portfolio Manager Vice President of Oppenheimer Capital.
Joseph M. LaMotta,
Chairman Chairman and Chief Executive Officer of
Oppenheimer Capital; Director & Executive Vice
President of Oppenheimer Financial Corp. and
Oppenheimer Group, Inc.; General Partner of
Oppenheimer & Co., L.P.; Director of
Oppenheimer Capital Trust Company; Director
and President of Oppenheimer Capital Limited.
George A. Long,
Chief Investment Officer President of Oppenheimer Capital.
Elisa A. Mazen,
Portfolio Manager Vice President of Oppenheimer Capital
International Division.
Timothy McCormack,
Portfolio Manager Vice President of Oppenheimer Capital;
formerly Assistant Vice President of
Oppenheimer Capital.
<PAGE>
Susan Murphy,
President of an affiliate President of OCC Cash Management Services
Division and Oppenheimer Capital Trust
Company; Senior Vice President of Oppenheimer
Capital.
Eileen Rominger,
Portfolio Manager Managing Director of Oppenheimer Capital.
Sheldon M. Siegel,
Treasurer and Chief Financial
Officer Managing Director/Treaasurer Chief Financial
Officer of Oppenheimer Capital; Director of
Oppenheimer Capital Trust Company; Treasurer
and Chief Financial Officer of Oppenheimer
Capital Limited.
Jeffrey Whittington,
Portfolio Manager Senior Vice President of Oppenheimer Capital.
The address of OpCap Advisors is 200 Liberty Street, New York, New
York 10281.
For information as to the business, profession, vocation or
employment of a substantial nature of the officers and trustees of
Oppenheimer Capital, Oppenheimer Capital Trust Company, Oppenheimer
Capital Financial Corp., Oppenheimer Group, Inc., Oppenheimer &
Co., L.P. and Oppenheimer Capital Limited, reference is made to
Form ADV filed by OpCap Advisors, under the Investment Advisers Act
of 1940, which are incorporated herein by reference.
Item 29. Principal Underwriter
- -------- ---------------------
(a)OppenheimerFunds Distributor, Inc. is the Distributor of
Registrant's shares. It is also the Distributor of each of the
other registered open-end investment companies for which
OppenheimerFunds, Inc. is the investment adviser, as described in
Part A and B of this Registration Statement and listed in Item
28(b) above.
(b)The directors and officers of the Registrant's principal
underwriter are:
Positions and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- -------------
Susan P. Bader ++ Assistant Vice President None
Christopher Blunt Vice President None
38954 Plumbrook Drive
Farmington Hills, MI 48331
George Clarence Bowen+ Vice President & Treasurer
Vice President and
Treasurer of the NY-based Oppenheimer
funds / Vice President, Secretary
and Treasurer of the Denver-based Oppen-
heimer funds
Julie Bowers Vice President None
21 Dreamwold Road
Scituate, MA 02066
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Maryann Bruce* Senior Vice President - None
Director - Financial
Institution Div.
Robert Coli Vice President None
12 White Tail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce DeLeon Ave.
Decatur, GA 30030
Bill Coughlin Vice President None
34251/2 Irving Avenue So.
Minneapolis, MN 55408
Mary Crooks+ Senior Vice President None
Paul Delli-Bovi Vice President None
750 W. Broadway
Apt. 5M
Long Beach, NY 11561
E. Drew Devereaux ++ Assistant Vice President None
Andrew John Donohue* Executive Vice Secretary of President,
General the New York-
Counsel and Director based Oppenheimer funds
/ Vice President of the
Denver-based Oppenheimer
funds
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
Katherine P. Feld* Vice President & Secretary None
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding++ Vice President; Chairman:
Rochester Division None
Reed F. Finley Vice President - None
320 E. Maple, Ste. 254 Financial Institution Div.
Birmingham, MI 48009
Wendy Fishler* Vice President - None
Financial Institution Div.
Ronald R. Foster Senior Vice President None
139 Avant Lane
Cincinatti, OH 45249
Patricia Gadecki Vice President None
3906 Americana Drive
Tampa, FL 3334
Luiggino Galleto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President - None
5506 Bryn Mawr Financial Institution Div.
Dallas, TX 75209
Ralph Grant* Vice President/National None
Sales Manager - Financial
Institution Div.
Sharon Hamilton Vice President None
720 N. Juanita Ave. - #1
Redondo Beach, CA 90277
Carla Jiminez Vice President None
111 Rexford Court
Summerville, SC 29485
Mark D. Johnson Vice President None
7512 Cromwell Dr. Apt 1
Clayton, MO 63105
Michael Keogh* Vice President None
Richard Klein Vice President None
4011 Queen Avenue South
Minneapolis, MN 55410
Ilene Kutno* Vice President - None
Director - Regional Sales
Wayne A. LeBlang Senior Vice President - None
23 Fox Trail Director Eastern Div.
Lincolnshire, IL 60069
Dawn Lind Vice President - None
7 Maize Court Financial Institution Div.
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
John McDonough Vice President None
P.O. Box 760
50 Riverview Road
New Castle, NH 03854
Laura Mulhall* Senior Vice President - None
Director of Key Accounts
Timothy G. Mulligan ++ Vice President None
Charles Murray Vice President None
50 Deerwood Drive
Littleton, CO 80127
Wendy Murray Vice President None
114-B Larchmont Acres West
Larchmont, NY 10538
Joseph Norton Vice President None
2518 Fillmore Street
Apt. 1
San Francisco, CA 94115
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Randall Payne Vice President - None
1307 Wandering Way Dr. Financial Institution Div.
Charlotte, NC 28226
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice President None
1777 Larimer St. #807
Denver, CO 80202
Tilghman G. Pitts, III* Chairman & Director None
Elaine Puleo* Vice President - None
Financial Institution Div.,
Director -
Key Accounts
Minnie Ra Vice President - None
0895 Thirty-First Ave. Financial Institution Div.
Apt. 4
San Francisco, CA 94121
Michael Raso Vice President None
30 Hommocks Road
Apt. 30
Larchmont, NY 10538
John C. Reinhardt ++ Vice President None
Ian Robertson Vice President None
4204 Summit Way
Marietta, GA 30066
Michael S. Rosen++ Vice President, President:
Rochester Division None
Kenneth Rosenson Vice President None
3802 Knickerbocker Place
Apt. 3D
Indianapolis, IN 46240
James Ruff* President None
Timothy Schoeffler Vice President None
1717 Fox Hall Road
Washington, DC 20007
Mark Schon Vice President None
10483 E. Corrine Dr.
Scottsdale, AZ 85259
Michael Sciortino Vice President None
3114 Hickory Run
Sugarland, TX 77479
Robert Shore Vice President - None
26 Baroness Lane Financial Institution Div.
Laguna Niguel, CA 92677
Peggy Spilker ++ Vice President None
Michael Stenger Vice President None
8572 Saint Ives Place
Cincinnati, OH 45255
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
David G. Thomas Vice President - None
111 South Joliet Circle Financial Institution Div.
#304
Aurora, CO 80112
Philip Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Gary Paul Tyc+ Assistant Treasurer None
Mark Stephen Vandehey+ Vice President None
Gregory K. Wilson Vice President None
2 Side Hill Road
Westport, CT 06880
* Two World Trade Center, New York, NY 10048-0203
+ 3410 South Galena St., Denver, CO 80231
++ 350 Linden Oaks, Rochester, NY 14625-2807 (the "Rochester
Division")
(c) Not applicable.
Item 30. Location of Accounts and Records
- -------- --------------------------------
The accounts, books and other documents required to be
maintained by Registrant pursuant to Section 31(a) of the
Investment Company Act of 1940 and rules promulgated thereunder are
in the possession of OppenheimerFunds, Inc. at its offices at 3410
South Galena Street, Denver, Colorado 80231 and Two World Trade
Center, New York, New York 10048-0203
Item 31. Management Services
- ------- -------------------
Not Applicable.
Item 32. Undertakings
- ------- ------------
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or
the Investment Company Act of 1940, the Registrant has duly caused
this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York and
State of New York on the 22nd day of November, 1996.
QUEST FOR VALUE DUAL PURPOSE FUND, INC.
By: /s/ Joseph La Motta
Joseph La Motta, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
Signatures Title Date
/s/ Joseph La Motta Chairman of the November 22, 1996
______________________ Board of Directors
Joseph La Motta Principal Executive
Officer and President
/s/ Sheldon Siegel
______________________Treasurer and Principal November 22, 1996
Sheldon Siegel Financial and Accounting
Officer
/s/ Eugene Brody
______________________Director November 22, 1996
Eugene Brody
/s/ George D. Langdon
______________________Director November 22, 1996
George D. Langdon
/s/ George Loft
______________________Director November 22, 1996
George Loft
/s/ Pamela W. McCann
______________________Director November 22, 1996
Pamela W. McCann
/s/ Thomas W. Murnane
_____________________Director November 22, 1996
Thomas W. Murnane
/s/ Lawrence M. Sherman
______________________Director November 22, 1996
Lawrence M. Sherman
QUEST FOR VALUE DUAL PURPOSE FUND, INC.
Index to Exhibits
Exhibit
Number Description
- ------- -----------
24(b)(1) Articles of Amendment and Restatement
24(b)(2) By-Laws
24(b)(4)(i) Specimen Share Certificate for Class A shares
24(b)(4)(ii) Specimen Share Certificate for Class B shares
24(b)(4)(iii) Specimen Share Certificate for Class C shares
24(b)(5)(a) Form of Investment Advisory Agreement
24(b)(5)(b) Form of Subadvisory Agreement
24(b)(6)(a) Form of General Distributor Agreement
24(b)(10)(a) Opinion and Consent of Counsel
24(b)(13)(a) Investment Letter
24(b)(15)(a) Form of Distribution and Service Plan and
Agreements for Class A shares
24(b)(15)(b) Form of Distribution and Service
Plan and Agreement for Class B shares
24(c)(15)(c) Form of Distribution and Service
Plan and Agreement for Class C shares
ARTICLES OF AMENDMENT AND
RESTATEMENT OF
QUEST FOR VALUE DUAL PURPOSE FUND, INC.
Quest for Value Dual Purpose Fund, Inc., a Maryland
corporation (the "Corporation), hereby certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by:
Changing and reclassifying each of the shares of Common Stock
(par value $.01 per share) of the Corporation, which is issued at
the close of business on the effective date of this amendment, into
one share of Common Stock of the Oppenheimer Quest Capital Value
Fund Series of Common Stock (par value $.0001 per share) and by
transferring to the account designated "capital in excess of par
value" $.0099 for each share of Common Stock outstanding
immediately after the change and reclassification.
SECOND: The charter of the Corporation is hereby amended
and restated to read in its entirety as follows:
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
ARTICLES OF INCORPORATION
ARTICLE I
The name of the Corporation is Oppenheimer Quest Capital
Value Fund, Inc.
ARTICLE II
(a) The purposes for which the Corporation is formed and the
business and objects to be carried on and promoted by it are:
(1) To engage primarily in the business of investing,
reinvesting or trading in securities as an investment company
classified under the Investment Company Act of 1940 as an open-end,
management company.
(2) To engage in any one or more businesses or transactions,
or to acquire all or any portion of any entity engaged in any one
or more businesses or transactions, which the Board of Directors
may from time to time authorize or approve, whether or not related
to the business described elsewhere in this article or to any other
business at the time or theretofore engaged in by the Corporation.
(b) The foregoing enumerated purposes and objects shall be in
no way limited or restricted by reference to, or inference from,
the terms of any other clause of this or any other Article of the
Charter of the Corporation, and each shall be regarded as
independent; and they are intended to be and shall be construed as
powers as well as purposes and objects of the Corporation and shall
be in addition to and not in limitation of the general powers of
corporations under the General Laws of the State of Maryland.
ARTICLE III
The post office address of the principal office of the
Corporation in this State is c/o The Corporation Trust
Incorporated, 32 South Street, Baltimore, Maryland 21202.
ARTICLE IV
THE name of the resident agent of the Corporation in this
State is The Corporation Trust Incorporated, a corporation of this
state and the post office address of the resident agent is 32 South
Street, Baltimore, Maryland 21202.
ARTICLE V
(a) The total number of shares of stock of all classes and
series which the Corporation initially has authority to issue is
1,000,000,000 (one billion) shares of common stock (par value
$.0001 per share), amounting in aggregate par value to $100,000
(one hundred thousand). Of the authorized shares of capital stock
of the Corporation, 500,000,000 (five hundred million) shares are
further initially classified as a series of Common Stock designated
the "Oppenheimer Quest Capital Value Fund". This series of Common
Stock shall initially have three classes of shares, designated
Class A, Class B and Class C, consisting, until further changed, of
300,000,000 (three hundred million) Class A shares, 100,000,000(one
hundred million) Class B shares and 100,000,000 (one hundred
million) Class C shares. The Board of Directors may classify and
reclassify any unissued shares of capital stock by setting or
changing in any one or more respects the preferences, conversion or
other rights, voting powers, restrictions, limitations as to
dividends, qualifications, or terms or conditions of redemption of
such shares of stock.
(b) Unless otherwise prohibited by law, so long as the
Corporation is registered as an open-end company under the
Investment Company Act of 1940, the Board of Directors shall have
the power and authority, without the approval of the holders of any
outstanding shares, to increase or decrease the number of shares of
capital stock, or the number of shares of capital stock of any
class or series, that the Corporation has authority to issue.
(c) The following is a description of the preferences,
conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and
conditions of redemption of the Oppenheimer Quest Capital Value
Fund, and any additional series of Common Stock of the Corporation
(unless otherwise provided in the articles supplementary or other
charter document classifying or reclassifying such series) and
Class A, Class B and Class C of each series of Common Stock of the
Corporation.
(1) All consideration received by the Corporation from the
issue or sale of shares of a particular series of Common Stock,
together with all assets in which such consideration is invested
or reinvested, all income, earnings, profits and proceeds thereof,
including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from
any investment or reinvestment of such proceeds in whatever form
the same may be, shall irrevocably belong to that series for all
purposes and shall be so recorded upon the books of account of the
Corporation. Such consideration, assets, income, earnings, profits
and proceeds, together with any items allocated as provided in the
following sentence, are hereinafter referred to collectively as the
"assets belonging to" that series. In the event that there are any
assets, income, profits or proceeds which are not identifiable as
belonging to a particular series of Common Stock, such items shall
be allocated by or under the supervision of the Board of Directors
to and among one or more of the series of Common Stock from time to
time classified or reclassified, in such manner and on such basis
as the Board of Directors, in it sole discretion, deems fair and
equitable. Each such allocation shall be conclusive and binding
for all purposes. No holder of a particular series of Common Stock
shall have any right or claim against the assets belonging to any
other series, except as a holder of the shares of such other
series.
(2) The assets belonging to each series of Common Stock shall
be charged with the liabilities of the Corporation in respect of
that series and all expenses, costs, charges and reserves
attributable to that series. Any liabilities, expenses, costs,
charges or reserves of the Corporation which are attributable to
more than one series of Common Stock, or are not identifiable as
pertaining to any series, shall be allocated and charged by or
under the supervision of the Board of Directors to and among one or
more of the series of Common Stock from time to time classified or
reclassified, in such manner and on such basis as the Board of
Directors, in its sole discretion, deems fair and equitable. Each
such allocation shall be conclusive and binding for all purposes.
The liabilities, expenses, costs, charges and reserves charged to
a series of Common Stock are hereinafter referred to collectively
as the "liabilities of" that series. All persons who have extended
credit with respect to, or who have a claim or contract in respect
of, a particular series of Common Stock shall look only to the
assets belonging to that series for payment or satisfaction of such
credit, claim or contract.
(3) The net asset value per share of a particular series of
Common Stock shall be the quotient obtained by dividing the value
of the net assets of the series (being the value of the assets
belonging to that series less the liabilities of that series) by
the total number of shares of that series outstanding, all as
determined by or under the discretion of the Board of Directors in
accordance with generally accepted accounting principles and the
Investment Company Act of 1940. Subject to the applicable
provisions of the Investment Company Act of 1940, the Board of
Directors, in its sole discretion, may prescribe and shall set
forth in the by-laws of the Corporation, or in a duly adopted
resolution of the Board of Directors, such bases and times for
determining the current net asset value per share of each series of
Common Stock and the net income attributable to such series, as the
Board of Directors deems necessary or desirable. The Board of
Directors shall have full discretion, to the extent not
inconsistent with the Investment Company Act of 1940, to determine
whether any moneys or other assets received by the Corporation
shall be treated as income or capital and whether any item of
expense shall be charged to income or capital, and each such
determination shall be conclusive and binding for all purposes.
(4) Subject to the provisions of law and any preferences of
any class or series of stock from time to time classified or
reclassified, dividends, including dividends payable in shares of
another class or series of the Corporation's stock, may be paid on
a particular class or series of Common Stock of the Corporation at
such time and in such amounts as the Board of Directors may deem
advisable. Dividends and other distributions on the shares of a
particular series of Common Stock shall be paid only out of the
assets belonging to that series after providing for the liabilities
of that series.
(5) Each holder of Common Stock shall have one vote for each
share standing in his name on the books of the Corporation,
irrespective of the class or series thereof, and the exclusive
voting power for all purposes shall be vested in the holders of the
Common Stock. All classes and series of Common Stock shall vote
together as a single class; provided, however, that as to any
matter with respect to which a separate vote of a particular class
or series is required by the Investment Company Act of 1940 or the
Maryland General Corporation Law, such requirement shall apply
and, in that event, the other classes and series entitled to vote
on the matter shall vote together as a single class; and provided,
further, that the holders of a particular class or series of
Common Stock shall not be entitled to vote on any matter which does
not affect any interest of that class or series (as determined by
the Board of Directors in its sole discretion), including
liquidation of another class or series, except as otherwise
required by the Investment Company Act of 1940 or the Maryland
General Corporation Law.
(6) Each holder of Common Stock shall have the right to
require the Corporation to redeem all or any part of his shares of
any class or series at a redemption price equal to the current net
asset value per share of that class or series which is next
computed after receipt of a tender of such shares for redemption,
less such redemption fee or deferred sales charge, if any, as the
Board of Directors may from time to time establish in accordance
with the Investment Company Act of 1940 and the Rules of Fair
Practice adopted by the National Association of Securities Dealers,
Inc. Payment of the redemption price shall be made by the Corporation only
from the assets belonging to the series whose
shares are being redeemed. The redemption price shall be paid in
cash; provided, however, that if the Board of Directors determines,
which determination shall be conclusive, that conditions exist
which make payment wholly in cash unwise or undesirable, the
Corporation may, to the extent and in the manner permitted by law,
make payment wholly or partly in securities or other assets, at the
value of such securities or other assets used in such determination
of current net asset value. Notwithstanding the foregoing, the
Corporation may suspend the right of holders of any series of
Common Stock to require the Corporation to redeem their shares, or
postpone the date of payment or satisfaction upon such redemption
for more than seven days after tender of such shares for
redemption, during any period or at any time when and to the extent
permitted under the Investment Company Act of 1940.
(7) To the extent and in the manner permitted by the
Investment Company Act of 1940 and the Maryland General Corporation
Law, the Board of Directors may cause the Corporation to redeem, at
their current net asset value, the shares of any series of Common
Stock held in the account of any stockholder having, because of
redemptions or exchanges, an aggregate net asset value which is
less than the minimum initial investment in that series specified
by the Board of Directors from time to time in its sole discretion.
The Board of Directors of the Corporation may also, from time to
time in its discretion, authorize the Corporation to require the
redemption of all or any part of the outstanding shares of its
capital stock of any series for the proportionate interest in the
assets of the Corporation represented by those shares or the cash
equivalent thereof (which shall be the net asset value of those
shares determined as provided hereof), upon the sending of written
or telegraphic notice of redemption to each holder whose shares are
so redeemed and upon such terms and conditions as the Board of
Directors of the Corporation shall deem advisable.
(8) In the event of any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, or of the
liquidation of a particular series of Common Stock, the holders of
each series that is being liquidated shall be entitled, after
payment or provision for payment of the liabilities of that series
and the amount to which the holders of any class of that series
shall be entitled, as a class, to share ratably in the remaining
assets belonging to the series. The holders of shares of any
particular series shall not be entitled thereby to any distribution
upon the liquidation of any other series. The liquidation of any
series of Common Stock of which there are shares then outstanding
shall be approved by the vote of a majority (as defined in the
Investment Company Act of 1940) of the outstanding shares of that
series, and without the vote of the holders of shares of any other
series of Common Stock.
(9) Subject to compliance with the Investment Company Act of
1940, the Board of Directors shall have authority to provide that
holders of any series of Common Stock shall have the right to
exchange their shares for shares of one or more other series in
accordance with such requirements and procedures as may be
established by the Board of Directors.
(10) Except to the extent provided otherwise by the charter
of the Corporation, the Class A, Class B and Class C shares of each
series of Common Stock shall represent an equal proportionate
interest in the assets belonging to that series (subject to the
liabilities of that series) and each share of a particular series
shall have identical voting, dividend, liquidation and other
rights; provided, however, that notwithstanding anything in the
charter of the Corporation to the contrary:
(i) The Class A, Class B and Class C shares may be
issued and sold subject to such different sales or charges, whether
initial, deferred or contingent, or any combination thereof, as the
Board of Directors may from time to time establish in accordance
with the Investment Company Act of 1940 and the Rules of Fair
Practice adopted by the National Association of Securities Dealers,
Inc.
(ii) Expenses, costs and charges which are determined by
or under the supervision of the Board of Directors to be
attributable to a particular class of a series may be charged to
that class and appropriately reflected in the net asset value of,
or dividends payable on, the shares of that class of the series.
(iii) The Class A, Class B and Class C shares of a
particular series may have such different exchange and conversion
rights as the Board of Directors shall provide in compliance with
the Investment Company Act of 1940.
(d) Subject to the foregoing and to the Investment Company
Act of 1940, the power of the Board of Directors to classify and
reclassify any of the shares of capital stock shall include,
without limitation, subject to the provisions of the charter of the
Corporation, authority to classify or reclassify any unissued
shares of such stock into one or more classes or series of
preferred stock, preference stock, special stock or other stock,
and to divide and classify shares of any class or series into one
or more classes or series of such class or series, by determining,
fixing or altering one or more of the following:
(1) The distinctive designation of such class or series and
the number of shares to constitute such class or series; provided
that, unless otherwise prohibited by the terms of such or any other
class or series, the number of shares of any class or series may
be decreased by the Board of Directors in connection with any
classification or reclassification of unissued shares and the
number of shares of such class or series may be increased by the
Board of Directors in connection with any such classification or
reclassification, and any shares of any class or series which have
been redeemed, purchased, otherwise acquired or converted into
shares of any other class or series shall become part of the
authorized capital stock and be subject to classification and
reclassification as herein provided.
(2) Whether or not and, if so, the rates, amounts and times
at which, and the conditions under which, dividends shall be
payable on shares of such class or series, whether any such
dividends shall rank senior or junior to or on a parity with the
dividends payable on any other class or series of stock, and the
status of any such dividends as cumulative, cumulative to a limited
extent or non-cumulative and as participating or non-participating.
(3) Whether or not shares of such class or series shall have
voting rights, in addition to any voting rights provided by law
and, if so, the terms of such voting rights.
(4) Whether or not shares of such class or series shall have
conversion or exchange privileges and, if so, the terms and
conditions thereof, including provision for adjustment of the
conversion or exchange rate in such events or at such times as the
Board of Directors shall determine.
(5) Whether or not shares of such class or series shall be
subject to redemption and, if so, the terms and conditions of such
redemption, including the date or dates upon or after which they
shall be redeemable and the amount per share payable in case of
redemption, which amount may vary under different conditions and at
different redemption dates; and whether or not there shall be any
sinking fund or purchase account in respect thereof and, if so, the
terms thereof.
(6) The rights of the holders of shares of such class or
series upon the liquidation, dissolution or winding up of the
affairs of, or upon any distribution of the assets of, the
Corporation, which rights may vary depending upon whether such
liquidation, dissolution or winding up is voluntary or involuntary
and, if voluntary, may vary at different dates, and whether such
rights shall rank senior or junior to or on a parity with such
rights of any other class or series of stock.
(7) Whether or not there shall be any limitations applicable,
while shares of such class or series are outstanding, upon the
payment of dividends or making of distributions on, or the
acquisition of, or the use of monies for purchase or redemption of,
any stock of the Corporation, or upon any other action of the
Corporation, including action under this paragraph and, if so, the
terms and conditions thereof.
(8) Any other preferences, rights, restrictions, including
restrictions on transferability, and qualifications of shares of
such class or series, not inconsistent with law and the charter of
the Corporation.
(e) For the purposes hereof and of any articles supplementary
to the charter providing for the classification or reclassification
of any shares of capital stock or of any other charter document of
the Corporation (unless otherwise provided in any such articles or
document), any class or series of stock of the Corporation shall be
deemed to rank:
(1) prior to another class or series either as to dividends
or upon liquidation, if the holders of such class or series be
entitled to the receipt of dividends or of amounts distributable on
liquidation, dissolution or winding up, as the case may be, in
preference or priority to holders of such other class or series;
(2) on a parity with another class or series either as to
dividends or upon liquidation, whether or not the dividend rates,
dividend payment dates or redemption or liquidation price per share
thereof be different from those of such others, if the holders of
such class or series of stock shall be entitled to receipt of
dividends or amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in proportion to their respective
dividend rates or redemption or liquidation prices, without
preference or priority over the holders of such other class or
series; and
(3) junior to another class or series either as to dividends
or upon liquidation, if the rights of the holders of such class or
series shall be subject or subordinate to the rights of the holders
of such other class or series in respect of the receipt of
dividends or the amounts distributable upon liquidation,
dissolution or winding up, as the case may be.
(f) The Corporation may issue and sell fractions of shares of
capital stock having pro rata all the rights of full shares,
including, without limitation, the right to vote and to receive
dividends, and wherever the words "share" or "shares" are used in
the charter or by-laws of the Corporation, they shall be deemed to
include fractions of shares where the context does not clearly
indicate that only full shares are intended.
(g) The Corporation shall not be obligated to issue
certificates representing shares of capital stock of any class or
series. At the time of issue or transfer of shares without
certificates, the Corporation shall provide the stockholder with
such information as may be required under the Maryland General
Corporation Law.
ARTICLE SIX
The number of directors of the Corporation shall be five,
which number may be increased or decreased pursuant to the by-laws of the
Corporation, but shall never be less than the minimum
number permitted by the General Laws of the State of Maryland now
or hereafter in force. The names of the directors who will serve
until the next annual meeting and until their successors are
elected and qualified are as follows:
Paul Clinton
Thomas Courtney
Lacy Herrmann
George Loft
Bridget A. Macaskill
ARTICLE SEVEN
(a) The following provisions are hereby adopted for the purpose of
defining, limiting and regulating the powers of the Corporation and
of the directors and stockholders:
(1) The Board of Directors is hereby empowered to authorize
the issuance from time to time of shares of its stock of any class
or series, whether now or hereafter authorized, or securities
convertible into shares of its stock of any class or series,
whether now or hereafter authorized, for such consideration as may
be deemed advisable by the Board of Directors and without any
action by the stockholders.
(2) No holder of any stock or any other securities of the
Corporation, whether now or hereafter authorized, shall have any
preemptive right to subscribe for or purchase any stock or any
other securities of the Corporation other than such, if any, as the
Board of Directors, in its sole discretion, may determine and at
such price or prices and upon such other terms as the Board of
Directors, in its sole discretion, may fix; and any stock or other
securities which the Board of Directors may determine to offer for
subscription may, as the Board of Directors in its sole discretion
shall determine, be offered to the holders of any class, series or
type of stock or other securities at the time outstanding to the
exclusion of the holders of any or all other classes, series or
types of stock or other securities at the time outstanding.
(3) The Board of Directors of the Corporation shall,
consistent with applicable law, have power in its sole discretion
to determine from time to time in accordance with sound accounting
practice or other reasonable valuation methods what constitutes
annual or other net profits, earnings, surplus or net assets in
excess of capital; to determine that retained earnings or surplus
shall remain in the hands of the Corporation; to set apart out of
any funds of the Corporation such reserve or reserves in such
amount or amounts and for such proper purpose or purposes as it
shall determine and to abolish any such reserve or any part
thereof; to distribute and pay distributions or dividends in stock,
cash or other securities or property, out of surplus or any other
funds or amounts legally available therefor, at such times and to
the stockholders of record on such dates as it may, from time to
time, determine; and to determine whether and to what extent and at
what times and places and under what conditions and regulations the
books, accounts and documents of the Corporation, or any of them,
shall be open to the inspection of stockholders, except as
otherwise provided by statue of the by-laws of the Corporation,
and, except as so provided, no stockholder shall have any right to
inspect any book, account or document of the Corporation unless
authorized to do so by resolution of the Board of Directors.
(4) Notwithstanding any provision of law requiring the
authorization of any action by a greater proportion than a majority
of the total number of shares of capital stock or of any class or
series of capital stock, such action shall be valid and effective
if authorized by the affirmative vote of the holders of a majority
of the total number of shares of capital stock or of such class or
series, as the case may be, outstanding and entitled to vote
thereon, except as otherwise provided in the charter of the
Corporation. At a meeting of stockholders the presence in person
or by proxy of stockholders entitled to cast a majority of all the
votes entitled to be cast on any matter with respect to which one
or more classes or series of capital stock are entitled to vote as
a separate class shall constitute a quorum of such separate class
for action on that matter. Whether or not a quorum of such a
separate class for action on any such matter is present, a meeting
of stockholders convened on the date for which it was called may be
adjourned as to that matter from time to time without further
notice by a majority vote of the stockholders of the separate class
present in person or by proxy to a date not more than 120 days
after the original record date.
(5) The Corporation shall indemnify (i) its currently acting
and its former directors and officers, whether serving the
Corporation or at its request any other entity, to the full extent
required or permitted by the General Laws of the State of Maryland now or
hereafter in force, including the advance of
expenses under the procedures and to the full extent permitted by
law, and (ii) other employees and agents to such extent as shall
be authorized by the Board of Directors or the by-laws of the
Corporation and as permitted by law. The foregoing rights of
indemnification shall not be exclusive of any other rights to which
those seeking indemnification may be entitled. The Board of
Directors may take such action as is necessary to carry out these
indemnification provisions and is expressly empowered to adopt,
approve and amend from time to time such by-laws, resolutions or
contracts implementing such provisions or such further
indemnification arrangements as may be permitted by law. The right
of indemnification provided hereunder shall not be construed to
protect any director or officer of the Corporation against any
liability to the Corporation or its security holders to which he
would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
(6) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, no director or officer
of the Corporation shall be personally liable to the Corporation or
its stockholders for money damages; provided, however, that this
provision shall not be construed to protect any director or officer
against any liability to the Corporation or its security holders to
which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office. No amendment,
modification or repeal of this provision shall adversely affect
any right or protection provided hereunder that exists at the time
of such amendment, modification or repeal.
(7) The Corporation reserves the right from time to time to
make any amendments of its charter which may now or hereafter be
authorized by law, including any amendments changing the terms or
contract rights, as expressly set forth in its charter, of any of
its outstanding stock by classification, reclassification or
otherwise.
(b) The enumeration and definition of particular powers of
the Board of Directors included in the foregoing shall in no way
be limited or restricted by reference to or inference from the
terms of any other clause of this or any other article of the
charter of the Corporation, or construed as or deemed by
inference or otherwise in any manner to exclude or limit any
powers conferred upon the Board of Directors under the General
Laws of the State of Maryland now or hereafter in force.
ARTICLE EIGHT
The duration of the Corporation shall be perpetual.
THIRD: The provisions hereunder set forth are all the
provisions of the charter of the Corporation currently in effect.
FOURTH:
(a) As of immediately before the amendment the total number
of shares of stock of all classes which the Corporation has
authority to issue is 40,000,000 shares of capital stock, of
which 20,000,000 shares are Income Shares (par value $.01 per
share) and 20,000,000 shares are Capital Shares (par value $.01
per share).
(b) As amended the total number of shares of stock of all
classes which the Corporation has authority to issue is
1,000,000,000 shares, of which 500,000,000 shares are Common
Stock --- Oppenheimer Quest Capital Value Fund Series (par value
$.0001 per share), consisting of 300,000,000 Class A shares,
100,000,000 Class B shares and 100,000,000 Class C shares and
500,000,000 shares are undesignated as to class or series (par
value $.0001 per share).
(c) The aggregate par value of all shares having a par
value is $400,000 before the amendment and $100,000 as amended.
(d) The preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of each
class of capital stock of the Corporation have been changed to
provide that all shares of capital stock are redeemable shares of
an open-end management investment company and as specified in
Article V above.
FIFTH: In accordance with the provisions of section 2-604
of the General Corporation Law of the State of Maryland, the
foregoing amendment was duly approved by a majority of the
entire Board of Directors and by a vote of two-thirds (2/3) of
the outstanding stock entitled to vote on the matter.
IN WITNESS WHEREOF, the Corporation has caused these present
to be signed in its name and on its behalf by its President and
witnessed by its Secretary on this _____ day of __________, 1996.
OPPENHEIMER QUEST CAPITAL
VALUE FUND, INC.
By: _________________________
Attest:
__________________________
prosp\capex.1
BY-LAWS OF
QUEST FOR VALUE DUAL PURPOSE FUND, INC.
ARTICLE 1
Fiscal Year and Officers
Section 1. Fiscal Year. Unless otherwise provided by resolution
of the board of directors, the fiscal year of the Corporation shall begin
November 1 and end on the last day of October.
Section 2. Registered Office. The registered office of the
Corporation in Maryland shall be located at 32 South Street, Baltimore,
Maryland 21202, and the name of its resident agent at such address is The
Corporation Trust Incorporated.
Section 3. Other Offices. The Corporation shall have the power
to open offices for the conduct of its business, either within or outside
the State of Maryland, at such places as the board of directors may from
time to time designate.
ARTICLE II
Meetings of Stockholders
Section 1. Place of Meeting. Meetings of the stockholders for
the election of directors shall be held in such place as the board of
directors may by resolution establish. In the absence of any specific
resolution, annual meetings of stockholders shall be held at the
Corporation's principal office. Meetings of stockholders for any other
purpose may be held at such place and time as shall be fixed by resolution
of the board of directors and stated in the notice of the meeting, or in
a duly executed waiver of notice thereof.
Section 2. Annual Meetings. The annual meeting of the stockholders
shall be held at such time and on such date during the first six months
of each fiscal year of the Corporation as may be fixed by resolution of
the board of directors in each year. At the annual meeting, the
stockholders shall elect a board of directors and transact any other
business which may properly be brought before the meeting.
Section 3. Special Meetings. Special meetings of stockholders
may be called at any time by the chairman of the board or the president,
or by a majority of the board of directors, and shall be called by the
chairman of the board, president or secretary upon written request of the
holders of shares entitled to cast not less than twenty-five percent of
all the votes entitled to be cast at such meeting provided that (a) such
request shall state the purposes of such meeting and the matters proposed
to be acted on, and (b) the stockholders requesting such meeting shall
have paid to the Corporation the reasonably estimated cost of preparing
and mailing the notice thereof, which the secretary shall determine and
specify to such stockholders. No special meeting need be called to
consider any matter which is substantially the same as a matter voted on
at any meeting of the stockholders held during the preceding twelve
months.
Section 4. Notice. Not less than ten days before the date of
every annual or special stockholders' meeting, the secretary shall cause
to be mailed to each stockholder entitled to vote at such meeting at his
address (as it appears on the records of the Corporation at the time of
mailing) written notice stating the time and place of the meeting and, in
the case of a special meeting of stockholders shall be limited to the
purposes stated in the notice. Notice of any stockholders' meeting need
not be given to any stockholder who shall sign a written waiver of such
notice whether before or after the time of such meeting, or to any
stockholder who shall attend such meeting in person or by proxy. Notice
of adjournment of a stockholders' meeting to another time or place need
not be given, if such time and place are announced at the meeting.
Section 5. Record Date for Meetings. The board of directors may
fix in advance a date not more than sixty days, nor less than ten days,
prior to the date of any annual or special meeting of the stockholders as
a record date for the determination of the stockholders entitled to
receive notice of, and to vote at any meeting and any adjournment thereof;
and in such case such stockholders and only such stockholders as shall be
stockholders of record on the date so fixed shall be entitled to receive
notice of and to vote at such meeting and any adjournment thereof,
notwithstanding any transfer of any stock on the books of the Corporation
after any such record date fixed as aforesaid.
Section 6. Quorum. At any meeting of stockholders, the presence
in person or by proxy of the holders of a majority of the aggregate number
of Income Shares and Capital Shares at the time outstanding shall
constitute a quorum for the transaction of business at the meeting, except
that where any provision of law or the Articles of Incorporation require
that the holders of any class of shares shall vote as a class, then a
majority of the aggregate number of shares of that class at the time
outstanding shall be necessary to constitute a quorum for the transaction
of such business. If, however, such quorum shall not be present or
represented at any meeting of stockholders, any officer entitled to
preside at or act as secretary of such meeting shall have the power to
adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present
or represented, any business may be transacted which might have been
transacted at the meeting as originally noticed.
Section 7. Voting. Each stockholder shall have one vote for each
full share and a fractional vote for each fractional share of stock held
by such stockholder on the record date set pursuant to Section 5 of this
Article II on each matter submitted to a vote at a meeting of
stockholders. Such vote may be made in person or by proxy. If no record
date has been fixed for the determination of stockholders entitled to
notice of or to vote at a meeting of stockholders, the record date for
such determination shall be (a) at the close of business (i) on the day
ten days before the day on which notice of the meeting is mailed or (ii)
on the day sixty days before the meeting, whichever is the closer date to
the meeting; or (b) if notice is waived by all stockholders entitled to
notice of or to vote at the meeting, at the close of business on the tenth
day next preceding the day on which the meeting is held. At all meetings
of the stockholders at which a quorum is present, all matters shall be
decided by majority vote of the shares of stock entitled to vote held by
stockholders present in person or by proxy, unless the question is one
which by express provision of the laws of the State of Maryland, the
Investment Company Act of 1940, as from time to time amended, or the
Articles of Incorporation, a different vote is required, in which case
such express provision shall control the decision of such question. At
all meetings of stockholders, unless the voting is conducted by
inspectors, all questions relating to the qualifications of voters and the
validity of proxies and the acceptance or rejection of votes shall be
decided by the chairman of the meeting.
Section 8. Voting - Proxies. The right to vote by proxy shall
exist only if the instrument authorizing such proxy to act shall have been
executed in writing by the stockholder himself or by his attorney
thereunto duly authorized in writing. No proxy shall be voted after
eleven months from its date unless the proxy provides for a longer period.
Each proxy shall be in writing subscribed by the stockholder or his duly
authorized attorney and shall be dated, but need not be sealed, witnessed
or acknowledged. Proxies shall be delivered to the secretary of the
Corporation or person acting as secretary of the meeting before being
voted. A proxy with respect to stock held in the name of two or more
persons shall be valid if executed by one of them unless at or prior to
exercise of such proxy the Corporation receives a specific written notice
to the contrary from any one of them. A proxy purporting to be executed
by or on behalf of a stockholder shall be deemed valid unless challenged
at or prior to its exercise.
Section 9. Inspectors. At any election of directors, the board
of directors prior thereto may, or if it has not so acted, the chairman
of the meeting may appoint one or more inspectors of election who shall
first subscribe an oath or affirmation to execute faithfully the duties
of inspectors at such election with strict impartiality and according to
the best of their ability, and shall after the election make a certificate
of the result of the vote taken. No candidate for the office of director
shall be appointed as an inspector.
Section 10. Stock Ledger and List of Stockholders. It shall be
the duty of the secretary or assistant secretary of the Corporation to
cause an original or duplicate stock ledger to be maintained at the office
of the Corporation's transfer agent. Such stock ledger may be in written
form or any other form capable of being converted into written form within
a reasonable time for visual inspection. Any one or more persons, each
of whom has been a stockholder of record of the Corporation for more than
six months next preceding such request, who owns or own in the aggregate
5% or more of the outstanding capital stock of the Corporation, may submit
a written request to any officer of the Corporation or its resident agent
in Maryland for a list of the stockholders of the Corporation. Within
twenty days after such a request, there shall be prepared and filed at the
Corporation's principal office a list containing the names and addresses
of all stockholders of the corporation and the number of shares of each
class held by each stockholder, certified as correct by an officer of the
Corporation, by its stock transfer agent, or by its registrar.
Section 11. Action Without Meeting. Any action to be taken by
stockholders may be taken without a meeting if all stockholders entitled
to vote on the matter consent to the action in writing, and the written
consents are filed with the records of the meetings of stockholders. Such
consent shall be treated for all purposes as a vote at a meeting.
ARTICLE III
Directors
Section 1. General Powers. The business of the Corporation shall
be under the direction of its board of directors, which may exercise all
powers of the Corporation, except such as are by the laws of the State of
Maryland, the Articles of Incorporation , or these By-laws conferred upon
or reserved to the stockholders. All acts done by any meeting of the
directors or by an person acting as a director, so long as his successor
shall not have been duly elected or appointed, notwithstanding that it be
afterwards discovered that there was some defect in the election of the
directors or of such person acting as aforesaid or that they or any of
them were disqualified, shall be as valid as if the directors or such
other person, as the case may be, had been duly elected and were or was
qualified to be directors or a director of the corporation.
Section 2. Number and Term of Office. The number of directors
which shall constitute the whole board shall be determined from time to
time by the board of directors, but shall not be fewer than five, nor more
than ten. Each director elected shall hold office until his successor is
elected and qualified. Directors need not be stockholders.
Section 3. Election. Initially the directors shall be those
persons named as such in the Articles of Incorporation. Each director
shall be elected annually by the vote of a majority of the shares entitled
to elect such director, as provided in the Articles of Incorporation,
present in person or by proxy at the annual meeting of the stockholders.
Vacancies in the board of directors may be filled by a majority vote of
the board of directors, if permitted by the Articles of Incorporation.
A newly-created directorship may be filled only by a vote of the entire
board of directors.
Section 4. Removal of Directors. At any stockholders' meeting,
provided a quorum is present, any director may be removed (either with or
without cause) by the vote of the holders of a majority of the shares
entitled to elect such director as provided in the Articles of
Incorporation, present or represented at the meeting, and at the same
meeting a duly qualified person may be elected in his stead by a majority
of the votes validly cast.
Section 5. Place of Meeting. Meetings of the board of directors,
regular or special, may be held at any place in or out of the State of
Maryland as the board may from time to time determine.
Section 6. Quorum. At all meetings of the board of directors a
majority of the entire board of directors shall constitute a quorum for
the transaction of business, and the action of a majority of the directors
present at any meeting at which a quorum is present shall be the action
of the board of directors unless the concurrence of a greater proportion
is required for such action by the laws of the State of Maryland, the
Investment Company Act of 1940, these By-laws or the Articles of
Incorporation. If a quorum shall not be present at any meeting of
directors, the directors present thereat may be a majority vote adjourn
the meeting from time to time without notice other than announcement at
the meeting, until a quorum shall be present.
Section 7. Regular Meetings. Regular meetings of the board of
directors may be held without notice at such time and place as shall from
time to time be determined by the board of directors provided that notice
of any change in the time or place of such meetings shall be sent promptly
to each director not present at the meeting at which such change was made
in the manner provided for notice of special meetings. Members of the
board of directors or any committee designated thereby may participate in
a meeting of such board or committee by means of a conference telephone
call or similar communications equipment by means of which all persons
participating in the meeting can hear one another at the same time, and
participation by such means shall constitute presence in person at a
meeting.
Section 8. Special Meetings. Special meetings of the board of
directors may be called by the chairman of the board or the president on
one day's notice to each director. Special meetings shall be called by
the chairman of the board, president or secretary in like manner and on
like notice on the written request of two directors.
Section 9. Informal Actions. Any action required or permitted
to be taken at any meeting of the board of directors or of any committee
thereof may be taken without a meeting, if a written consent to such
action is signed in one or more counterparts by all members of the board
or of such committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the board or committee.
Section 10. Committees. The board of directors may by resolution
passed by a majority of the entire board appoint from among its members
an executive committee and other committees composed of two or more
directors, and may delegate to such committees, in the intervals between
meetings of the board of directors, any or all of the powers of the board
of directors in the management of the business and affairs of the
Corporation, except the powers to declare dividends, to issue stock or to
recommend to stockholders any action requiring stockholder approval.
Section 11. Action of Committees. In the absence of an
appropriate resolution of the board of directors, each committee may adopt
such rules and regulations governing the proceedings, quorum and manner
of acting as it shall deem proper and desirable, provided that the quorum
shall not be less than two directors. The committees shall keep minutes
of their proceedings and shall report the same to the board of directors
at the meeting next succeeding, and any action by the committee shall be
subject to revision and alteration by the board of directors, provided
that no rights of third persons shall be affected by any such revision or
alteration. In the absence of any member of such committee the members
thereof present at any meeting, whether or not they constitute a quorum,
may appoint a member of the board of directors to act in the place of such
absent member.
Section 12. Compensation. Any director, whether or not he is a
salaried officer or employee of the Corporation, may be compensated for
his services as director or as a member of a committee of directors, or
as chairman of the board or chairman of a committee by fixed periodic
payments or by fees for attendance at meetings or by both, and in addition
may be reimbursed for transportation and other expenses, all in such
manner and amounts as the board of directors may from time to time
determine.
ARTICLE IV
Notices
Section 1. Form. Notices to stockholders shall be in writing and
delivered personally or mailed to the stockholders at their addresses
appearing on the books of the Corporation. Notices to directors shall be
oral or by telephone or telegram or in writing delivered personally or
mailed to the directors at their addresses appearing on the books of the
Corporation. Notice by mail shall be deemed to be given at the time when
the same shall be mailed. Notice to directors need not state the purpose
of a regular or special meeting.
Section 2. Waiver. Whenever any notice of the time, place or
purpose of any meeting of stockholders, directors or a committee is
required to be given under the provisions of Maryland law or under the
provisions of the Articles of Incorporation or these By-laws, a waiver
thereof in writing, signed by the person or persons entitled to such
notice and filed with the records of the meeting, whether before or after
the holding thereof, or actual attendance at the meeting of stockholders
in person or by proxy, or at the meeting of directors of committee in
person, shall be deemed equivalent to the giving of such notice to such
persons.
ARTICLE V
Officers
Section 1. Executive Officers. The officers of the Corporation
shall be chosen by the board of directors and shall include a president,
who shall be a director, a secretary and a treasurer. The board of
directors may, from time to time, elect or appoint a controller, one or
more vice presidents, assistant secretaries and assistant treasurers. The
board of directors, at its discretion, may also appoint a director as
chairman of the board who shall perform and execute such executive and
administrative duties and powers as the board of directors shall from time
to time prescribe. The same person may hold two or more offices, except
that no person shall be both president and secretary and no officer shall
execute, acknowledge or verify any instrument in more than one capacity,
if such instrument is required by law, the Articles of Incorporation or
these By-laws to be executed, acknowledged or verified by two or more
officers.
Section 2. Election. The board of directors shall choose a
president, a secretary and a treasurer at its first meeting and thereafter
at the next meeting following a stockholders' meeting at which directors
were elected.
Section 3. Other Officers. The board of directors from time to
time may appoint such other officers and agents as it shall deem
advisable, who shall hold their offices for such terms and shall exercise
such powers and perform such duties as shall be determined from time to
time by the board. The board of directors from time to time may delegate
to one or more officers or agents the power to appoint any such
subordinate officers or agent and to prescribe their respective rights,
terms of office, authorities and duties.
Section 4. Compensation. The salaries or other compensation of
all officers and agents of the Corporation shall be fixed by the board of
directors, except that the board of directors may delegate to any person
or group of persons the power to fix the salary or other compensation of
any subordinate officers or agents appointed pursuant to Section 3 of this
Article V.
Section 5. Tenure. The officers of the Corporation shall serve
for one year and until their successors are chosen and shall qualify. Any
officer or agent may be removed by the affirmative vote of a majority of
the board of directors whenever, in its judgment, the best interests of
the Corporation will be served thereby. In addition, any officer or agent
appointed pursuant to Section 3 of this Article V may be removed, either
with or without cause, by any officer upon whom such power of removal
shall have been conferred by the board of directors. Any vacancy
occurring in any office of the Corporation by death, resignation, removal
or otherwise shall be filled by the board of directors, unless pursuant
to Section 3 of this Article V the power of appointment has been conferred
by the board of directors on any other officer.
Section 6. President. The president, unless the chairman has
been so designated, shall be the chief executive officer of the
Corporation. He shall preside at all meetings of the stockholders and
directors, and shall see that all orders and resolutions of the board are
carried into effect. The president, unless the chairman has been so
designated, shall also be the chief administrative officer of the
Corporation and shall perform such other duties and have such other powers
as the board of directors may from time to time prescribe.
Section 7. Chairman of the Board. The chairman of the board, if
one shall be chosen, shall preside at all meetings of the board of
directors and stockholders, and shall perform and execute such executive
duties and administrative powers as the board of directors shall from time
to time prescribe.
Section 8. Vice-President. The vice-presidents, in the order of
their seniority, shall, in the absence or disability of the president,
perform the duties and exercise the powers of the president and shall
perform such other duties as the board of directors of the chief executive
officer may from time to time prescribe.
Section 9. Secretary. The secretary shall attend all meetings
of the board of directors and all meetings of the stockholders and record
all the proceedings thereof and shall perform like duties for any
committee when required. He shall give, or cause to be given, notice of
meetings of the stockholders and of the board of directors, shall have
charge of the records of the Corporation, including the stock books, and
shall perform such other duties as may be prescribed by the board of
directors or chief executive officer, under whose supervision he shall be.
He shall keep in safe custody the seal of the Corporation and, when
authorized by the board of directors, shall affix and attest the same to
any instrument requiring it. The board of directors may give general
authority to any officer to affix the seal of the Corporation and to
attest the affixing by his signature.
Section 10. Assistant Secretaries. The assistant secretaries in
order of their seniority, shall, in the absence or disability of the
secretary, perform the duties and exercise the powers of the secretary and
shall perform such other duties as the board of directors shall prescribe.
Section 11. Treasurer. The treasurer, unless another officer has
been so designated, shall be the chief financial officer of the
Corporation. He shall have general supervision of the funds and property
of the Corporation and of the performance by the custodian of its duties
with respect thereto. He shall render to the board of directors whenever
directed by the board, an account of the financial condition of the
Corporation and of all his transactions as Treasurer; and as soon as
possible after the close of each financial year he shall make and submit
to the board of directors a like report for such financial year. He shall
cause to be prepared annually a full and correct statement of the affairs
of the Corporation, including a balance sheet and a financial statement
of operation for the preceding fiscal year, which shall be submitted at
the annual meeting of stockholders and filed within twenty days thereafter
at the principal office of the Corporation in the State of Maryland. He
shall perform all the acts incidental to the office of treasurer, subject
to the control of the board of directors.
Section 12. Controller. The controller shall be under the
direct supervision of the chief financial officer of the Corporation. He
shall maintain adequate records of all assets, liabilities and
transactions of the Corporation, establish and maintain internal
accounting control and, in cooperation with the independent public
accountants selected by the board of directors shall supervise internal
auditing. He shall have such further powers and duties as may be
conferred upon him from time to time by the president or the board of
directors.
Section 13. Assistant Treasurer. The assistant treasurers, in the
order of their seniority, shall, in the absence or disability of the
treasurer, perform the duties and exercise the powers of the treasurer and
shall perform such other duties as the board of directors may from time
to time prescribe.
Section 14. Surety Bonds. The board of directors may require any
officer or agent of the Corporation to execute a bond (including, without
limitation, any bond required by the federal Investment Company Act of
1940, as amended, and the rules and regulations of the Securities and
Exchange Commission) to the Corporation in such sum and with such surety
or sureties as the board of directors may determine, conditioned upon the
faithful performance of his duties to the Corporation, including
responsibility for negligence and for the accounting of any of the
Corporation's property, funds or securities that may come into his hands.
ARTICLE VI
Investment Limitations
Without the approval of the lesser of (i) 67% or more of the voting
securities (Income Shares and Capital Shares voting as a single class)
present at a meeting if the holders of more than 50% of the outstanding
voting securities of the Corporation are present or represented by proxy,
or (ii) more than 50% of the outstanding voting securities of the
Corporation, the Corporation shall not:
(a) with respect to 75% of its total assets, invest more than 5% of
the value of its total assets (taken at market value at the time of
purchase) in the securities of any one issuer, excluding obligations
issued or guaranteed by the U.S. Government or any agency or
instrumentality thereof;
(b) own more than 10% of the outstanding voting securities of any
one issuer (other than securities issued or guaranteed by the U.S.
Government or any agency or instrumentality thereof;
(c) purchase shares of other investment companies in an amount
exceeding the limitations set forth in Section 12(d) of the Investment
Company Act of 1940 and the rules and regulations thereunder, except as
part of a plan of reorganization, merger, consolidation or an offer of
exchange;
(d) borrow money, except as a temporary measure for extraordinary
or emergency purposes, and in no event in excess of 10% of the lower of
the market value or cost of its total assets and shall not purchase any
securities at a time when such borrowings exceed 5% of total assets;
(e) purchase securities on margin, except such short-term credits
as may be necessary for the clearance of transactions;
(f) invest for the purpose of exercising control over management of
any company;
(g) purchase or retain securities of any company if, to the
knowledge of the Corporation, any officer or director of the Corporation
or its investment adviser owns more than 1/2 of 1% of the outstanding
securities of such Company and such officers or directors who own 1/2 of
1% in the aggregate own more than 5% of such securities;
(h) make loans of money or property to any person, except (1)
through loans of portfolio securities in an amount not to exceed 33-1/3%
of the value of the Corporation's total assets; (2) the purchase of fixed-
income securities consistent with the Corporation's investment objectives
and policies, and (3) by entering into repurchase agreements. For purposes
of this restriction, collateral arrangements with respect to stock
options, options on stock indices, stock index futures and options on such
futures are not deemed to be loans of assets;
(i) underwrite the securities of other issuers except to the extent
that, in connection with the disposition of portfolio securities or the
sale of its own shares the Corporation may be deemed to be an underwriter;
(j) purchase real estate or interests therein, although the
Corporation may purchase or sell securities of companies which deal in
real estate or interests therein;
(k) purchase oil, gas or other mineral leases, rights or royalty
contracts or exploration or development programs, except that the
Corporation may invest in the securities which invest in or sponsor such
programs;
(l) purchase or sell commodities or commodities futures contracts,
except stock index futures and options on such futures under policies
adopted by the board of directors and disclosed to shareholders;
(m) invest more than 25% of the value of its total assets in any one
industry;
(n) make short sales of securities, except short sales "against-the
- -box," but no more than 15% of the Corporation's net assets (taken at
current value) may be held as collateral for such short sales at any one
time;
(o) mortgage, hypothecate or pledge any of its assets, except to the
extent the Corporation may pledge assets to secure permitted borrowings
and in connection with collateral arrangements with respect to options and
futures;
(p) issue senior securities, as defined in the Investment Company
Act of 1940, other than Income Shares, except that the Corporation may
enter into repurchase agreements, lend its portfolio securities and borrow
money from banks for temporary or emergency purposes;
(q) invest more than 5% of its assets at the time of purchase in
warrants (other than warrants acquired in units or attached to securities)
or more than 2% of assets at time of purchase in warrants not listed on
the New York or American Stock Exchange;
(r) invest in restricted securities or securities for which there
is no readily available market (including private placements and
repurchase transactions maturing beyond seven days), if such acquisition
will cause the current value of such securities to exceed 10% of the value
of the Company's net assets;
(s) invest more than 25% of the Corporation's net assets (at time
of purchase) in securities of issuers located in any single foreign
country;
(t) invest in debt securities which are rated lower than CCC by
Standard and Poor's Corporation are Caa by Moody's's Investor's Service,
Inc.
If a percentage restriction on investment or use of assets set forth
above is adhered to at the time a transaction is effected, later changes
in percentages resulting from changing values will not be considered a
violation.
Notwithstanding these limitations, the Corporation may own all or any
portion of the securities of, or make loans to, or contribute to the costs
or other financial requirements of any company which will be wholly-owned
by the Corporation and one or more other investment companies and is
primarily engaged in the business of providing, at-cost, management,
administrative distribution or related services to the Corporation and
other investment companies.
ARTICLE VII
Other Restrictions
Section 1. Trading in Securities. Neither the investment adviser
or any officer or director thereof, nor any officer or director of the
Corporation shall take a long or short position in the securities issued
by the Corporation, except as permitted by applicable laws and
regulations; provided, that the foregoing shall not prevent the purchase
from the Corporation of shares issued by it by the officers or directors
of the Corporation or of the investment adviser or by the investment
adviser at the price available to the public at the moment of such
purchase.
In any case where an officer or director of the Corporation or of the
investment adviser or a member of an advisory or portfolio committee of
the Corporation is also an officer or director of another corporation and
the purchase or sale of shares issued by that other corporation is under
consideration, the officer or director or committee member concerned will
abstain from participating in any decision made on behalf of the
Corporation to purchase or sell any securities issued by the other
corporation.
Section 2. Loans to Affiliates. The Corporation shall not lend
assets of the Corporation to any officer or director of the Corporation,
or to any partner, officer, director or stockholder of, or person who has
a material financial interest in the investment adviser of the
Corporation, or the distributor of the Corporation, or to the investment
adviser of the Corporation or to the distributor of the Corporation.
Section 3. Conflict of Interest Transactions. The Corporation
shall not permit any officer or director, or any officer or director of
the investment adviser or distributor of the Corporation to deal for or
on behalf of the Corporation with himself as principal or agent, or with
any partnership, association or corporation in which he has a material
financial interest; provided that the foregoing provisions shall not
prevent:
(a) officers or directors of the Corporation from buying, holding
or selling shares in the Corporation, or from being partners, officers or
directors of or otherwise financially interested in the investment
adviser, sponsor, manager or distributor of the Corporation;
(b) purchases or sales of securities or other property in the
Corporation from or to an affiliated person or to the investment adviser
or distributor of the Corporation if such transaction is exempt from the
applicable provisions of the Investment Company Act of 1940;
(c) purchases of investments owned by the Corporation through a
security dealer who is, or one or more of whose partners, stockholders,
officers or directors is, an officer or director of the Corporation, if
such transactions are handled in the capacity of brokers only and
commissions charged do not exceed customary brokerage charges for such
services;
(d) employment of legal counsel, registrar, transfer agent, dividend
disbursing agent or custodian who is, or has a partner, stockholder,
officer or director, who is an officer or director of the Corporation, if
only customary fees are charged for services to the Corporation;
(e) sharing statistical, research, legal and management expenses
with a firm of which an officer or director of the Corporation is an
officer or director or otherwise financially interested;
(f) purchase for the portfolio of the Corporation of securities
issued by an issuer having an officer, director or security holder who is
an officer or director of the Corporation or of any investment adviser of
the Corporation, unless the retention of such securities in the portfolio
of the Corporation would be a violation of these By-laws or the Articles
of Incorporation of the Corporation.
ARTICLE VIII
Stock
Section 1. Certificates. Each stockholder shall be entitled to
a certificate or certificates in form approved by the board of directors
which shall certify the class and the number of shares owned by him in the
Corporation. Each certificate shall be signed by the president or
vice-president and countersigned by the secretary or an assistant secretary of
the treasurer or an assistant treasurer.
Section 2. Signature. Where a certificate is signed (1) by a
transfer agent or an assistant transfer agent or (2) by a transfer clerk
acting on behalf of the Corporation and a registrar, the signature of any
such president, vice-president, treasurer, assistant treasurer, secretary
or assistant secretary may be a facsimile. In case any officer who has
signed any certificate ceases to be an officer of the Corporation before
the certificate is issued, the certificate may nevertheless be issued by
the Corporation with the same effect as if the officer had not ceased to
be such officer as of the date of its issue.
Section 3. Recording and Transfer without Certificates.
Notwithstanding the foregoing provisions of this Article VIII, the
Corporation shall have full power to participate in any program approved
by the board of directors providing for the recording and transfer of
ownership of shares of the Corporation's stock by electronic or other
means without the issuance of certificates.
<PAGE>
Section 4. Lost Certificates. The board of directors may direct
a new certificate or certificates to be issued in place of any certificate
or certificates theretofore issued by the Corporation alleged to have been
stolen, lost or destroyed, upon the making of an affidavit of that fact
by the person claiming the certificate of stock to have been stolen, lost
or destroyed, or upon other satisfactory evidence of such theft, loss or
destruction. When authorizing such issuance of a new certificate or
certificates, the board of directors may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such
stolen, lost or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require
and to give the Corporation a bond with sufficient surety, to the
Corporation to indemnify it against any loss or claim that may be made by
reason of the issuance of a new certificate.
Section 5. Transfer of Capital Stock. Transfers of shares of the
stock of the Corporation shall be made on the books of the Corporation by
the holder of record thereof (in person or by his attorney thereunto duly
authorized by a power of attorney duly executed in writing and filed with
the secretary of the Corporation) (i) if a certificate or certificates
have been issued, upon the surrender of the certificate or certificates,
properly endorsed or accompanied by proper instruments of transfer
representing such shares, or (ii) as otherwise prescribed by the board of
directors. Every certificate exchanged, surrendered for redemption or
otherwise returned to the Corporation shall be marked "Cancelled" with the
date of cancellation.
Section 6. Registered Stockholders. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its
books as the owner of shares to receive dividends, and to vote as such
owner, and to hold liable for calls and assessments a person registered
on its books as the owner of shares, and shall not be bound to recognize
any equitable or other claim to or interest in such shares on the part of
any other person, whether or not it shall have express or other notice
thereof, except as otherwise provided by the General Laws of the State of
Maryland.
Section 7. Transfer Agents and Registrars. The board of
directors may, from time to time, appoint or remove transfer agents and/or
registrars of transfers of shares of stock of the Corporation, and it may
appoint the same person as both transfer agent and registrar. Upon any
such appointment being made all certificates representing shares of stock
thereafter issued shall be countersigned by one of such transfer agents
or by one of such registrars of transfers or by both and shall not be
valid unless so countersigned. If the same person shall be both transfer
agent and registrar, only one countersignature by such person shall be
required.
Section 8. Stock Ledger. The Corporation shall maintain an
original stock ledger containing the names and addresses of all
stockholders and the number and class of shares held by each stockholder.
Such stock ledger may be in written form or any other form capable of
being converted into written form within a reasonable time for visual
inspection.
ARTICLE IX
General Provisions
Section 1. Rights in Securities. The board of directors, on
behalf of the Corporation, shall have the authority to exercise all of the
rights of the Corporation as owner of any securities which might be
exercised by any Individual owning such securities in his own right,
including, but not limited to, the right to vote by proxy for any and all
purposes, to consent to the reorganization, merger or consolidation of any
issuer or to consent to the sale, lease or mortgage of all or
substantially all of the property and assets of any issuer; and to
exchange any of the shares of stock of any issuer for the shares of stock
issued therefor upon any such reorganization, merger, consolidation, sale
lease or mortgage. The board of directors shall have the right to
authorize any officer of the investment adviser to execute proxies and the
right to delegate the authority granted to any officer of the Corporation
by this Section 1 of Article IX.
Section 2. Custodianship.
(a) The Corporation shall place and at all times maintain in the
custody of a custodian (including any subcustodian for the custodian) all
funds, securities and similar investments owned by the Corporation.
Subject to the approval of the board of directors, the custodian may enter
into arrangements with securities depositories, as long as such
arrangements comply with the provisions of the Investment Company Act of
1940 and the rules and regulations promulgated thereunder. The custodian
(and any sub-custodian) shall be a bank having not less than $2,000,000
aggregate capital, surplus and undivided profits and shall be appointed
from time to time by the board of directors, which shall fix its
remuneration.
(b) Upon termination of a custodian agreement or inability of the
custodian to continue to serve, the board of directors shall promptly
appoint a successor custodian. In the event that no successor custodian
can be found who has the required qualifications and is willing to serve,
the board of directors shall call as promptly as possible a special
meeting of the stockholders to determine whether the Corporation shall
function without a custodian or shall be liquidated. If so directed by
vote of the holders of a majority of the outstanding shares of stock of
the Corporation (Income Shares and Capital Shares voting as a single
class), the custodian shall deliver and pay over all property of the
Corporation held by it as specified in such vote.
(c) The following provisions shall apply to the employment of a
custodian and to any contract entered into with the custodian so employed:
The board of directors shall cause to be delivered to
the custodian all securities owned by the Corporation or
to which it may become entitled, and shall order the same
to be delivered by the custodian only in completion of a
sale, exchange, transfer, pledge, or other disposition
thereof, all as the board of directors may generally or
from time to time require or approve or to a successor
custodian; and the board of directors shall cause all
funds owned by the Corporation or to which it may become
entitled to be paid to the custodian, and shall order the
same disbursed only for investment against delivery of the
securities acquired, or in payment of expenses, including
management compensation, and liabilities of the
Corporation, including distributions to shareholders or
proper payments to borrowers of securities representing
partial return of collateral, or to a successor custodian.
Section 3. Reports. Not less than semi-annually, the Corporation
shall transmit to the stockholders a report of the operations of the
Corporation, based at least annually upon an audit by independent public
accountants, which report shall clearly set forth, in addition to the
information customarily furnished in a balance sheet and profit and loss
statement, a statement of all amounts paid to security dealers, legal
counsel, transfer agent, disbursing agent, registrar or custodian or
trustee, where such payments are made to a firm, corporation, bank or
trust company, having a partner, officer or director who is also an
officer or director of the Corporation. A copy, or copies, of all reports
submitted to the stockholders of the Corporation shall also be sent, as
required, to the regulatory agencies of the United States and of the
states in which the securities of the Corporation are registered and sold.
Section 4. Seal. The corporate seal shall have inscribed thereon
the name of the Corporation, the year of its organization and the words
"Corporate Seal, Maryland". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
Section 5. Execution of Instruments. All deeds, documents,
transfers, contracts, agreements and other instruments requiring execution
by the Corporation shall be signed by the chairman or the president or a
vice-president and by the treasurer or secretary or an assistant treasurer
or an assistant secretary, or as the board of directors may otherwise,
from time to time, authorize. Any such authorization may be general or
confined to specific instances. Except as otherwise authorized by the
board of directors, all requisitions or orders for the assignment of
securities standing in the name of the custodian or its nominee, or for
the execution of powers to transfer the same, shall be signed in the name
of the Corporation by the chairman or the president or a vice-president
and by the secretary, treasurer or an assistant treasurer.
ARTICLE X
Amendments
The By-laws of the Corporation may be altered, amended or repealed
either by the affirmative vote of a majority of the stock issued and
outstanding and entitled to vote in respect thereof and represented in
person or by proxy at any annual or special meeting of the stockholders,
or by the board of directors at any regular or special meeting of the
board of directors; provided, that the board of directors may not alter,
amend or repeal Article VI, and that the vote of stockholders required for
alteration, amendment or repeal of any such provisions shall be subject
to all applicable requirements of federal or state laws or of the Articles
of Incorporation.
prosp\capex.2
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
Class A Share Certificate (8-1/2" x 11")
I. FACE OF CERTIFICATE (All text and other matter lies within
8-1/4" x 10-3/4" decorative border, 5/16" wide)
(upper left corner, box with heading: NUMBER [of shares]
(upper right corner) [share certificate no.] XX-000000
(upper right box, CLASS A SHARES
below cert. no.)
(centered
below boxes) Oppenheimer Quest Capital Value Fund, Inc.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR
CERTAIN
DEFINITIONS
(box with number)
CUSIP
(at left) is the owner of
(centered) FULLY PAID AND NON-ASSESSABLE CLASS A SHARES OF
COMMON STOCK WITH THE PAR VALUE OF $.0001 EACH OF
Oppenheimer Quest Capital Value Fund, Inc.
hereinafter called the "Corporation", transferable only on the
books of the Corporation by the holder hereof in person or by
duly authorized attorney, upon surrender of this certificate
properly endorsed. This certificate and the shares
represented hereby are issued and shall be held subject to all
of the provisions of the Articles of Incorporation of the
Corporation to all of which the holder by acceptance hereof
assents. This certificate is not valid until countersigned by
the Transfer Agent.
<PAGE>
WITNESS the facsimile seal of Corporation and the signatures
of its duly authorized officers.
(signature Dated: (signature
at left of seal) at right of seal)
/s/ George C. Bowen /s/ Bridget Macaskill
_______________________ ___________________
TREASURER PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
Oppenheimer Quest Capital Value Fund, Inc.
SEAL
1986
Maryland
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS SHAREHOLDER SERVICES
(A DIVISION OF OPPENHEIMERFUNDS, INC.)
Denver (CO) Transfer Agent
By ____________________________
Authorized Signature
II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension)
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as joint tenants with
rights of survivorship and not
as tenants in common
UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian _______________
(Cust) (Minor)
UNDER UGMA/UTMA ___________________
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received ................ hereby sell(s), assign(s), and transfer(s)
unto
<PAGE>
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
_______________________________________________________________________
(Please print or type name and address of assignee)
______________________________________________________
________________________________________________Class A Shares of common stock
represented by the within Certificate, and do hereby irrevocably constitute and
appoint ___________________________ Attorney to transfer the said shares on the
books of the within named Corporation with full power of substitution in the
premises.
Dated: ______________________
Signed: __________________________
___________________________________
(Both must sign if joint owners)
Signature(s) __________________________
guaranteed Name of Guarantor
by: _____________________________
Signature of
Officer/Title
(text printed NOTICE: The signature(s) to this assignment must
vertically to right correspond with the name(s) as written upon the of above
paragraph) face of the certificate in every particular
without alteration or enlargement or any change whatever.
(text printed in Signatures must be guaranteed by a financial
box to left of institution of the type described in the current
signature(s)) prospectus of the Corporation.
The Corporation will furnish to any stockholder, on request and without charge,
a full statement of the designations and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of redemption of the stock of each class which the
Corporation is authorized to issue.
<PAGE>
PLEASE NOTE: This document contains a watermark OppenheimerFunds
when viewed at an angle. It is invalid without this "four hands"
watermark: logotype
___________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
Class B Share Certificate (8-1/2" x 11")
I. FACE OF CERTIFICATE (All text and other matter lies within
8-1/4" x 10-3/4" decorative border, 5/16" wide)
(upper left corner, box with heading: NUMBER [of shares]
(upper right corner) [share certificate no.] XX-000000
(upper right box, Class B SHARES
below cert. no.)
(centered
below boxes) Oppenheimer Quest Value Fund, Inc.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR
CERTAIN DEFINITIONS
(box with number)
CUSIP
(at left) is the owner of
(centered) FULLY PAID AND NON-ASSESSABLE CLASS B SHARES OF
COMMON STOCK WITH THE PAR VALUE OF $.0001 EACH OF
Oppenheimer Quest Capital Value Fund, Inc.
hereinafter called the "Corporation", transferable only on the
books of the Corporation by the holder hereof in person or by
duly authorized attorney, upon surrender of this certificate
properly endorsed. This certificate and the shares
represented hereby are issued and shall be held subject to all
of the provisions of the Articles of Incorporation of the
Corporation to all of which the holder by acceptance hereof
assents. This certificate is not valid until countersigned by
the Transfer Agent.
<PAGE>
WITNESS the facsimile seal of Corporation and the signatures
of its duly authorized officers.
(signature Dated: (signature
at left of seal) at right of seal)
/s/ George C. Bowen /s/ Bridget Macaskill
_______________________ ___________________
TREASURER PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
Oppenheimer Quest Capital Value Fund, Inc.
SEAL
1986
Maryland
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS SHAREHOLDER SERVICES
(A DIVISION OF OPPENHEIMERFUNDS, INC.)
Denver (CO) Transfer Agent
By ____________________________
Authorized Signature
II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension)
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as joint tenants with
rights of survivorship and not
as tenants in common
UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian _______________
(Cust) (Minor)
UNDER UGMA/UTMA ___________________
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received ................ hereby sell(s), assign(s), and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
_______________________________________________________________________
(Please print or type name and address of assignee)
______________________________________________________
________________________________________________Class B Shares of common stock
represented by the within Certificate, and do hereby irrevocably constitute and
appoint ___________________________ Attorney to transfer the said shares on the
books of the within named Corporation with full power of substitution in the
premises.
Dated: ______________________
Signed: __________________________
___________________________________
(Both must sign if joint owners)
Signature(s) __________________________
guaranteed Name of Guarantor
by: _____________________________
Signature of
Officer/Title
(text printed NOTICE: The signature(s) to this assignment must
vertically to right correspond with the name(s) as written upon the of above
paragraph) face of the certificate in every particular
without alteration or enlargement or any change
whatever.
(text printed in Signatures must be guaranteed by a financial
box to left of institution of the type described in the current
signature(s)) prospectus of the Corporation.
The Corporation will furnish to any stockholder, on request and without charge,
a full statement of the designations and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of redemption of the stock of each class which the
Corporation is authorized to issue.
PLEASE NOTE: This document contains a watermark OppenheimerFunds
when viewed at an angle. It is invalid without this "four hands"
watermark:
logotype
___________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
Class C Share Certificate (8-1/2" x 11")
I. FACE OF CERTIFICATE (All text and other matter lies within
8-1/4" x 10-3/4" decorative border, 5/16" wide)
(upper left corner, box with heading: NUMBER [of shares]
(upper right corner) [share certificate no.] XX-000000
(upper right box, Class C SHARES
below cert. no.)
(centered
below boxes) Oppenheimer Quest Capital Value Fund, Inc.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR
CERTAIN DEFINITIONS
(box with number)
CUSIP
(at left) is the owner of
(centered) FULLY PAID AND NON-ASSESSABLE CLASS C SHARES OF
COMMON STOCK WITH THE PAR VALUE OF $.0001 EACH OF
Oppenheimer Quest Capital Value Fund, Inc.
hereinafter called the "Corporation", transferable only on the
books of the Corporation by the holder hereof in person or by
duly authorized attorney, upon surrender of this certificate
properly endorsed. This certificate and the shares
represented hereby are issued and shall be held subject to all
of the provisions of the Articles of Incorporation of the
Corporation to all of which the holder by acceptance hereof
assents. This certificate is not valid until countersigned by
the Transfer Agent.
<PAGE>
WITNESS the facsimile seal of Corporation and the signatures
of its duly authorized officers.
(signature Dated: (signature
at left of seal) at right of seal)
/s/ George C. Bowen /s/ Bridget Macaskill
_______________________ ___________________
TREASURER PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
Oppenheimer Quest Capital Value Fund, Inc.
SEAL
1986
Maryland
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS SHAREHOLDER SERVICES
(A DIVISION OF OPPENHEIMERFUNDS, INC.)
Denver (CO) Transfer Agent
By ____________________________
Authorized Signature
II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension)
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as joint tenants with
rights of survivorship and not
as tenants in common
UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian _______________
(Cust) (Minor)
UNDER UGMA/UTMA ___________________
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received ................ hereby sell(s), assign(s), and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
_______________________________________________________________________
(Please print or type name and address of assignee)
______________________________________________________
________________________________________________Class C Shares of common stock
represented by the within Certificate, and do hereby irrevocably constitute and
appoint ___________________________ Attorney to transfer the said shares on the
books of the within named Corporation with full power of substitution in the
premises.
Dated: ______________________
Signed: __________________________
___________________________________
(Both must sign if joint owners)
Signature(s) __________________________
guaranteed Name of Guarantor
by: _____________________________
Signature of
Officer/Title
(text printed NOTICE: The signature(s) to this assignment must
vertically to right correspond with the name(s) as written upon the of above
paragraph) face of the certificate in every particular without
alteration or enlargement or any change whatever.
(text printed in Signatures must be guaranteed by a financial
box to left of institution of the type described in the current
signature(s)) prospectus of the Corporation.
The Corporation will furnish to any stockholder, on request and without charge,
a full statement of the designations and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of redemption of the stock of each class which the
Corporation is authorized to issue.
PLEASE NOTE: This document contains a watermark OppenheimerFunds
when viewed at an angle. It is invalid without this "four hands" watermark:
logotype
___________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made the ____ day of January, 1997, by and between
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC., a Maryland corporation
(hereinafter referred to as the "Company"), and OPPENHEIMERFUNDS,
INC. (hereinafter referred to as "OFI").
WHEREAS, the Company is an open-end, diversified management
investment company registered as such with the Securities and
Exchange Commission (the "Commission") pursuant to the Investment
Company Act of 1940 (the "Investment Company Act"), and OFI is an
investment adviser registered as such with the Commission under the
Investment Advisers Act of 1940;
WHEREAS, the Company desires that OFI shall act as its
investment adviser pursuant to this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and
covenants hereinafter set forth, it is agreed by and between the
parties, as follows:
1. General Provisions:
The Company hereby employs OFI and OFI hereby undertakes
to act as the investment adviser of the Company, and to perform for
the Company such other duties and functions for the period and on
such terms as set forth in this Agreement. OFI shall, in all
matters, give to the Company and its Board of Directors (the
"Directors") the benefit of its best judgment, effort, advice and
recommendations and shall at all times conform to, and use its best
efforts to enable the Company to conform to (i) the provisions of
the Investment Company Act and any rules or regulations thereunder;
(ii) any other applicable provisions of state or Federal law; (iii)
the provisions of the Articles of Incorporation and By-Laws of the
Company as amended from time to time; (iv) policies and
determinations of the Directors; (v) the fundamental policies and
investment restrictions as reflected in the registration statement
of the Company under the Investment Company Act or as such policies
may, from time to time, be amended and (vi) the Prospectus and
Statement of Additional Information in effect from time to time.
The appropriate officers and employees of OFI shall be available
upon reasonable notice for consultation with any of the Directors
and officers of the Company with respect to any matters dealing
with the business and affairs of the Company including the
valuation of portfolio securities of the Company which are either
not registered for public sale or not traded on any securities
market.
2. Investment Management:
(a) OFI shall, subject to the direction and control by
the Directors, (i) regularly provide investment advice and
recommendations to the Company with respect to the investments,
investment policies and the purchase and sale of securities; (ii)
supervise continuously the investment program of the Company and
the composition of its portfolio and determine what securities
shall be purchased or sold by the Company; and (iii) arrange,
subject to the provisions of paragraph 7 hereof, for the purchase
of securities and other investments by the Company and the sale of
securities and other investments held in the Company's portfolio.
(b) Provided that the Company shall not be required to
pay any compensation for services under this Agreement other than
as provided by the terms of the Agreement and subject to the
provisions of paragraph 7 hereof, OFI may obtain investment
information, research or assistance from any other person, firm or
corporation to supplement, update or otherwise improve its
investment management services including entering into sub-advisory
agreements with other affiliated or unaffiliated registered
investment advisers to obtain specialized services.
(c) Provided that nothing herein shall be deemed to
protect OFI from willful misfeasance, bad faith or gross negligence
in the performance of its duties, or reckless disregard of its
obligations and duties under this Agreement, OFI shall not be
liable for any loss sustained by reason of good faith errors or
omissions in connection with any matters to which this Agreement
relates.
(d) Nothing in this Agreement shall prevent OFI or any
entity controlling, controlled by or under common control with OFI
or any officer thereof from acting as investment adviser for any
other person, firm or corporation or in any way limit or restrict
OFI or any of its directors, officers, stockholders or employees
from buying, selling or trading any securities for its or their own
account or for the account of others for whom it or they may be
acting, provided that such activities will not adversely affect or
otherwise impair the performance by OFI of its duties and
obligations under this Agreement.
3. Other Duties of OFI:
OFI shall, at its own expense, provide and supervise the
activities of all administrative and clerical personnel as shall be
required to provide effective corporate administration for the
Company, including the compilation and maintenance of such records
with respect to its operations as may reasonably be required; the
preparation and filing of such reports with respect thereto as
shall be required by the Commission; composition of periodic
reports with respect to operations of the Company for its
shareholders; composition of proxy materials for meetings of the
Company's shareholders; and the composition of such registration
statements as may be required by Federal and state securities laws
for continuous public sale of Shares of the Company. OFI shall, at
its own cost and expense, also provide the Company with adequate
office space, facilities and equipment. OFI shall, at its own
expense, provide such officers for the Company as the Board of
Directors may request.
4. Allocation of Expenses:
All other costs and expenses of the Company not
expressly assumed by OFI under this Agreement, or to be paid by
OppenheimerFunds Distributor, Inc., the distributor of the shares
of the Company, shall be paid by the Company, including, but not
limited to: (i) interest, taxes and governmental fees; (ii)
brokerage commissions and other expenses incurred in acquiring or
disposing of the portfolio securities and other investments; (iii)
insurance premiums for fidelity and other coverage requisite to its
operations; (iv) compensation and expenses of its Directors other
than those affiliated with OFI; (v) legal and audit expenses; (vi)
custodian and transfer agent fees and expenses; (vii) expenses
incident to the redemption of its Shares; (viii) expenses incident
to the issuance of its Shares against payment therefor by or on
behalf of the subscribers thereto; (ix) fees and expenses, other
than as hereinabove provided, incident to the registration under
Federal and state securities laws of Shares of the Company for
public sale; (x) expenses of printing and mailing reports, notices
and proxy materials to shareholders of the Company; (xi) except as
noted above, all other expenses incidental to holding meetings of
the Company's shareholders; and (xii) such extraordinary non-recurring expenses
as may arise, including litigation, affecting
the Company and any legal obligation which the Company may have to
indemnify its officers and Directors with respect thereto. Any
officers or employees of OFI or any entity controlling, controlled
by, or under common control with OFI who also serve as officers,
Directors or employees of the Company shall not receive any
compensation from the Company for their services.
5. Compensation of OFI:
The Company agrees to pay OFI and OFI agrees to accept as
full compensation for the performance of all functions and duties
on its part to be performed pursuant to the provisions hereof, a
fee computed on the total net asset value of the Company as of the
close of each business day and payable monthly at the annual rate
set forth on Schedule A hereto.
6. Use of Name "Oppenheimer" or "Quest For Value":
OFI hereby grants to the Company a royalty-free, non-exclusive license
to use the name "Oppenheimer" or "Quest For
Value" in the name of the Company for the duration of this
Agreement and any extensions or renewals thereof. To the extent
necessary to protect OFI's rights to the name "Oppenheimer" or
"Quest For Value" under applicable law, such license shall allow
OFI to inspect, subject to control by the Company's Board, control
the nature and quality of services offered by the Company under
such name and may, upon termination of this Agreement, be
terminated by OFI, in which event the Company shall promptly take
whatever action may be necessary to change its name and discontinue
any further use of the name "Oppenheimer" or "Quest For Value" in
the name of the Company or otherwise. The name "Oppenheimer" and
"Quest For Value" may be used or licensed by OFI in connection with
any of its activities, or licensed by OFI to any other party.
7. Portfolio Transactions and Brokerage:
(a) OFI (and any sub-adviser) is authorized, in
arranging the purchase and sale of the portfolio securities of the
Company, to employ or deal with such members of securities or
commodities exchanges, brokers or dealers (hereinafter "broker-dealers"),
including "affiliated" broker-dealers (as that term is
defined in the Investment Company Act), as may, in its best
judgment, implement the policy of the Fund to obtain, at reasonable
expense, the "best execution" (prompt and reliable execution at the
most favorable security price obtainable) of the portfolio
transactions of the Company as well as to obtain, consistent with
the provisions of subparagraph (c) of this paragraph 7, the benefit
of such investment information or research as will be of
significant assistance to the performance by OFI of its investment
management functions.
(b) OFI (and any sub-adviser) shall select broker-dealers
to effect the portfolio transactions of the Company on the
basis of its estimate of their ability to obtain best execution of
particular and related portfolio transactions. The abilities of a
broker-dealer to obtain best execution of particular portfolio
transaction(s) will be judged by OFI (or any sub-adviser) on the
basis of all relevant factors and considerations including, insofar
as feasible, the execution capabilities required by the transaction
or transactions; the ability and willingness of the broker-dealer
to facilitate the portfolio transactions of the Company by
participating therein for its own account; the importance to the
Company of speed, efficiency or confidentiality; the broker-dealer's apparent
familiarity with sources from or to whom
particular securities might be purchased or sold; as well as any
other matters relevant to the selection of a broker-dealer for
particular and related transactions of the Company.
(c) OFI (and any sub-adviser) shall have discretion, in
the interest of the Company, to allocate brokerage on the
portfolio transactions of the Company to broker-dealers, other than
an affiliated broker-dealer, qualified to obtain best execution of
such transactions who provide brokerage and/or research services
(as such services are defined in Section 28(e)(3) of the Securities
Exchange Act of 1934) for the Company and/or other accounts for
which OFI or its affiliates (or any sub-adviser) exercise
"investment discretion" (as that term is defined in Section
3(a)(35) of the Securities Exchange Act of 1934) and to cause the
Company to pay such broker-dealers a commission for effecting a
portfolio transaction for the Company that is in excess of the
amount of commission another broker-dealer adequately qualified to
effect such transaction would have charged for effecting that
transaction, if OFI (or any sub-adviser) determines, in good faith,
that such commission is reasonable in relation to the value of the
brokerage and/or research services provided by such broker-dealer
viewed in terms of either that particular transaction or the
overall responsibilities of OFI or its affiliates (or any sub-adviser) with
respect to accounts as to which they exercise
investment discretion. In reaching such determination, OFI (or any
sub-adviser) will not be required to place or attempt to place a
specific dollar value on the brokerage and/or research services
provided or being provided by such broker-dealer. In demonstrating
that such determinations were made in good faith, OFI (and any
sub-adviser) shall be prepared to show that all commissions were
allocated for purposes contemplated by this Agreement and that the
total commissions paid by the Company over a representative period
selected by the Company's Directors were reasonable in relation to
the benefits to the Company.
(d) OFI (or any sub-adviser) shall have no duty or
obligation to seek advance competitive bidding for the most
favorable commission rate applicable to any particular portfolio
transactions or to select any broker-dealer on the basis of its
purported or "posted" commission rate but will, to the best of its
ability, endeavor to be aware of the current level of the charges
of eligible broker-dealers and to minimize the expense incurred by
the Company for effecting its portfolio transactions to the extent
consistent with the interests and policies of the Company as
established by the determinations of the Board of Directors of the
Company and the provisions of this paragraph 7.
(e) The Company recognizes that an affiliated broker-dealer:
(i) may act as one of the Company's regular brokers for the
Company so long as it is lawful for it so to act; (ii) may be a
major recipient of brokerage commissions paid by the Company; and
(iii) may effect portfolio transactions for the Company thereof
only if the commissions, fees or other renumeration received or to
be received by it are determined in accordance with procedures
contemplated by any rule, regulation or order adopted under the
Investment Company Act for determining the permissible level of
such commissions.
(f) Subject to the foregoing provisions of this
paragraph 7, OFI (and any sub-adviser) may also consider sales of
shares of the Company, and the other funds advised by OFI and its
affiliates as a factor in the selection of broker-dealers for its
portfolio transactions.
8. Duration:
This Agreement will take effect on the date first set
forth above. Unless earlier terminated pursuant to paragraph 10
hereof, this Agreement shall remain in effect from year-to-year, so
long as such continuance shall be approved at least annually by the
Company's Board of Directors, including the vote of the majority of
the Directors of the Company who are not parties to this Agreement
or "interested persons" (as defined in the Investment Company Act)
of any such party, cast in person at a meeting called for the
purpose of voting on such approval, or by the holders of a
"majority" (as defined in the Investment Company Act) of the
outstanding voting securities of the Company, and by such a vote of
the Company's Board of Directors.
9. Termination:
This Agreement may be terminated (i) by OFI at any time
without penalty upon sixty days' written notice to the Company
(which notice may be waived by the Company); or (ii) by the Company
at any time without penalty upon sixty days' written notice to OFI
(which notice may be waived by OFI) provided that such termination
by the Company shall be directed or approved by the vote of a
majority of all of the Directors of the Company then in office or
by the vote of the holders of a "majority" of the outstanding
voting securities of the Company (as defined in the Investment
Company Act).
10. Assignment or Amendment:
This Agreement may not be amended, or the rights of OFI
hereunder sold, transferred, pledged or otherwise in any manner
encumbered without the affirmative vote or written consent of the
holders of the "majority" of the outstanding voting securities of
the Company. This Agreement shall automatically and immediately
terminate in the event of its "assignment," as defined in the
Investment Company Act.
11. Definitions:
The terms and provisions of the Agreement shall be
interpreted and defined in a manner consistent with the provisions
and definitions contained in the Investment Company Act.
OPPENHEIMER QUEST CAPITAL VALUE FUND,
INC.
Attest: ______________________ By: _______________________
Andrew J. Donohue Bridget A. Macaskill
Secretary Chairman
OPPENHEIMERFUNDS, INC.
Attest: ______________________ By: _______________________
Katherine P. Feld Andrew J. Donohue
Secretary Executive Vice President
quest\qbtsf\investad.ag4
Schedule A
To
Investment Advisory Agreement
Between
Oppenheimer Quest Capital Value Fund, Inc.
and
OppenheimerFunds, Inc.
Annual Fee as a Percentage of Daily Total
Name of Series Net Assets1
Oppenheimer Quest Capital 1.00% of first $400 million of all net assets
Value Fund, Inc. 0.90% of next $400 million of all net assets
0.85% of net assets over $800 million
_______________
1 For the period of two years from the date of this Agreement, OFI
agrees to waive the following portion of its investment advisory fee:
0.15% of first $200 million of all net assets; 0.40% of next $200
million of all net assets; 0.30% of next $400 million of all net
assets; and 0.25% of net asset over $800 million.
SUBADVISORY AGREEMENT
THIS AGREEMENT is made by and between OppenheimerFunds, Inc.,
a Colorado corporation (the "Adviser"), and OpCap Advisors, a
Delaware general partnership (the "Subadviser"), as of the date set
forth below.
RECITAL
WHEREAS, Oppenheimer Quest Capital Value Fund, Inc. (the
"Fund") is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end, diversified management
investment company;
WHEREAS, the Adviser is registered under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), as an
investment adviser and engages in the business of acting as an
investment adviser;
WHEREAS, the Subadviser is registered under the Advisers Act
as an investment adviser and engages in the business of acting as
an investment adviser;
WHEREAS, the Adviser has entered into an Investment Advisory
Agreement as of the date hereof with the Fund (the "Investment
Advisory Agreement"), pursuant to which the Adviser shall act as
investment adviser with respect to the Fund; and
WHEREAS, pursuant to Paragraph 2 of the Investment Advisory
Agreement, the Adviser wishes to retain the Subadviser for purposes
of rendering investment advisory services to the Adviser in
connection with the Fund upon the terms and conditions hereinafter
set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of
which are hereby acknowledged, the parties hereto agree as follows:
I. Appointment and Obligations of the Adviser.
The Adviser hereby appoints the Subadviser to render to the
Adviser with respect to the Fund, investment research and advisory
services as set forth below in Section II, under the supervision of
the Adviser and subject to the approval and direction of the Fund's
Board of Directors (the "Board"), and the Subadviser hereby accepts
such appointment, all subject to the terms and conditions contained
herein. The Subadviser shall, for all purposes herein, be deemed
an independent contractor and shall not have, unless otherwise
expressly provided or authorized, any authority to act for or
represent the Fund in any way or otherwise to serve as or be deemed
an agent of the Fund.
<PAGE>
II. Duties of the Subadviser and the Adviser.
A. Duties of the Subadviser.
The Subadviser shall regularly provide investment advice with
respect to the Fund and shall, subject to the terms of this
Agreement, continuously supervise the investment and reinvestment
of cash, securities and instruments or other property comprising
the assets of the Fund, and in furtherance thereof, the
Subadviser's duties shall include:
1. Obtaining and evaluating pertinent information about
significant developments and economic, statistical and
financial data, domestic, foreign or otherwise, whether
affecting the economy generally or the Fund, and whether
concerning the individual issuers whose securities are
included in the Fund or the activities in which such
issuers engage, or with respect to securities which the
Subadviser considers desirable for inclusion in the
Fund's investment portfolio;
2. Determining which securities shall be purchased,
sold or exchanged by the Fund or otherwise represented in
the Fund's investment portfolio and regularly reporting
thereon to the Adviser and, at the request of the
Adviser, to the Board;
3. Formulating and implementing continuing programs for
the purchases and sales of the securities of such issuers
and regularly reporting thereon to the Adviser and, at
the request of the Adviser, to the Board; and
4. Taking, on behalf of the Fund, all actions that
appear to the Subadviser necessary to carry into effect
such investment program, including the placing of
purchase and sale orders, and making appropriate reports
thereon to the Adviser and the Board.
B. Duties of the Adviser.
The Adviser shall retain responsibility for, among other
things, providing the following advice and services with respect to
the Fund:
1. Without limiting the obligation of the Subadviser
to so comply, the Adviser shall monitor the
investment program maintained by the Subadviser for
the Fund to ensure that the Fund's assets are
invested in compliance with this Agreement and the
Fund's Registration Statement, as currently in
effect from time to time; and
2. The Adviser shall oversee matters relating to Fund
promotion, including, but not limited to,
marketing materials and the Subadviser's reports to
the Board.
III. Representations, Warranties and Covenants.
A. Representations, Warranties and Covenants of the
Subadviser.
1. Organization. The Subadviser is now, and will
continue to be, a general partnership duly formed and
validly existing under the laws of its jurisdiction of
formation, fully authorized to enter into this Agreement
and carry out its duties and obligations hereunder.
2. Registration. The Subadviser is registered as an
investment adviser with the Securities and Exchange
Commission (the "SEC") under the Advisers Act, and is
registered or licensed as an investment adviser under the
laws of all jurisdictions in which its activities require
it to be so registered or licensed, except where the
failure to be so licensed would not have a material
adverse effect on the Subadviser. The Subadviser shall
maintain such registration or license in effect at all
times during the term of this Agreement.
3. Best Efforts. The Subadviser at all times shall
provide its best judgment and effort to the Adviser and
the Fund in carrying out its obligations hereunder.
4. Other Covenants. The Subadviser further agrees
that:
a. it will use the same skill and care in
providing such services as it uses in
providing services to other accounts for which
it has investment management responsibilities;
b. it will not make loans to any person to
purchase or carry shares of the Fund or make
loans to the Fund;
c. it will report regularly to the Fund and to
the Adviser and will make appropriate persons
available for the purpose of reviewing with
representatives of the Adviser on a regular
basis the management of the Fund, including,
without limitation, review of the general
investment strategy of the Fund, economic
considerations and general conditions
affecting the marketplace;
d. as required by applicable laws and
regulations, it will maintain books and
records with respect to the Fund's securities
transactions and it will furnish to the
Adviser and to the Board such periodic and
special reports as the Adviser or the Board
may reasonably request;
e. it will treat confidentially and as
proprietary information of the Fund all
records and other information relative to the
Fund, and will not use records and information
for any purpose other than performance of its
responsibilities and duties hereunder, except
after prior notification to and approval in
writing by the Fund or when so requested by
the Fund or required by law or regulation;
f. it will, on a continuing basis and at its own
expense, (1) provide the distributor of the
Fund (the "Distributor") with assistance in
the distribution and marketing of the Fund in
such amount and form as the Adviser may
reasonably request from time to time, and (2)
use its best efforts to cause the portfolio
manager or other person who manages or is
responsible for overseeing the management of
the Fund's portfolio (the "Portfolio Manager")
to provide marketing and distribution
assistance to the Distributor, including,
without limitation, conference calls, meetings
and road trips, provided that each Portfolio
Manager shall not be required to devote more
than 10% of his or her time to such marketing
and distribution activities;
g. it will use its reasonable best efforts (i) to
retain the services of the Portfolio Manager
who manages the portfolio of the Fund, from
time to time and (ii) to promptly obtain the
services of a Portfolio Manager acceptable to
the Adviser if the services of the Portfolio
Manager are no longer available to the
Subadviser;
h. it will, from time to time, assure that each
Portfolio Manager is acceptable to the
Adviser;
i. it will obtain the written approval of the
Adviser prior to designating a new Portfolio
Manager; provided, however, that, if the
services of a Portfolio Manager are no longer
available to the Subadviser due to
circumstances beyond the reasonable control of
the Subadviser (e.g., voluntary resignation,
death or disability), the Subadviser may
designate an interim Portfolio Manager who (a)
shall be reasonably acceptable to the Adviser
and (b) shall function for a reasonable period
of time until the Subadviser designates an
acceptable permanent replacement; and
j. it will promptly notify the Adviser of any
impending change in Portfolio Manager,
portfolio management or any other material
matter that may require disclosure to the
Board, shareholders of the Fund or dealers.
B. Representations, Warranties and Covenants of the Adviser.
1. Organization. The Adviser is now, and will continue
to be, duly organized and in good standing under the laws
of its state of incorporation, fully authorized to enter
into this Agreement and carry out its duties and
obligations hereunder.
2. Registration. The Adviser is registered as an
investment adviser with the SEC under the Advisers Act,
and is registered or licensed as an investment adviser
under the laws of all jurisdictions in which its
activities require it to be so registered or licensed.
The Adviser shall maintain such registration or license
in effect at all times during the term of this Agreement.
3. Best Efforts. The Adviser at all times shall
provide its best judgment and effort to the Fund in
carrying out its obligations hereunder. For a period of
five years from the date hereof, and subject to the
Adviser's fiduciary obligations to the Fund and its
shareholders, the Adviser will not recommend to the Board
that the Fund be reorganized into another Fund unless the
total net assets of the Fund are less than $100 million
at the time of such reorganization.
IV. Compliance with Applicable Requirements.
In carrying out its obligations under this Agreement, the
Subadviser shall at all times conform to:
A. all applicable provisions of the 1940 Act and any rules
and regulations adopted thereunder;
B. the provisions of the registration statement of the Fund,
as the same may be amended from time to time, under the
Securities Act of 1933, as amended, and the 1940 Act;
C. the provisions of the Fund's Articles of Incorporation or
other governing document, as amended from time to time;
D. the provisions of the By-laws of the Fund, as amended
from time to time;
E. any other applicable provisions of state or federal law;
and
F. guidelines, investment restrictions, policies, procedures
or instructions adopted or issued by the Fund or the
Adviser from time to time.
The Adviser shall promptly notify the Subadviser of any
changes or amendments to the provisions of B., C., D. and F. above
when such changes or amendments relate to the obligations of the
Subadviser.
V. Control by the Board.
Any investment program undertaken by the Subadviser pursuant
to this Agreement, as well as any other activities undertaken by
the Subadviser with respect to the Fund, shall at all times be
subject to any directives of the Adviser and the Board.
VI. Books and Records.
The Subadviser agrees that all records which it maintains for
the Fund on behalf of the Adviser are the property of the Fund and
further agrees to surrender promptly to the Fund or to the Adviser
any of such records upon request. The Subadviser further agrees to
preserve for the periods prescribed by applicable laws, rules and
regulations all records required to be maintained by the Subadviser
on behalf of the Adviser under such applicable laws, rules and
regulations, or such longer period as the Adviser may reasonably
request from time to time.
VII. Broker-Dealer Relationships.
A. Portfolio Trades.
The Subadviser, at its own expense, and to the extent
appropriate, in consultation with the Adviser, shall place all
orders for the purchase and sale of portfolio securities for the
Fund with brokers or dealers selected by the Subadviser, which may
include, to the extent permitted by the Adviser and the Fund,
brokers or dealers affiliated with the Subadviser. The Subadviser
shall use its best efforts to seek to execute portfolio
transactions at prices that are advantageous to the Fund and at
commission rates that are reasonable in relation to the benefits
received.
B. Selection of Broker-Dealers.
With respect to the execution of particular transactions,
the Subadviser may, to the extent permitted by the Adviser and the
Fund, select brokers or dealers who also provide brokerage and
research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934, as amended) to the Fund
and/or the other accounts over which the Subadviser or its
affiliates exercise investment discretion. The Subadviser is
authorized to pay a broker or dealer who provides such brokerage
and research services a commission for executing a portfolio
transaction for the Fund that is in excess of the amount of
commission another broker or dealer would have charged for
effecting that transaction if the Subadviser determines in good
faith that such amount of commission is reasonable in relation to
the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of
either that particular transaction or the overall responsibilities
that the Subadviser and its affiliates have with respect to
accounts over which they exercise investment discretion. The
Adviser, Subadviser and the Board shall periodically review the
commissions paid by the Fund to determine, among other things, if
the commissions paid over representative periods of time were
reasonable in relation to the benefits received.
C. Soft Dollar Arrangements.
The Subadviser may enter into "soft dollar" arrangements
through the agency of third parties on behalf of the Adviser. Soft
dollar arrangements for services may be entered into in order to
facilitate an improvement in performance in respect of the
Subadviser's service to the Adviser with respect to the Fund. The
Subadviser makes no direct payments but instead undertakes to place
business with broker-dealers who in turn pay third parties who
provide these services. Soft dollar transactions will be conducted
on an arm's-length basis, and the Subadviser will secure best
execution for the Adviser. Any arrangements involving soft dollars
and/or brokerage services shall be effected in compliance with
Section 28(e) of the Securities Exchange Act of 1934, as amended,
and the policies that the Adviser and the Board may adopt from time
to time. The Subadviser agrees to provide reports to the Adviser
as necessary for purposes of providing information on these
arrangements to the Board.
VIII. Compensation.
A. Amount of Compensation. The Adviser shall pay the
Subadviser, as compensation for services rendered
hereunder, from its own assets, an annual fee, payable
monthly, equal to 40% of the investment advisory fee
collected by the Adviser from the Fund, based on the
total net assets of the Fund existing as of the date
hereof and remaining 120 days later (the "base amount"),
plus 30% of the advisory fee collected by the Adviser,
based on the total net assets of the Fund that exceed the
base amount (the "marginal amount"), in each case
calculated after any waivers, voluntary or otherwise.
B. Calculation of Compensation. Except as hereinafter set
forth, compensation under this Agreement shall be
calculated and accrued on the same basis as the advisory
fee paid to the Adviser by the Fund. If this Agreement
becomes effective subsequent to the first day of a month
or shall terminate before the last day of a month,
compensation for that part of the month this Agreement is
in effect shall be prorated in a manner consistent with
the calculation of the fees set forth above.
C. Payment of Compensation: Subject to the provisions of
this paragraph, payment of the Subadviser's compensation
for the preceding month shall be made within 15 days
after the end of the preceding month.
D. Reorganization of the Fund. If the Fund is reorganized
with another investment company for which the Subadviser
does not serve as an investment adviser or subadviser,
and the Fund is the surviving entity, the subadvisory fee
payable under this section shall be adjusted in an
appropriate manner as the parties may agree.
IX. Allocation of Expenses.
The Subadviser shall pay the expenses incurred in providing
services in connection with this Agreement, including, but not
limited to, the salaries, employment benefits and other related
costs of those of its personnel engaged in providing investment
advice to the Fund hereunder, including, without limitation, office
space, office equipment, telephone and postage costs and other
expenses. In the event of an "assignment" of this Agreement, other
than an assignment resulting solely by action of the Adviser or an
affiliate thereof, the Subadviser shall be responsible for payment
of all costs and expenses incurred by the Adviser and the Fund
relating thereto, including, but not limited to, reasonable legal,
accounting, printing and mailing costs related to obtaining
approval of Fund shareholders.
X. Non-Exclusivity.
The services of the Subadviser with respect to the Fund are
not to be deemed to be exclusive, and the Subadviser shall be free
to render investment advisory and administrative or other services
to others (including other investment companies) and to engage in
other activities, subject to the provisions of a certain Agreement
Not to Compete dated as of November 22, 1995 among the Adviser,
Oppenheimer Capital, the Subadviser and Quest For Value
Distributors (the "Agreement Not to Compete"). It is understood
and agreed that officers or directors of the Subadviser may serve
as officers or directors of the Adviser or of the Fund; that
officers or directors of the Adviser or of the Fund may serve as
officers or directors of the Subadviser to the extent permitted by
law; and that the officers and directors of the Subadviser are not
prohibited from engaging in any other business activity or from
rendering services to any other person, or from serving as
partners, officers, directors or trustees of any other firm or
trust, including other investment advisory companies (subject to
the provisions of the Agreement Not to Compete), provided it is
permitted by applicable law and does not adversely affect the Fund.
XI. Term.
This Agreement shall become effective at the close of business
on the date hereof and shall remain in force and effect, subject to
Paragraphs XII.A and XII.B hereof and approval by the Fund's
shareholders, for a period of two years from the date hereof.
XII. Renewal.
Following the expiration of its initial two-year term, the
Agreement shall continue in full force and effect from year to
year for a period of eight years, provided that such continuance is
specifically approved:
A. at least annually (1) by the Board or by the vote of a
majority of the Fund's outstanding voting securities (as
defined in Section 2(a)(42) of the 1940 Act), and (2) by
the affirmative vote of a majority of the directors who
are not parties to this Agreement or interested persons
of a party to this Agreement (other than as a director of
the Fund), by votes cast in person at a meeting
specifically called for such purpose; or
B. by such method required by applicable law, rule or
regulation then in effect.
XIII. Termination.
A. Termination by the Fund. This Agreement may be
terminated at any time, without the payment of any
penalty, by vote of the Board or by vote of a majority of
the Fund's outstanding voting securities, on sixty (60)
days' written notice. The notice provided for herein may
be waived by the party required to be notified.
B. Assignment. This Agreement shall automatically terminate
in the event of its "assignment," as defined in Section
2 (a) (4) of the 1940 Act. In the event of an assignment
that occurs solely due to the change in control of the
Subadviser (provided that no condition exists that
permits, or, upon the consummation of the assignment,
will permit, the termination of this Agreement by the
Adviser pursuant to Section XIII. D. hereof), the Adviser
and the Subadviser, at the sole expense of the
Subadviser, shall use their reasonable best efforts to
obtain shareholder approval of a successor Subadvisory
Agreement on substantially the same terms as contained in
this Agreement.
C. Payment of Fees After Termination. Notwithstanding the
termination of this Agreement prior to the tenth
anniversary of the date hereof, the Adviser shall
continue to pay to the Subadviser the subadvisory fee for
the term of this Agreement and any renewals thereof
through such tenth anniversary, if: (1) the Adviser or
the Fund terminates this Agreement for a reason other
than the reasons set forth in Section XIII.D. hereof,
provided the Investment Advisory Agreement remains in
effect; (2) the Fund reorganizes with another investment
company advised by the Adviser (or an affiliate of the
Adviser) and for which the Subadviser does not serve as
an investment adviser or subadviser and such other
investment company is the surviving entity; or (3) the
Investment Advisory Agreement terminates (i) by reason of
an "assignment;" (ii) because the Adviser is disqualified
from serving as an investment adviser; or (iii) by reason
of a voluntary termination by the Adviser; provided that
the Subadviser does not serve as the investment adviser
or subadviser of the Fund after such termination of the
Investment Advisory Agreement. The amount of the
subadvisory fee paid pursuant to this section shall be
calculated on the basis of the Fund's net assets measured
at the time of such termination or such reorganization.
Notwithstanding anything to the contrary, if the
Subadviser terminates this Agreement or if this Agreement
is terminated by operation of law, due solely to an act
or omission by the Subadviser, Oppenheimer Capital
("OpCap") or their respective partners, subsidiaries,
directors, officers, employees or agents (other than by
reason of an "assignment"of this Agreement), then the
Adviser shall not be liable for any further payments
under this Agreement, provided, however, that if at any
time prior to the end of the term of the Agreement Not to
Compete any event that would have permitted the
termination of this Agreement by the Adviser pursuant to
Section XIII. D. (3) hereof occurs, the Adviser shall be
under no further obligation to pay any subadvisory fees.
D. Termination by the Adviser. The Adviser may terminate
this Agreement without penalty and without the payment of
any fee or penalty, immediately after giving written
notice, upon the occurrence of any of the following
events:
1. The Fund's investment performance of the Fund's
Class A shares compared to the appropriate universe
of Class A shares (or their equivalent), as set
forth on Schedule D-1, as amended from time to
time, ranks in the bottom quartile for two
consecutive calendar years (beginning with the
calendar year 1996) and earns a Morningstar three-year rating
of less than three (3) stars at the
time of such termination; or
2. Any of the Subadviser, OpCap, their respective
partners, subsidiaries, affiliates, directors,
officers, employees or agents engages in an action
or omits to take an action that would cause the
Subadviser or OpCap to be disqualified in any
manner under Section 9(a) of the 1940 Act, if the
SEC were not to grant an exemptive order under
Section 9(c) thereof or that would constitute
grounds for the SEC to deny, revoke or suspend the
registration of the Subadviser as an investment
adviser with the SEC; or
3. Any of OpCap, the Subadviser, their respective
partners, subsidiaries, affiliates, directors,
officers, employees or agents causes a material
violation of the Agreement Not to Compete which is
not cured in accordance with the provisions of that
agreement; or
4. The Subadviser breaches the representations
contained in Paragraph III.A.4.i. of this Agreement
or any other material provision of this Agreement,
and any such breach is not cured within a
reasonable period of time after notice thereof from
the Adviser to the Subadviser. However, consistent
with its fiduciary obligations, for a period of
seven months the Adviser will not terminate this
Agreement solely because the Subadviser has failed
to designate an acceptable permanent replacement to
a Portfolio Manager whose services are no longer
available to the Subadviser due to circumstances
beyond the reasonable control of the Subadviser,
provided that the Subadviser uses its reasonable
best efforts to promptly obtain the services of a
Portfolio Manager acceptable to the Adviser and
further provided that the Adviser has not
unreasonably withheld approval of such replacement
Portfolio Manager.
E. Transactions in Progress upon Termination. The Adviser
and Subadviser will cooperate with each other to ensure
that portfolio or other transactions in progress at the
date of termination of this Agreement shall be completed
by the Adviser in accordance with the terms of such
transactions, and to this end the Subadviser shall
provide the Adviser with all necessary information and
documentation to secure the implementation thereof.
XIV. Non-Solicitation.
During the term of this Agreement, the Adviser (and its
affiliates under its control) shall not solicit or knowingly assist
in the solicitation of any Portfolio Manager of the Fund or any
portfolio assistant of the Fund then employed by the Subadviser or
OpCap, provided, however, that the Adviser (or its affiliates) may
solicit or hire any such individual who (A) the Subadviser or OpCap
(or its affiliates) has terminated or (B) has voluntarily
terminated his or her employment with the Subadviser, OpCap (or its
affiliates) without inducement of the Adviser (or its affiliates
under its control) prior to the time of such solicitation.
Advertising in general circulation newspapers or industry
newsletters by the Adviser shall not constitute "inducement" by the
Adviser (or its affiliates under its control).
XV. Liability of the Subadviser.
In the absence of willful misfeasance, bad faith, negligence
or reckless disregard of obligations or duties hereunder on the
part of the Subadviser or any of its officers, directors or
employees, the Subadviser shall not be subject to liability to the
Adviser for any act or omission in the course of, or connected
with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security;
provided, however, that the foregoing shall not be construed to
relieve the Subadviser of any liability it may have arising under
the Agreement Not to Compete or the Acquisition Agreement dated
August 15, 1995, among the Subadviser, the Adviser and certain
affiliates of the Subadviser.
XVI. Notices.
Any notice or other communication required or that may be
given hereunder shall be in writing and shall be delivered
personally, telecopied, sent by certified, registered or express
mail, postage prepaid or sent by national next-day delivery service
and shall be deemed given when so delivered personally or
telecopied, or if mailed, two days after the date of mailing, or if
by next-day delivery service, on the business day following
delivery thereto, as follows or to such other location as any party
notifies any other party:
A. if to the Adviser, to:
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Attention: Andrew J. Donohue
Executive Vice President and General Counsel
Telecopier: 212-321-1159
B. if to the Subadviser, to:
OpCap Advisors
c/o Oppenheimer Capital
225 Liberty Street
New York, New York 10281
Attention: Thomas E. Duggan
Secretary and General Counsel
Telecopier: 212-349-4759
XVII. Questions of Interpretation.
This Agreement shall be governed by the laws of the State of
New York applicable to agreements made and to be performed entirely
within the State of New York (without regard to any conflicts of
law principles thereof). Any question of interpretation of any
term or provision of this Agreement having a counterpart in or
otherwise derived from a term or provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act and
to interpretations thereof, if any, by the United States Courts or,
in the absence of any controlling decision of any such court, by
rules, regulations or orders of the SEC issued pursuant to the 1940
Act. In addition, where the effect of a requirement of the 1940
Act reflected in any provision of this Agreement is revised by
rule, regulation or order of the SEC, such provision shall be
deemed to incorporate the effect of such rule, regulation or order.
XVIII. Form ADV - Delivery.
The Adviser hereby acknowledges that it has received from the
Subadviser a copy of the Subadviser's Form ADV, Part II as
currently filed, at least 48 hours prior to entering into this
Agreement and that it has read and understood the disclosures set
forth in the Subadviser's Form ADV, Part II.
<PAGE>
XIX. Miscellaneous.
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective successors.
XX. Counterparts.
This Agreement may be executed in counterparts, each of which
shall constitute an original and both of which, collectively, shall
constitute one agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in duplicate by their respective officers
as of the ____ day of January, 1997.
OPPENHEIMERFUNDS, INC.
By:___________________________________
Name: Andrew J. Donohue
Title: Executive Vice President
OPCAP ADVISORS
By: OPPENHEIMER FINANCIAL CORP.
a general partner
By:____________________________________
Name:
Title:
SCHEDULE XIII.D.1
The universe of funds to which Class A shares of Oppenheimer Quest
Capital Value Fund, Inc. (the "Fund") subadvised by OpCap Advisors will
be compared to so that it can be determined in which quartile
the performance ranks shall consist of those funds
with the same Lipper investment objective being offered
as the only class of shares of such fund or, in the case where
there is more than one class of shares being offered, with a
front-end load (typically referred to as Class A shares).
The present Lipper investment objective category for the fund is:
Fund Lipper Category
Oppenheimer Quest Capital CA - Capital Appreciation
Value Fund, Inc.
GENERAL DISTRIBUTOR'S AGREEMENT
BETWEEN
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
AND
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
Date: __________, 1997
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
Two World Trade Center, Suite 3400
New York, NY 10048
Dear Sirs:
Oppenheimer Quest Capital Value Fund, Inc., a Maryland
corporation (the "Fund"), is registered as an investment company
under the Investment Company Act of 1940 (the "1940 Act"), and an
indefinite number of one or more classes of its shares of
beneficial interest ("Shares") have been registered under the
Securities Act of 1933 (the "1933 Act") to be offered for sale to
the public in a continuous public offering in accordance with the
terms and conditions set forth in the Prospectus and Statement of
Additional Information ("SAI") included in the Fund's Registration
Statement as it may be amended from time to time (the "current
Prospectus and/or SAI").
In this connection, the Fund desires that your firm (the
"General Distributor") act in a principal capacity as General
Distributor for the sale and distribution of Shares which have been
registered as described above and of any additional Shares which
may become registered during the term of this Agreement. You have
advised the Fund that you are willing to act as such General
Distributor, and it is accordingly agreed by and between us as
follows:
1. Appointment of the Distributor. The Fund hereby appoints
you as the sole General Distributor, pursuant to the aforesaid
continuous public offering of its Shares, and the Fund further
agrees from and after the date of this Agreement, that it will not,
without your consent, sell or agree to sell any Shares otherwise
than through you, except (a) the Fund may itself sell shares
without sales charge as an investment to the officers, trustees or
directors and bona fide present and former full-time employees of
the Fund, the Fund's Investment Adviser and affiliates thereof, and
to other investors who are identified in the current Prospectus
and/or SAI as having the privilege to buy Shares at net asset
value; (b) the Fund may issue shares in connection with a merger,
consolidation or acquisition of assets on such basis as may be
authorized or permitted under the 1940 Act; (c) the Fund may issue
shares for the reinvestment of dividends and other distributions of
the Fund or of any other Fund if permitted by the current
Prospectus and/or SAI; and (d) the Fund may issue shares as
underlying securities of a unit investment trust if such unit
investment trust has elected to use Shares as an underlying
investment; provided that in no event as to any of the foregoing
exceptions shall Shares be issued and sold at less than the then-existing net
asset value.
2. Sale of Shares. You hereby accept such appointment and
agree to use your best efforts to sell Shares, provided, however,
that when requested by the Fund at any time because of market or
other economic considerations or abnormal circumstances of any
kind, or when agreed to by mutual consent of the Fund and the
General Distributor, you will suspend such efforts. The Fund may
also withdraw the offering of Shares at any time when required by
the provisions of any statute, order, rule or regulation of any
governmental body having jurisdiction. It is understood that you
do not undertake to sell all or any specific number of Shares.
3. Sales Charge. Shares shall be sold by you at net asset
value plus a front-end sales charge not in excess of 8.5% of the
offering price, but which front-end sales charge shall be
proportionately reduced or eliminated for larger sales and under
other circumstances, in each case on the basis set forth in the
Fund's current Prospectus and/or SAI. The redemption proceeds of
shares offered and sold at net asset value with or without a front-end sales
charge may be subject to a contingent deferred sales
charge ("CDSC") under the circumstances described in the current
Prospectus and/or SAI. You may reallow such portion of the front-end sales
charge to dealers or cause payment (which may exceed the
front-end sales charge, if any) of commissions to brokers through
which sales are made, as you may determine, and you may pay such
amounts to dealers and brokers on sales of shares from your own
resources (such dealers and brokers shall collectively include all
domestic or foreign institutions eligible to offer and sell the
Shares), and in the event the Fund has more than one class of
Shares outstanding, then you may impose a front-end sales charge
and/or a CDSC on Shares of one class that is different from the
charges imposed on Shares of the Fund's other class(es), in each
case as set forth in the current Prospectus and/or SAI, provided
the front-end sales charge and CDSC to the ultimate purchaser do
not exceed the respective levels set forth for such category of
purchaser in the Fund's current Prospectus and/or SAI.
<PAGE>
4. Purchase of Shares.
(a) As General Distributor, you shall have the right to
accept or reject orders for the purchase of Shares
at your discretion. Any consideration which you
may receive in connection with a rejected purchase
order will be returned promptly.
(b) You agree promptly to issue or to cause the duly
appointed transfer or shareholder servicing agent
of the Fund to issue as your agent confirmations of
all accepted purchase orders and to transmit a copy
of such confirmations to the Fund. The net asset
value of all Shares which are the subject of such
confirmations, computed in accordance with the
applicable rules under the 1940 Act, shall be a
liability of the General Distributor to the Fund to
be paid promptly after receipt of payment from the
originating dealer or broker (or investor, in the
case of direct purchases) and not later than eleven
business days after such confirmation even if you
have not actually received payment from the
originating dealer or broker or investor. In no
event shall the General Distributor make payment to
the Fund later than permitted by applicable rules
of the National Association of Securities Dealers,
Inc.
(c) If the originating dealer or broker shall fail to
make timely settlement of its purchase order in
accordance with applicable rules of the National
Association of Securities Dealers, Inc., or if a
direct purchaser shall fail to make good payment
for shares in a timely manner, you shall have the
right to cancel such purchase order and, at your
account and risk, to hold responsible the
originating dealer or broker, or investor. You
agree promptly to reimburse the Fund for losses
suffered by it that are attributable to any such
cancellation, or to errors on your part in relation
to the effective date of accepted purchase orders,
limited to the amount that such losses exceed
contemporaneous gains realized by the Fund for
either of such reasons with respect to other
purchase orders.
(d) In the case of a canceled purchase for the account
of a directly purchasing shareholder, the Fund
agrees that if such investor fails to make you
whole for any loss you pay to the Fund on such
canceled purchase order, the Fund will reimburse
you for such loss to the extent of the aggregate
redemption proceeds of any other shares of the Fund
owned by such investor, on your demand that the
Fund exercise its right to claim such redemption
proceeds. The Fund shall register or cause to be
registered all Shares sold to you pursuant to the
provisions hereof in such names and amounts as you
may request from time to time and the Fund shall
issue or cause to be issued certificates evidencing
such Shares for delivery to you or pursuant to your
direction if and to the extent that the shareholder
account in question contemplates the issuance of
such certificates. All Shares when so issued and
paid for, shall be fully paid and non-assessable by
the Fund (which shall not prevent the imposition of
any CDSC that may apply) to the extent set forth in
the current Prospectus and/or SAI.
5. Repurchase of Shares.
(a) In connection with the repurchase of Shares, you
are appointed and shall act as Agent of the Fund.
You are authorized, for so long as you act as
General Distributor of the Fund, to repurchase,
from authorized dealers, certificated or
uncertificated shares of the Fund ("Shares") on the
basis of orders received from each dealer
("authorized dealer") with which you have a dealer
agreement for the sale of Shares and permitting
resales of Shares to you, provided that such
authorized dealer, at the time of placing such
resale order, shall represent (i) if such Shares
are represented by certificate(s), that
certificate(s) for the Shares to be repurchased
have been delivered to it by the registered owner
with a request for the redemption of such Shares
executed in the manner and with the signature
guarantee required by the then-currently effective
prospectus of the Fund, or (ii) if such Shares are
uncertificated, that the registered owner(s) has
delivered to the dealer a request for the
redemption of such Shares executed in the manner
and with the signature guarantee required by the
then-currently effective prospectus of the Fund.
(b) You shall (a) have the right in your discretion to
accept or reject orders for the repurchase of
Shares; (b) promptly transmit confirmations of all
accepted repurchase orders; and (c) transmit a copy
of such confirmation to the Fund, or, if so
directed, to any duly appointed transfer or
shareholder servicing agent of the Fund. In your
discretion, you may accept repurchase requests made
by a financially responsible dealer which provides
you with indemnification in form satisfactory to
you in consideration of your acceptance of such
dealer's request in lieu of the written redemption
request of the owner of the account; you agree that
the Fund shall be a third party beneficiary of such
indemnification.
(c) Upon receipt by the Fund or its duly appointed
transfer or shareholder servicing agent of any
certificate(s) (if any has been issued) for
repurchased Shares and a written redemption request
of the registered owner(s) of such Shares executed
in the manner and bearing the signature guarantee
required by the then-currently effective Prospectus
or SAI of the Fund, the Fund will pay or cause its
duly appointed transfer or shareholder servicing
agent promptly to pay to the originating authorized
dealer the redemption price of the repurchased
Shares (other than repurchased Shares subject to
the provisions of part (d) of Section 5 of this
Agreement) next determined after your receipt of
the dealer's repurchase order.
(d) Notwithstanding the provisions of part (c) of
Section 5 of this Agreement, repurchase orders
received from an authorized dealer after the
determination of the Fund's redemption price on a
regular business day will receive that day's
redemption price if the request to the dealer by
its customer to arrange such repurchase prior to
the determination of the Fund's redemption price
that day complies with the requirements governing
such requests as stated in the current Prospectus
and/or SAI.
(e) You will make every reasonable effort and take all
reasonably available measures to assure the
accurate performance of all services to be
performed by you hereunder within the requirements
of any statute, rule or regulation pertaining to
the redemption of shares of a regulated investment
company and any requirements set forth in the then-current Prospectus
and/or SAI of the Fund. You
shall correct any error or omission made by you in
the performance of your duties hereunder of which
you shall have received notice in writing and any
necessary substantiating data; and you shall hold
the Fund harmless from the effect of any errors or
omissions which might cause an over- or under-redemption
of the Fund's Shares and/or an excess or
non-payment of dividends, capital gains
distributions, or other distributions.
(f) In the event an authorized dealer initiating a
repurchase order shall fail to make delivery or
otherwise settle such order in accordance with the
rules of the National Association of Securities
Dealers, Inc., you shall have the right to cancel
such repurchase order and, at your account and
risk, to hold responsible the originating dealer.
In the event that any cancellation of a Share
repurchase order or any error in the timing of the
acceptance of a Share repurchase order shall result
in a gain or loss to the Fund, you agree promptly
to reimburse the Fund for any amount by which any
loss shall exceed then-existing gains so arising.
6. 1933 Act Registration. The Fund has delivered to you a
copy of its current Prospectus and SAI. The Fund agrees that it
will use its best efforts to continue the effectiveness of the
Registration Statement under the 1933 Act. The Fund further agrees
to prepare and file any amendments to its Registration Statement as
may be necessary and any supplemental data in order to comply with
the 1933 Act. The Fund will furnish you at your expense with a
reasonable number of copies of the Prospectus and SAI and any
amendments thereto for use in connection with the sale of Shares.
7. 1940 Act Registration. The Fund has already registered
under the 1940 Act as an investment company, and it will use its
best efforts to maintain such registration and to comply with the
requirements of the 1940 Act.
8. State Blue Sky Qualification. At your request, the Fund
will take such steps as may be necessary and feasible to qualify
Shares for sale in states, territories or dependencies of the
United States, the District of Columbia, the Commonwealth of Puerto
Rico and in foreign countries, in accordance with the laws thereof,
and to renew or extend any such qualification; provided, however,
that the Fund shall not be required to qualify shares or to
maintain the qualification of shares in any jurisdiction where it
shall deem such qualification disadvantageous to the Fund.
9. Duties of Distributor. You agree that:
(a) Neither you nor any of your officers will take any
long or short position in the Shares, but this
provision shall not prevent you or your officers
from acquiring Shares for investment purposes only;
and
(b) You shall furnish to the Fund any pertinent
information required to be inserted with respect to
you as General Distributor within the purview of
the Securities Act of 1933 in any reports or
registration required to be filed with any
governmental authority; and
(c) You will not make any representations inconsistent
with the information contained in the current
Prospectus and/or SAI; and
(d) You shall maintain such records as may be
reasonably required for the Fund or its transfer or
shareholder servicing agent to respond to
shareholder requests or complaints, and to permit
the Fund to maintain proper accounting records, and
you shall make such records available to the Fund
and its transfer agent or shareholder servicing
agent upon request; and
(e) In performing under this Agreement, you shall
comply with all requirements of the Fund's current
Prospectus and/or SAI and all applicable laws,
rules and regulations with respect to the purchase,
sale and distribution of Shares.
10. Allocation of Costs. The Fund shall pay the cost of
composition and printing of sufficient copies of its Prospectus and
SAI as shall be required for periodic distribution to its
shareholders and the expense of registering Shares for sale under
federal securities laws. You shall pay the expenses normally
attributable to the sale of Shares, other than as paid under the
Fund's Distribution Plan under Rule 12b-1 of the 1940 Act,
including the cost of printing and mailing of the Prospectus (other
than those furnished to existing shareholders) and any sales
literature used by you in the public sale of the Shares and for
registering such shares under state blue sky laws pursuant to
paragraph 8.
11. Duration. This Agreement shall take effect on the date
first written above, and shall supersede any and all prior General
Distributor's Agreements by and among the Fund and you. Unless
earlier terminated pursuant to paragraph 12 hereof, this Agreement
shall remain in effect until ________________________1997. This
Agreement shall continue in effect from year to year thereafter,
provided that such continuance shall be specifically approved at
least annually: (a) by the Fund's Board of Trustees or by vote of
a majority of the voting securities of the Fund; and (b) by the
vote of a majority of the Trustees, who are not parties to this
Agreement or "interested persons" (as defined the 1940 Act) of any
such person, cast in person at a meeting called for the purpose of
voting on such approval.
12. Termination. This Agreement may be terminated (a) by the
General Distributor at any time without penalty by giving sixty
days' written notice (which notice may be waived by the Fund); (b)
by the Fund at any time without penalty upon sixty days' written
notice to the General Distributor (which notice may be waived by
the General Distributor); or (c) by mutual consent of the Fund and
the General Distributor, provided that such termination by the Fund
shall be directed or approved by the Board of Trustees of the Fund
or by the vote of the holders of a "majority" of the outstanding
voting securities of the Fund. In the event this Agreement is
terminated by the Fund, the General Distributor shall be entitled
to be paid the CDSC under paragraph 3 hereof on the redemption
proceeds of Shares sold prior to the effective date of such
termination.
13. Assignment. This Agreement may not be amended or changed
except in writing and shall be binding upon and shall enure to the
benefit of the parties hereto and their respective successors;
however, this Agreement shall not be assigned by either party and
shall automatically terminate upon assignment.
14. Disclaimer of Shareholder Liability. The General
Distributor understands and agrees that the obligations of the Fund
under this Agreement are not binding upon any Trustee or
shareholder of the Fund personally, but bind only the Fund and the
Fund's property; the General Distributor represents that it has
notice of the provisions of the Declaration of Trust of the Fund
disclaiming Trustee and shareholder liability for acts or
obligations of the Fund.
15. Section Headings. The heading of each section is for
descriptive purposes only, and such headings are not to be
construed or interpreted as part of this Agreement.
If the foregoing is in accordance with your understanding, so
indicate by signing in the space provided below.
Oppenheimer Quest Capital Value Fund, Inc.
By:
Andrew J. Donohue
Secretary
Accepted:
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By:
Katherine P. Feld
Vice President & Secretary
[Letterhead of Gordon Hurwitz Butowsky Weitzen Shalov & Wein]
February 13, 1987
Quest for Value Dual Purpose Fund, Inc.
Oppenheimer Tower
World Financial Center
New York, New York 10017
Dear Sirs:
This opinion is being furnished in connection with the
registration by Quest For Value Dual Purpose Fund, Inc., a Maryland
corporation (the "Company"), of 19,800,000 Capital Shares, par
value $0.01 per share (the "Capital Shares"), and 19,800,000 Income
Shares, par value $0.01 per shares (the "Income Shares")
(collectively, the "Shares"), pursuant to the Company's
registration statement on Form N-2, as amended (the "Registration
Statement"), under the Securities Act of 1933 and the Investment
Company Act of 1940.
As counsel for the Company, we are familiar with the
proceedings taken by it in connection with the authorization,
issuance and sale of the Shares, including the adoption by the
Company's Board of Directors of a resolution authorizing issuance
of the Shares computed at a price determined in the manner
described in the Registration Statement. In addition, we have
examined and are familiar with the Articles of Incorporation and
the By-Laws of the Company, both as amended to the date of this
opinion, and such other documents as we have deemed relevant to the
matters referred to in this opinion. In rendering this opinion, as
to matters of Maryland law, we have relied on the opinion of the
Maryland counsel to the Company.
Based upon the foregoing, we are of the opinion that the
Shares, upon issuance and sale in the manner referred to in the
Registration Statement, will be legally issued, fully paid and non-assessable
by the Company.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the use of our name in the
prospectus constituting a part thereof.
Very truly yours,
/s/Gordon Hurwitz Butowsky Weitzen
Shalov & Wein
QFV DUAL PURPOSE FUND
OPPENHEIMER TOWER
WORLD FINANCIAL CENTER
NEW YORK, NEW YORK 10281
December 4, 1986
Quest for Value Advisors, Inc.
Oppenheimer Tower
World Financial Center
New York, New York 10281
Dear Sirs:
In connection with your purchase of an aggregate of 8604
shares of beneficial interest of this Fund (4302 capital shares and
4302 income shares) for $100,021.50, you hereby represent and
confirm that you have acquired such securities for investment for
your own account, with no present intention of redeeming, reselling
or otherwise distributing the same.
It is mutually agreed that the aforementioned shares purchased
by you cannot be sold, assigned, or transferred, except upon
redemption by Quest For Value Advisors, Inc.
Furthermore, you hereby confirm that you are party to no
arrangement, agreement or understanding regarding QFV Dual Purpose
Fund or its securities, with the Fund, QFV Distributors, Inc. or
any other person made in consideration of your purchase of the
aforementioned shares.
If the foregoing correctly expresses your understanding and
our agreement, please so indicate by signing the accompanying copy
of this letter and return the same to us.
<PAGE>
A copy of the Articles of Incorporation of QFV Dual Purpose
Fund is on file with the Secretary of State of Maryland and this
Agreement is executed on behalf of the Directors as Directors and
not individually, and the obligations hereunder are not binding
upon any of the Directors or shareholders of the Fund individually,
but are binding only upon the assets and the property of the Fund.
Very truly yours,
QVF Dual Purpose Fund
By: /s/ Joseph M. LaMotta
Name: Joseph M. LaMotta
Title: President
Confirmed and Agreed:
Quest for Value Advisors, Inc.
By: /s/ Thomas E. Duggan
Name: Thomas E. Duggan
Title: Secretary
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
FOR CLASS A SHARES OF
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan") dated
the ____ day of January, 1997, by and between OPPENHEIMER QUEST
CAPITAL VALUE FUND, INC. (the "Fund") and OPPENHEIMERFUNDS
DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution
plan for Class A shares of the Fund (the "Shares"), contemplated by
Rule 12b-1 (the "Rule") under the Investment Company Act of 1940
(the "1940 Act"), pursuant to which the Fund will compensate the
Distributor for its services incurred in connection with the
distribution of Shares, and the personal service and maintenance of
shareholder accounts that hold Shares ("Accounts"). The Fund may
act as distributor of securities of which it is the issuer,
pursuant to the Rule, according to the terms of this Plan. The
Distributor is authorized under the Plan to pay "Recipients," as
hereinafter defined, for rendering (1) distribution assistance in
connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are
intended to have certain rights as third-party beneficiaries under
this Plan. The terms and provisions of this Plan shall be
interpreted and defined in a manner consistent with the provisions
and definitions contained in (i) the 1940 Act, (ii) the Rule, (iii)
Rule 2830 of the National Association of Securities Dealers, Inc.
Conduct Rules, or its successor (the "NASD Conduct Rules") and (iv)
any conditions pertaining either to distribution-related expenses
or to a plan of distribution, to which the Fund is subject under
any order on which the Fund relies, issued at any time by the
Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms
shall have the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
person or entity which: (i) has rendered assistance (whether
direct, administrative or both) in the distribution of Shares or
has provided administrative support services with respect to Shares
held by Customers (defined below) of the Recipient; (ii) shall
furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer
such questions as may arise concerning the sale of Shares; and
(iii) has been selected by the Distributor to receive payments
under the Plan. Notwithstanding the foregoing, a majority of the
Fund's Board of Directors (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of this Plan or in any
agreements relating to this Plan (the "Independent Directors") may
remove any broker, dealer, bank or other person or entity as a
Recipient, whereupon such person's or entity's rights as a third-party
beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all
Shares owned beneficially or of record by: (i) such Recipient, or
(ii) such customers, clients and/or accounts as to which such
Recipient is a fiduciary or custodian or co-fiduciary or co-custodian
(collectively, the "Customers"), but in no event shall
any such Shares be deemed owned by more than one Recipient for
purposes of this Plan. In the event that two entities would
otherwise qualify as Recipients as to the same Shares, the
Recipient which is the dealer of record on the Fund's books shall
be deemed the Recipient as to such Shares for purposes of this
Plan.
3. Payments for Distribution Assistance and Administrative
Support Services.
(a) The Fund will make payments to the Distributor (i) within
forty-five (45) days of the end of each calendar quarter, in the
aggregate amount of 0.0625% (0.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset
value of the Shares computed as of the close of each business day
(the "Service Fee"), plus (ii) within ten (10) days of the end of
each month, in the aggregate 0.020833% (0.25% on an annual basis)
of the average during the calendar quarter of the aggregate net
asset value of the Shares computed as of the close of each business
day (the "Asset-Based Sales Charge"). Such Service Fee payments
received from the Fund will compensate the Distributor and
Recipients for providing administrative support services with
respect to Accounts. Such Asset-Based Sales Charge payments
received from the Fund will compensate the Distributor and
Recipients for providing distribution assistance in connection with
the sale of Shares.
The administrative support services in connection with the
Accounts to be rendered by Recipients may include, but shall not be
limited to, the following: answering routine inquiries concerning
the Fund, assisting in establishing and maintaining accounts or
sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend
payment options available, and providing such other information and
services in connection with the rendering of personal services
and/or the maintenance of Accounts, as the Distributor or the Fund
may reasonably request.
The distribution assistance in connection with the sale of
Shares to be rendered by the Distributor and by Recipients may
include, but shall not be limited to, the following: distributing
sales literature and prospectuses other than those furnished to
current holders of the Fund's Shares ("Shareholders"), and
providing such other information and services in connection with
the distribution of Shares as the Distributor or the Fund may
reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for
payment under the Plan if it has Qualified Holdings of Shares to
entitle it to payments under the Plan. In the event that either
the Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, a Recipient may
not be rendering appropriate distribution assistance in connection
with the sale of Shares or administrative support services for the
Accounts, then the Distributor, at the request of the Board, shall
require the Recipient to provide a written report or other
information to verify that said Recipient is providing appropriate
distribution assistance and/or services in this regard. If the
Distributor or the Board of Directors still is not satisfied,
either may take appropriate steps to terminate the Recipient's
status as such under the Plan, whereupon such Recipient's rights as
a third-party beneficiary hereunder shall terminate.
(b) The Distributor shall make service fee payments to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares, computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than the minimum period (the "Minimum Holding
Period"), if any, to be set from time to time by a majority of the
Independent Directors.
Alternatively, the Distributor may, at its sole option, make
service fee payments ("Advance Service Fee Payments") to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed (i) 0.25% of the average
during the calendar quarter of the aggregate net asset value of
Shares, computed as of the close of business on the day such Shares
are sold, constituting Qualified Holdings sold by the Recipient
during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (ii) 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than one (1) year, subject to reduction or
chargeback so that the Advance Service Fee Payments do not exceed
the limits on payments to Recipients that are, or may be, imposed
by the NASD Conduct Rules. In the event Shares are redeemed less
than one year after the date such Shares were sold, the Recipient
is obligated and will repay to the Distributor on demand a pro rata
portion of such Advance Service Fee Payments, based on the ratio of
the time such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of the
preceding sentence may, at the Distributor's sole option, be made
more often than quarterly, and sooner than the end of the calendar
quarter. In addition, the Distributor may make asset-based sales
charge payments to any Recipient quarterly, within forty-five (45)
days of the end of each calendar quarter, at a rate not to exceed
0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares
computed as of the close of each business day, constituting
Qualified Holdings owned beneficially or of record by the Recipient
or its Customers. However, no such service fee or asset-based
sales charge payments (collectively, the "Recipient Payments")
shall be made to any Recipient for any such quarter in which its
Qualified Holdings do not equal or exceed, at the end of such
quarter, the minimum amount ("Minimum Qualified Holdings"), if any,
to be set from time to time by a majority of the Independent
Directors.
A majority of the Independent Directors may at any time or
from time to time decrease and thereafter adjust the rate of fees
to be paid to the Distributor or to any Recipient, but not to
exceed the rates set forth above, and/or direct the Distributor to
increase or decrease the Minimum Holding Period or the Minimum
Qualified Holdings. The Distributor shall notify all Recipients of
the Minimum Qualified Holdings or Minimum Holding Period, if any,
and the rates of Recipient Payments hereunder applicable to
Recipients, and shall provide each Recipient with written notice
within thirty (30) days after any change in these provisions.
Inclusion of such provisions or a change in such provisions in a
revised current prospectus shall constitute sufficient notice. The
Distributor may make Plan payments to any "affiliated person" (as
defined in the 1940 Act) of the Distributor if such affiliated
person qualifies as a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on
Shares are subject to reduction or elimination of such amounts
under the limits to which the Distributor is, or may become,
subject under the NASD Conduct Rules. The distribution assistance
and administrative support services to be rendered by the
Distributor in connection with the Shares may include, but shall
not be limited to, the following: (i) paying sales commissions to
any broker, dealer, bank or other person or entity that sells
Shares, and\or paying such persons Advance Service Fee Payments in
advance of, and\or greater than, the amount provided for in Section
3(b) of this Agreement; (ii) paying compensation to and expenses of
personnel of the Distributor who support distribution of Shares by
Recipients; (iii) obtaining financing or providing such financing
from its own resources, or from an affiliate, for interest and
other borrowing costs of the Distributor's unreimbursed expenses
incurred in rendering distribution assistance and administrative
support services to the Fund; (iv) paying other direct distribution
costs, including without limitation the costs of sales literature,
advertising and prospectuses (other than those furnished to current
Shareholders) and state "blue sky" registration expenses; and (v)
providing any service rendered by the Distributor that a Recipient
may render pursuant to part (a) of this Section 3. Such services
include distribution assistance and administrative support services
rendered in connection with Shares acquired (i) by purchase, (ii)
in exchange for shares of another investment company for which the
Distributor serves as distributor or sub-distributor, or (iii)
pursuant to a plan of reorganization to which the Fund is a party.
In the event that the Board should have reason to believe that the
Distributor may not be rendering appropriate distribution
assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the
Board, shall provide the Board with a written report or other
information to verify that the Distributor is providing appropriate
services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i)
by OppenheimerFunds, Inc. ("OFI") from its own resources (which may
include profits derived from the advisory fee it receives from the
Fund), or (ii) by the Distributor (a subsidiary of OFI), from its
own resources, from Asset-Based Sales Charge payments or from its
borrowings.
(e) Notwithstanding any other provision of this Plan, this
Plan does not obligate or in any way make the Fund liable to make
any payment whatsoever to any person or entity other than directly
to the Distributor. In no event shall the amounts to be paid to
the Distributor exceed the rate of fees to be paid by the Fund to
the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Directors. While this Plan
is in effect, the selection and nomination of those persons to be
Directors of the Fund who are not "interested persons" of the Fund
("Disinterested Directors") shall be committed to the discretion of
such Disinterested Directors. Nothing herein shall prevent the
Disinterested Directors from soliciting the views or the
involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Directors.
5. Reports. While this Plan is in effect, the Treasurer of
the Fund shall provide written reports to the Funds's Board for its
review, detailing services rendered in connection with the
distribution of the Shares, the amount of all payments made and the
purpose for which the payments were made. The reports shall be
provided quarterly and shall state whether all provisions of
Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan
shall be in writing and shall provide that: (i) such agreement may
be terminated at any time, without payment of any penalty, by a
vote of a majority of the Independent Directors or by a vote of the
holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities of the Class, on not more than sixty
days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act); (iii) it shall go into
effect when approved by a vote of the Board and its Independent
Directors cast in person at a meeting called for the purpose of
voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long
as such continuance is specifically approved at least annually by
a vote of the Board and its Independent Directors cast in person at
a meeting called for the purpose of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment.
This Plan has been approved by a vote of the Board and its
Independent Directors cast in person at a meeting called on
_______, 1996 for the purpose of voting on this Plan, and shall
take effect after approval by Class A shareholders of the Fund.
Unless terminated as hereinafter provided, it shall continue in
effect from year to year from the date first set forth above or as
the Board may otherwise determine only so long as such continuance
is specifically approved at least annually by a vote of the Board
and its Independent Directors cast in person at a meeting called
for the purpose of voting on such continuance. This Plan may not
be amended to increase materially the amount of payments to be made
without approval of the Class A Shareholders, in the manner
described above, and all material amendments must be approved by a
vote of the Board and of the Independent Directors. This Plan may
be terminated at any time by vote of a majority of the Independent
Directors or by the vote of the holders of a "majority" (as defined
in the 1940 Act) of the Fund's outstanding voting securities of the
Class. In the event of such termination, the Board and its
Independent Directors shall determine whether the Distributor is
entitled to payment from the Fund of all or a portion of the
Service Fee and/or the Asset-Based Sales Charge in respect of
Shares sold prior to the effective date of such termination.
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
By: ______________________________________
Bridget A. Macaskill, Chairman
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By:____________________________________
Andrew J. Donohue
Executive Vice President
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
FOR CLASS B SHARES OF
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan") dated
the ______ day of January, 1997, by and between OPPENHEIMER QUEST
CAPITAL VALUE FUND, INC. (the "Fund") and OPPENHEIMERFUNDS
DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution
and service plan for Class B shares of the Fund (the "Shares"),
contemplated by Rule 12b-1 (the "Rule") under the Investment
Company Act of 1940 (the "1940 Act"), pursuant to which the Fund
will compensate the Distributor for its services in connection with
the distribution of Shares, and the personal service and
maintenance of shareholder accounts that hold Shares ("Accounts").
The Fund may act as distributor of securities of which it is the
issuer, pursuant to the Rule, according to the terms of this Plan.
The Distributor is authorized under the Plan to pay "Recipients,"
as hereinafter defined, for rendering (1) distribution assistance
in connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are
intended to have certain rights as third-party beneficiaries under
this Plan. The terms and provisions of this Plan shall be
interpreted and defined in a manner consistent with the provisions
and definitions contained in (i) the 1940 Act, (ii) the Rule, (iii)
Rule 2830 of the National Association of Securities Dealers, Inc.
Conduct Rules, or its successor (the "NASD Conduct Rules" ) and
(iv) any conditions pertaining either to distribution-related
expenses or to a plan of distribution, to which the Fund is subject
under any order on which the Fund relies, issued at any time by the
Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms
shall have the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
person or entity which: (i) has rendered assistance (whether
direct, administrative or both) in the distribution of Shares or
has provided administrative support services with respect to Shares
held by Customers (defined below) of the Recipient; (ii) shall
furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer
such questions as may arise concerning the sale of Shares; and
(iii) has been selected by the Distributor to receive payments
under the Plan. Notwithstanding the foregoing, a majority of the
Fund's Board of Directors (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of this Plan or in any
agreements relating to this Plan (the "Independent Directors") may
remove any broker, dealer, bank or other person or entity as a
Recipient, whereupon such person's or entity's rights as a third-party
beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all
Shares owned beneficially or of record by: (i) such Recipient, or
(ii) such customers, clients and/or accounts as to which such
Recipient is a fiduciary or custodian or co-fiduciary or co-custodian
(collectively, the "Customers"), but in no event shall
any such Shares be deemed owned by more than one Recipient for
purposes of this Plan. In the event that two entities would
otherwise qualify as Recipients as to the same Shares, the
Recipient which is the dealer of record on the Fund's books shall
be deemed the Recipient as to such Shares for purposes of this
Plan.
3. Payments for Distribution Assistance and Administrative
Support Services.
(a) The Fund will make payments to the Distributor, (i)
within forty-five (45) days of the end of each calendar quarter, in
the aggregate amount of 0.0625% (0.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset
value of the Shares computed as of the close of each business day
(the "Service Fee"), plus (ii) within ten (10) days of the end of
each month, in the aggregate amount of 0.0625% (0.75% on an annual
basis) of the average during the month of the aggregate net asset
value of Shares computed as of the close of each business day (the
"Asset-Based Sales Charge") outstanding for six years or less (the
"Maximum Holding Period"). Such Service Fee payments received from
the Fund will compensate the Distributor and Recipients for
providing administrative support services with respect to Accounts.
Such Asset-Based Sales Charge payments received from the Fund will
compensate the Distributor and Recipients for providing
distribution assistance in connection with the sales of Shares.
The administrative support services in connection with the
Accounts to be rendered by Recipients may include, but shall not be
limited to, the following: answering routine inquiries concerning
the Fund, assisting in the establishment and maintenance of
accounts or sub-accounts in the Fund and processing Share
redemption transactions, making the Fund's investment plans and
dividend payment options available, and providing such other
information and services in connection with the rendering of
personal services and/or the maintenance of Accounts, as the
Distributor or the Fund may reasonably request.
The distribution assistance in connection with the sale of
Shares to be rendered by the Distributor and Recipients may
include, but shall not be limited to, the following: distributing
sales literature and prospectuses other than those furnished to
current holders of the Fund's Shares ("Shareholders"), and
providing such other information and services in connection with
the distribution of Shares as the Distributor or the Fund may
reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for
payment under the Plan if it has Qualified Holdings of Shares to
entitle it to payments under the Plan. In the event that either
the Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, a Recipient may
not be rendering appropriate distribution assistance in connection
with the sale of Shares or administrative support services for
Accounts, then the Distributor, at the request of the Board, shall
require the Recipient to provide a written report or other
information to verify that said Recipient is providing appropriate
distribution assistance and/or services in this regard. If the
Distributor or the Board of Directors still is not satisfied,
either may take appropriate steps to terminate the Recipient's
status as such under the Plan, whereupon such Recipient's rights as
a third-party beneficiary hereunder shall terminate.
(b) The Distributor shall make service fee payments to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than the minimum period (the "Minimum Holding
Period"), if any, to be set from time to time by a majority of the
Independent Directors.
Alternatively, the Distributor may, at its sole option, make
service fee payments ("Advance Service Fee Payments") to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed (i) 0.25% of the average
during the calendar quarter of the aggregate net asset value of
Shares, computed as of the close of business on the day such Shares
are sold, constituting Qualified Holdings sold by the Recipient
during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (ii) 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than one (1) year, subject to reduction or
chargeback so that the Advance Service Fee Payments do not exceed
the limits on payments to Recipients that are, or may be, imposed
by the NASD Conduct Rules. In the event Shares are redeemed less
than one year after the date such Shares were sold, the Recipient
is obligated and will repay to the Distributor on demand a pro rata
portion of such Advance Service Fee Payments, based on the ratio of
the time such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of this
paragraph (b) may, at the Distributor's sole option, be made more
often than quarterly, and sooner than the end of the calendar
quarter. However, no such payments shall be made to any Recipient
for any such quarter in which its Qualified Holdings do not equal
or exceed, at the end of such quarter, the minimum amount ("Minimum
Qualified Holdings"), if any, to be set from time to time by a
majority of the Independent Directors.
A majority of the Independent Directors may at any time or
from time to time decrease and thereafter adjust the rate of fees
to be paid to the Distributor or to any Recipient, but not to
exceed the rate set forth above, and/or direct the Distributor to
increase or decrease the Maximum Holding Period, the Minimum
Holding Period or the Minimum Qualified Holdings. The Distributor
shall notify all Recipients of the Minimum Qualified Holdings,
Maximum Holding Period and Minimum Holding Period, if any, and the
rate of payments hereunder applicable to Recipients, and shall
provide each Recipient with written notice within thirty (30) days
after any change in these provisions. Inclusion of such provisions
or a change in such provisions in a revised current prospectus
shall constitute sufficient notice. The Distributor may make Plan
payments to any "affiliated person" (as defined in the 1940 Act) of
the Distributor if such affiliated person qualifies as a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on
Shares are subject to reduction or elimination of such amounts
under the limits to which the Distributor is, or may become,
subject under the NASD Conduct Rules. The distribution assistance
and administrative support services to be rendered by the
Distributor in connection with the Shares may include, but shall
not be limited to, the following: (i) paying sales commissions to
any broker, dealer, bank or other person or entity that sells
Shares, and\or paying such persons Advance Service Fee Payments in
advance of, and\or greater than, the amount provided for in Section
3(b) of this Agreement; (ii) paying compensation to and expenses of
personnel of the Distributor who support distribution of Shares by
Recipients; (iii) obtaining financing or providing such financing
from its own resources, or from an affiliate, for interest and
other borrowing costs on the Distributor's unreimbursed expenses
incurred in rendering distribution assistance and administrative
support services to the Fund; (iv) paying other direct distribution
costs, including without limitation the costs of sales literature,
advertising and prospectuses (other than those furnished to current
Shareholders) and state "blue sky" registration expenses; and (v)
providing any service rendered by the Distributor that a Recipient
may render pursuant to part (a) of this Section 3. Such services
include distribution assistance and administrative support services
rendered in connection with Shares acquired (i) by purchase, (ii)
in exchange for shares of another investment company for which the
Distributor serves as distributor or sub-distributor, or (iii)
pursuant to a plan of reorganization to which the Fund is a party.
In the event that the Board should have reason to believe that the
Distributor may not be rendering appropriate distribution
assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the
Board, shall provide the Board with a written report or other
information to verify that the Distributor is providing appropriate
services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i)
by OppenheimerFunds, Inc. ("OFI") from its own resources (which may
include profits derived from the advisory fee it receives from the
Fund), or (ii) by the Distributor (a subsidiary of OFI), from its
own resources, from Asset-Based Sales Charge payments or from its
borrowings.
(e) Notwithstanding any other provision of this Plan, this
Plan does not obligate or in any way make the Fund liable to make
any payment whatsoever to any person or entity other than directly
to the Distributor. In no event shall the amounts to be paid to
the Distributor exceed the rate of fees to be paid by the Fund to
the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Directors. While this Plan is in
effect, the selection and nomination of those persons to be
Directors of the Fund who are not "interested persons" of the Fund
("Disinterested Directors") shall be committed to the discretion of
such Disinterested Directors. Nothing herein shall prevent the
Disinterested Directors from soliciting the views or the
involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Directors.
5. Reports. While this Plan is in effect, the Treasurer of the
Fund shall provide written reports to the Fund's Board for its
review, detailing services rendered in connection with the
distribution of the Shares, the amount of all payments made and the
purpose for which the payments were made. The reports shall be
provided quarterly, and shall state whether all provisions of
Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall
be in writing and shall provide that: (i) such agreement may be
terminated at any time, without payment of any penalty, by a vote
of a majority of the Independent Directors or by a vote of the
holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities of the Class, on not more than sixty
days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act); (iii) it shall go into
effect when approved by a vote of the Board and its Independent
Directors cast in person at a meeting called for the purpose of
voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long
as such continuance is specifically approved at least annually by
a vote of the Board and its Independent Directors cast in person at
a meeting called for the purpose of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This
Plan has been approved by a vote of the Board and its Independent
Directors cast in person at a meeting called on _______, 1996, for
the purpose of voting on this Plan, and shall take effect after
approval by Class B shareholders of the Fund. Unless terminated as
hereinafter provided, it shall continue in effect from year to year
thereafter or as the Board may otherwise determine only so long as
such continuance is specifically approved at least annually by a
vote of the Board and its Independent Directors cast in person at
a meeting called for the purpose of voting on such continuance.
This Plan may not be amended to increase materially the amount of
payments to be made without approval of the Class B Shareholders,
in the manner described above, and all material amendments must be
approved by a vote of the Board and of the Independent Directors.
This Plan may be terminated at any time by vote of a majority of
the Independent Directors or by the vote of the holders of a
"majority" (as defined in the 1940 Act) of the Fund's outstanding
voting securities of the Class. In the event of such termination,
the Board and its Independent Directors shall determine whether the
Distributor shall be entitled to payment from the Fund of all or a
portion of the Service Fee and/or the Asset-Based Sales Charge in
respect of Shares sold prior to the effective date of such
termination.
OPPENHEIMER QUEST CAPITAL VALUE FUND,
INC
By:____________________________________
Bridget A. Macaskill, Chairman
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By:___________________________________
Andrew J. Donohue
Executive Vice President
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
AND OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
FOR CLASS C SHARES OF
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the "Plan") dated
the ______ day of January, 1997, by and between OPPENHEIMER QUEST
CAPITAL VALUE FUND, INC. (the "Fund") and OPPENHEIMERFUNDS
DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution
plan for Class C shares of the Fund (the "Shares"), contemplated by
Rule 12b-1 (the "Rule") under the Investment Company Act of 1940
(the "1940 Act"), pursuant to which the Fund will compensate the
Distributor for its services incurred in connection with the
distribution of Shares, and the personal service and maintenance of
shareholder accounts that hold Shares ("Accounts"). The Fund may
act as distributor of securities of which it is the issuer,
pursuant to the Rule, according to the terms of this Plan. The
Distributor is authorized under the Plan to pay "Recipients," as
hereinafter defined, for rendering (1) distribution assistance in
connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are
intended to have certain rights as third-party beneficiaries under
this Plan. The terms and provisions of this Plan shall be
interpreted and defined in a manner consistent with the provisions
and definitions contained in (i) the 1940 Act, (ii) the Rule, (iii)
Rule 2830 of the National Association of Securities Dealers, Inc.
Conduct Rules, or its successor (the "NASD Conduct Rules") and (iv)
any conditions pertaining either to distribution-related expenses
or to a plan of distribution, to which the Fund is subject under
any order on which the Fund relies, issued at any time by the
Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms
shall have the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
person or entity which: (i) has rendered assistance (whether
direct, administrative or both) in the distribution of Shares or
has provided administrative support services with respect to Shares
held by Customers (defined below) of the Recipient; (ii) shall
furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer
such questions as may arise concerning the sale of Shares; and
(iii) has been selected by the Distributor to receive payments
under the Plan. Notwithstanding the foregoing, a majority of the
Fund's Board of Directors (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of this Plan or in any
agreements relating to this Plan (the "Independent Directors") may
remove any broker, dealer, bank or other person or entity as a
Recipient, whereupon such person's or entity's rights as a third-party
beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all
Shares owned beneficially or of record by: (i) such Recipient, or
(ii) such customers, clients and/or accounts as to which such
Recipient is a fiduciary or custodian or co-fiduciary or co-custodian
(collectively, the "Customers"), but in no event shall
any such Shares be deemed owned by more than one Recipient for
purposes of this Plan. In the event that two entities would
otherwise qualify as Recipients as to the same Shares, the
Recipient which is the dealer of record on the Fund's books shall
be deemed the Recipient as to such Shares for purposes of this
Plan.
3. Payments for Distribution Assistance and Administrative
Support Services.
(a) The Fund will make payments to the Distributor, within
forty-five (45) days of the end of each calendar quarter, in the
aggregate amount (i) of 0.0625% (0.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset
value of the Shares computed as of the close of each business day
(the "Service Fee"), plus (ii) 0.1875% (0.75% on an annual basis)
of the average during the calendar quarter of the aggregate net
asset value of the Shares computed as of the close of each business
day (the "Asset-Based Sales Charge"). Such Service Fee payments
received from the Fund will compensate the Distributor and
Recipients for providing administrative support services with
respect to Accounts. Such Asset-Based Sales Charge payments
received from the Fund will compensate the Distributor and
Recipients for providing distribution assistance in connection with
the sale of Shares.
The administrative support services in connection with the
Accounts to be rendered by Recipients may include, but shall not be
limited to, the following: answering routine inquiries concerning
the Fund, assisting in establishing and maintaining accounts or
sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend
payment options available, and providing such other information and
services in connection with the rendering of personal services
and/or the maintenance of Accounts, as the Distributor or the Fund
may reasonably request.
The distribution assistance in connection with the sale of
Shares to be rendered by the Distributor and by Recipients may
include, but shall not be limited to, the following: distributing
sales literature and prospectuses other than those furnished to
current holders of the Fund's Shares ("Shareholders"), and
providing such other information and services in connection with
the distribution of Shares as the Distributor or the Fund may
reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for
payment under the Plan if it has Qualified Holdings of Shares to
entitle it to payments under the Plan. In the event that either
the Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, a Recipient may
not be rendering appropriate distribution assistance in connection
with the sale of Shares or administrative support services for the
Accounts, then the Distributor, at the request of the Board, shall
require the Recipient to provide a written report or other
information to verify that said Recipient is providing appropriate
distribution assistance and/or services in this regard. If the
Distributor or the Board of Directors still is not satisfied,
either may take appropriate steps to terminate the Recipient's
status as such under the Plan, whereupon such Recipient's rights as
a third-party beneficiary hereunder shall terminate.
(b) The Distributor shall make service fee payments to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares, computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than the minimum period (the "Minimum Holding
Period"), if any, to be set from time to time by a majority of the
Independent Directors.
Alternatively, the Distributor may, at its sole option, make
service fee payments ("Advance Service Fee Payments") to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed (i) 0.25% of the average
during the calendar quarter of the aggregate net asset value of
Shares, computed as of the close of business on the day such Shares
are sold, constituting Qualified Holdings sold by the Recipient
during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (ii) 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than one (1) year, subject to reduction or
chargeback so that the Advance Service Fee Payments do not exceed
the limits on payments to Recipients that are, or may be, imposed
by the NASD Conduct Rules. In the event Shares are redeemed less
than one year after the date such Shares were sold, the Recipient
is obligated and will repay to the Distributor on demand a pro rata
portion of such Advance Service Fee Payments, based on the ratio of
the time such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of the
preceding sentence may, at the Distributor's sole option, be made
more often than quarterly, and sooner than the end of the calendar
quarter. In addition, the Distributor shall make asset-based sales
charge payments to any Recipient quarterly, within forty-five (45)
days of the end of each calendar quarter, at a rate not to exceed
0.1875% (0.75% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares
computed as of the close of each business day, constituting
Qualified Holdings owned beneficially or of record by the Recipient
or its Customers for a period of more than one (1) year. However,
no such service fee or asset-based sales charge payments
(collectively, the "Recipient Payments") shall be made to any
Recipient for any such quarter in which its Qualified Holdings do
not equal or exceed, at the end of such quarter, the minimum amount
("Minimum Qualified Holdings"), if any, to be set from time to time
by a majority of the Independent Directors.
A majority of the Independent Directors may at any time or
from time to time decrease and thereafter adjust the rate of fees
to be paid to the Distributor or to any Recipient, but not to
exceed the rates set forth above, and/or direct the Distributor to
increase or decrease the Minimum Holding Period or the Minimum
Qualified Holdings. The Distributor shall notify all Recipients of
the Minimum Qualified Holdings or Minimum Holding Period, if any,
and the rates of Recipient Payments hereunder applicable to
Recipients, and shall provide each Recipient with written notice
within thirty (30) days after any change in these provisions.
Inclusion of such provisions or a change in such provisions in a
revised current prospectus shall constitute sufficient notice. The
Distributor may make Plan payments to any "affiliated person" (as
defined in the 1940 Act) of the Distributor if such affiliated
person qualifies as a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on
Shares are subject to reduction or elimination of such amounts
under the limits to which the Distributor is, or may become,
subject under the NASD Conduct Rules. The distribution assistance
and administrative support services to be rendered by the
Distributor in connection with the Shares may include, but shall
not be limited to, the following: (i) paying sales commissions to
any broker, dealer, bank or other person or entity that sells
Shares, and\or paying such persons Advance Service Fee Payments in
advance of, and\or greater than, the amount provided for in Section
3(b) of this Agreement; (ii) paying compensation to and expenses of
personnel of the Distributor who support distribution of Shares by
Recipients; (iii) obtaining financing or providing such financing
from its own resources, or from an affiliate, for interest and
other borrowing costs of the Distributor's unreimbursed expenses
incurred in rendering distribution assistance and administrative
support services to the Fund; (iv) paying other direct distribution
costs, including without limitation the costs of sales literature,
advertising and prospectuses (other than those furnished to current
Shareholders) and state "blue sky" registration expenses; and (v)
providing any service rendered by the Distributor that a Recipient
may render pursuant to part (a) of this Section 3. Such services
include distribution assistance and administrative support services
rendered in connection with Shares acquired (i) by purchase, (ii)
in exchange for shares of another investment company for which the
Distributor serves as distributor or sub-distributor, or (iii)
pursuant to a plan of reorganization to which the Fund is a party.
In the event that the Board should have reason to believe that the
Distributor may not be rendering appropriate distribution
assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the
Board, shall provide the Board with a written report or other
information to verify that the Distributor is providing appropriate
services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i)
by OppenheimerFunds, Inc. ("OFI") from its own resources (which may
include profits derived from the advisory fee it receives from the
Fund), or (ii) by the Distributor (a subsidiary of OFI), from its
own resources, from Asset-Based Sales Charge payments or from its
borrowings.
(e) Notwithstanding any other provision of this Plan, this
Plan does not obligate or in any way make the Fund liable to make
any payment whatsoever to any person or entity other than directly
to the Distributor. In no event shall the amounts to be paid to
the Distributor exceed the rate of fees to be paid by the Fund to
the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Directors. While this Plan
is in effect, the selection and nomination of those persons to be
Directors of the Fund who are not "interested persons" of the Fund
("Disinterested Directors") shall be committed to the discretion of
such Disinterested Directors. Nothing herein shall prevent the
Disinterested Directors from soliciting the views or the
involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Directors.
5. Reports. While this Plan is in effect, the Treasurer of
the Fund shall provide written reports to the Fund's Board for its
review, detailing services rendered in connection with the
distribution of the Shares, the amount of all payments made and the
purpose for which the payments were made. The reports shall be
provided quarterly and shall state whether all provisions of
Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan
shall be in writing and shall provide that: (i) such agreement may
be terminated at any time, without payment of any penalty, by a
vote of a majority of the Independent Directors or by a vote of the
holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities of the Class, on not more than sixty
days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act); (iii) it shall go into
effect when approved by a vote of the Board and its Independent
Directors cast in person at a meeting called for the purpose of
voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long
as such continuance is specifically approved at least annually by
a vote of the Board and its Independent Directors cast in person at
a meeting called for the purpose of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment.
This Plan has been approved by a vote of the Board and its
Independent Directors cast in person at a meeting called on
_______, 1996 for the purpose of voting on this Plan, and shall
take effect after approval by Class C shareholders of the Fund.
Unless terminated as hereinafter provided, it shall continue in
effect from year to year from the date first set forth above or as
the Board may otherwise determine only so long as such continuance
is specifically approved at least annually by a vote of the Board
and its Independent Directors cast in person at a meeting called
for the purpose of voting on such continuance. This Plan may not
be amended to increase materially the amount of payments to be made
without approval of the Class C Shareholders, in the manner
described above, and all material amendments must be approved by a
vote of the Board and of the Independent Directors. This Plan may
be terminated at any time by vote of a majority of the Independent
Directors or by the vote of the holders of a "majority" (as defined
in the 1940 Act) of the Fund's outstanding voting securities of the
Class. In the event of such termination, the Board and its
Independent Directors shall determine whether the Distributor is
entitled to payment from the Fund of all or a portion of the
Service Fee and/or the Asset-Based Sales Charge in respect of
Shares sold prior to the effective date of such termination.
OPPENHEIMER QUEST CAPITAL VALUE FUND,
INC.
By: ____________________________________
Bridget A. Macaskill, Chairman
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By:____________________________________
Andrew J. Donohue
Executive Vice President
