Registration No.
333-16881
File No. 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. 1 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940/ X
/
Amendment No. 12 /X /
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
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(Exact Name of Registrant as Specified in Charter)
Two World Trade Center, New York, New York 10048-0203
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(Address of Principal Executive Offices)
(212)323-0200
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(Registrant's Telephone Number)
Andrew J. Donohue, Esq.
OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
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(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)
/X / On January 26, 1998, pursuant to paragraph (a)(1)
/ / 75 days after filing, pursuant to paragraph (a)(2)
/ / On ____________, pursuant to paragraph (a)(2) of Rule 485.
A Rule 24f-2 Notice for the Registrant's fiscal year ended October 31, 1997,
will be filed on or about December 26, 1997.
<PAGE>
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
FORM N-1A
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; A Brief Overview of the Fund;
Investment Objective and
Policies; Investment Risks; Investment
Techniques and Strategies; How the Fund
is Managed
5 Expenses; A Brief Overview of the Fund; How the
Fund is Managed; Back Cover
5A Performance of the Fund
6 How the Fund is Managed; Dividends, Capital
Gains and Taxes
7 How to Buy Shares; How to Exchange Shares;
Special Investor Services; 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
14 How the Fund is Managed
15 How the Fund is Managed
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
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* Not applicable or negative answer.
prosp\835N1a.#1
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
Prospectus dated January 26, 1998
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 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 debt securities
(commonly known as "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 January
26, 1998 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 NOR HAS THE
COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-2-
<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
APPENDIX C: PRIOR FEES AND EXPENSES
-3-
<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. The numbers below are
based on the Fund's fees and expenses during its fiscal period ended October 31,
1997. On March 3, 1997, the Fund was converted from a closed-end to an open-end
investment company. See "How the Fund is Managed - Organization and History" for
information on the organizational background of the Fund. The Fund has changed
its fiscal year from December 31 to October 31.
o 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.
Class Class Class
A SHARES B SHARES C SHARES
Maximum Sales Charge
on Purchases (as a %
of offering price) 5.75% None None
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Maximum Deferred Sales
Charge (as a % of
the lower of the
original offering
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)
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Maximum Sale Charge on
Reinvested Dividends None None None
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Exchange Fee None None None
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Redemption Fee None(3) None(3) None(3)
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(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 12 calendar months(18 months
for shares purchased prior to May 1, 1997)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.
(3) There is a $10 transaction fee for redemptions paid by Federal Funds wire,
but not for redemptions paid by ACH transfer through AccountLink.
See "How to Sell Shares", below.
o 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.
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<PAGE>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Class A Class B Class C
Shares Shares Shares
------- ------- -------
Management Fees % % %
(after waiver)
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12b-1 Distribution % % %
Plan Fees
(after waiver)
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Other Expenses % % %
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Total Fund
Operating Expenses % % %
(after waivers)
The numbers for Class A, Class B and Class C shares in the chart above are
based on the Fund's expenses as an open-end investment company in its last
fiscal period ended October 31, 1997 as if the Fund had operated as an open-end
investment company during the entire fiscal period. The Fund was converted to an
open-end investment company on March 3, 1997, and Class B and Class C shares
were first publicly offered on that date.
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 than the numbers in the chart above, depending on a number of factors,
including changes in the actual value of the Fund's assets represented by each
class of shares.
o 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 chart above and that Class
B shares automatically convert into Class A shares six years after purchase. 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 $ $ $ $
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*The expenses set forth in the examples above are based upon expenses of the
Fund incurred since it commenced operations as an open-end investment company on
March 3, 1997 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.
-5-
<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.
O WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund's investment
objective is to seek capital appreciation.
o WHAT DOES THE FUND INVEST IN? The Fund seeks its investment objective
through investment in securities (primarily equity securities) of companies
believed by the Sub-Adviser (as defined below) to be undervalued in the
marketplace in relation to factors such as the companies' assets, earnings,
growth potential and cash flows. Equity securities are common stocks and
preferred stocks; bonds, debentures and notes convertible into common stock; and
depository receipts for such securities. The Fund may invest up to 25% of its
net assets in high-yield, lower-grade debt securities(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 _.
o WHO MANAGES THE FUND? The Manager, OppenheimerFunds, Inc., supervises
the Fund's investment program and handles its day-to-day business.
The Manager (including subsidiaries)
manages investment company portfolios having over $__ billion in assets as of
December 31, 1997. 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, Jeffrey C.
Whittington, 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.
o 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. Lower-grade, high-yield debt securities are subject to greater market
fluctuations and risk of loss of income and principal than higher-grade
securities and may be considered to have certain speculative characteristics.
Investments in foreign securities involve additional risks not associated with
investments in domestic securities, including risks associated with changes in
currency rates.
While the Sub-Adviser 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 investment 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.
o 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.
o 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 is 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,
described on pages ___ and ___, 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.
o 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 __.
o HOW HAS THE FUND PERFORMED? Prior to March 3, 1997, the Fund operated as
a closed-end investment company with a dual-purpose structure, and with dual
investment objectives. See "How the Fund is Managed - Organization and History".
The Fund measures its performance by quoting its average annual total return and
cumulative total return, which measure historical performance. The historical
performance of the Class A shares of the Fund has been restated to reflect the
fees and expenses of such Class A shares in effect as of March 3, 1997(without
giving effect to any fee waivers). Appendix C sets forth the fees and expenses
in effect as of March 3, 1997. 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 pages
__ and ___.
-6-
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights 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 period ended October
31, 1997 is included in the Statement of Additional Information. The Fund has
changed its fiscal year from December 31 to October 31. Class B and Class C
shares were only offered during a portion of the fiscal period ended October 31,
1997, commencing on March 3, 1997.
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 (both hereinafter defined) outstanding. The Income
Shares were redeemed on January 31, 1997 and Capital Shares of the Fund existing
at the time of its conversion to an open-end investment company on March 3, 1997
were classified as Class A shares. See "How the Fund is Managed" for additional
information about the background of the Fund.
-7-
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
OBJECTIVE. The Fund seeks capital appreciation.
INVESTMENT POLICIES AND STRATEGIES. The Fund seeks its investment objective
through investment 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. 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.
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 Investors
Service, Inc. ("Moody's") or BBB-by Standard & Poors Corporation
("S&P")(commonly known as "junk bonds"). 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 such U.S. Government securities and
money market instruments.
o 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 states 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.
o INVESTMENT IN BONDS AND CONVERTIBLE SECURITIES. The Fund may invest
up
to 25% of its net assets in high-yield, "lower-grade" bonds (commonly known as
"junk bonds"). Such securities are rated below "investment grade," which means
they have a rating lower than "Baa" by Moody's or lower than "BBB" by S&P or
similar ratings by other rating organizations, or if unrated, are determined by
the Sub-Adviser to be of comparable quality to debt securities rated below
investment grade. Appendix B to this Prospectus describes these rating
categories. A reduction in the rating of a security after its purchase by the
Fund will not require the Fund to dispose of the security. Once the rating of a
security has been changed, the Fund will consider all circumstances deemed
relevant in determining whether to continue to hold the security. "Lower-grade"
debt securities are subject to special risks as described in "Investment Risks"
below.
Convertible fixed-income securities in which the Fund invests are bonds,
debentures or notes that may be converted into or exchanged for a prescribed
amount of company stock of the same or a different issue within a particular
period of time at a specified price or formula. The Fund considers convertible
securities to be "equity equivalents" because of the conversion feature and the
security's rating has less impact on the investment decision than in the case of
non-convertible securities.
o 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 may buy securities in any country; however, the Fund
does not presently intend to invest more than 25% of its net assets (at time of
purchase) in securities of issuers located in any single foreign country and
does not presently intend to invest more than 5% of its net assets in securities
issued by emerging market countries, or by companies located in those countries.
The Fund will hold foreign currency only in connection with the purchase or sale
of foreign securities.
o 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. The "Financial Highlights" table above shows the Fund's portfolio turnover
rate during past fiscal years. 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.
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.
o STOCK INVESTMENT RISKS. Because the Fund normally invests 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.
The Fund attempts to limit market risks by diversifying its investments,
that is, by not holding a substantial amount of the stock of any one company and
by not investing too great a percentage of the Fund's assets in any one company.
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.
o 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.
o 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. 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, described below, are subject to credit risks
to a greater extent than lower yielding, investment grade bonds.
o SPECIAL RISKS OF LOWER-GRADE SECURITIES. The Fund may invest up to
25% of its net assets in high-yield, "lower-grade" bonds as described above
in "Investment Policies and Strategies".
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.
These risks mean that the Fund's net asset value per share may be affected
by declines in value of these securities. However, the Fund's limitations on
investments in these types of securities may reduce some of the risk. Also,
convertible securities may be less subject to some of these risks than other
debt securities, to the extent they can be converted into stock, which may be
more liquid and less affected by these other risk factors.
o SPECIAL RISKS OF HEDGING INSTRUMENTS. 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.
o TEMPORARY DEFENSIVE INVESTMENTS. In times of unstable market or economic
conditions, when the Sub-Adviser determines it appropriate to do so to attempt
to reduce fluctuations in the value of the Fund's net assets, the Fund may
assume a temporary defensive position and invest an unlimited amount of assets
in U.S. Government securities and money market instruments of the type
identified on page __ under "Investment Policies and Strategies." At any time
that the Fund invests for temporary defensive purposes, to the extent of such
investments, it is not pursuing its investment objective.
O WARRANTS. A warrant is an option to purchase an equity security at a
specific price which is valid for a specific period of time. The Fund will
not invest more than 5% of its net 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.
o INVESTING IN SMALL, UNSEASONED COMPANIES. The Fund may invest without
limitation 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.
o HEDGING. 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.
o FUTURES. The Fund may buy and sell futures contracts that relate to (1)
broadly-based stock indices (these are referred to as Stock Index Futures), (2)
foreign currencies (these are called Forward Contracts and are discussed below)
or (3) commodities (these are referred to as commodity futures).
o PUT AND CALL OPTIONS. The Fund may buy and sell exchange-traded and
over-the-counter put and call options, including index options, securities
options, currency options, commodities options, and options on the other types
of futures described in "Futures," above. A call or put may be purchased only
if, after the purchase, the value of all call and put options held by the Fund
will not exceed 5% of the Fund's total assets.
If the Fund sells (that is, writes) a call option, it must be "covered."
That means the Fund must own the security subject to the call while the call is
outstanding, or, for other types of written calls, the Fund must segregate
liquid assets to enable it to satisfy its
obligations if the call is exercised.
Up to 25% of the Fund's total assets may be subject to calls.
The Fund may buy puts whether or not it holds the underlying investment in
the portfolio. If the Fund writes a put, the put must be covered by segregated
liquid assets. The Fund will not write puts if more than 25% of the Fund's net
assets would have to be segregated to cover put options.
o 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.
o 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 may not invest more than 15% of its net assets in illiquid and
restricted securities, including repurchase agreements that have a maturity of
longer than seven days and certain over-the-counter options. The Fund's
percentage limitation on these investments does not apply to certain restricted
securities that are eligible for resale to "qualified institutional buyers". The
Manager monitors holdings of illiquid securities on an ongoing basis to
determine whether to sell any holdings to maintain adequate liquidity.
o 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.
o 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 such
agreements, the Fund sells securities and agrees to repurchase them at a
mutually agreed upon date and price. 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." Additional information about repurchase agreements is set forth in
"Repurchase Agreements" in the Statement of Additional Information.
o "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.
|X| BORROWING. As a fundamental policy, the Fund may not borrow money,
except as a temporary measure for extraordinary or emergency purposes, and in no
event in excess of 33-1/3% of the lower of the market value or cost of its total
assets, and will not purchase any securities at a time 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.
o INVESTMENT IN OTHER INVESTMENT COMPANIES. The Fund generally may
invest
up to 10% of its total assets in the aggregate in shares of other investment
companies and up to 5% of its total assets in any one investment company, as
long as each investment does not represent more than 3% of the outstanding
voting securities of the acquired investment company. These limitations do not
apply in the case of investment company securities which may be purchased as
part of a plan of merger, consolidation, reorganization or acquisition.
Investment in other investment companies may involve the payment of substantial
premiums above the value of such investment companies' portfolio securities, and
is subject to limitations under the Investment Company Act and market
availability. The Fund does not intend to invest in such investment companies
unless, in the judgment of the Manager, the potential benefits of such
investment justify the payment of any applicable premiums or sales charge. As a
shareholder in an investment company, the Fund would bear its ratable share of
that investment company's expenses, including its advisory and administration
fees. At the same time, the Fund would continue to pay its own management fees
and other expenses.
OTHER INVESTMENT RESTRICTIONS. The Fund has other investment restrictions
which are fundamental policies. Under these fundamental policies, the Fund
cannot:
o Invest more than 25% of the value of its total assets (valued at the
time of investment) in any one industry.
o 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 commenced operations on February 13, 1987 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. On March 3, 1997, the Fund was converted to an open-end
investment company with a single investment objective of capital appreciation
and the outstanding Capital Shares of the Fund became Class A shares of common
stock, bearing their allocable share of the Fund's expenses. On that date the
Fund was renamed "Oppenheimer Quest Capital Value Fund, Inc."
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 will not normally hold annual meetings, it may hold
shareholder meetings from time to time on important matters, and shareholders
have the right 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 subsidiaries) currently manages investment companies, including other
Oppenheimer funds, with assets of more than $__ billion as of December 31, 1997,
and with more than 3 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 February 28, 1997, the Sub-Adviser
was named Quest for Value Advisors and was the investment adviser to the Fund.
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.
On November 4, 1997, PIMCO Advisors L.P. ("PIMCO Advisors"), a registered
investment adviser with $125 billion in assets under management through various
subsidiaries, acquired control of Oppenheimer Capital and the Sub-Adviser. On
November 5, 1997, a new sub-advisory agreement between the Sub-Adviser and the
Manager, on terms identical to the prior sub-advisory agreement, became
effective. The new sub-advisory agreement had been approved by shareholders of
the Fund on May 19, 1997. Value Advisors LLC, a limited liability company and a
wholly-owned subsidiary of PIMCO Advisors, holds a one-third managing general
partner interest in Oppenheimer Capital and a 1.0% general partner interest in
the Sub-Adviser. Oppenheimer Capital L.P., a Delaware limited partnership whose
units are traded on The New York Stock Exchange, owns the remaining two-thirds
interest in Oppenheimer Capital. PIMCO Partners G.P., general partner of PIMCO
Advisors, holds the sole general partner interest in Oppenheimer Capital, L.P.
o 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, who
is Chairman, Chief Executive Officer and Chief Investment Officer for
Oppenheimer Capital. Mr. Long has been with Oppenheimer Capital since 1981.
o 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, until February
28, 1999, 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. After giving effect to the waiver, the Fund's
management fee for the fiscal period ended October 31, 1997 was ___% of average
annual net assets for its Class A, Class B and Class C shares (without the
waiver, the management fee would have been __%). The Fund pays expenses related
to its daily operations, such as custodian fees, Directors' fees, transfer
agency fees and legal and auditing costs. These expenses are paid out of the
Fund's assets and are not paid directly by shareholders. However, they 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 pays 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 net assets of the Fund as of February 28,
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.
Information about the Fund's brokerage policies and practices is set forth
in "Brokerage Policies of the Fund" in the Statement of Additional Information.
That section discusses how brokers and dealers are selected for the Fund's
portfolio transactions. When deciding which broker to use, the Manager and the
Sub-Adviser are permitted by the Investment Advisory Agreement to consider
whether brokers have sold shares of the Fund or any other funds for which the
Manager serves as investment adviser.
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 it to other funds or market indices, as
we have done on page __.
Prior to March 3, 1997, the Fund operated as a closed-end investment
company with a dual- purpose structure and with dual investment objectives. See
"How the Fund is Managed -Organization and History." The historical performance
of the Class A shares of the Fund (formerly, the Capital Shares) has been
restated to reflect the fees and expenses of such Class A shares in effect as of
March 3, 1997(without giving effect to any fee waivers). See Appendix C for a
description of such fees and expenses. As discussed in "How the Fund is Managed
Organization and History", prior to January 31, 1997 (the date of redemption of
the Income Shares) the Capital Shares were entitled to all gains and losses
attributable to both the Capital Shares as well as the Income Shares.
Consequently, the Capital Shares were leveraged financially. Absent the leverage
afforded by the former dual-purpose structure, the historical performance of the
Capital Shares would have been lower.
It is important to understand that the Fund's total returns represent past
performance (as adjusted for Class A shares) and should not be considered to be
predictions of future returns or performance. This performance data is described
below, but 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.
o 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, total returns may also be quoted at "net asset value", without
considering the effect of 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 fiscal period ended October 31, 1997, followed by a
graphical comparison of the Fund's performance to an appropriate broad-based
market index.
o MANAGEMENT'S DISCUSSION OF PERFORMANCE. During the fiscal period ended
October 31, 1997, the Fund remained virtually fully invested in equity
securities. Consistent with the Fund's investment objective of seeking capital
appreciation, the Sub-Adviser sought to invest in the common stocks of companies
believed to have superior, undervalued businesses. Using this investment
philosophy, the Fund's five largest common stock holdings at year-end were
characterized by companies with perceived quality businesses, a strong
competitive position and excellent earnings prospects. Those holdings were
MidOcean Ltd., a Bermuda-based provider of excess property and casualty
insurance; Canadian Pacific, Ltd., a Canadian transportation and natural
resources company; Security Capital Group, automotive and housing; EXEL Ltd.,
insurance and H&R Block Inc., industrial services. The Fund's portfolio
holdings, allocations and strategies are subject to change.
o COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs below
show
the performance of a hypothetical $10,000 investment in Class A, Class B and
Class C shares of the Fund at October 31, 1997. In the case of Class A shares
(formerly, Capital Shares), performance is measured over a ten-year period and
in the case of Class B and Class C shares, performance is measured from the
inception of those classes on March 3, 1997. The Fund's performance reflects the
deduction of the 5.75% current maximum initial sales charge on Class A shares,
the applicable contingent deferred sales charge on Class B and Class C shares,
and the reinvestment of any dividends and capital gains distributions. In
addition, the performance for Class A shares reflects the adjustment for fees
and expenses as of March 3, 1997 as described above in "Explanation of
Performance Terminology".
The Fund's performance is compared to the performance of the S&P 500
Index, a broad-based index of equity securities widely regarded as 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. (Class A) and the S & P 500 Index
[Graph]
Average Annual Total Returns of Class A Shares of the Fund at 10/31/971
1 YEAR 5 YEARS 10 YEARS
% % %
CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENT IN:
Oppenheimer Quest Capital Value Fund, Inc. (Class B) and the S & P 500 Index
[Graph]
Cumulative Total Returns of Class B Shares of the Fund at 10/31/972
LIFE OF CLASS
%
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENT IN:
Oppenheimer Quest Capital Value Fund, Inc. (Class C) and the S & P 500 Index
[Graph]
Cumulative Total Returns of Class C Shares of the Fund at 10/31/973
LIFE OF CLASS
%
Total returns and ending account values in the graphs show change in share value
and include reinvestment of all dividends and capital gains distributions. The
Fund's fiscal year end has changed from 12/31 to 10/31. The performance
information for the S & P 500 Index begins on 1/31/87 for Class A shares and
2/28/97 for Class B and Class C shares. 1The inception date of the Fund (Class A
shares) was 2/13/87. Class A returns are shown net of the applicable 5.75%
maximum initial sales charge. 2Class B shares of the Fund were first publicly
offered on 3/3/97. Returns are shown net of the applicable 5% contingent
deferred sales charge for the life-of-class. The ending account value for Class
B shares in the graph is net of the applicable 5% contingent deferred sales
charge. 3Class C shares of the Fund were first publicly offered on 3/3/97. The
1-year return is shown net of the applicable 1% contingent deferred sales
charge. Past performance is not predictive of future performance. Graphs are not
drawn to same scale.
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.
o 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 12 months of buying them (18 months if the shares were purchased
prior to May 1, 1997), 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.
o 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.
o 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
annual 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.
o 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.
o 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 of Class B shares or $1 million or
more of Class C shares from a single investor.
o 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.
o 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.
o 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 contingent deferred sales charges and asset-based sales
charges for Class B and Class C shares 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. The Distributor may pay additional periodic compensation from
its own resources to securities dealers or financial institutions based upon the
value of shares of the Fund owned by the dealer or financial institution for its
own account or for its customers.
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:
o 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.
o Under pension, profit-sharing 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 or distributions 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.
o 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.
o BUYING SHARES THROUGH YOUR DEALER. Your dealer will place your
order with the Distributor on your behalf.
o 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.
PAYMENT BY FEDERAL FUNDS WIRE: Shares may be purchased by Federal Funds wire.
The Minimum investment is $2,500. You must FIRST call the Distributor's Wire
Department at 1-800-525-7041 to notify the Distributor of the wire, and receive
further instructions.
o 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
BANK 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.
o 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 in the Statement of Additional Information.
O 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, or the order is
received and transmitted to the Distributor by an entity authorized by the Fund
to accept purchase or redemption orders. The Fund has authorized the
Distributor, certain broker-dealers and agents or intermediaries designated by
the Distributor or those broker-dealers to accept orders. In most cases, to
enable you to receive that day's offering price, the Distributor or an
authorized entity 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, normally your order must be
transmitted 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 one 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:
FRONT-END SALES CHARGE COMMISSION
AS A PERCENTAGE OF AS PERCENTAGE
OFFERING AMOUNT OF OFFERING
AMOUNT OF PURCHASE PRICE INVESTED PRICE
- ------------------------------------------------------------------------------
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%
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.
o 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:
o Purchases aggregating $1 million or more.
o Purchases by a retirement plan qualified under section 401(a) of the
Internal Revenue Code if the retirement plan has total plan assets of $500,000
or more.
o 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,
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) buys shares costing $500,000 or more or (2) has, at the time
of purchase, 100 or more eligible participants, or (3) certifies that it
projects to have annual plan purchases of $200,000 or more.
o 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, and calculated on a
calendar year basis. 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 purchased prior to May 1, 1997 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. A Class A contingent deferred sales
charge may be deducted from the redemption proceeds of any of those shares
purchased on or after May 1, 1997 that are redeemed within 12 months of the end
of the calendar month of their purchase. 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.
o 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:
o 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 Distributor will add the value,
at current offering price, of the shares you previously purchased and currently
own to the value of current purchases to determine the sales charge rate that
applies. 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.
o 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. In order to receive a waiver of the Class A contingent deferred
sales charge, you must notify the Transfer Agent as to which conditions apply.
o 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. In
order to receive a waiver of the Class A contingent deferred sales charge, you
must notify the Transfer Agent as to which conditions apply.
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:
o the Manager or its affiliates;
o 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;
o registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the Distributor for
that purpose;
o 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;
o 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);
o dealers, brokers, banks 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);
o (1) investment advisers and financial planners who have entered into an
agreement for this purpose with the Distributor and 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 investment advisers or financial
planners (that have entered into an agreement for this purpose with the
Distributor) 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 adviser 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)
o employee benefit plans purchasing shares through a shareholder servicing
agent which the Distributor has appointed as agent to accept those purchase
orders;
o 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;
o 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;
o any unit investment trust that has entered into an appropriate
agreement with the Distributor;
o 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
o 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 commenced 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:
o shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party;
o 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;
o 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;
o shares purchased and paid for with the proceeds of shares redeemed in
the prior 30 days 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
o 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:
o to make Automatic Withdrawal Plan payments that are limited annually to
no more than 12% of the original account value;
o involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (see "Shareholder Account Rules and Policies,"
below);
o if, at the time of purchase of shares (prior to May 1, 1997) the dealer
agreed in writing to accept the dealer's portion of the sales commission 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);
o if, at the time of purchase of shares (on or after May 1, 1997) the
dealer agrees in writing to accept the dealer's portion of the sales commission
in installments of 1/12th of the commission per month (and no further commission
will be payable if the shares are redeemed within 12 months of purchase);
o for distributions from a TRAC-2000 401(k) plan sponsored by the
Distributor due to the termination of the TRAC-2000 program;
o 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
subsidiaries) 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;
o for distributions from Retirement Plans having 500 or more eligible
participants, except distributions due to termination of all of the Oppenheimer
funds as an investment option under the Plan; and
o for distributions from 401(k) plans sponsored by broker-dealers that
have entered into a special agreement with the Distributor allowing this waiver.
o DISTRIBUTION AND SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted
a
Distribution and Service Plan for Class A shares to compensate the Distributor
for its services in connection with the distribution of shares and 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 at
an annual rate 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 and (2) 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. Class B shares held for a period greater
than 6 years automatically convert to Class
A shares.
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.
o 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.
o 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."
o 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.
O DISTRIBUTION AND SERVICE PLANS FOR CLASS B AND CLASS C SHARES.
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 and
retains the service fee paid by the Fund in that year. 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 therefore
4.00% of the purchase price. The Distributor retains the Class B asset-based
sales charge. The Distributor may pay the Class B service fee and the
asset-based sales charge to the dealer quarterly in lieu of paying the sales
commission and service fee advance at the time of purchase.
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 therefore
1.00% of the purchase price. The Distributor retains the asset-based sales
charge during the first year Class C shares are outstanding to recoup sales
commissions it has paid, the advances of service fee payments it has made, and
its financing costs and other expenses. 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 may pay
the Class C service fee and asset-based sales charge to the dealer quarterly in
lieu of paying the sales commission and service fee advance at the time of
purchase.
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. At October 31, 1997, the end of
the Class B Plan year, the Distributor had incurred unreimbursed expenses in
connection with sales of Class B shares of $ (equal to % of the Fund's net
assets represented by Class B shares on that date). At October 31, 1997, the end
of the Class C Plan year, the Distributor had incurred unreimbursed expenses in
connection with sales of Class C shares of $ (equal to % of the Fund's net
assets represented by Class C shares on that date).
If either Plan is terminated by the Fund, the Board of Directors may allow
the Fund to continue payments of the service fee and/or asset-based sales charge
to the Distributor for distributing
shares before the Plan was terminated.
o 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. In order to receive a waiver of the Class B or Class C contingent
deferred sales charge, you must notify the Transfer Agent as to which conditions
apply.
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:
o 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);
o 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);
o returns of excess contributions to Retirement Plans;
o distributions from retirement plans to make "substantially equal
periodic payments" as permitted in Section 72(t) of the Internal Revenue Code
provided the distributions do not exceed 10% of the account value annually,
measured from the date the Transfer Agent receives the request;
o shares redeemed involuntarily, as described in "Shareholder Account
Rules and Policies," below; or
o distributions from OppenheimerFunds prototype 401(k) plans and from
certain Massachusetts Mutual Life Insurance Company prototype 401(k) plans: (1)
for hardship withdrawals; (2) under a Qualified Domestic Relations Order, as
defined in the Internal Revenue Code; (3) to meet minimum distribution
requirements as defined in the Internal Revenue Code; (4) to make "substantially
equal periodic payments" as described in Section 72(t) of the Internal Revenue
Code;(5) for separation from service or (6) for loans to participants.
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:
o shares sold to the Manager or its affiliates;
o 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;
o shares issued in plans of reorganization to which the Fund is a party
or;
o distributions from 401(k) plans sponsored by broker-dealers that have
entered into a special agreement with the Distributor allowing this waiver.
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 call the Transfer
Agent for more information.
AccountLink privileges should be requested 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.
o 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.
o 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.
o 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.
o 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.
o 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.
SHAREHOLDER TRANSACTIONS BY FAX. Requests for certain account transactions may
be sent to the Transfer Agent by fax (telecopier). Please call 1-800-525-7048
for information about which transactions are included. Transaction requests
submitted by fax are subject to the same rules and restrictions as written and
telephone requests described in this Prospectus.
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:
o 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 Statement of Additional Information for more details.
o 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:
o INDIVIDUAL RETIREMENT ACCOUNTS including rollover IRAs, for individuals
and their spouses and SIMPLE IRA as offered by employers
o 403(B)(7) CUSTODIAL PLANS for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
o SEP-IRAS (Simplified Employee Pension Plans) for small business owners
or people with income from self-employment, including SAR/SEP IRAs
o PENSION AND PROFIT-SHARING PLANS for self-employed persons and other
employers
o 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 by selling (redeeming)
some or all of your shares on any regular business day. 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.
o 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.
o CERTAIN REQUESTS REQUIRE A SIGNATURE GUARANTEE. To protect you and
the
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):
o You wish to redeem more than $50,000 worth of shares and receive a
check
o The redemption check is not payable to all shareholders listed on the
account statement
o The redemption check is not sent to the address of record on your
account statement
o Shares are being transferred to a Fund account with a different owner
or name
o Shares are redeemed by someone other than the owners (such as an
Executor)
o 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:
o Your name
o The Fund's name
o Your Fund account number (from your account statement) o The dollar
amount or number of shares to be redeemed o Any special payment
instructions o Any share certificates for the shares you are selling, o
The signatures of all registered owners exactly as the account is
registered, and
o 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.
o To redeem shares through a service representative, call 1-800-852-8457 o
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.
o 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.
o TELEPHONE REDEMPTIONS THROUGH ACCOUNTLINK OR BY WIRE. 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.
Shareholders may also have the Transfer Agent send redemption proceeds of
$2,500 or more by Federal Funds wire to a designated commercial bank account.
The bank must be a member of the Federal Reserve wire system. There is a $10 fee
for each Federal Funds wire. To place a wire redemption request, call the
Transfer Agent at 1-800-852-8457. The wire will normally be transmitted on the
next bank business day after the shares are redeemed. There is a possibility
that the wire may be delayed up to seven days to enable the Fund to sell
securities to pay the redemption proceeds. No dividends are accrued or paid on
the proceeds of shares that have been redeemed and are awaiting transmittal by
wire. To establish wire redemption privileges on an account that is already
established, please contact the Transfer Agent for instructions.
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 call your dealer for
more information about this procedure. 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:
o Shares of the fund selected for exchange must be available for sale
in your state of residence
o The prospectuses of this Fund and the fund whose shares you want to
buy must offer the exchange privilege
o 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
o You must meet the minimum purchase requirements for the fund you
purchase by exchange
o 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:
o 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."
o 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:
o 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.
o 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.
o 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.
o 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.
o 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
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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 FEDERAL FUNDS WIRE, CERTIFIED CHECK OR ARRANGE
TO HAVE YOUR
BANK TO PROVIDE TELEPHONE OR WRITTEN ASSURANCE TO THE TRANSFER
AGENT THAT YOUR
PURCHASE PAYMENT HAS CLEARED.
o 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.
o 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.
o "BACKUP WITHHOLDING" of Federal income tax may be applied at the rate of
31% from taxable dividends, distributions and redemption proceeds (including
exchanges) if you fail to furnish the Fund a certified Social Security or
Employer Identification Number when you sign your application, or if you violate
Internal Revenue Service regulations on tax reporting of dividends.
o 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.
o 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
October 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:
o 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.
o 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.
o 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.
o REINVEST YOUR DISTRIBUTIONS IN ANOTHER OPPENHEIMER FUND
ACCOUNT. You
can reinvest all distributions in the same class of shares of 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. So that the Fund will
not have to pay taxes on the amounts it distributes to shareholders as dividends
and capital gains, the Fund intends to manage its investments so that it will
qualify as a "regulated investment company" under the Internal Revenue Code,
although it reserves the right not to qualify in a particular year.
o "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.
o 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.
o 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.
-8-
<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 & 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
o REDUCED CLASS A INITIAL SALES CHARGE RATES FOR CERTAIN FORMER
QUEST
SHAREHOLDERS
o 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 CHARGEAS
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.
O 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:
o 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.
o 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.
O 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:
o 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.
o 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
O 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, Class B or Class C shares of the Fund 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 Class 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.
O 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, Class B or Class C shares of the Fund 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 Class 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, Class B or Class 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.
<PAGE>
APPENDIX B
DESCRIPTION OF RATINGS
BOND RATINGS
o 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.
o 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.
o 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.
o 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.
o 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+").
o 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.
o 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.
o 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.
o 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".
B-1
<PAGE>
APPENDIX C
PRIOR FEES AND OPERATING EXPENSES
As discussed in the Prospectus in "Performance of the Fund - Explanation of
Performance Terminology", the historical performance of the Class A shares of
the Fund (formerly, the Capital Shares) has been restated to reflect the fees
and expenses of such Class A shares in effect as of March 3, 1997 (without
giving effect to any fee waviers). Set forth below are the Fund's fees and
expenses as of such date.
PRIOR ANNUAL FUND OPERATING EXPENSES AT MARCH 3, 1997
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Class A Class B Class C
Shares Shares Shares
------- ------- -------
Management Fees .69% .69% .69%
(after waiver)
- ------------------------------------------------------------------------------
12b-1 Distribution .35% 1.00% 1.00%
Plan Fees
(after waiver)
- ------------------------------------------------------------------------------
Other Expenses .40% .40% .40%
- ------------------------------------------------------------------------------
Total Fund
Operating Expenses 1.44% 2.09% 2.09%
(after waivers)
The Annual Fund Operating Expenses, including "Other Expenses," shown
above are based on restated data estimated to be paid through the end of the
Fund's first fiscal year (ending December 31, 1996) 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%.
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 .97%, .50% and 1.87%, respectively; and for Class B and Class C
shares would have been .97%, 1.00% and 2.37%, respectively.
The actual expenses for each class of shares in future years may be more
or less than the numbers in the chart above, depending on a number of factors,
including changes in the actual value of the Fund's assets represented by each
class of shares.
C-1
<PAGE>
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
Investments in Class A, Class B and Class C shares of Quest Capital Value Fund,
Inc., and the S&P 500 Index.
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. In
the case of the Fund's Class A shares (formerly, the Capital Shares), that graph
will cover the performance of the Fund for the ten fiscal years ended 12/31/96
and the period from 1/1/97 through 10/31/97 and in the case of the Fund's Class
B and Class C shares will cover the period from the inception of those classes
on 3/3/97 through 10/31/97. The graph will compare such values with hypothetical
$10,000 investments over the time periods indicated below in the S&P 500 Index.
Set forth below are the relevant data points that will appear on the linear
graph. Additional information with respect to the foregoing, including a
description of the S&P 500 Index, is set forth in the Prospectus under
"Performance of the Fund Comparing the Fund's Performance to the Market."
Fiscal
Period/Year Oppenheimer Quest S&P 500
ENDED CAPITAL VALUE FUND, INC. INDEX(1)
12/31/87 $ 7,665 $ 9,224
12/31/88 $10,413 $10,752
12/31/89 $15,948 $14,153
12/31/90 $14,815 $13,713
12/31/91 $20,986 $17,882
12/31/92 $25,490 $19,242
12/31/93 $27,513 $21,177
12/31/94 $26,548 $21,456
12/31/95 $36,852 $29,509
12/31/96 $44,404 $36,280
10/31/97 $ $
Oppenheimer
Fiscal Year/ Quest Capital Value S&P
PERIOD ENDED FUND,INC.B 500 INDEX(2)
- ------------ ---------- ------------
3/3/97 $ $
10/31/97 $ $
Oppenheimer
Fiscal Year/ Quest Capital Value S&P
PERIOD ENDED FUND,INC.C 500 INDEX(2)
- ------------ ---------- ------------
3/3/97 $ $
10/31/97 $ $
(1) Performance information for the S & P 50 Index begins on 1/31/87 for
Class A shares.
(2) Performance information for the S & P 50 Index begins on 2/28/97 for
Class B and Class C shares.
C-2
<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
State Street Bank and Trust Company
P.O. Box 8505
Boston, Massachusetts 02266-8505
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. PRO835.001.0198 prosp\835psp.#1
C-3
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
Two World Trade Center, New York, New York 10048
1-800-525-7048
STATEMENT OF ADDITIONAL INFORMATION DATED JANUARY 26, 1998
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 January 26,
1998. 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
Report of Independent Accountants.....................................
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.
O FOREIGN SECURITIES. The Fund may invest in securities (which may be
denominated in U.S. dollars or non-U.S. currencies) issued or guaranteed by
foreign corporations, certain supranational entities (described below) and
foreign governments or their agencies or instrumentalities, and in securities
issued by U.S. corporations denominated in non-U.S. currencies. All such
securities are referred to as "foreign securities."
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.
o 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
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such restrictions could be re-imposed.
o 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.
O U.S. GOVERNMENT OBLIGATIONS. 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.
o 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:
o 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
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<PAGE>
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.
o 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.
o CONVERTIBLE SECURITIE 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.
o 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
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<PAGE>
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.
o 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.
O WARRANTS. The Fund may purchase warrants subject to the percentage
limitations stated in the Prospectus. 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.
5
<PAGE>
O 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 sell them and can reduce the price the Fund might
be able to obtain for them. If other investors holding the same securities as
the Fund sells them 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.
o BORROWING. The Fund may increase its ownership of securities by
borrowing 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
as set forth in the 1940 Act 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. Borrowing for investment increases both investment opportunity and
risk. 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
o 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.
o 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
6
<PAGE>
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 assets of any type,
including equity and debt securities of any grade 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.
O 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. Illiquid securities include repurchase agreements maturing in more
than seven days, or certain participation interests other than those with puts
exercisable within seven days.
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
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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.
O LOANS OF PORTFOLIO SECURITIES. The Fund may lend its portfolio
securities subject to the restrictions stated in the Prospectus and herein.
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.
o 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.
o 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
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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.
o 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 sale
price 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 or on foreign currencies, 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
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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.
o 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,
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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.
o STOCK INDEX FUTURES. As described in the Prospectus, the Fund may
invest in Stock Index
11
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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.
o 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 (the
"Rule") adopted by the CFTC. Under the 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, under the Rule the Fund must
limit its aggregate initial futures margins and related options premiums to 5%
or less of the Fund's total assets for hedging strategies that are not
considered bona fide hedging strategies under the Rule. Under the Rule the Fund
also must use short futures and options on futures positions solely for bona
fide hedging purposes within the meaning and intent of applicable provisions of
the Commodity Exchange Act.
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
12
<PAGE>
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.
o 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 unless subject to a buy-back
agreement with the executing broker. 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 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
13
<PAGE>
underlying investments.
o 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).
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 and timing of gains (or losses) recognized 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.
o ADDITIONAL RISK FACTORS IN HEDGING. An option position may be closed
out only on a
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<PAGE>
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.
15
<PAGE>
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:
o Invest for the purpose of exercising control over management of
any company;
o Purchase or retain securities of any company if, to the knowledge of the
Fund, any officer or director of the Fund, the investment adviser or the
Sub-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 the outstanding securities;
o Make loans of money or property to any person, except (i) through loans
of portfolio securities in an amount not to exceed 33-1/3% of the value of the
Fund's total assets, (ii) the purchase of fixed income securities consistent
with the Fund's investment objective and policies and (iii) 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);
o 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;
o Purchase real estate or interests therein, although the Fund may
purchase or sell securities of companies which deal in real estate or interests
therein;
o Invest in physical commodities or physical commodity contracts;
however, the Fund
may: (i) buy and sell hedging instruments to the extent specified in its
Prospectus from time to time,
and (ii) buy and sell options, futures, securities or other instruments backed
by, or the investment return from which is linked to changes in the price of,
physical commodities;
16
<PAGE>
o 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
o 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.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. The following operating
policies
of the Fund are not fundamental policies and, as such, may be changed by vote of
a majority of the Fund's Board of Directors without shareholder approval. These
additional restrictions provide that the Fund cannot:
o purchase securities on margin (except for such short-term loans as may
be necessary for the clearance of transactions) or make short sales of
securities.
o 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.
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. The
percentage restrictions described above and in the Prospectus apply only at the
time of investment and require no action by the Fund as a result of subsequent
changes in relative values.
HOW THE FUND IS MANAGED
ORGANIZATION AND HISTORYThe Fund is organized as a Maryland corporation
which currently operates as a diversified open-end management investment
company. The Fund originally commenced operations on February 13, 1987 as a
closed-end investment company. On March 3, 1997, the Fund was converted to an
open-end investment company.
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
17
<PAGE>
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 directors or trustees of Oppenheimer Quest
Capital Value Fund, Inc., 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, and
Oppenheimer Quest Small Cap Value Fund), Oppenheimer Quest Global Value Fund,
Inc. and Oppenheimer Quest Value Fund, Inc. (collectively, the "Oppenheimer
Quest Funds"), Rochester Fund Municipals, Rochester Portfolio Series - Limited
Term New York Municipal Fund and Bond Fund Series - Oppenheimer Bond Fund For
Growth (collectively, the "Oppenheimer Rochester Funds") and Oppenheimer MidCap
Fund. As of January __, 1998, 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 TRUSTEES AND
PRESIDENT 1; AGE: 49
President (since June 1991), Chief Executive Officer (since September 1995) and
a Director (since December 1994) of the Manager; President and director (since
June 1991) of HarbourView Asset Management Corporation ("HarbourView"), a
subsidiary of the Manager; Chairman and a director of Shareholder Services, Inc.
("SSI") (since August 1994) and Shareholder Financial Services, Inc. ("SFSI")
(September 1995), transfer agent subsidiaries of the Manager; President (since
September 1995) and a director (since October 1990) of Oppenheimer Acquisition
Corp. ("OAC"), the Manager's parent holding company; President (since September
1995) and a director (since November 1989) of Oppenheimer Partnership Holdings,
Inc., a holding company subsidiary of the Manager; a director of Oppenheimer
Real Asset Management, Inc. (since July 1996); President and a director (since
October 1997) of OppenheimerFunds International Ltd. ("OFIL"), an offshore fund
manager subsidiary of the Manager and Oppenheimer Millennium Funds plc (since
October 1997); President and a director of other Oppenheimer funds; a director
of the NASDAQ Stock Market, Inc. and of Hillsdown Holdings plc (a U.K. food
company); formerly an Executive Vice President of the Manager.
- -----------------------
1 A director who is an "interested person" of the Fund as defined in the 1940
Act.
18
<PAGE>
PAUL Y. CLINTON, TRUSTEE; AGE: 66
39 Blossom Avenue, Osterville, Massachusetts 02655
Principal of Clinton Management Associates (financial and venture capital
consulting firm); Trustee of Capital Cash Management Trust (money-market fund)
and Narragansett Tax-Free Fund (tax-exempt bond fund); Director of OCC Cash
Reserves, Inc. and Trustee of OCC Accumulation Trust, (both open-end investment
companies). Formerly: Director, External Affairs, Kravco Corporation, ( national
real estate owner and property management corporation); President of Essex
Management Corporation (management consulting company); a general partner of
Capital Growth Fund (venture capital partnership); a general partner of Essex
Limited Partnership ( investment partnership); President of Geneve Corp.
(venture capital fund); Chairman of Woodland Capital Corp. (small business
investment company); and Vice President of W.R. Grace & Co.
THOMAS W. COURTNEY, TRUSTEE; AGE: 64
833 Wyndemere Way, Naples, Florida 34105
Principal of Courtney Associates, Inc. (venture capital firm); former General
Partner of Trivest Venture Fund (private venture capital fund); Trustee of Cash
Assets Trust, (money market fund); Director of OCC Cash Reserves, Inc., and
Trustee of OCC Accumulation Trust, both open-end investment companies); Trustee
of Hawaiian Tax-Free Trust and Tax Free Trust of Arizona, (both tax-exempt bond
funds); Director of several privately owned corporations. Formerly President of
Investment Counseling Federated Investors, Inc.; former President of Boston
Company Institutional Investors; Director of Financial Analysts Federation.
LACY B. HERRMANN, TRUSTEE; AGE: 68
380 Madison Avenue, Suite 2300, New York, New York 10017
Chairman and Chief Executive Officer of Aquila Management Corporation
(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, Aquila Cascadia Equity Fund,
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 (both open-end investment companies);
Trustee Emeritus of Brown University.
GEORGE LOFT, TRUSTEE; AGE: 83
51 Herrick Road, Sharon, Connecticut 06069
Private Investor; Director of OCC Cash Reserves, Inc. and Trustee of OCC
Accumulation Trust
19
<PAGE>
(both open-end investment companies).
ROBERT C. DOLL, JR., VICE PRESIDENT; AGE: 43
Executive Vice President and Director of the Manager (since January 1993) ;
Executive Vice President of HarbourView (since January 1993); Vice President and
a director of OAC (since September 1995); an officer of other Oppenheimer funds.
JEFFREY C. WHITTINGTON, PORTFOLIO MANAGER; AGE 40
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: 47
Executive Vice President (since January 1993), General Counsel (since October
1991) and a Director (since September 1995) of the Manager; Executive Vice
President (since September 1993), and a director (since January 1992) of
OppenheimerFunds Distributor, Inc. (the "Distributor"); Executive Vice
President, General Counsel and a director of HarbourView, SSI, SFSI and
Oppenheimer Partnership Holdings, Inc. since (September 1995) and MultiSource
Services, Inc. (a broker-dealer) (since December 1995); President and a director
of Centennial Asset Management Corporation ("Centennial") (since September
1995); President and a director of Oppenheimer Real Asset Management, Inc.
(since July 1996); General Counsel (since May 1996) and Secretary (since April
1997) of OAC; Vice President of OFIL and Oppenheimer Millennium Funds plc (since
October 1997); an officer of other Oppenheimer funds.
GEORGE C. BOWEN, TREASURER; AGE: 61
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President (since September 1987) and Treasurer (since March 1985) of
the Manager; Vice President (since June 1983) and Treasurer (since March 1985)
of the Distributor; Vice President (since October 1989) and Treasurer (since
April 1986) of HarbourView; Senior Vice President (since February 1992),
Treasurer (since July 1991) and a director (since December 1991) of Centennial;
President, Treasurer and a director of Centennial Capital Corporation (since
June 1989); Vice President and Treasurer (since August 1978) and Secretary
(since April 1981) of SSI; Vice President, Treasurer and Secretary of SFSI
(since November 1989); Treasurer of OAC (since June 1990); Treasurer of
Oppenheimer Partnership Holdings, Inc. (since November 1989); Vice President and
Treasurer of Oppenheimer Real Asset Management, Inc. (since July 1996); Chief
Executive Officer, Treasurer and a director of MultiSource Services, Inc., a
broker-dealer (since December 1995); an officer of other Oppenheimer funds.
ROBERT BISHOP, ASSISTANT TREASURER; AGE: 39
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); an
officer of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for
the Manager.
20
<PAGE>
SCOTT T. FARRAR, ASSISTANT TREASURER; AGE: 32
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); Assistant
Treasurer of Oppenheimer Millennium Funds plc (since October 1997); an officer
of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for
the Manager.
ROBERT G. ZACK, ASSISTANT SECRETARY; AGE: 49
Senior Vice President (since May 1985) and Associate General Counsel (since May
1981) of the Manager, Assistant Secretary of SSI (since May 1985), and SFSI
(since November 1989); Assistant Secretary of Oppenheimer Millennium Funds plc
(since October 1997); an officer of other Oppenheimer funds.
o 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 period ended October 31, 1997
and (ii) other investment companies (or series thereof) managed by the Manager
and/or Sub-Adviser paid during the calendar year ended December 31, 1997.
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)
Paul Y. Clinton None None $
Thomas W. Courtney None None $
Lacy B. Herrmann None None $
George Loft None None $
(1) For the purpose of the chart above, "Fund Complex" includes the Oppenheimer
Quest Funds, the Oppenheimer Rochester Funds, Oppenheimer MidCap Fund and three
funds advised by the Sub- Adviser (the "Sub-Adviser Funds"). For these purposes,
each series constitutes a separate fund. Messrs. Clinton and Courtney served as
directors or trustees of two Sub-Adviser Funds, for which they are to receive
$______ and $______, respectively, and Messrs. Herrmann and Loft served as a
directors or trustees of three Sub-Adviser Funds, for which they are to receive
$_______ and $_______, respectively. Effective April 1997, Messrs. Herrmann and
Loft resigned as trustees from the third Sub-Adviser fund.
DEFERRED COMPENSATION PLAN. The Board of Directors has adopted a Deferred
Compensation plan for disinterested directors that enables them to elect to
defer receipt of all or a portion of the annual
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fees they are entitled to receive from the Fund. Under the plan, the
compensation deferred by a Director is periodically adjusted as though an
equivalent amount had been invested in shares of one or more Oppenheimer funds
selected by the Director. The amount paid to the Director under the plan will be
determined based upon the performance of the selected funds. Deferral of
Directors' fees under the plan will not materially affect the Fund's assets,
liabilities and net income per share. The plan will not obligate the Fund to
retain the services of any Director or to pay any particular level of
compensation to any Director. Pursuant to an order issued by the SEC, the Fund
may invest in the funds selected by the Director under the plan for the limited
purpose of determining the value of the Director's deferred fee account.
o MAJOR SHAREHOLDERS. As of January __, 1998, 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 an officer and 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.
o PORTFOLIO MANAGEMENT. The Portfolio Manager of the Fund is Jeffrey C.
Whittington, who is principally responsible for the day-to-day management of the
Fund's portfolio. Mr. Whittington's background is described in the Prospectus
under "Portfolio Manager".
o THE INVESTMENT ADVISORY AGREEMENT. The Manager acts as investment adviser
to the Fund pursuant to the terms of an Investment Advisory Agreement dated as
of February 28, 1997. The Sub-Adviser previously served as the Fund's investment
adviser from the Fund's inception (February 13, 1987) through February 28, 1997;
effective as of February 28, 1997, 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. 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
December 20, 1996.
Under the Investment Advisory Agreement, the Manager acts as the investment
adviser for
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<PAGE>
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. For the
fiscal period March 3, 1997 (when the Manager became the investment adviser to
the Fund) to October 31, 1997 (the "Fiscal Period") the Fund paid to the Manager
$_____ in management fees after giving effect to the fee waiver described below;
without such fee waiver, the Management fees for the Fiscal Period would have
been ___%.
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
23
<PAGE>
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 November 5, 1997, with
respect to the Fund, described below, which replaced the Subadvisory Agreement
dated as of February 28, 1997.
o 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 February 28, 1997. Under the prior Investment Advisory
Agreement, the total advisory fees accrued or paid by the Fund were $4,418,791
and $4,916,973 for the fiscal years ended December 31, 1995 and 1996,
respectively, and $_____ for the fiscal period January 1, 1997 to February 28,
1997 (the "Interim Period").
For the fiscal years ended December 31, 1995 and 1996 and the Interim
Period, the Fund paid or accrued administration fees to Oppenheimer Capital in
the amounts of $783,758, $883,395 and $____, respectively. The Administration
Agreement between the Fund and Oppenheimer Capital was terminated as of February
28, 1997; the services previously provided thereunder are provided by the
Manager under the Investment Advisory Agreement.
o 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
February 28, 1997 and by the shareholders of the Fund at a meeting held for that
purpose on May 19, 1997.
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 February 28, 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 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 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. On November 4, 1997, PIMCO
Advisors L.P. ("PIMCO Advisors"), a registered investment adviser with $125
billion in assets under management through various subsidiaries, acquired
control of Oppenheimer Capital and the Sub-Adviser. Value Advisors LLC, a
limited liability company and a wholly-owned subsidiary of PIMCO Advisors, holds
a one-third managing general partner interest in Oppenheimer Capital and a 1.0%
general partner interest in the Sub-Adviser. Oppenheimer Capital L.P., a
Delaware limited partnership whose units are traded on The New York Stock
Exchange, owns the remaining two-thirds interest in Oppenheimer Capital. PIMCO
Partners G.P., general partner of PIMCO Advisors, holds the sole general partner
interest in Oppenheimer Capital, L.P.
PIMCO Partners, G.P. ("PIMCO GP") owns approximately 42.83% and 66.37%,
respectively, of the total outstanding Class A and Class B units of limited
partnership interest ("Units") of PIMCO Advisors' sole general partner. PIMCO GP
is a California general partnership with two general partners. The first of
these is Pacific Investment Management Company, which is a California
corporation and is wholly-owned by Pacific Financial Asset Management Company, a
direct subsidiary of Pacific Life Insurance Company ("Pacific Life").
The managing general partner of PIMCO GP is PIMCO Partners L.L.C.
("PPLLC"), a California limited liability company. PPLLC's members are the
Managing Directors (the "PIMCO Managers") of Pacific Investment Management
Company, a subsidiary of PIMCO Advisors (the "PIMCO Subpartnership"). The PIMCO
Managers are: William H. Gross, Dean S. Meiling, James F. Muzzy, William F.
Podlich, III, Frank B. Rabinovitch, Brent R. Harris, John L. Hague, William S.
Thompson Jr., William C. Powers, David H. Edington, Benjamin Trosky, William R.
Benz, II and Lee R. Thomas, III.
PIMCO Advisors is governed by an Operating Board and an Equity Board.
Because of its power to appoint (directly or indirectly ) seven of the twelve
members of the Operating Board, the PIMCO Subpartnership may be deemed to
control PIMCO Advisors. Because of direct or indirect power to appoint 25% of
the members of the Equity Board, (i) Pacific Life and (ii) the PIMCO Managers
and/or the PIMCO Subpartnership may each be deemed, under applicable provisions
of the investment Company Act, to control PIMCO Advisors. Pacific Life, the
PIMCO Subpartnership and the PIMCO Managers disclaim such control.
o THE DISTRIBUTOR. Under a General Distributor's Agreement with the Fund
dated as of February 28, 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. During the Fiscal Period, the
aggregate amount of sales charges on sales of the Fund's Class A shares was $ ,
of which the Distributor and affiliated brokers retained $___________.
During the Fiscal Period, the Distributor received contingent
deferred sales charges of $ upon redemption of Class B
shares, and received contingent deferred sales charges of
$ upon redemption of Class C shares.
-------------------------
o THE TRANSFER AGENT. OppenheimerFunds Services, a division of the Manager,
acts as the Fund's Transfer Agent pursuant to a Transfer Agency and Service
Agreement dated February 28, 1997. Pursuant to the Agreement, the Transfer Agent
is responsible for maintaining the Fund's
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<PAGE>
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
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<PAGE>
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 consid eration 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 acting as principal for its own account.
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<PAGE>
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, 1995 and
1996 and the Fiscal Period. Prior to November 3, 1997, Oppenheimer & Co., Inc.
("OpCo"), a broker-dealer, was an affiliate of the Sub- Adviser.
Total Amount of
Total Transactions Where
For the Brokerage Brokerage Commissions Brokerage Commissions
Fiscal Year/Period Commissions Paid to Opco PAID TO OPCO
ENDED PAID DOLLAR AMOUNT % DOLLAR AMOUNT %
12/31/95 $1,051,545 $267,394 25.4% $251,309,982 31.3%
12/31/96 $1,040,957 $319,406 30.7 % $245,963,037 31.0%
10/31/97 $ $ % $ %
During the Fiscal Period $__________ 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.
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<PAGE>
The Fund's advertisements of its performance data must, under applicable
SEC rules, 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.
Prior to March 3, 1997, 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. Effective as of March 3, 1997, 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 bear their allocable share of the Fund's expenses. The
historical performance of the Class A shares of the Fund (formerly, the Capital
Shares) has been restated to reflect the fees and expenses of such Class A
shares in effect as of March 3, 1997 without giving effect to any fee waivers.
O 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 )
o 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 March 3, 1997, the Fund operated as a closed-end
investment company and no initial sales charge was imposed on Fund shares. For
Class B shares, the payment of the applicable contingent deferred sales charge
(5.0% for the first year, 4.0% for the second year, 3.0% for the third and
fourth years, 2.0% for the fifth year, 1.0% for the sixth year, and none
thereafter) is applied to the investment result for the period shown (unless the
total return is shown at net asset value, as described below). For Class C
shares, the 1.0% contingent deferred sales charge is applied to the investment
result for the one-year period (or less). 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 for Class A
shares have been adjusted to reflect the fees and expenses of such Class of
shares in effect as of the date thereof without giving effect to any fee
waivers.
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 October 31, 1997 and for the period from February 13, 1987
(commencement of operations) to October 31, 1997 were _____%, _____% and _____%,
respectively. Class B and Class C shares were first offered on March 3, 1997;
accordingly, average annual total return information for such shares is not yet
available.
The "cumulative total return" on Class A shares for the period from
February 13, 1987 (commencement of operations) to October 31, 1997 was ______%.
The cumulative total return on Class B shares and Class C shares for the period
from March 3, 1997 (commencement of the public offering of the class) through
October 31, 1997 was ______% and _____%, respectively.
O 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 average annual total return at net asset value for Class A shares for
the one and five year periods ended October 31, 1997 and for the period from
February 13, 1987 through October 31, 1997 were _____%, _____% and _____%,
respectively. 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
October 31, 1997 was ______%. The cumulative total return at net asset value on
the Fund's Class B and Class C shares for the period from March 3, 1997
(commencement of the public
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<PAGE>
offering of the class) through October 31, 1997 was ___% 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 star ranking of the performance
of its Class A, Class B and/or Class C shares by Morningstar Inc.
("Morningstar"),an independent mutual fund monitoring service. Morningstar ranks
mutual funds in broad investment categories: domestic stock funds, international
stock funds, taxable bond funds and municipal bond funds, based on risk-adjusted
total investment returns. The Fund is ranked among domestic equity funds.
Investment return measures a fund's or class's one, three, five and ten-year
average annual total returns (depending on the inception of the fund or class)
in excess of 90-day U.S. Treasury bill returns after considering the fund's
sales charges and expenses. Risk measure a fund's class performance below 90-day
U.S. Treasury bill returns. Risk and investment return are combined to produce
star rankings reflecting performance relative to the average fund in the 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%). The current star
rankings is the fund's or class's 3-year ranking or its combined 3 and 5-year
ranking (weighted 60%/40% respectively, or its combined 3-,5-and 10-year ranking
(weighted 40%, 30% and 30%, respectively) depending on the inception of the fund
or class. Rankings are subject to change monthly. 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 sources, including
Lipper.
The Fund may also compare its performance to that of other funds in its
Morningstar category. In addition to its star rankings, Morningstar also
categorizes and compares a fund's 3-year performance on Morningstar's
classification of the fund's investments and investment style, rather than how a
fund defines its investment objective. Morningstar's four broad categories
(domestic equity, international equity, municipal bond and taxable bond) are
each further subdivided into categories based on types of investments and
investment styles. Those comparison by Morningstar are based on the same risk
and return measurements as its star rankings but do not consider the effect of
sales charges.
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.
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<PAGE>
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, each dated February 28, 1997, 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 December 20, 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 March 3, 1997
the Fund operated as a closed-end investment company and did not have
Distribution and Service Plans and Agreements.
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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 by a SEC rule 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
detailing services rendered in connection with the distribution of shares, the
amount of all payments made pursuant to each Plan and the purpose for which the
payments were made. 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
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quarterly basis, as described in the Prospectus. The advance payment is based on
the net assets of the shares of that class 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 Conduct Rules of
the National Association of Securities Dealers, Inc. on payments of asset-based
sales charges and service fees.
For the Fiscal Period, (i) payments made under the Class A Plan totaled $ ,
of which $___________ was retained by the Distributor and $ was paid to a dealer
affiliated with the Distributor, (ii) payments made under the Class B Plan
totaled $_____________, of which $____________ was retained by the Distributor
and $ was paid to a dealer affiliated with the Distributor and (iii) payments
made under the Class C plan totaled $ , of which $_________ was retained by the
Distributor and $______ was paid to a dealer affiliated with the Distributor.
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 Plans, (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 generally not accept any order
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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 and Service 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 SHARThe 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
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on New Year's Day, Martin Luther King 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 exchange generally 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 having a
maturity of more than 397 days 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-type debt securities held by a non-money
market fund that had a maturity of less than 397 days when issued that have a
remaining maturity of 60 days or less, and debt instruments held by a money
market fund that have a remaining maturity of 397 days or less, shall be 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" comparisons to the prices for comparable instruments on
the basis of quality, yield, maturity and other special factors involved. The
Manager may use any of the pricing services approved by the Board of Directors
to price U.S. Government securities or mortgage-backed securities for which last
sale information is not generally available. The Manager will monitor the
accuracy of such pricing services, which may include comparing prices used for
portfolio evaluation to actual prices of selected
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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 sale 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 there
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 by the
Fund is included in the Fund's Statement of Assets and Liabilities as an asset,
and an equivalent deferred 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
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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 or dealer or broker 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. Relations by virtue of a remarriage (step-children,
step-parents, etc.) are included.
o 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 Discovery Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Multiple Strategies 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 Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer International Bond Fund
Oppenheimer International Small Company Fund
Oppenheimer Enterprise Fund
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Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Bond Fund For Growth
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
Oppenheimer MidCap Fund
Oppenheimer Real Asset 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.
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).
o 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
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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.
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o 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 sold with a front-end sales
charge or Class B 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
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Plan payments from bank accounts are subject to the redemption restrictions for
recent purchases described in "How to Sell Shares," 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. If you make payments from your bank account to purchase
shares of the Fund, your bank account will automatically be debited normally
four to five business days prior to the investment dates selected in the Account
Application. Neither the Distributor, the Transfer Agent nor the Fund shall be
responsible for any delays in purchasing shares resulting from delays in ACH
transmission.
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 other than
public school 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 persons (the members of which may include other
groups), if the group or association has made special arrangements with the
Distributor and all members of the group or association participating in or who
are eligible to participate in the plan(s) purchase Class A shares of the Fund
through a single investment dealer, broker, or other financial
40
<PAGE>
institution designated by the group. "Group retirement plan" also includes
qualified retirement plans and non-qualified deferred compensation plans and
IRAs that purchase Class A shares of the Fund through a single investment
dealer, broker, or other financial institution, if that broker-dealer has made
special arrangements with the Distributor enabling those plans to purchase Class
A shares of the Fund at net asset value but subject to a contingent deferred
sales charge.
In addition to the discussion in the Prospectus relating to the ability of
Retirement Plans to purchase Class A shares at net asset value in certain
circumstances, there is no initial sales charge on purchases of Class A shares
of any one or more of the Oppenheimer funds by a Retirement Plan in the
following cases: (i) the recordkeeping for the Retirement Plan is performed on a
daily valuation basis by Merrill Lynch Pierce Fenner & Smith, Inc. ("Merrill
Lynch") and, on the date the plan sponsor signs the Merrill Lynch recordkeeping
service agreement, the Retirement Plan has $3 million or more in assets invested
in mutual funds other than those advised or managed by Merrill Lynch Asset
Management, L.P. ("MLAM") that are made available pursuant to a Service
Agreement between Merrill Lynch and the mutual fund's principal underwriter or
distributor and in funds advised or managed by MLAM (collectively, the
"Applicable Investments"); or (ii) the recordkeeping for the Retirement Plan is
performed on a daily valuation basis by an independent record keeper whose
services are provided under a contract or arrangement between the Retirement
Plan and Merrill Lynch. On the date the plan sponsor signs the Merrill Lynch
record keeping service agreement, the Plan must have $3 million or more in
assets, excluding assets held in money market funds, invested in Applicable
Investments; or (iii) the Plan has 500 or more eligible employees, as determined
by the Merrill Lynch plan conversion manager on the date the plan sponsor signs
the Merrill Lynch record keeping service agreement.
If a Retirement Plan's records are maintained on a daily valuation basis
by Merrill Lynch or an independent record keeper under a contract or alliance
arrangement with Merrill Lynch, and if on the date the plan sponsor signs the
Merrill Lynch record keeping service agreement the Retirement Plan has less than
$3 million in assets, excluding money market funds, invested in Applicable
Investments, then the Retirement Plan may purchase only Class B shares of one or
more of the Oppenheimer funds. Otherwise, the Retirement Plan will be permitted
to purchase Class A shares of one or more of the Oppenheimer funds. Any of those
Retirement Plans that currently invest in Class B shares of the Fund will have
their Class B shares be converted to Class A shares of the Fund once the Plan's
Applicable Investments have reached $5 million.
Any redemptions of shares of the Fund held by Retirement Plans whose
records are maintained on a daily valuation basis by Merrill Lynch or an
independent record keeper under a contract with Merrill Lynch that are currently
invested in Class B shares of the Fund shall not be subject to the Class B CDSC.
HOW TO SELL SHARES
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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.
o 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 lesser
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 that were subject to the Class B 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
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<PAGE>
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
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<PAGE>
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. Shares are
normally redeemed pursuant to an Automatic Withdrawal Plan three business days
before the date you select in the Account Application. If a contingent deferred
sales charge applies to the redemption, the amount of the check or payment will
be reduced accordingly. 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 Contingent Deferred 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 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.
o 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.
o 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.
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<PAGE>
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 the
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
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<PAGE>
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. 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. 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
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<PAGE>
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 12 months of the end of the calendar month of the
initial purchase of the exchanged Class A shares (18 months if the shares were
purchased prior to May 1, 1997), 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
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<PAGE>
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.
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<PAGE>
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.
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.
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<PAGE>
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 either 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. State Street Bank and Trust Company 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 serves as the Fund's
independent accountants. Their services include examining the annual financial
statements of the Fund as well as other related services.
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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
Food
Gas Utilities
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Information Technology
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
Wireless Services
A-0
<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
State Street Bank and Trust Company
P.O. Box 8505
Boston, Massachusetts 02266-8505
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
835sai.#1
A-1
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
- ---------------------------------------
(a) Financial Statements:
--------------------
(1) Financial Highlights - See Parts A and B*
(2) Report of Independent Accountants - See Part B*
(3) Statement of Investments - See Part B*
(4) Statement of Assets and Liabilities - See Part B*
(5) Statement of Operations - See Part B*
(6) Statement of Changes in Net Assets - See Part B*
(7) Notes to Financial Statements - See Part B*
(8) Consent of Independent Accountants*
(b) Exhibits:
(1) Articles of Amendment and Restatement of the Fund: Filed
with Registrant's Pre- Effective Amendment No. 2, 2/21/97, and incorporated
herein by reference.
(2)(a)By-Laws of the Fund: Filed herewith.
2(b) Amendment No. 1 to By-Laws of the Fund: Filed herewith
(3) Not Applicable.
(4) (i) Specimen Class A Share Certificate: Previously filed with
Registrant's Registration Statement on Form N-1A, 11/27/96, and incorporated
herein by reference.
(ii) Specimen Class B Share Certificate: Previously filed with
Registrant's Registration Statement on Form N-1A, 11/27/96, and incorporated
herein by reference.
*To be filed by amendment
<PAGE>
(iii) Specimen Class C Share Certificate: Previously filed with
Registrant's Registration Statement on Form N-1A, 11/27/96, and incorporated
herein by reference.
(5) (a)Investment Advisory Agreement dated 2/28/97: Filed herewith.
(b)Subadvisory Agreement dated 11/5/97: Filed herewith.
(6) (a) General Distributor's Agreement dated 2/28/97: 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: Filed with Registrant's Pre-Effective
Amendment No. 2, 2/21/97,
and incorporated herein by reference.
(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: Filed with Registrant's Pre-Effective
Amendment No. 2, 2/21/97, and incorporated herein
by reference.
(11) Not Applicable.
<PAGE>
(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.: Filed herewith.
(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) Distribution and Service Plan and Agreement dated 2/28/97 with
respect to Class A shares: Filed herewith.
(b) Distribution and Service Plan and Agreement dated 2/2/897 with
respect to Class B shares: Filed herewith.
(c) Distribution and Service Plan and Agreement dated 2/28/97 with
respect to Class C shares: Filed herewith.
<PAGE>
(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: To be filed by
Amendment.
(3) Financial Data Schedule for Class C shares: To be filed by
Amendment.
(18) Oppenheimer Funds Multiple Class Plan under Rule 18f-3 dated 10/24/95:
Filed with the Initial Registration Statement of Oppenheimer MidCap Fund
(333-31533), 7/18/97, and incorporated herein by reference.
-- Powers of Attorney and Certified Board Resolutions signed by
Registrant's Directors:
Filed herewith.
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 January __, 1998
- -------------- -----------------
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
<PAGE>
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 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 and Current Position
with OppenheimerFunds, Inc. Other Business and Connections
During
("OFI") 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 Asset
Management Corporation
("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
<PAGE>
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.
Beichert, Kathleen None.
Rajeev Bhaman,
Vice President Formerly Vice President (January
1992 - February,
1996) of Asian Equities for
Barclays de Zoete
Wedd, Inc.
Robert J. Bishop,
Vice President Vice President of Mutual Fund
Accounting (since
May 1996); an officer of other
Oppenheimer funds;
formerly an Assistant Vice
President of
OFI/Mutual Fund Accounting (April
1994-May
1996), and a Fund Controller for
OFI.
George C. Bowen,
Senior Vice President & Treasurer Vice President (since June 1983)
and Treasurer
(since March 1985) of
OppenheimerFunds
Distributor, Inc. (the
"Distributor"); Vice President
(since October 1989) and Treasurer
(since April
1986) of HarbourView; Senior Vice
President
(since February 1992), Treasurer
(since July
1991)and a director (since December
1991) of
Centennial; President, Treasurer
and a director of
Centennial Capital Corporation
(since June 1989);
Vice President and Treasurer (since
August 1978)
and Secretary (since April 1981)
of Shareholder
Services, Inc. ("SSI"); Vice
President, Treasurer and
Secretary of Shareholder Financial
Services, Inc.
("SFSI") (since November 1989);
Treasurer of
Oppenheimer Acquisition Corp.
("OAC") (since
June 1990); Treasurer of
Oppenheimer Partnership
Holdings, Inc. (since November
1989); Vice
President and Treasurer of ORAMI
(since July
1996); Chief Executive Officer,
Treasurer and a
director of MultiSource Services,
Inc., a broker-
dealer (since December 1995); an
officer of other
<PAGE>
Oppenheimer funds.
Scott Brooks,
Vice President None.
Susan Burton,
Assistant Vice President None.
Adele Campbell,
Assistant Vice President & Assistant
Treasurer: Rochester Division Formerly Assistant Vice President
of Rochester
Fund Services, Inc.
Michael Carbuto,
Vice President An officer and/or portfolio
manager of certain Oppenheimer funds;
Vice President of Centennial.
Ruxandra Chivu,
Assistant Vice President None.
H.D. Digby Clements,
Assistant Vice President:
Rochester Division None.
O. Leonard Darling,
Executive Vice President Trustee (1993 - present) of
Awhtolia College -
Greece.
Robert A. Densen,
Senior Vice President None.
Sheri Devereux,
Assistant Vice President None.
Robert Doll, Jr.,
Executive Vice President & 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 Executive Vice President (since
September 1993),
and a director (since January 1992)
of the
Distributor; Executive Vice
President, General
Counsel and a director of
HarbourView, SSI, SFSI
and Oppenheimer Partnership
Holdings, Inc. since
<PAGE>
(September 1995) and MultiSource
Services, Inc. (a broker-dealer)
(since December 1995); President and a
director of Centennial (since
September 1995); President and a
director of ORAMI (since July 1996);
General Counsel (since May 1996) and
Secretary (since April 1997) of OAC;
Vice President of OppenheimerFunds
International, Ltd. ("OFIL") and
Oppenheimer Millennium Funds plc
(since October 1997); an officer of
other Oppenheimer funds.
George Evans,
Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
Edward Everett,
Assistant Vice President None.
Scott Farrar,
Vice President Assistant Treasurer of Oppenheimer
Millennium
Funds plc (since October 1997); an
officer of other
Oppenheimer funds; formerly an
Assistant Vice
President of OFI/Mutual Fund
Accounting (April
1994-May 1996), and a Fund
Controller for OFI.
Leslie A. Falconio,
Assistant Vice President None.
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary of the
Distributor;
Secretary of HarbourView,
MultiSource and
Centennial; 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;
Presently he holds the
following other positions: Director
(since 1995) of
ICI Mutual Insurance Company;
Governor (since
1994) of St. John's College;
Director (since 1994 -
present) of International Museum of
Photography at
George Eastman House; Director
(since 1986) of
GeVa Theatre. Formerly he held the
following
positions: 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.
<PAGE>
("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.; Director
(1993 - 1997) of VehiCare Corp.;
Director (1993 -
1996) of VoiceMode.
John Fortuna,
Vice President None.
Patricia Foster,
Vice President Formerly she held the following
positions: An
officer of certain Oppenheimer
funds (May, 1993 -
January, 1996); Secretary of
Rochester Capital
Advisors, Inc. and General Counsel
(June, 1993 -
January 1996) of Rochester Capital
Advisors, L.P.
Jennifer Foxson,
Assistant Vice President None.
Paula C. Gabriele,
Executive Vice President Formerly, Managing Director
(1990-1996) for
Bankers Trust Co.
Robert G. Galli,
Vice Chairman Trustee of the New York-based
Oppenheimer
Funds. Formerly Vice President and
General
Counsel of Oppenheimer Acquisition
Corp.
Linda Gardner,
Vice President None.
Alan Gilston,
Vice President Formerly Vice President for
Schroder Capital
Management International.
Jill Glazerman,
Assistant Vice President None.
Jeremy Griffiths,
Chief Financial Officer Currently a Member
and Fellow of the Institute of
Chartered Accountants; formerly an
accountant for Arthur Young (London,
U.K.).
Robert Grill,
Vice President Formerly Marketing Vice President
for Bankers
Trust Company (1993-1996); Steering
Committee
Member, Subcommittee Chairman for
American
Savings Education Council
(1995-1996).
<PAGE>
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.
Elaine T. Hamann,
Vice President Formerly Vice President (September,
1989 -
January, 1997) of Bankers Trust
Company.
Glenna Hale,
Director of Investor Marketing Formerly, Vice President
(1994-1997) of
Retirement Plans Services for
OppenheimerFunds
Services.
Thomas B. Hayes,
Vice President None.
Barbara Hennigar,
Executive Vice 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, None.
Assistant Vice President
Alan Hoden,
Vice President None.
Merryl Hoffman,
Vice President None.
<PAGE>
Nicholas Horsley,
Vice President Formerly a Senior Vice President
and Portfolio
Manager for Warburg, Pincus
Counsellors, Inc.
(1993-1997), Co-manager of Warburg,
Pincus
Emerging Markets Fund (12/94 -
10/97), Co-
manager Warburg, Pincus
Institutional Emerging
Markets Fund - Emerging Markets
Portfolio (8/96
-10/97), Warburg Pincus Japan OTC
Fund,
Associate Portfolio Manager of Warburg
Pincus International Equity Fund,
Warburg Pincus Institutional Fund -
Intermediate Equity Portfolio, and
Warburg Pincus EAFE Fund.
Scott T. Huebl,
Assistant Vice President None.
Richard Hymes,
Assistant Vice President None.
Jane Ingalls,
Vice President None.
Byron Ingram,
Assistant Vice President None.
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.
Thomas W. Keffer,
Senior Vice President Formerly Senior Managing Director
(1994 - 1996)
of Van Eck Global.
Avram Kornberg,
Vice President None.
Joseph Krist,
Assistant Vice President None.
Paul LaRocco,
Vice President An officer and/or portfolio manager
of certain
<PAGE>
Oppenheimer funds; formerly, a
Securities Analyst
for Columbus Circle Investors.
Michael Levine,
Assistant Vice President None.
Shanquan Li,
Vice President Director of Board (since 2/96),
Chinese Finance
Society; formerly, Chairman
(11/94-2/96), Chinese
Finance Society; and Director
(6/94-6/95), Greater
China Business Networks.
Stephen F. Libera,
Vice President An officer and/or portfolio manager
for certain
Oppenheimer funds; a Chartered
Financial Analyst;
a Vice President of HarbourView;
prior to March
1996, the senior bond portfolio
manager for
Panorama Series Fund Inc., other
mutual funds and
pension accounts managed by G.R.
Phelps; also
responsible for managing the public
fixed-income
securities department at
Connecticut Mutual Life
Insurance Co.
Mitchell J. Lindauer,
Vice President None.
David Mabry,
Assistant Vice President None.
Steve Macchia,
Assistant Vice President None.
<PAGE>
Bridget Macaskill,
President, Chief Executive Officer
and Director Chief Executive Officer (since
September 1995);
President and director (since June
1991) of
HarbourView; Chairman and a
director of SSI (since
August 1994), and SFSI (September
1995);
President (since September 1995)
and a director
(since October 1990) of OAC;
President (since
September 1995) and a director
(since November
1989) of Oppenheimer Partnership
Holdings, Inc.,
a holding company subsidiary of
OFI; a director of
ORAMI (since July 1996) ; President
and a director
(since October 1997) of OFIL, an
offshore fund
manager subsidiary of OFI and
Oppenheimer
Millennium Funds plc (since October
1997);
President and a director of other
Oppenheimer
funds; a director of the NASDAQ
Stock Market,
Inc. and of Hillsdown Holdings plc
(a U.K. food
company); formerly an Executive
Vice President of
OFI.
Wesley Mayer,
Vice President Formerly Vice President (January,
1995 - June,
1996) of Manufacturers Life
Insurance Company.
Loretta McCarthy,
Executive Vice President None.
Kevin McNeil,
Vice President Treasurer (September, 1994 -
present) for the
Martin Luther King Multi-Purpose
Center (non-profit community
organization); Formerly Vice President
(January, 1995 - April, 1996) for
Lockheed Martin IMS.
Tanya Mrva,
Assistant 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
(August, 1989 - August, 1995) with
Phoenix
Securities Group.
Denis R. Molleur,
Vice President None.
<PAGE>
Linda Moore,
Vice President Formerly, Marketing Manager (July
1995-
November 1996) for Chase Investment
Services
Corp.
Tanya Mrva,
Assistant 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.
Richard M. O'Shaugnessy,
Assistant Vice President:
Rochester Division None.
Gina M. Palmieri,
Assistant 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
and Director Chairman and Director of the
Distributor.
Jane Putnam,
Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
Russell Read,
Senior Vice President Formerly a consultant for
Prudential Insurance on
behalf of the General Motors
Pension Plan.
<PAGE>
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 None.
Michael S. Rosen
Vice President; President,
Rochester Division An officer and/or portfolio manager
of certain
Oppenheimer funds; Formerly, Vice
President
(June, 1983 - January, 1996) of
RFS, President and
Director of RFD; Vice President and
Director of
FMC; Vice President and director of
RCAI; General
Partner of RCA; Vice President and
Director of
Rochester Tax Managed Fund Inc.
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 None.
James Ruff,
Executive Vice President None.
Valerie Sanders,
Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Stephanie Seminara,
Vice President Formerly, Vice President of
Citicorp
Investment Services
Richard Soper,
Vice President None.
Nancy Sperte,
Executive Vice President None.
<PAGE>
Donald W. Spiro,
Chairman Emeritus and Director Vice Chairman and Trustee of the
New York-based
Oppenheimer Funds; formerly
Chairman of the
Manager and the Distributor.
Richard A. Stein,
Vice President: Rochester Division Assistant Vice President (since
1995) of Rochester
Capitol Advisors, L.P.
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, 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 An officer and/or portfolio
manager of certain Oppenheimer funds;
formerly Managing Director of
Buckingham Capital Management.
Gary Tyc,
Vice President, Assistant
Secretary and Assistant Treasurer Assistant Treasurer of the
Distributor and SFSI.
<PAGE>
Ashwin Vasan,
Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
Dorothy Warmack,
Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
Jerry 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.
Joseph Welsh,
Assistant 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, 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.; Point of
Contact: Finance
Supporters of Children; Member of
the Oncology
Advisory Board of the Childrens
Hospital; Member
of the Board of Directors of the
Colorado Museum
of Contemporary Art.
Caleb Wong,
Assistant Vice President None.
<PAGE>
Robert G. Zack,
Senior Vice President and
Assistant Secretary, Associate
General Counsel Assistant Secretary of SSI (since
May 1985), and
SFSI (since November 1989);
Assistant Secretary
of Oppenheimer Millennium Funds plc
(since
October 1997); an officer of other
Oppenheimer
funds.
Jill Zachman,
Assistant Vice President:
Rochester Division None.
Arthur J. Zimmer,
Senior 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, the
Denver-based Oppenheimer Funds and the Oppenheimer/Quest Rochester Funds, as
set forth below:
New York-based Oppenheimer Funds
- --------------------------------
Oppenheimer Multiple Strategies Fund
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise 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 Municipal Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer World Bond Fund
Oppenheimer Developing Markets Fund
Oppenheimer International Small Company Fund
Quest/Rochester Funds
- ---------------------
Oppenheimer Quest Global Value Fund, Inc.
<PAGE>
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest For Value Funds
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Bond Fund For Growth
Oppenheimer MidCap Fund
Rochester Fund Municipals
Limited Term New York Municipal Fund
Denver-based Oppenheimer Funds
- ------------------------------
Oppenheimer Cash Reserves
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Oppenheimer Champion 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 Municipal Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
Oppenheimer Real Asset Fund
The address of OppenheimerFunds, Inc., the New York- based
Oppenheimer Funds, the 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., and
<PAGE>
Oppenheimer Real Asset Management, Inc. is 6803 South
Tucson Way, Englewood, Colorado 80012.
The address of MultiSource Services, Inc. is 1700 Lincoln
Street, Denver, Colorado 80203.
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
- ---------------------------- -------------------------------
Gavin Albert
Portfolio Manager Vice President, Oppenheimer
Capital
Robert J. Bluestone,
Director of Fixed Income
Management President, Oppenheimer Capital;
Director
of Oppenheimer Capital Trust
Company.
Timothy J. Curro
Portfolio Manager Vice President, Oppenheimer
Capital
Pierre Daviron,
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 Oppenheimer
Capital.
Bernard H. Garil,
President Managing Director of Oppenheimer
Capital
and Oppenheimer & Co., Inc;
Director of
Oppenheimer Capital Trust
Company.
John Giusio,
<PAGE>
Portfolio Manager Vice President of Oppenheimer
Capital.
Richard J. Glasebrook, II,
Portfolio Manager Managing Director of Oppenheimer
Capital.
Colin Glinsman,
Portfolio Manager Senior Vice President of
Oppenheimer
Capital.
Louis Goldstein,
Assistant Portfolio Manager Senior Vice President of
Oppenheimer
Capital.
Matthew Greenwald,
Portfolio Manager Senior Vice President of
Oppenheimer
Capital.
Vikki Y. Hanges,
Portfolio Manager Vice President of Oppenheimer
Capital.
Joseph M. LaMotta,
Chairman Chairman Emeritus 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.
Francis LeCatts, Jr.
Director of Research Managing Director of Oppenheimer
Capital
George A. Long,
Chief Investment Officer Chairman, President, Chief
Executive
Officer and Chief Investment
Officer 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
<PAGE>
Oppenheimer Capital.
Susan Murphy,
President of an affiliate President of OCC Cash Management
Services Division and
Oppenheimer Capital
Trust Company; Managing Director
of
Oppenheimer Capital.
Eileen Rominger,
Portfolio Manager Managing Director of Oppenheimer
Capital.
Sheldon M. Siegel,
Treasurer and Chief Financial
Officer Managing Director/Treasurer/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 of Oppenheimer Capital, reference is
made to Form ADV filed by OpCap Advisors, under the Investment Advisers
Act of 1940, which is incorporated herein by reference.
Item 29. Principal Underwriter
- -------- ---------------------
(a) OppenheimerFunds Distributor, Inc. is the Distributor of the
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:
Name & Principal Positions & Offices Positions &Offices
Business Address with Underwriter with Registrant
- ---------------- ------------------- -------------------
<PAGE>
George C. Bowen(1) Vice President and Vice President and
Treasurer Treasurer of the
Oppenheimer 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(2) Senior Vice President; None
Director: Financial
Institution Division
Robert Coli Vice President None
12 White Tail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce de Leon Ave.
Decatur, GA 30030
William Coughlin Vice President None
542 West Surf - #2N
Chicago, IL 60657
Mary Crooks(1)
E. Drew Devereaux(3) Assistant Vice President None
Rhonda Dixon-Gunner(1) Assistant Vice President None
Andrew John Donohue(2) Executive Vice Secretary of
President & Director the 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
<PAGE>
Todd Ermenio Vice President None
11011 South Darlington
Tulsa, OK 74137
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
George Fahey Vice President None
201 E. Rund Grove Rd.
#26-22
Lewisville, TX 75067
Katherine P. Feld(2) Vice President None
& Secretary
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding(3) Vice President None
Reed F. Finley Vice President None
1657 Graefield
Birmingham, MI 48009
Wendy Fishler(2) Vice President None
Ronald R. Foster Senior Vice President None
11339 Avant Lane
Cincinnati, OH 45249
Patricia Gadecki Vice President None
950 First St., S.
Suite 204
Winter Haven, FL 33880
Luiggino Galleto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President None
5506 Bryn Mawr
Dallas, TX 75209
<PAGE>
Ralph Grant(2) Vice President/National None
Sales Manager
Sharon Hamilton Vice President None
720 N. Juanita Ave.,#1
Redondo Beach, CA 90277
Byron Ingram(2) Assistant Vice President None
Mark D. Johnson Vice President None
129 Girard Place
Kirkwood, MO 63105
Michael Keogh(2) Vice President None
Richard Klein Vice President None
4820 Fremont Avenue So.
Minneapolis, MN 55409
Daniel Krause Vice President None
13416 Larchmere Square
Shaker Heights, OH 44120
Ilene Kutno(2) Assistant Vice President None
Todd Lawson Vice President None
3333 E. Bayaud Avenue
Unit 714
Denver, CO 80209
Wayne A. LeBlang Senior Vice President None
23 Fox Trail
Lincolnshire, IL 60069
Dawn Lind Vice President None
7 Maize Court
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
Todd Marion Vice President None
21 N. Passaic Avenue
<PAGE>
Chatham,N.J. 07928
Marie Masters Vice President None
520 E. 76th Street
New York, NY 10021
John McDonough Vice President None
P.O. Box 760
50 Riverview Road
New Castle, NH 03854
Tanya Mrva(2) Assistant Vice President None
Laura Mulhall(2) Senior Vice President None
Charles Murray Vice President None
18 Spring Lake Drive
Far Hills, NJ 07931
Wendy Murray Vice President None
32 Carolin Road
Upper Montclair, NJ 07043
Chad V. Noel Vice President None
3238 W. Taro Lane
Phoenix, AZ 85027
Joseph Norton Vice President None
2518 Fillmore Street
San Francisco, CA 94115
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Kevin Parchinski Vice President None
1105 Harney St., #310
Omaha, NE 68102
Randall Payne Vice President None
3530 Providence Plantation Way
Charlotte, NC 28270
<PAGE>
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice President None
1777 Larimer St. #807
Denver, CO 80202
Tilghman G. Pitts, III(2) Chairman & Director None
Elaine Puleo(2) Vice President None
Minnie Ra Vice President None
895 Thirty-First Ave.
San Francisco, CA 94121
Michael Raso Vice President None
16 N. Chatsworth Ave.
Apt. 301
Larchmont, NY 10538
John C. Reinhardt(3) Vice President None
Douglas Rentschler Vice President None
867 Pemberton
Grosse Pointe Park, MI
48230
Ian Robertson Vice President None
4204 Summit Wa
Marietta, GA 30066
Michael S. Rosen(3) Vice President None
Kenneth Rosenson Vice President None
3802 Knickerbocker Place
Apt. #3D
Indianapolis, IN 46240
James Ruff(2) President None
<PAGE>
Timothy Schoeffler Vice President None
1717 Fox Hall Road
Washington, DC 77479
Michael Sciortino Vice President None
785 Beau Chene Drive
Mandeville, LA 70471
Robert Shore Vice President None
26 Baroness Lane
Laguna Niguel, CA 92677
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Andrew Sweeny Vice President None
5967 Bayberry Drive
Cincinnati, OH 45242
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
David G. Thomas Vice President None
8116 Arlingon Blvd.
#123
Falls Church, VA 22042
Philip St. John Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Sarah Turpin Vice President None
2735 Dover Road
Atlanta,GA 30327
Gary Paul Tyc(1) Assistant Treasurer None
Mark Stephen Vandehey(1) Vice President None
Marjorie Williams Vice President None
6930 East Ranch Road
<PAGE>
Cave Creek, AZ 85331
(1) 6803 South Tucson Way, Englewood, Colorado 80112
(2) Two World Trade Center, New York, NY 10048-0203
(3) 350 Linden Oaks, Rochester, NY 14625-2807
(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 6803 South Tucson Way, Englewood, Colorado 80112 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 24th day of November, 1997.
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
By: /s/ Bridget A. Macaskill
-------------------------
Bridget A. Macaskill
Chairman of the Board and 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/ Bridget A Macaskill Chairman of the Board, November 24, 1997
- ----------------------- President (Principal
Bridget A. Macaskill Executive Officer) and
Director
/s/ George C. Bowen Treasurer (Principal November 24, 1997
- ----------------------- Financial and Accounting
George Bowen Officer)
/s/ Paul Y. Clinton Director November 24, 1997
- -----------------------
Paul Y. Clinton
/s/ Thomas W. Courtney Director November 24, 1997
- -----------------------
Thomas W. Courtney
/s/ Lacy B. Herrmann Director November 24, 1997
- -----------------------
Lacy B. Herrmann
/s/ George Loft Director November 24, 1997
- -----------------------
George Loft
<PAGE>
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
INDEX TO EXHIBITS
Exhibit Number Description
24(b)(2)(a) By-Laws of the Fund
24(b)(2)(b) Amendment No. 1 to By-Laws
24(b)(5)(a) Investment Advisory Agreement dated 2/28/97
24(b)(5)(b) Subadvisory Agreement dated 11/5/97
24(b)(6)(a) General Distributor's Agreement dated 2/28/97
24(b)(15)(a) Class A Distribution and Service Plan and Agreement dated
2/28/97
24(b)(15)(b) Class B Distribution and Service Plan and Agreement dated
2/28/97
24(b)(15)(c) Class C Distribution and Service Plan and Agreement dated
2/28/97
__ Powers of Attorney and Certified Board Resolutions
(Revised 2/28/97)
BY-LAWS OF
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
(the "Corporation")
ARTICLE 1
FISCAL YEAR AND OFFICES
Section 1. FISCAL YEAR. Unless otherwise provided by resolution of the
board of directors, the fiscal year of the Corporation shall begin January 1 and
end on the last day of December.
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 stockholders may be held at the
Corporation's principal office or at such other place 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. STOCKHOLDER MEETINGS. Meetings of stockholders for any purpose
or purposes 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 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 3. NOTICE. Not less than ten days before the date of the
1
<PAGE>
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 4. RECORD DATE FOR MEETINGS. The board of directors may fix in
advance a date not more than one-hundred and twenty days, nor less than ten
days, prior to the date of any 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 5. QUORUM. At any meeting of stockholders, the presence in person
or by proxy of the holders of a majority of the aggregate number of shares of
the Corporation 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 6. 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 4 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
2
<PAGE>
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 7. 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 8. 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 9. 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
3
<PAGE>
class held by each stockholder, certified as correct by an officer of the
Corporation, by its stock transfer agent, or by its registrar.
Section 10. 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 five, which number may be increased or
decreased as provided in Section 4 of this Article. 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 Corporation's Articles of Incorporation. Each director shall be
elected 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 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. INCREASE OR DECREASE IN NUMBER OF DIRECTORS; REMOVAL
OF
DIRECTORS. Subject to the Investment Company Act of 1940, the board of
directors, by the vote of a majority of the entire board, may increase the
number of directors to a number not exceeding ten, and may elect directors to
fill the vacancies created by any such increase in the number of directors and
to hold office until the next meeting of the stockholders called for the purpose
of electing directors and until their successor are duly elected and qualify.
The board of directors, by the vote of a majority of the entire board, may
likewise decrease the number of directors to a number not less than three, but
the tenure of office of any director shall not be affected by any such decrease
made by the board.
4
<PAGE>
Any director may at any time be removed either with or without cause by
resolution duly adopted by the affirmative votes of the holders of a majority of
the shares of the Corporation present in person or by proxy at any meeting of
stockholders provided that a quorum is present or by such larger vote as may be
required by Maryland law. Any director may at any time be removed for cause by
resolution duly adopted at any meeting of stockholders provided that a quorum is
present or by such larger vote as may be required by Maryland law. Any director
may at any time be removed for cause by resolution duly adopted at any meeting
of the board of directors provided that notice thereof is contained in the
notice of such meeting and that such resolution is adopted by the vote of at
least two thirds of those directors whose removal is not proposed.
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
5
<PAGE>
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
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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
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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
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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 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 of the Corporation 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.
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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 33-1/3% 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 or sub-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 expected 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
securities, 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 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;
(l) invest more than 25% of the value of its total assets in any one
industry;
(m) 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
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futures;
(n) issue senior securities, as defined in the Investment Company Act of
1940, except that the Corporation may enter into repurchase agreements, lend its
portfolio securities and borrow money from banks for temporary or emergency
purposes;
(o) 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;
(p) 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; and
(q) invest more than 25% of the Corporation's net assets (at time of
purchase) in securities of issuers located in any single foreign country.
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
STOCK
Section 1. CERTIFICATES. No stockholder shall be entitled to a certificate
or certificates in connection with the purchase of shares of the Corporation
unless specifically authorized by the Board of Directors. Each certificate
issued 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
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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 VII, 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.
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
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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 VIII
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 VIII.
Section 2. 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.
Section 3. 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 4. 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
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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 IX
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
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.
orgzn\QCap.1
14
AMENDMENT NO. 1 TO BY-LAWS OF
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
1. The By-Laws of Oppenheimer Quest Capital Value Fund, Inc., a Maryland
corporation (the "Fund"), are hereby amended by replacing Section 4 of Article
II thereof with the following:
Section 4. RECORD DATE FOR MEETINGS. The board of directors may fix
in advance a date not more than one hundred and twenty days, nor
less than ten days, prior to the date of any 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.
2. The By-Laws of the Fund, as amended by this Amendment No. 1, hereby remain in
full force and effect.
IN WITNESS WHEREOF, I hereby set my hand as of this 4th day of February,
1997.
/s/ Andrew J. Donohue
Andrew J. Donohue
Secretary
orgzn\capbly.amn
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made the 28th day of February, 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
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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
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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
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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
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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
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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
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<PAGE>
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
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<PAGE>
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: /s/ Robert G. Zack By: /s/ Andrew J. Donohue
Robert G. Zack Andrew J. Donohue
Assistant Secretary Secretary
OPPENHEIMERFUNDS, INC.
Attest: /s/ Katherine P. Feld By: /s/ Andrew J. Donohue
Katherine P. Feld Andrew J. Donohue
Secretary Executive Vice President
quest\qstdpf\investad.ag5
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SCHEDULE A
TO
INVESTMENT ADVISORY AGREEMENT
BETWEEN
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
AND
OPPENHEIMERFUNDS, INC.
Annual Fee as a Percentage of Daily
Name of Series Total Net Assets1
Oppenheimer Quest Capital 1.00% of first $400 million of all net
Value Fund, Inc. assets
0.90% of next $400 million of all
net assets
0.85% of net assets over $800
million
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1For 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.
quest\qstdpf\investad.ag5
-9-
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 February 28, 1997 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 has retained and wishes to continue 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.
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:
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<PAGE>
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.
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<PAGE>
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;
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<PAGE>
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;
-4-
<PAGE>
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
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<PAGE>
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.
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<PAGE>
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 until February 28, 2007,
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.
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<PAGE>
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 February 28, 1997, 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:
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<PAGE>
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.
-9-
<PAGE>
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 17, 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
-10-
<PAGE>
to such term or provision of the 1940 Act and to interpretations thereof, if
any, by the United States Courts or, in the absence of any controlling decision
of any such court, by rules, regulations or orders of the SEC issued pursuant to
the 1940 Act. In addition, where the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is revised by rule, regulation or
order of the SEC, such provision shall be deemed to incorporate the effect of
such rule, regulation or order.
XVIII.FORM ADV - DELIVERY.
The Adviser hereby acknowledges that it has received from the Subadviser a
copy of the Subadviser's Form ADV, Part II as currently filed, at least 48 hours
prior to entering into this Agreement and that it has read and understood the
disclosures set forth in the Subadviser's Form ADV, Part II.
XIX. MISCELLANEOUS.
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule 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 5th day of
November, 1997.
OPPENHEIMERFUNDS, INC.
By: /s/ Andrew J. Donohue
Andrew J. Donohue
Executive Vice President
OPCAP ADVISORS
By: /s/ Bernard Baril
Bernard Garil
-11-
SCHEDULE XIII.D.1
The universe of funds to which Class A shares of funds 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 categories for the funds are:
FUND LIPPER CATEGORY
Oppenheimer Quest Value Fund, Inc. CA - Capital Appreciation
Oppenheimer Quest Global Value Fund, Inc. GL - Global Oppenheimer
Quest Opportunity Value Fund FX - Flexible Portfolio
Oppenheimer Quest Small Cap Value Fund SG - Small Company Growth
Oppenheimer Quest Growth & Income Value Fund GI - Growth & Income
Oppenheimer Quest Officers Value Fund CA - Capital Appreciation
Oppenheimer Quest Capital
Value Fund, Inc. CA - Capital Appreciation
ADVISORY\835SUB
-12-
GENERAL DISTRIBUTOR'S AGREEMENT
BETWEEN
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
AND
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
Date: February 28, 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.
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<PAGE>
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.
4. PURCHASE OF SHARES.
(a) As General Distributor, you shall have the right to accept or
reject orders for the purchase of Shares at your discretion.
Any consideration which you may receive in connection with a
rejected purchase order will be returned promptly.
(b) You agree promptly to issue or to cause the duly appointed
transfer or shareholder servicing agent of the Fund to issue as your
agent confirmations of all accepted purchase orders and to transmit a
copy of such confirmations to the Fund. The net asset value of all
Shares which are the subject of such confirmations, computed in
accordance with the applicable rules under the 1940 Act, shall be a
liability of the General Distributor to the Fund to be paid promptly
after receipt of payment from the originating dealer or broker (or
investor, in the case of direct purchases) and not later than eleven
business days after such confirmation even if you have not actually
received payment from the originating dealer or broker or investor. In
no event shall the General Distributor make payment to the Fund later
than permitted by applicable rules of the National Association of
Securities Dealers, Inc.
2
<PAGE>
(c) If the originating dealer or broker shall fail to make timely
settlement of its purchase order in accordance with applicable rules of the
National Association of Securities Dealers, Inc., or if a direct purchaser
shall fail to make good payment for shares in a timely manner, you shall
have the right to cancel such purchase order and, at your account and risk,
to hold responsible the originating dealer or broker, or investor. You
agree promptly to reimburse the Fund for losses suffered by it that are
attributable to any such cancellation, or to errors on your part in
relation to the effective date of accepted purchase orders, limited to the
amount that such losses exceed contemporaneous gains realized by the Fund
for either of such reasons with respect to other purchase orders.
(d) In the case of a canceled purchase for the account of a directly
purchasing shareholder, the Fund agrees that if such investor fails to make
you whole for any loss you pay to the Fund on such canceled purchase order,
the Fund will reimburse you for such loss to the extent of the aggregate
redemption proceeds of any other shares of the Fund owned by such investor,
on your demand that the Fund exercise its right to claim such redemption
proceeds. The Fund shall register or cause to be registered all Shares sold
to you pursuant to the provisions hereof in such names and amounts as you
may request from time to time and the Fund shall issue or cause to be
issued certificates evidencing such Shares for delivery to you or pursuant
to your direction if and to the extent that the shareholder account in
question contemplates the issuance of such certificates. All Shares when so
issued and paid for, shall be fully paid and non-assessable by the Fund
(which shall not prevent the imposition of any CDSC that may apply) to the
extent set forth in the current Prospectus and/or SAI.
5. REPURCHASE OF SHARES.
(a) In connection with the repurchase of Shares, you are appointed
and shall act as Agent of the Fund. You are authorized, for so
long as you act as General Distributor of the Fund, to
repurchase, from authorized dealers, certificated or
uncertificated shares of the Fund ("Shares") on the basis of
orders received from each dealer ("authorized dealer") with which
you have a dealer agreement for the sale of Shares and permitting
resales of Shares to you, provided that such authorized dealer,
at the time of placing such resale order, shall represent (i) if
such Shares are represented by certificate(s), that
certificate(s) for the Shares to be repurchased have been
delivered to it by the registered owner with a request for the
redemption of such Shares executed in the manner and with the
signature guarantee required by the then-currently effective
prospectus of the Fund, or (ii) if such Shares are
uncertificated, that the registered owner(s) has delivered to the
dealer a request for the
3
<PAGE>
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.
4
<PAGE>
(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
5
<PAGE>
(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 December 31, 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.
6
<PAGE>
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: /s/ Andrew J. Donohue
Andrew J. Donohue
Secretary
Accepted:
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: /s/ Katherine P. Feld
Katherine P. Feld
Vice President & Secretary
ofmi\dualpur.dis
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 28th
day of February, 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
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<PAGE>
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
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<PAGE>
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
3
<PAGE>
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
4
<PAGE>
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 February 28, 1997 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: /s/ Andrew J. Donohue
Andrew J. Donohue, Secretary
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: /s/ Katherine P. FEld
Katherine P. Feld
Vice President
quest\qstdpf\value.a
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 28th
day of February, 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"),
1
<PAGE>
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
2
<PAGE>
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
3
<PAGE>
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
4
<PAGE>
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 February 28, 1997, 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: /s/ Andrew J. Donohue
Andrew J. Donohue, Secretary
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: /s/ Katherine P. Feld
Katherine P. Feld
Vice President
quest\qstdpf\value.b
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 28th
day of February, 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
-1-
<PAGE>
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,
-2-
<PAGE>
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
-3-
<PAGE>
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
-4-
<PAGE>
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 February 28, 1997 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: /s/ Andrew J. Donohue
Andrew J. Donohue, Secretary
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: /s/ Katherine P. Feld
Katherine P. Feld
Vice President
quest\qstdpf\value.c
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue or Robert G. Zack, and each of them, her true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for her and in her capacity as Chairman of the Board of
Directors, President (Principal Executive Officer) and Director of OPPENHEIMER
QUEST CAPITAL VALUE FUND, INC., a Maryland corporation (the "Fund"), to sign on
her behalf any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto, and
other documents in connection thereunder, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully as to all intents and purposes as she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, and each of them, may lawfully do or cause to be done by virtue hereof.
Dated this 8th day of November, 1997.
/S/ BRIDGET A. MACASKILL
Bridget A. Macaskill
POWERS\CAPITAL.VAL
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue or Robert G. Zack, and each of them, his true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his capacity as Director of OPPENHEIMER QUEST
CAPITAL VALUE FUND, INC., a Maryland corporation (the "Fund"), to sign on his
behalf any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto, and
other documents in connection thereunder, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully as to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, and each of them, may lawfully do or cause to be done by virtue hereof.
Dated this 8th day of November, 1997.
/S/ PAUL Y. CLINTON
Paul Y. Clinton
POWERS\CAPITAL.VAL
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue or Robert G. Zack, and each of them, his true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his capacity as Treasurer (Principal Financial
and Accounting Officer) of OPPENHEIMER QUEST CAPITAL VALUE FUND, INC., a
Maryland corporation (the "Fund"), to sign on his behalf any and all
Registration Statements (including any post-effective amendments to Registration
Statements) under the Securities Act of 1933, the Investment Company Act of 1940
and any amendments and supplements thereto, and other documents in connection
thereunder, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully as to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, and each of them, may lawfully do or cause to be
done by virtue hereof.
Dated this 8th day of November, 1997.
/S/ GEORGE C. BOWEN
George C. Bowen
POWERS\CAPITAL.VAL
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue or Robert G. Zack, and each of them, his true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his capacity as Director of OPPENHEIMER QUEST
CAPITAL VALUE FUND, INC., a Maryland corporation (the "Fund"), to sign on his
behalf any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto, and
other documents in connection thereunder, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully as to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, and each of them, may lawfully do or cause to be done by virtue hereof.
Dated this 8th day of November, 1997.
/S/ THOMAS W. COURTNEY
Thomas W. Courtney
POWERS\CAPITAL.VAL
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue or Robert G. Zack, and each of them, his true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his capacity as Director of OPPENHEIMER QUEST
CAPITAL VALUE FUND, INC., a Maryland corporation (the "Fund"), to sign on his
behalf any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto, and
other documents in connection thereunder, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully as to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, and each of them, may lawfully do or cause to be done by virtue hereof.
Dated this 8th day of November, 1997.
/S/ GEORGE LOFT
George Loft
POWERS\CAPITAL.VAL
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Andrew J. Donohue or Robert G. Zack, and each of them, her true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for her and in her capacity as Director of OPPENHEIMER QUEST
CAPITAL VALUE FUND, INC., a Maryland corporation (the "Fund"), to sign on her
behalf any and all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of 1933, the
Investment Company Act of 1940 and any amendments and supplements thereto, and
other documents in connection thereunder, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully as to all intents and purposes as she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, and each of them, may lawfully do or cause to be done by virtue hereof.
Dated this 8th day of November, 1997.
/S/ LACY B. HERRMANN
Lacy B. Herrmann
<PAGE>
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
OPPENHEIMER MIDCAP FUND
CERTIFIED BOARD RESOLUTIONS
The undersigned, the duly elected, acting and qualified Secretary of the
above referenced funds (the "Funds") does hereby certify that the resolutions
set forth below were duly adopted and approved at a meeting of the Board of
Trustees or Directors, as applicable, of the Funds held on August 5, 1997:
"RESOLVED, that Andrew J. Donohue and Robert G. Zack be, and each of them
hereby is, appointed the attorney-in-fact and agent of Bridget A.
Macaskill, the Chairman of the Board and President (Principal Executive
Officer) of the Funds, Andrew J. Donohue, the Secretary of the Funds, and
George C. Bowen, the Treasurer (Principal Financial and Accounting
Officer) of the Funds, with full power of substitution and resubstitution,
to sign on the behalf of such officers of each of the Funds any and all
Registration Statements (including any post-effective amendments to such
Registration Statements) under the Securities Act of 1933 and the
Investment Company Act of 1940 and any amendments and supplements thereto,
and other documents in connection thereunder, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission; and be it further
RESOLVED, that Andrew J. Donohue and Robert G. Zack be, and each of them
hereby is, authorized, empowered and directed, in the name and on behalf
of the Funds, to take such additional action and to execute and deliver
such additional documents and instruments as any of them may deem
necessary or appropriate to implement the provisions of the foregoing
resolution, the authority for the taking of such action and the execution
and delivery of such documents and instruments to be conclusively
evidenced thereby."
IN WITNESS WHEREOF, the undersigned has hereunto set his
hand
as of this 5th day of August, 1997.
/s/ Andrew J. Donohue
Andrew J. Donohue
powers\certd.res
