As filed with the Securities and Exchange Commission on February 21, 1997
Registration No. 333-16881
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. 2 / X /
POST-EFFECTIVE AMENDMENT NO. __ / /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /
X /
Amendment No. 11 / X /
QUEST FOR VALUE DUAL PURPOSE FUND, INC.*
- -------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Oppenheimer Tower, One World Financial Center, New York, New York 10281
- -------------------------------------------------------------------------
(Address of Principal Executive Offices)
(212) 667-7000
- -------------------------------------------------------------------------
(Registrant's Telephone Number)
Thomas Duggan, Esq.
OpCap Advisors
Oppenheimer Tower, One World Financial Center, New York, New York 10281
- -------------------------------------------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
Approximate Date of Proposed Offering: As soon as practicable after the
effective date of this Registration Statement and thereafter from day to day.
/ / Immediately upon filing pursuant to paragraph (b)
/ / On ______________, pursuant to paragraph (b)
/ / 60 days after filing, pursuant to paragraph (a)(1)
/ / On ___________, pursuant to paragraph (a)(1)
/ / 75 days after filing, pursuant to paragraph (a)(2)
/ / On ____________, pursuant to paragraph (a)(2) of Rule 485.
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
Proposed
Title of Maximum Amount
Securities Amount Offering of
Being Being Price Per Registration
Registered Registered Unit Fee
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Class A,**
Class B and
Class C
Shares of Indefinite*** $_________ N/A
Common Stock
(par value
$0.0001 per
share)
* On the effective date of this Registration Statement, the Registrant will
change its name to Oppenheimer Quest Capital Value Fund, Inc.
** Previously registered under the Securities Act of 1933 (Reg. No. 33-7967)
*** An indefinite number of Class A, Class B and Class C Shares of Common Stock
of the Registrant is being registered by this Registration Statement pursuant to
Rule 24f-2 under the Investment Company Act of 1940.
The Registrant hereby amends the Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a),
shall determine.
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
______________________________________
* Not applicable or negative answer.
prosp\capN1a.#2
<PAGE>
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
Supplement dated March 3, 1997 to the
Prospectus dated March 3, 1997
The Prospectus is changed as follows:
In addition to paying dealers the regular commission for
(1) sales of Class A shares stated in the sales charge table in
"Buying Class A Shares," (2) sales of Class B shares described in
the fifth paragraph in "Distribution and Service Plans for Class B
and Class C Shares," and (3) sales of Class C shares described in
the sixth paragraph in "Distribution and Service Plans for Class B
and Class C Shares," the Distributor will pay additional
commission to each broker, dealer and financial institution that
has a sales agreement with the Distributor and agrees to accept
that additional commission (these are referred to as "participating
firms") for Class A, Class B and Class C shares of the Fund sold in
"qualifying transactions" (the "promotion"). The additional
commission will be 1.00% of the offering price of shares of the
Fund sold by a registered representative or sales representative of
a participating firm during the promotion. If the additional
commission is paid on the sale of Class A shares of $500,000 or
more or the sale of Class A shares to a SEP IRA with 100 or more
eligible participants and those shares are redeemed within 13
months from the end of the month in which they were purchased, the
participating firm will be required to return the additional
commission.
"Qualifying transactions" are aggregate sales of
$150,000 or more of Class A, Class B and/or Class C shares of any
one or more of the Oppenheimer funds (except money market funds and
municipal bond funds) for rollovers or trustee-to-trustee
transfers from another retirement plan trustee, of IRA assets or
other employee benefit plan assets from an account or investment
other than an account or investment in the Oppenheimer funds to (1)
IRAs, rollover IRAs, SEP IRAs and SAR-SEP IRAs, using the
OppenheimerFunds, Inc. prototype IRA agreement, if the rollover
contribution is received during the period from March 3, 1997
through April 15, 1997 (the "promotion period"), or the acceptance
of a direct rollover or trustee-to-trustee transfer is acknowledged
by the trustee of the OppenheimerFunds prototype IRA during the
promotion period, and (2) IRAs, rollover IRAs, SEP IRAs and SAR-
SEP IRAs using the A.G. Edwards & Sons, Inc. prototype IRA
agreement, if the rollover contribution or trustee-to-trustee
payment is received during the promotion period. "Qualifying
transactions" do not include (1) purchases of Class A shares
intended but not yet made under a Letter of Intent, and (2)
purchases of Class A, Class B and/or Class C shares with the
redemption proceeds from an existing Oppenheimer funds account.
March 3, 1997 PS0835.001
Oppenheimer Quest Capital Value Fund, Inc.
Prospectus dated March 3, 1997
Oppenheimer Quest Capital Value Fund, Inc. is a mutual
fund that seeks capital appreciation as its investment objective.
The Fund invests in securities (primarily equity securities) of
companies believed to be undervalued in the marketplace in relation
to factors such as the companies' assets, earnings, growth
potential and cash flows. The Fund may invest its assets in equity
securities of companies without limit as to market capitalization.
The Fund may invest up to 25% of its net assets in high-yield,
lower-grade bonds rated below Baa3 by Moody's Investors Service,
Inc. or BBB- by Standard & Poor's Corporation (commonly known as
"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 March 3, 1997 Statement
of Additional Information. For a free copy, call OppenheimerFunds
Services, the Fund's Transfer Agent, at 1-800-525-7048, or write to
the Transfer Agent at the address on the back cover. The Statement
of Additional Information has been filed with the Securities and
Exchange Commission and is incorporated into this Prospectus by
reference (which means that it is legally part of this Prospectus).
(OppenheimerFunds logo)
Shares of the Fund are not deposits or obligations of any bank, are
not guaranteed by any bank, are not insured by the F.D.I.C. or any
other agency, and involve investment risks, including the possible
loss of the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
Contents
ABOUT THE FUND
Expenses
A Brief Overview of the Fund
Financial Highlights
Investment Objective and Policies
Investment Risks
Investment Techniques and Strategies
How the Fund is Managed
Performance of the Fund
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Appendix A: Special Sales Charge Arrangements for
Shareholders of the Former Quest for Value Funds
Appendix B: Description of Ratings
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 in effect as of the date of this Prospectus.
Background. The Fund is a diversified, open-end
management investment company. Prior to the date of this
Prospectus, the Fund was organized as a closed-end investment
company with a dual purpose structure, a dual investment objective
of (a) long-term capital appreciation and preservation of capital
and (b) current income and long-term growth of income, and had
common stock (the Capital Shares ) and preferred stock (the Income
Shares ) outstanding. Under the Fund s prior dual purpose
structure, the Capital Shares were entitled to all gains and losses
on all of the assets of the Fund and no expenses were allocated to
such shares; the Income Shares were entitled to receive all of the
Fund s income and bore all of the operating expenses of the Fund.
The Income Shares were redeemed by the Fund on January 31, 1997 and
The Fund s dual purpose structure terminated. With respect to the
Capital Shares, the Fund s Board of Directors (the Board of
Directors ) determined that it was in the best interests of the
holders of the Capital Shares to convert the Fund to an open-end
investment company and approved the submission of this proposal to
such shareholders. Pursuant to shareholder approval received on
December 20, 1996, effective as of the date of this Prospectus, the
Fund was converted to an open-end investment company with a single
investment objective of capital appreciation. The outstanding
Capital Shares of the Fund became Class A shares of common stock
and will now bear their allocable share of the Fund s expenses.
Other changes to the Fund, including a change in investment adviser
to OppenheimerFunds, Inc., are described below in How The Fund is
Managed .
Shareholder Transaction Expenses are charges you pay
when you buy or sell shares of the Fund. Please refer to "About
Your Account," starting on page ___, for an explanation of how and
when these charges apply.
<TABLE>
<CAPTION>
Class Class Class
A Shares B Shares C Shares
<S> <C> <C> <C>
Maximum Sales Charge
on Purchases (as a %
of offering price) 5.75% None None
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _
Maximum Deferred Sales
Charge (as a % of
the lower of the
original 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)
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Maximum Sale Charge on
Reinvested Dividends None None None
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Exchange Fee None None None
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Redemption Fee None(3) None(3) None(3)
(1) If you invest $1 million or more ($500,000 or more for purchases by "Retirement
Plans," as defined in "Class A Contingent Deferred Sales Charge" on page __) in Class
A shares, you may have to pay a sales charge of up to 1% if you sell your shares
within 18 calendar months from the end of the calendar month during which you
purchased those shares, depending upon when you purchased such shares. See "How to
Buy Shares - Buying Class A Shares," below.
(2) See "How to Buy Shares - Buying Class B Shares" and "How to Buy Shares - Buying Class
C Shares" below, for more information on the contingent deferred sales charges.
(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.
</TABLE>
Annual Fund Operating Expenses are paid out of the Fund's assets
and represent the Fund's expenses of operating its business. For
example, the Fund pays management fees to its investment adviser,
OppenheimerFunds, Inc. (referred to in this Prospectus as the
"Manager"). The rates of the Manager's fees are set forth in "How
the Fund is Managed," below. The Fund has other regular expenses
for services, such as transfer agent fees, custodial fees paid to
the bank that holds the Fund's portfolio securities, audit fees and
legal expenses. Those expenses are detailed in the Fund's
Financial Statements in the Statement of Additional Information.
Annual Fund Operating Expenses
(as a Percentage of Average Net Assets)
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
------- ------- -------
<S> <C> <C> <C>
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)
</TABLE>
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%. 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 .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 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.
Examples. To try to show the effect of these expenses on
an investment over time, we have created the hypothetical examples
shown below. Assume that you make a $1,000 investment in each class
of shares of the Fund, and that the Fund's annual return is 5%, and
that its operating expenses for each class are the ones shown in
the Annual Fund Operating Expenses table above. If you were to
redeem your shares at the end of each period shown below, your
investment would incur the following expenses by the end of 1, 3,
5 and 10 years:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years(*)
<S> <C> <C> <C> <C>
Class A Shares $71 $105 $145 $257
Class B Shares $71 $ 98 $141 $242
Class C Shares $31 $ 68 $121 $266
If you did not redeem your investment, it would incur the
following expenses:
1 year 3 years 5 years 10 years(*)
Class A Shares $71 $105 $145 $257
Class B Shares $21 $ 68 $121 $242
Class C Shares $21 $ 68 $121 $266
</TABLE>
_________________________
* The expenses set forth in the examples above are based upon
expenses of the Fund that are expected to be incurred during the
Fund s first fiscal year as an open-end investment company on an
annualized basis. In the first example, expenses include the Class
A initial sales charge and the applicable Class B or Class C
contingent deferred sales charge. In the second example, Class A
expenses include the initial sales charge, but Class B and Class C
expenses do not include contingent deferred sales charges. The
Class B expenses in years 7 through 10 are based on the Class A
expenses shown above, because the Fund automatically converts your
Class B shares into Class A shares after 6 years. Because of the
effect of the higher asset-based sales charge and the contingent
deferred sales charge imposed on Class B and Class C shares, long-
term holders of Class B and Class C shares could pay the economic
equivalent of more than the maximum front-end sales charge allowed
under applicable regulations. For Class B shareholders, the
automatic conversion of Class B shares to Class A shares is
designed to minimize the likelihood that this will occur. Please
refer to "How to Buy Shares -- Buying Class B Shares" for more
information.
These examples show the effect of expenses on an investment, but
are not meant to state or predict actual or expected costs or
investment returns of the Fund, which may be more or less than
those shown.
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized
below, with references to the section of this Prospectus where more
complete information can be found. You should carefully read the
entire Prospectus before making a decision about investing in the
Fund. Keep the Prospectus for reference after you invest,
particularly for information about your account, such as how to
sell or exchange shares.
What is the Fund's Investment Objective? The Fund's
investment objective is to seek capital appreciation.
What Does the Fund Invest In? The Fund invests in
securities (primarily equity securities) of companies believed by
the 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. The Fund invests
primarily in equity securities including common stocks and
preferred stocks; bonds, debentures and notes convertible into
common stock; and depository receipts for such securities. The
Fund may invest its assets in equity securities of companies with
no limit as to market capitalization. The Fund may invest up to
25% of its net assets in high-yield, lower-grade bonds rated below
Baa3 by Moody's Investors Service, Inc. ("Moody's") or BBB- by
Standard & Poor's Corporation ("S&P")(commonly known as "junk
bonds"). To provide liquidity, the Fund typically invests a part
of its assets in various types of U.S. Government securities and
money market instruments. For temporary defensive purposes, the
Fund may invest up to 100% of its assets in money market
instruments. These investments are more fully explained in
"Investment Policies and Strategies," starting on page _.
Who Manages the Fund? The Manager supervises the Fund's
investment program and handles its day-to-day business. The
Manager (including a subsidiary) manages investment company
portfolios having over $62 billion in assets as of December 31,
1996. The Manager is paid an advisory fee by the Fund, based on
its net assets. The Fund's sub-adviser is OpCap Advisors (the
"Sub-Adviser"), which is paid a fee by the Manager, not the Fund.
The Sub-Adviser provides day-to-day portfolio management of the
Fund. The Fund's portfolio manager is employed by the Sub-Adviser
and is primarily responsible for the selection of the Fund's
securities. The Board of Directors, elected by shareholders,
oversees the Manager, the Sub-Adviser and the portfolio manager.
Please refer to "How the Fund is Managed," starting on page __ for
more information about the Manager, the Sub-Adviser and their fees.
How Risky is the Fund? All investments carry risks to some
degree. It is important to remember that the Fund is designed for
long-term investors. The Fund's investments in stocks and bonds
are subject to changes in their value from a number of factors such
as: changes in general stock and bond market movements, the change
in value of particular stocks because of an event affecting the
issuer, or changes in interest rates that can affect bond prices.
These changes affect the value of the Fund's investments and its
price per share. Investments in foreign securities involve
additional risks not associated with investments in domestic
securities, including risks associated with changes in currency
rates.
While the 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.
How Can I Buy Shares? You can buy shares through your
dealer or financial institution, or you can purchase shares
directly through OppenheimerFunds Distributor, Inc. (the
"Distributor") by completing an Application or by using an
Automatic Investment Plan under AccountLink. Please refer to "How
To Buy Shares" on page __ for more details.
Will I Pay a Sales Charge to Buy Shares? The Fund offers
Class A, Class B and Class C shares. All classes have the same
investment portfolio but have different expenses. Class A shares
are offered with a front-end sales charge, starting at 5.75%, and
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.
How Can I Sell My Shares? Shares can be redeemed by mail
or by telephone call to the Transfer Agent on any business day, or
through your dealer. Please refer to "How To Sell Shares" on page
__. The Fund also offers exchange privileges to other Oppenheimer
funds, described in "How to Exchange Shares" on page __.
How Has the Fund Performed? Prior to the date of this
Prospectus, the Fund operated as a closed-end investment company
with a dual-purpose structure and with dual investment objectives.
See About the Fund - Expenses - Background. 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 (formerly,
the Capital Shares) has been restated to reflect the fees and
expenses of such Class A shares in effect as of the date of this
Prospectus as set forth above in "About the Fund" in "Shareholder
Transaction Expenses" and "Annual Fund Operating Expenses" (without
giving effect to any fee waivers discussed therein). The Fund s
total returns can be compared to the returns (over similar periods)
of other funds. Of course, other funds may have different
objectives, investments, and levels of risk. The Fund's performance
can also be compared to a broad-based market index, which we have
done on page __.
<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 year ended December 31, 1996 is
included in the Statement of Additional Information.
The financial information below reflects the Fund's
performance as a closed-end investment company with a dual purpose
structure and with Income Shares and Capital Shares outstanding.
The Income Shares were redeemed on January 31, 1997 after the end
of the Fund s fiscal year. Accordingly, the financial information
below may not be indicative of the Fund s performance as an open-
end investment company. Capital Shares of the Fund existing at the
time of its conversion to an open-end investment company have been
classified as Class A shares. Class B and Class C shares were not
offered during the fiscal year ended December 31, 1996;
accordingly, financial information for such shares is not set forth
below. See About the Fund - Expenses - Background for additional
information about the background of the Fund.
<PAGE>
<TABLE>
<CAPTION>
Oppenheimer Quest Capital Value Fund, Inc.
Financial Highlights
Year Ended December 31,
- ----------------------------------------------------------------------------
1996 1995 1994 1993 1992
------------ ------------ ------------ ------------ ------------
Per Share Operating Data:
Income Shares:
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 11.63 $ 11.63 $ 11.61 $
11.61 $ 11.60
Net investment income............................. 1.38 1.39 1.36 1.30
1.35
Provision for income taxes........................ -- -- -- -- --
Dividends from net investment income.............. (1.38) (1.39) (1.34)
(1.30) (1.34)
Allocation from capital shares of tax basis net
realized short-term capital gains............... -- -- -- -- --
Offering expenses................................. -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Net asset value, end of period.................... $ 11.63 $ 11.63 $ 11.63 $ 11.61
$ 11.61
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Market value, end of period....................... $ 11.500 $ 12.000 $ 12.125 $
13.250 $ 13.000
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Total Return, at Market Value(3).................. 7.8% 10.9% 1.8%
12.3% 7.4%
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Capital Shares:
Net asset value, beginning of period.............. $ 33.65 $ 25.79 $ 27.09 $
26.29 $ 22.59
Net realized and unrealized gain (loss)........... 6.91 9.46 (0.38) 2.45
6.09
Provision for corporate income taxes on net
realized long-term capital gain................. (3.31) (1.57) (0.53) (1.43)
(1.10)
Distributions from net realized short-term gain... -- (0.03) (0.39)
(0.22) (1.29)
Allocation from capital shares of tax basis net
realized short-term capital gains............... -- -- -- -- --
Offering expenses................................. -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Net asset value, end of period.................... $ 37.25 $ 33.65 $ 25.79 $ 27.09
$ 26.29
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Market value, end of period....................... $ 36.125 $ 31.875 $ 23.000 $
23.750 $ 23.000
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Total Return, at Market Value(4).................. 23.6% 45.6% 0.9%
10.5% 44.6%
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands).......... $ 879,934 $ 815,179 $ 673,742 $
696,803 $ 682,374
------------ ------------ ------------ ------------ ------------
Ratios to average net assets:
Expenses........................................ 0.72%(6) 0.73% 0.74% 0.74%
0.74%
------------ ------------ ------------ ------------ ------------
Net investment income........................... 2.82% 3.20% 3.47% 3.29%
3.61%
------------ ------------ ------------ ------------ ------------
Portfolio turnover rate........................... 74% 72% 45% 51%
45%
------------ ------------ ------------ ------------ ------------
Average brokerage commission rate................. $ 0.05 -- -- --
--
------------ ------------ ------------ ------------ ------------
</TABLE>
1. Commencement of operations.
2. The Fund changed its fiscal year end from October 31 to December 31.
3. Change in market price assuming reinvestment of dividends on payable date
(at market).
4. Change in market price assuming reinvestment of short-term capital gains
distributions, if any, at payable date and federal taxes paid on long-term
capital gains on year end (both at market).
5. Annualized.
6. Gross of expense offsets.
<PAGE>
<TABLE>
<CAPTION>
Oppenheimer Quest Capital Value Fund, Inc.
Financial Highlights
Year Ended December 31,
-------------------------------------------------------------
1991 1990 1989 1988
------------ ------------ ------------ ------------
Per Share Operating Data:
Income Shares:
<S> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 11.60 $ 11.61 $ 11.69 $
11.62
Net investment income............................. 1.37 1.57 1.41 1.12
Provision for income taxes........................ -- -- -- --
Dividends from net investment income.............. (1.37) (1.58) (1.49)
(1.05)
Allocation from capital shares of tax basis net
realized short-term capital gains............... -- -- -- --
Offering expenses................................. -- -- -- --
------------ ------------ ------------ ------------
Net asset value, end of period.................... $ 11.60 $ 11.60 $ 11.61 $ 11.69
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Market value, end of period....................... $ 13.375 $ 12.875 $ 13.00 $
10.50
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Total Return, at Market Value(3).................. 15.0% 11.9% 39.8%
32.8%
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Capital Shares:
Net asset value, beginning of period.............. $ 16.43 $ 18.05 $ 11.93 $
8.70
Net realized and unrealized gain (loss)........... 6.77 (0.91) 6.43 3.23
Provision for corporate income taxes on net
realized long-term capital gain................. (0.60) (0.51) (0.31) --
Distributions from net realized short-term gain... (0.01) (0.20) -- --
Allocation from capital shares of tax basis net
realized short-term capital gains............... -- -- -- --
Offering expenses................................. -- -- -- --
------------ ------------ ------------ ------------
Net asset value, end of period.................... $ 22.59 $ 16.43 $ 18.05 $ 11.93
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Market value, end of period....................... $ 17.625 $ 12.00 $ 14.125 $
8.625
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Total Return, at Market Value(4).................. 52.1% (9.7)% 67.4%
35.3%
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands).......... $ 615,727 $ 504,739 $ 533,994 $
425,376
------------ ------------ ------------ ------------
Ratios to average net assets:
Expenses........................................ 0.77% 0.81% 0.83% 0.86%
------------ ------------ ------------ ------------
Net investment income........................... 4.39% 5.50% 5.17% 5.04%
------------ ------------ ------------ ------------
Portfolio turnover rate........................... 62% 78% 76% 155%
------------ ------------ ------------ ------------
Average brokerge commission rate.................. $ -- -- -- --
------------ ------------ ------------ ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Oppenheimer Quest Capital Value Fund, Inc.
Financial Highlights
February 13,
Year ended 1987(1) to
December 31, October 31,
1987(2) 1987
------------ ------------
Per Share Operating Data:
Income Shares:
<S> <C> <C>
Net asset value, beginning of period.............. $ 11.86 $ 11.63
Net investment income............................. 0.09 0.64
Provision for income taxes........................ (0.01) --
Dividends from net investment income.............. (0.32) (0.41)
Allocation from capital shares of tax basis net
realized short-term capital gains............... -- 0.03
Offering expenses................................. -- (0.03)
------------ ------------
Net asset value, end of period.................... $ 11.62 $ 11.86
------------ ------------
------------ ------------
Market value, end of period....................... $ 8.750 $ 9.125
------------ ------------
------------ ------------
Total Return, at Market Value(3).................. (0.7)% (24.2)%
------------ ------------
------------ ------------
Capital Shares:
Net asset value, beginning of period.............. $ 9.41 $ 11.63
Net realized and unrealized gain (loss)........... 0.07 (2.01)
Provision for corporate income taxes on net
realized long-term capital gain................. (0.01) (0.15)
Distributions from net realized short-term gain... (0.77) --
Allocation from capital shares of tax basis net
realized short-term capital gains............... -- (0.03)
Offering expenses................................. -- (0.03)
------------ ------------
Net asset value, end of period.................... $ 8.70 $ 9.41
------------ ------------
------------ ------------
Market value, end of period....................... $ 6.375 $ 5.875
------------ ------------
------------ ------------
Total Return, at Market Value(4).................. 22.4% (51.8)%
------------ ------------
------------ ------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands).......... $ 365,781 $ 382,870
------------ ------------
Ratios to average net assets:
Expenses........................................ 1.06%(5) 0.77%(5)
------------ ------------
Net investment income........................... 2.37%(5) 3.80%(5)
------------ ------------
Portfolio turnover rate........................... 25% 137%
------------ ------------
Average brokerage commission rate................. $ -- --
------------ ------------
</TABLE>
<PAGE>
Investment Objective and Policies
Objective. The Fund seeks capital appreciation.
Investment Policies and Strategies. The Fund invests in securities
(primarily equity securities) of companies believed by the Manager
to be undervalued in the marketplace in relation to factors such as
the companies' assets, earnings, growth potential and cash flows.
The Fund may invest its assets in equity securities of companies
with no limit as to market capitalization. The Fund may invest up
to 25% of its net assets in high-yield, lower-grade bonds (or high-
yielding unrated bonds)rated below Baa3 by Moody's or BBB- by
S&P(commonly known as "junk bonds"). For the purposes of this
Prospectus the term equity securities is defined as common stocks
and preferred stocks; bonds, debentures and notes convertible into
common stocks; and depository receipts for such securities.
To provide liquidity for the purchase of new instruments and
to effect redemptions of shares, the Fund typically invests a part
of its assets in various types of U.S. Government securities and
high quality, short-term debt securities with remaining maturities
of one year or less such as government obligations, certificates of
deposit, bankers' acceptances, commercial paper, short-term
corporate securities and repurchase agreements ("money market
instruments").
For temporary defensive purposes, the Fund may invest up to
100% of its assets in money market instruments. At any time that
the Fund for temporary defensive purposes invests in money market
instruments, to the extent of such investments, it is not pursuing
its investment objective.
Can the Fund's Investment Objective and Policies Change?
The Fund has an investment objective, which is described above, as
well as investment policies it follows to try to achieve its
objective. Additionally, the Fund uses certain investment
techniques and strategies in carrying out those investment
policies. The Fund's investment policies and practices are not
"fundamental" unless this Prospectus or the Statement of Additional
Information says that a particular policy is "fundamental". The
Fund's investment objective is a fundamental policy.
Fundamental policies are those that cannot be changed without
the approval of a "majority" of the Fund's outstanding voting
shares. The term "majority" is defined in the Investment Company
Act of 1940 to be a particular percentage of outstanding voting
shares (and this term is explained in the Statement of Additional
Information). The Board of Directors may change non-fundamental
policies without shareholder approval, although significant changes
will be described in amendments to this Prospectus.
Foreign Securities. The Fund may purchase foreign
securities that are listed on a domestic or foreign securities
exchange, traded in domestic or foreign over-the-counter markets or
represented by American Depository Receipts, European Depository
Receipts or Global Depository Receipts. There is no limit to the
amount of foreign securities the Fund may acquire. The Fund may
buy securities in any country; however as a fundamental policy, the
Fund may not invest more than 25% of its net assets (at time of
purchase) in securities of issuers located in any single foreign
country and, as a non-fundamental policy, 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.
Warrants. A warrant is an option to purchase an equity
security at a specific price which is valid for a specific period
of time. As a fundamental policy 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)or more than 2% of its net assets at the time of
purchase in warrants not listed on the New York or American Stock
Exchange. For further details about this type of investment,
please refer to "Warrants" in the Statement of Additional
Information.
Portfolio Turnover. A change in the securities held by the
Fund is known as "portfolio turnover." The Fund ordinarily does not
engage in short-term trading to try to achieve its objective. As a
result, the Fund's portfolio turnover (excluding turnover of
securities having a maturity of one year or less) is not expected
to be more than 100% each year.
Portfolio turnover affects brokerage costs, dealer markups
and other transaction costs, and results in the Fund's realization
of capital gains or losses for tax purposes. It may also affect
the Fund's ability to qualify as a "regulated investment company"
under the Internal Revenue Code for tax deductions for dividends
and capital gains distributions the Fund pays to shareholders. The
Fund qualified in its last fiscal year and intends to do so in the
coming year, although there is no guarantee that it will qualify.
Investment Risks
All investments carry risks to some degree, whether they are risks
that market prices of the investment will fluctuate (this is known
as "market risk") or that the underlying issuer will experience
financial difficulties and may default on its obligation under a
fixed-income investment to pay interest and repay principal (this
is referred to as "credit risk"). These general investment risks
and the special risks of certain types of investments that the Fund
may hold are described below. They affect the value of the Fund's
investments, its investment performance and the prices of its
shares. These risks collectively form the risk profile of the Fund.
Because of the types of securities the Fund invests in and
the investment techniques the Fund uses, the Fund is designed for
investors who are investing for the long term. It is not intended
for investors seeking assured income or preservation of capital.
While the Manager tries to reduce risks by diversifying
investments, by carefully researching securities before they are
purchased, and in some case by using hedging techniques, changes in
overall market prices can occur at any time, and because the income
earned on securities is subject to change, there is no assurance
that the Fund will achieve its investment objective. When you
redeem your shares, they may be worth more or less than what you
paid for them.
Stock Investment Risks. Because the Fund may invest a
substantial portion of its assets in stocks, the value of the
Fund's portfolio will be affected by changes in the stock markets.
At times, the stock markets can be volatile and stock prices can
change substantially. This market risk will affect the Fund's net
asset values per share, which will fluctuate as the values of the
Fund's portfolio securities change. Not all stock prices change
uniformly or at the same time and not all stock markets move in the
same direction at the same time. Other factors can affect a
particular stock's prices, for example, poor earnings reports by an
issuer, loss of major customers, major litigation against an
issuer, or changes in government regulations affecting an industry.
Not all of these factors can be predicted.
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.
Foreign Securities Have Special Risks. For example,
foreign issuers are not subject to the same accounting and
disclosure requirements as U.S. companies. The value of foreign
investments may be affected by changes in foreign currency rates,
exchange control regulations, expropriation or nationalization of
a company's assets, foreign taxes, delays in settlement of
transactions, changes in governmental economic or monetary policy
in the U.S. or abroad, or other political and economic factors. The
Fund may invest in emerging market countries; such countries may
have relatively unstable governments, economies based on only a few
industries that are dependent upon international trade and reduced
secondary market liquidity. More information about the risks and
potential rewards of investing in foreign securities is contained
in the Statement of Additional Information.
Risks of Fixed-Income Securities. In addition to credit
risks, described above, debt securities are subject to changes in
their value due to changes in prevailing interest rates. When
prevailing interest rates fall, the value of already-issued debt
securities generally rise. When interest rates rise, the values of
already-issued debt securities generally decline. The magnitude of
these fluctuations will often be greater for longer-term debt
securities than shorter-term debt securities. Changes in the value
of securities held by the Fund mean that the Fund's share prices
can go up or down when interest rates change because of the effect
of the change on the value of the Fund's portfolio of debt
securities.
The Fund may invest up to 25% of its net assets in high-
yield, "lower-grade" bonds (or high-yielding unrated bonds),
commonly known as "junk bonds." The Fund is not obligated to
dispose of securities that are downgraded below investment grade
after the Fund buys them. "Lower-grade" debt securities are those
rated below "investment grade," which means they have a rating
lower than "Baa3" by Moody's or lower than "BBB-" by S&P. The Fund
may invest in securities rated as low as "C" or "D" or which may be
in default at the time the Fund buys them. Appendix B to this
Prospectus describes these rating categories. If a debt security
is rated below investment grade by one rating agency and as
investment grade by a different rating agency, the Sub-Adviser will
make a determination as to the debt security's investment grade
quality. High yield, lower-grade securities, whether rated or
unrated, often have speculative characteristics and special risks
that make them riskier investments than investment grade
securities. Generally, higher yielding lower-grade bonds are
subject to credit risks to a greater extent than lower yielding,
investment grade bonds. They may be subject to greater market
fluctuations and risk of loss of income and principal than lower
yielding, investment grade securities. There may be less of a
market for them and therefore they may be harder to sell at an
acceptable price. There is a relatively greater possibility that
the issuer's earnings may be insufficient to make the payments of
interest due on the bonds. The issuer's low creditworthiness may
increase the potential for its insolvency. More information about
investment in fixed-income securities, including convertible
securities, is contained in the Statement of Additional
Information.
Hedging instruments can be volatile investments and may
involve special risks. As discussed below, the Fund may invest in
certain hedging instruments. The use of hedging instruments
requires special skills and knowledge of investment techniques that
are different than what is required for normal portfolio
management. If the Manager uses a hedging instrument at the wrong
time or judges market conditions incorrectly, hedging strategies
may reduce the Fund's return. The Fund could also experience losses
if the prices of its futures, forwards and options positions were
not correlated with its other investments or if it could not close
out a position because of an illiquid market for the future or
option.
Options trading involves the payment or receipt of premiums
and has special tax effects on the Fund. There are also special
risks in particular hedging strategies. If a covered call written
by the Fund is exercised on an investment that has increased in
value, the Fund will be required to sell the investment at the call
price and will not be able to realize any profit if the investment
has increased in value above the call price. In writing a put,
there is a risk that the Fund may be required to buy the underlying
security at a disadvantageous price. The use of forward contracts
may reduce the gain that would otherwise result from a change in
the relationship between the U.S. dollar and a foreign currency.
These risks are described in greater detail in the Statement of
Additional Information.
Investment Techniques and Strategies
The Fund may also use the investment techniques and strategies
described below. These techniques involve certain risks. The
Statement of Additional Information contains more information about
these practices, including limitations on their use that may help
to reduce some of the risks.
Investing in Small, Unseasoned Companies. The Fund may
invest 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. See "Investing in Small,
Unseasoned Companies" in the Statement of Additional Information
for a further discussion of the risks involved in such investments.
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.
Futures. The Fund may buy and sell futures contracts that
relate to broadly-based stock indices (these are referred to as
Stock Index Futures) or foreign currencies (these are called
Forward Contracts and are discussed below).
Put and Call Options. The Fund may buy and sell put
options (puts) and call options (calls) on broadly-based stock
indices, foreign currencies or on Stock Index Futures. The Fund
may also purchase call options on securities it intends to purchase
and may purchase put options on securities it owns. All options
purchased or sold by the Fund will be traded on a U.S. or foreign
commodities exchange or will result from separate, privately
negotiated transactions with a primary government securities dealer
recognized by the Board of Governors of the Federal Reserve System
or with other broker-dealers approved by the Board of Directors.
When the Fund writes (that is, sells) a call, it receives
cash (called a premium). The call gives the buyer the ability to
buy the investment on which the call was written from the Fund at
the call price during the period in which the call may be
exercised. If the value of the investment does not rise above the
call price, it is likely that the call will lapse without being
exercised, while the Fund keeps the cash premium (and the
investment). Each call the Fund writes must be "covered" while it
is outstanding. That means the Fund owns the investment on which
the call was written or the Fund owns and segregates liquid assets
to satisfy its obligations if the call is exercised.
The Fund may purchase and sell put options. Buying a put on
an investment gives the Fund the right to sell the investment at a
set price to a seller of a put on that investment. The Fund can
buy only those puts that relate to securities it owns, broadly-
based stock indices, foreign currencies or Stock Index Futures.
The Fund can buy a put on a Stock Index Future whether or not the
Fund owns the particular Stock Index Future in its portfolio. The
Fund may write puts on broadly-based stock indices, foreign
currencies or Stock Index Futures, but only if those puts are
covered by segregated liquid assets. The Fund will not write a put
if it will require more than 25% of the Fund's total assets to be
segregated.
Forward Contracts. Forward contracts are foreign currency
exchange contracts. They are used to buy or sell foreign currency
for future delivery at a fixed price. The Fund uses them to try to
"lock in" the U.S. dollar price of a security denominated in a
foreign currency that the Fund has bought or sold, or to protect
against possible losses from changes in the relative values of the
U.S. dollar and foreign currency. The Fund limits its exposure in
foreign currency exchange contracts in a particular foreign
currency to the amount of its assets denominated in that currency
or in a closely-correlated currency.
Illiquid and Restricted Securities. Under the policies and
procedures established by the Board of Directors, the Manager
determines the liquidity of certain of the Fund's investments.
Investments may be illiquid because of the absence of an active
trading market, making it difficult to value them or dispose of
them promptly at an acceptable price. A restricted security is one
that has a contractual restriction on its resale or which cannot be
sold publicly until it is registered under the Securities Act of
1933. As a fundamental policy, the Fund will not invest in
illiquid securities, including securities for which there is no
readily available market, repurchase agreements which have a
maturity of longer than seven days, securities subject to legal or
contractual restrictions and certain over-the-counter options if
such acquisition will cause the current value of such securities to
exceed 10% of the value of the Fund's net assets. The Fund's
percentage limitation on illiquid and restricted investments does
not apply to certain restricted securities that are eligible for
resale to qualified institutional purchasers. The Manager monitors
holdings of illiquid securities on an ongoing basis and at times
the Fund may be required to sell some holdings to maintain adequate
liquidity.
Loans of Portfolio Securities. To attempt to raise cash
for liquidity purposes, the Fund may lend its portfolio securities
to brokers, dealers and other financial institutions. The Fund
must receive collateral for a loan. After any loan, the value of
the securities loaned, is not expected to exceed 33-1/3% of the
value of the total assets of the Fund. Other conditions to which
loans are subject are described in the Statement of Additional
Information. There are some risks in connection with securities
lending. The Fund might experience a delay in receiving additional
collateral to secure a loan or a delay in recovery of the loaned
securities.
Repurchase Agreements. The Fund may enter into repurchase
agreements to generate income for liquidity purposes to meet
anticipated redemptions, or pending the investment of proceeds from
sales of Fund shares or settlement of purchases of portfolio
investments. In a repurchase transaction, the Fund buys a security
and simultaneously sells it to the vendor for delivery at a future
date. Repurchase agreements must be fully collateralized. However,
if the vendor fails to pay the resale price on the delivery date,
the Fund may incur costs in disposing of the collateral and may
experience losses if there is any delay in its ability to do so.
The Fund may enter into reverse repurchase agreements. Under
a reverse repurchase agreement, the Fund sells securities and
agrees to repurchase them at a mutually agreed upon date and price.
Reverse repurchase agreements involve the risk that the market
value of the securities retained in lieu of sale by the Fund may
decline more than or appreciate less than the securities the Fund
has sold but is obligated to repurchase. In the event the buyer of
securities under a reverse repurchase agreement files for
bankruptcy or becomes insolvent, such buyer or its trustee or
receiver may receive an extension of time to determine whether to
enforce the Fund's obligation to repurchase the securities and the
Fund's use of the proceeds of the reverse repurchase agreements may
effectively be restricted pending such decisions. Reverse
repurchase agreements create leverage, a speculative factor, and
will be considered borrowings by the Fund for purposes of the
percentage limitations set forth in Borrowing below.
Investment in repurchase agreements having a maturity beyond
seven days is subject to the limitations set forth above under
"Illiquid and Restricted Securities." There is no limit on the
amount of the Fund's net assets that may be subject to repurchase
agreements of seven days or less.
"When-Issued" and Delayed Delivery Transactions. The Fund
may purchase securities on a "when-issued" basis, and may purchase
or sell such securities on a "delayed delivery" basis or on a "firm
commitment" basis. These terms refer to securities that have been
created and for which a market exists, but which are not available
for immediate delivery. The Fund does not intend to make such
purchases for speculative purposes. During the period between the
purchase and settlement, the underlying securities are subject to
market fluctuations and no interest accrues prior to delivery of
the securities.
Borrowing. As a 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.
Short Sales "Against-the-Box." In a short sale, the
seller does not own the security that is sold, but normally borrows
the security to fulfill its delivery obligation. The seller later
buys the security to repay the loan, in the expectation that the
price of the security will be lower when the purchase is made,
resulting in a gain. The Fund may not sell securities short except
in collateralized transactions referred to as "short sales
against-the-box," where the Fund owns an equivalent amount of the
securities sold short. No more than 15% of the Fund's net assets
will be held as collateral for such short sales at any one time.
Other Investment Restrictions. The Fund has other investment
restrictions which are fundamental policies. Under these
fundamental policies, the Fund cannot:
Invest more than 25% of the value of its total assets
(valued at the time of investment) in any one industry.
With respect to 75% of its total assets, invest more than
5% of the value of its total assets (taken at market value at time
of purchase) in the outstanding securities of any one issuer,
excluding obligations issued or guaranteed by the U.S. Government
or any agency or instrumentality thereof or own more than 10% of
the outstanding voting securities of any one issuer (other than
securities issued or guaranteed by the U.S. Government or any
agency of instrumentality thereof).
Unless this Prospectus states that a percentage restriction
applies on an ongoing basis, it applies only at the time the Fund
makes an investment, and the Fund need not sell securities to meet
the percentage limits if the value of the investment increases in
proportion to the size of the Fund. Other investment restrictions
are listed in Investment Restrictions in the Statement of
Additional Information.
How the Fund is Managed
Organization and History. The Fund is a diversified, open-end
management investment company. The Fund was incorporated as "QFV
Dual Purpose Fund, Inc." on August 4, 1986 as a Maryland
corporation (and later renamed "Quest for Value Dual Purpose Fund,
Inc.") and commenced operations on February 13, 1987 as a closed-
end investment company with a dual purpose structure and with
Capital Shares and Income Shares. On December 20, 1996, the
shareholders of the Fund voted to, among other things, convert the
Fund to an open-end investment company. Effective as of the date
of this Prospectus, the Fund converted to an open-end investment
company with a single investment objective of capital appreciation
and with shares of stock designated as common stock (formerly,
Capital Shares), and was renamed "Oppenheimer Quest Capital Value
Fund, Inc." See About the Fund - Expenses -Background for
additional information.
The shares of common stock are divided into three classes
designated Class A, Class B and Class C, consisting of 300,000,000
Class A shares, and 100,000,000 each of Class B and Class C shares.
The remaining 500,000,000 shares of authorized common stock have
not been classified. The Board of Directors has the power, without
shareholder approval, to issue additional classes of shares of the
Fund. All classes invest in the same investment portfolio. Each
class has its own dividends and distributions and pays certain
expenses which may be different for the different classes. Each
class may have a different net asset value. Each share entitles a
shareholder to one vote on matters submitted to the shareholders to
vote on with fractional shares voting proportionally. Only shares
of a particular class vote as a class on matters that affect that
class alone. Shares are freely transferrable. Please refer to
"How the Fund is Managed" in the Statement of Additional
Information for more information on the voting of shares.
The Fund is governed by a Board of Directors, which is
responsible for protecting the interests of shareholders under
Maryland law. The Directors meet periodically throughout the year
to oversee the Fund's activities, review its performance, and
review the actions of the Manager and the Sub-Adviser. "Directors
and Officers of the Fund" in the Statement of Additional
Information names the Directors and officers of the Fund and
provides more information about them. Although the Fund is not
required by law to hold annual meetings, it may hold shareholder
meetings from time to time on important matters, and shareholders
have the right under certain circumstances to call a meeting to
remove a Director or to take other action described in the Fund's
Amended and Restated Articles of Incorporation.
The Manager. The Fund is managed by the Manager, OppenheimerFunds,
Inc., which supervises the Fund's investment program and handles
its day-to-day business. The Manager carries out its duties,
subject to the policies established by the Board of Directors,
under an Investment Advisory Agreement with the Fund which states
the Manager's responsibilities. The Agreement sets forth the fees
paid by the Fund to the Manager and describes the expenses that the
Fund is responsible to pay to conduct its business.
The Manager has operated as an investment adviser since 1959.
The Manager (including a subsidiary) currently manages investment
companies, including other Oppenheimer funds, with assets of more
than $62 billion as of December 31, 1996, 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 the investment adviser to
the Fund. Effective on such date, at the time of the conversion of
the Fund to an open-end management investment company, the Manager
acquired the investment advisory and other contracts and business
relationships and certain assets and liabilities of the Sub-
Adviser, OCC Distributors and Oppenheimer Capital relating to the
Fund. Pursuant to this acquisition and Fund shareholder approval
received on December 20, 1996, the Fund entered into the following
agreements, effective as February 28, 1997: the Investment Advisory
Agreement between the Fund and the Manager, and the Class A
Distribution and Service Plan between the Fund and the Distributor.
Further, as of February 28,1997, the Manager entered into a
subadvisory agreement with the Sub-Adviser for the benefit of the
Fund and the Fund entered into the Class B and Class C Distribution
and Service Plans with the Distributor. The agreements and plans
are described below.
The Sub-Adviser is a majority-owned subsidiary of Oppenheimer
Capital, a registered investment advisor, whose employees perform
all investment advisory services provided to the Fund by the Sub-
Adviser. Oppenheimer Financial Corp., a holding company, holds a
one-third interest in Oppenheimer Capital and Oppenheimer Capital,
L.P., a Delaware limited partnerhsip whose units are traded on The
New York Stock Exchange and of which Oppenheimer Financial Corp. is
the sole general partner, owns the remaining two-thirds interest.
On February 13, 1997, PIMCO Advisors L.P., a registered
investment adviser with $110 billion in assets under management
through various subsidiaries, signed a definitive agreement with
Oppenheimer Group, Inc. and its subsidiary Oppenheimer Financial
Corp. for PIMCO Advisors L.P. and its affiliate, Thomson Advisory
Group, Inc., to acquire the one-third managing general partner
interest in Oppenheimer Capital and the 1.0% general partner
interest in Oppenheimer Capital, L.P. The completion of the
transaction is subject to certain client, lender, Internal Revenue
Service and other approvals.
Portfolio Manager. The Fund's portfolio manager, Jeffrey
C. Whittington, is employed by the Sub-Adviser and is primarily
responsible for the selection of the Fund's securities. Mr.
Whittington, who is also a Senior Vice President of Oppenheimer
Capital was the Fund's portfolio manager from 1987 to September
1991, and from January 1996 to the present. From October 1991 to
July 1993, Mr. Whittington was a portfolio manager with Oppenheimer
& Co., Inc., from August 1993 to July 1994 was a portfolio manager
with Neuberger & Berman and since August 1994 has been a portfolio
manager at Oppenheimer Capital.
The Sub-Adviser's equity investment policy is overseen by
George Long, President and Chief Investment Officer for Oppenheimer
Capital. Mr. Long has been with Oppenheimer Capital since 1981.
Fees and Expenses. Under the Investment Advisory Agreement,
the Fund has agreed to pay the Manager a monthly fee at the
following annual rates, which decline on additional assets as the
Fund grows: 1.00% of the first $400 million of average daily net
assets, 0.90% of the next $400 million, and 0.85% of average daily
net assets over $800 million. This management fee is higher than
that paid by most other investment companies. Pursuant to the
Agreement, for a period of two years from the date thereof the
Manager will waive the following portion of the advisory fee: 0.15%
of the first $200 million of average annual net assets, 0.40% of
the next $200 million, 0.30% of the next $400 million and 0.25% of
average annual net assets over $800 million. The Fund pays expenses
related to its daily operations, such as custodian fees, Directors'
fees, transfer agency fees and legal and auditing costs. 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 has agreed to pay the Sub-Adviser an annual fee
payable monthly based on the average daily net assets of the Fund
equal to 40% of the net advisory fee collected by the Manager based
on the total net assets of the Fund as of 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 Sub-Adviser may select its affiliate, Oppenheimer & Co.,
Inc. ("Opco"), a registered broker-dealer, to execute transactions
for the Fund, provided that the commissions, fees or other
remuneration received by Opco are reasonable and fair compared to
those paid to other brokers in connection with comparable
transactions. When selecting broker-dealers other than Opco, the
Sub-Adviser may consider their record of sales of shares of the
Fund. Further information about the Fund's brokerage policies and
practices is set forth in "Brokerage Policies of the Fund" in the
Statement of Additional Information.
The Distributor. The Fund's shares are sold through dealers,
brokers and other financial institutions that have a sales
agreement with OppenheimerFunds Distributor, Inc., a subsidiary of
the Manager that acts as the Fund's Distributor. The Distributor
also distributes the shares of the other Oppenheimer funds managed
by the Manager and is sub-distributor for funds managed by a
subsidiary of the Manager.
The Transfer Agent and Shareholder Servicing Agent. The
transfer agent and shareholder servicing agent for the Fund is
OppenheimerFunds Services, a division of the Manager. It also acts
as the shareholder servicing agent for certain other Oppenheimer
funds. Shareholders should direct inquiries about their accounts
to the Transfer Agent at the address and toll-free number shown
below in this Prospectus and on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms
"total return" and "average annual total return" to illustrate its
performance. The performance of each class of shares is shown
separately, because the performance of each class of shares will
usually be different as a result of the different kinds of expenses
each class bears. These returns measure the performance of a
hypothetical account in the Fund over various periods, and do not
show the performance of each shareholder's investment (which will
vary if dividends are received in cash, or shares are sold or
additional shares are purchased). The Fund's performance
information may help you see how well your investment in the Fund
has done over time and to compare it to other funds or market
indices, as we have done on page __.
Prior to the date of this Prospectus, the Fund operated as a
closed-end investment company with a dual-purpose structure and
with dual investment objectives. See About the Fund - Expenses -
Background. 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 the date of this Prospectus as set forth in "About the Fund" in
"Shareholder Transaction Expenses" and "Annual Fund Operating
Expenses" (without giving effect to any fee waivers described
therein). As discussed in "About the Fund - Expenses -
Background", 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.
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 including
the sales charge, and those returns would be less if sales charges
were deducted.
How Has the Fund Performed? Below is a discussion by the Manager of
the Fund's performance during its last fiscal year ended December
31, 1996, followed by a graphical comparison of the Fund's
performance to an appropriate broad-based market index. Prior to
the date of this Prospectus, the Fund was known as Quest for Value
Dual Purpose Fund, Inc. and the Sub-Adviser was the Fund's
investment adviser.
Management's Discussion of Performance. During the fiscal
year ended December 31, 1996, the Fund operated as a dual purpose
fund and had Capital Shares and Income Shares outstanding. See
"About the Fund - Expenses - Background." During the year, the
Fund's investments were aimed at generating capital appreciation
for capital shareholders and income for income shareholders. In
selecting securities for 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; ACE, Ltd., a Bermuda-based
provider of excess directors and officers liability insurance;
Canadian Pacific, Ltd., a Canadian transportation and natural
resources company; Lucas Varity PLC, a manufacturer of automotive
components and other products; and World Com, Inc., the nation's
fourth largest long-distance telecommunications company. The Fund's
portfolio and its portfolio manager's strategies are subject to
change.
Comparing the Fund's Performance to the Market. The graph
below shows the performance of a hypothetical $10,000 investment in
Class A shares of the Fund (formerly, Capital Shares) held from
inception (February 13, 1987) until December 31, 1996. Class B and
C shares were not publicly offered during the fiscal year ended
December 31, 1996; therefore no performance information is
presented on Class B and Class C shares in the graph below. The
Fund's Class A performance reflects the deduction of the 5.75%
current maximum initial sales charge on Class A shares, the
reinvestment of any dividends and capital gains distributions and
the adjustment for fees and expenses as of the date of this
Prospectus 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.
and the Standard & Poor's 500 Index
[Graph]
Average Annual Total Return of the Fund at 12/31/96
1 Year 5 Years Life1
Class A : 13.57% 14.80% 16.28%
Total returns and ending account values in the graph reflect
reinvestment of any dividends and capital gains distributions
[1] The commencement of operations of the Fund (Class A shares)
was 2/13/87. Class A returns are shown net of the current
applicable 5.75% maximum initial sales charge and reflect the
historical performance of the Class A shares of the Fund (formerly,
Capital Shares) as adjusted for the fees and expenses of Class A
shares in effect as of the date of this Prospectus (without giving
effect to any fee waivers). Past performance is not predictive of
future performance.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors three different
classes of shares. The different classes of shares represent
investments in the same portfolio of securities but may be subject
to different expenses and will likely have different share prices.
Upon the conversion of the Fund to open-end status, the Fund's
outstanding shares were designated Class A shares. No sales
charge was due as a result of the conversion.
Class A Shares. If you buy Class A shares, you may pay an
initial sales charge on investments up to $1 million (up to
$500,000 for purchases by "Retirement Plans" as defined in "Class
A Contingent Deferred Sales Charge" on page __). If you purchase
Class A shares as part of an investment of at least $1 million
($500,000 for Retirement Plans) in shares of one or more
Oppenheimer funds you will not pay an initial sales charge, but if
you sell any of those shares within 18 months of buying them, you
may pay a contingent deferred sales charge. The amount of that
sales charge will vary depending on the amount you invested. Sales
charge rates are described in "Buying Class A Shares" below.
Class B Shares. If you buy Class B shares, you pay no
sales charge at the time of purchase, but if you sell your shares
within six years of buying them you will normally pay a contingent
deferred sales charge that varies, depending on how long you have
owned your shares as described in "Buying Class B Shares" below.
Class C Shares. If you buy Class C shares, you pay no
sales charge at the time of purchase, but if you sell your shares
within 12 months of buying them, you will normally pay a contingent
deferred sales charge of 1% as described in "Buying Class C Shares"
below.
Which Class of Shares Should You Choose? Once you decide that the
Fund is an appropriate investment for you, the decision as to which
class of shares is better suited to your needs depends on a number
of factors which you should discuss with your financial advisor.
The Fund's operating costs that apply to a class of shares and the
effect of the different types of sales charges on your investment
will vary your investment results over time. The most important
factors to consider are how much you plan to invest and how long
you plan to hold your investment. If your goals and objectives
change over time and you plan to purchase additional shares, you
should re-evaluate those factors to see if you should consider
another class of shares.
In the following discussion, to help provide you and your
financial advisor with a framework in which to choose a class, we
have made some assumptions using a hypothetical investment in the
Fund. We used the sales charge rates that apply to each class, and
considered the effect of the higher asset-based sales charges on
Class B and Class C expenses (which, like all expenses, will affect
your investment return). For the sake of comparison, we have
assumed that there is a 10% rate of appreciation in the investment
each year. Of course, the actual performance of your investment
cannot be predicted and will vary, based on the Fund's actual
investment returns and the operating expenses borne by each class
of shares, and which class of shares you invest in.
The factors discussed below are not intended to be investment
advice or recommendations, because each investor's financial
considerations are different. The discussion below of the factors
to consider in purchasing a particular class of shares assumes that
you will purchase only one class of shares and not a combination of
shares of different classes.
How Long Do You Expect to Hold Your Investment? While
future financial needs cannot be predicted with certainty, knowing
how long you expect to hold your investment will assist you in
selecting the appropriate class of shares. The effect of the sales
charge, over time, using our assumptions will generally depend on
the amount invested. Because of the effect of class-based
expenses, your choice will also depend on how much you plan to
invest. For example, the reduced sales charges available for
larger purchases of Class A shares may, over time, offset the
effect of paying an initial sales charge on your investment (which
reduces the amount of your investment dollars used to buy shares
for your account), compared to the effect over time of higher
class-based expenses on Class B or Class C shares for which no
initial sales charge is paid.
Investing for the Short Term. If you have a short-term
investment horizon (that is, you plan to hold your shares for not
more than six years), you should probably consider purchasing Class
A or Class C shares rather than Class B shares, because of the
effect of the Class B contingent deferred sales charge if you
redeem within 6 years, as well as the effect of the higher Class B
asset-based sales charge on the investment return for that class in
the short-term. Class C shares might be the appropriate choice
(especially for investments of less than $100,000), because there
is no initial sales charge on Class C Shares, and the contingent
deferred sales charge does not apply to amounts you sell after
holding them one year.
However, if you plan to invest more than $100,000 for the
shorter term, then the more you invest and the more your investment
horizon increases toward six years, Class C shares might not be as
advantageous as Class A shares. That is because the higher annual
asset-based sales charge on Class C shares will have a greater
economic impact on your account over the longer term than the
reduced front-end sales charge available for larger purchases of
Class A shares. For example, Class A might be more advantageous
than Class C (as well as Class B) for investments of more than
$100,000 expected to be held for 5 or 6 years (or more). For
investments over $250,000 expected to be held 4 to 6 years (or
more), Class A shares may become more advantageous than Class C
(and Class B). If investing $500,000 or more, Class A may be more
advantageous as your investment horizon approaches 3 years or more.
And for most investors who invest $1 million or more, in most
cases Class A shares will be the most advantageous choice, no
matter how long you intend to hold your shares. For that reason,
the Distributor normally will not accept purchase orders of
$500,000 or more of Class B shares or $1 million or more of Class
C shares from a single investor.
Investing for the Longer Term. If you are investing for
the longer-term, for example, for retirement, and do not expect to
need access to your money for seven years or more, Class B shares
may be an appropriate consideration, if you plan to invest less
than $100,000. If you plan to invest more than $100,000 over the
long term, Class A shares will likely be more advantageous than
Class B shares or Class C shares, as discussed above, because of
the effect of the expected lower expenses for Class A shares and
the reduced initial sales charges available for larger investments
in Class A shares under the Fund's Right of Accumulation.
Of course, these examples are based on approximations of the
effect of current sales charges and expenses on a hypothetical
investment over time, using the assumed annual performance return
stated above, and therefore you should analyze your options
carefully.
Are There Differences in Account Features That Matter to
You? Because some account features may not be available for Class
B or Class C shareholders, or other features (such as Automatic
Withdrawal Plans) may not be advisable (because of the effect of
the contingent deferred sales charge in non-retirement accounts)
for Class B or Class C shareholders, you should carefully review
how you plan to use your investment account before deciding which
class of shares is better for you. For example, share certificates
are not available for Class B or Class C shares, and if you are
considering using your shares as collateral for a loan, that may be
a factor to consider. Additionally, dividends payable to Class B
and Class C shareholders will be reduced by the additional expenses
borne solely by those classes or higher expenses, such as the
asset-based sales charges to which Class B and Class C shares are
subject, as described below and in the Statement of Additional
Information.
How Does It Affect Payments to My Broker? A salesperson,
such as a broker, or any other person who is entitled to receive
compensation for selling Fund shares may receive different
compensation for selling one class of shares than for selling
another class. It is important that investors understand that the
purpose of the 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.
How Much Must You Invest? You can open a Fund account with a
minimum initial investment of $1,000 and make additional
investments at any time with as little as $25. There are reduced
minimum investments under special investment plans:
With Asset Builder Plans, Automatic Exchange Plans,
403(b)(7) custodial plans and military allotment plans, you can
make initial and subsequent investments of as little as $25; and
subsequent purchases of at least $25 can be made by telephone
through AccountLink.
Under pension, profit-sharing plans and 401(k) plans and
Individual Retirement Accounts (IRAs), you can make an initial
investment of as little as $250 (if your IRA is established under
an Asset Builder Plan, the $25 minimum applies), and subsequent
investments may be as little as $25.
There is no minimum investment requirement if you are buying
shares by reinvesting dividends from the Fund or other Oppenheimer
funds (a list of them appears in the Statement of Additional
Information, or you can ask your dealer or call the Transfer
Agent), or by reinvesting distributions from unit investment trusts
that have made arrangements with the Distributor.
How Are Shares Purchased? You can buy shares several ways:
through any dealer, broker or financial institution that has a
sales agreement with the Distributor, directly through the
Distributor, or automatically from your bank account through an
Asset Builder Plan under the OppenheimerFunds AccountLink service.
The Distributor may appoint certain servicing agents as the
Distributor's agent to accept purchase (and redemption) orders.
When you buy shares, be sure to specify Class A, Class B or Class
C shares. If you do not choose, your investment will be made in
Class A shares.
Buying Shares Through Your Dealer. Your dealer will place
your order with the Distributor on your behalf.
Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "OppenheimerFunds Distributor, Inc." Mail it to P.O. Box
5270, Denver, Colorado 80217. If you don't list a dealer on the
application, the Distributor will act as your agent in buying the
shares. However, we recommend that you discuss your investment
first with a financial advisor, to be sure it is appropriate for
you.
Buying Shares Through OppenheimerFunds AccountLink. You
can use AccountLink to link your Fund account with an account at a
U.S. bank or other financial institution that is an Automated
Clearing House (ACH) member, to transmit funds electronically to
purchase shares, to have the Transfer Agent send redemption
proceeds, or to transmit dividends and distributions to your 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.
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.
At What Price Are Shares Sold? Shares are sold at the
public offering price based on the net asset value (and any initial
sales charge that applies) that is next determined after the
Distributor receives the purchase order in Denver, Colorado. In
most cases, to enable you to receive that day's offering price, the
Distributor or its designated agent must receive your order by the
time of day The New York Stock Exchange closes, which is normally
4:00 P.M., New York time, but may be earlier on some days (all
references to time in this Prospectus mean "New York time"). The
net asset value of each class of shares is determined as of that
time on each day The New York Stock Exchange is open (which is a
"regular business day").
If you buy shares through a dealer, the dealer must receive
your order by the regular close of business of the New York Stock
Exchange on a regular business day and transmit it to the
Distributor so that it is received before the Distributor's close
of business that day, which is normally 5:00 P.M. The Distributor,
in its sole discretion, may reject any purchase order for the
Fund's shares.
Special Sales Charge Arrangements for Certain Persons. Appendix A
to this Prospectus sets forth conditions for the waiver of, or
exemption from, sales charges or the special sales charge rates
that apply to shareholders of 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:
<TABLE>
<CAPTION>
Front-End Sales Charge Commission
As a Percentage of as Percentage
Offering Amount of Offering
Amount of Purchase Price Invested Price
- ------------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
</TABLE>
The Distributor reserves the right to reallow the entire commission
to dealers. If that occurs, the dealer may be considered an
"underwriter" under Federal securities laws.
Class A Contingent Deferred Sales Charge. There is no
initial sales charge on purchases of Class A shares of any one or
more of the Oppenheimer funds in the following cases:
Purchases aggregating $1 million or more.
Purchases by a retirement plan qualified under section
401(a) of the Internal Revenue Code if the retirement plan has
total plan assets of $500,000 or more.
Purchases by a retirement plan qualified under sections
401(a) or 401(k) of the Internal Revenue Code, by a non-qualified
deferred compensation plan (not including Section 457 plans),
employee benefit plan, group retirement plan (see "How to Buy
Shares - Retirement Plans" in the Statement of Additional
Information for further details), an employee's 403(b)(7) custodial
plan account, SEP IRA, SARSEP, or SIMPLE plan (all of these plans
are collectively referred to as "Retirement Plans") that: (1) buy
shares costing $500,000 or more or (2) has, at the time of
purchase, 100 or more eligible participants, or (3) certifies that
it projects to have annual plan purchases of $200,000 or more.
Purchases by an OppenheimerFunds Rollover IRA if the
purchases are made (1) through a broker, dealer, bank or registered
investment adviser that has made special arrangements with the
Distributor for these purchases, or (2) by a direct rollover of a
distribution from a qualified retirement plan if the administrator
of that plan has made special arrangements with the Distributor for
those purchases.
The Distributor pays dealers of record commissions on those
purchases in an amount equal to (i) 1.0% for non-Retirement Plan
accounts, and (ii)for Retirement Plan accounts, 1.0% of the first
$2.5 million, plus 0.50% of the next $2.5 million, plus 0.25% of
purchases over $5 million. That commission will be paid only on
those purchases that were not previously subject to a front-end
sales charge and dealer commission. No sales commission will be
paid to the dealer, broker or financial institution on sales of
Class A shares purchased with the redemption proceeds of shares of
a mutual fund offered as an investment option in a Retirement Plan
in which Oppenheimer funds are also offered as investment options
under a special arrangement with the Distributor if the purchase
occurs more than 30 days after the addition of the Oppenheimer
funds as an investment option to the Retirement Plan.
If you redeem any of those shares within 18 months of the end
of the calendar month of their purchase, a contingent deferred
sales charge (called the "Class A contingent deferred sales
charge") will be deducted from the redemption proceeds. That sales
charge may be equal to 1.0% of the lesser of (1) the aggregate net
asset value of the redeemed shares (not including shares purchased
by reinvestment of dividends or capital gain distributions) or (2)
the original offering price (which is the original net asset value)
of the redeemed shares. However, the Class A contingent deferred
sales charge will not exceed the aggregate amount of the
commissions the Distributor paid to your dealer on all Class A
shares of all Oppenheimer funds you purchased subject to the Class
A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is
payable, the Fund will first redeem shares that are not subject to
the sales charge, including shares purchased by reinvestment of
dividends and capital gains, and then will redeem other shares in
the order that you purchased them. The Class A contingent deferred
sales charge is waived in certain cases described in "Waivers of
Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on
exchanges of shares under the Fund's exchange privilege (described
below). However, if the shares acquired by exchange are redeemed
within 18 months of the end of the calendar month of the purchase
of the exchanged shares, the contingent deferred sales charge will
apply.
Special Arrangements With Dealers. The Distributor may
advance up to 13 months' commissions to dealers that have
established special arrangements with the Distributor for Asset
Builder Plans for their clients.
Reduced Sales Charges for Class A Share Purchases. You may be
eligible to buy Class A shares at reduced sales charge rates in one
or more of the following ways:
Right of Accumulation. To qualify for the lower sales
charge rates that apply to larger purchases of Class A shares, you
and your spouse can add together Class A and Class B shares you
purchase for your individual accounts, or jointly, or for trust or
custodial accounts on behalf of your children who are minors. A
fiduciary can count all shares purchased for a trust, estate or
other fiduciary account (including one or more employee benefit
plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class
A and Class B shares of the Fund and other Oppenheimer funds to
reduce the sales charge rate that applies to current purchases of
Class A shares. You can also count Class A and Class B shares of
Oppenheimer funds you previously purchased subject to an initial or
contingent deferred sales charge to reduce the sales charge rate
for current purchases of Class A shares, provided that you still
hold your investment in one of the Oppenheimer funds. The value of
those shares will be based on the greater of the amount you paid
for the shares or their current value (at offering price). The
Oppenheimer funds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from
the Transfer Agent. The reduced sales charge will apply only to
current purchases and must be requested when you buy your shares.
Letter of Intent. Under a Letter of Intent, if you purchase
Class A shares or Class A and Class B shares of the Fund and other
Oppenheimer funds during a 13-month period, you can reduce the
sales charge rate that applies to your purchases of Class A shares.
The total amount of your intended purchases of both Class A and
Class B shares will determine the reduced sales charge rate for the
Class A shares purchased during that period. This can include
purchases made up to 90 days before the date of the Letter. More
information is contained in the Application and in "Reduced Sales
Charges" in the Statement of Additional Information.
Waivers of Class A Sales Charges. The Class A sales charges
are not imposed in the circumstances described below. There is an
explanation of this policy in "Reduced Sales Charges" in the
Statement of Additional Information.
Waivers of Initial and Contingent Deferred Sales Charges for
Certain Purchasers. Class A shares purchased by the following
investors are not subject to any Class A sales charges:
the Manager or its affiliates;
present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced
Sales Charges" in the Statement of Additional Information) of the
Fund, the Manager and its affiliates, and retirement plans
established by them for their employees;
registered management investment companies, or separate
accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose;
dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
employees and registered representatives (and their spouses)
of dealers or brokers described above or financial institutions
that have entered into sales arrangements with such dealers or
brokers (and are identified to the Distributor) or with the
Distributor; the purchaser must certify to the Distributor at the
time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor
children);
dealers, brokers, 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);
(1) investment advisors and financial planners who charge an
advisory, consulting or other fee for their services and buy shares
for their own accounts or the accounts of their clients, (2)
Retirement Plans and deferred compensation plans and trusts used to
fund those Plans (including, for example, plans qualified or
created under sections 401(a), 403(b) or 457 of the Internal
Revenue Code), and "rabbi trusts" that buy shares for their own
accounts, in each case if those purchases are made through a broker
or agent or other financial intermediary that has made special
arrangements with the Distributor for those purchases; and (3)
clients of such investment advisors or financial planners who buy
shares for their own accounts may also purchase shares without
sales charge but only if their accounts are linked to a master
account of their investment advisor or financial planner on the
books and records of the broker, agent or financial intermediary
with which the Distributor has made such special arrangements (each
of these investors may be charged a fee by the broker, agent or
financial intermediary for purchasing shares).
employee benefit plans purchasing shares through a
shareholder servicing agent which the Distributor has appointed as
agent to accept those purchase orders;
directors, trustees, officers or full time employees of the
Sub-Adviser or its affiliates, their relatives or any trust,
pension, profit sharing or other benefit plan which beneficially
owns shares for those persons;
accounts for which Oppenheimer Capital is the investment
adviser (the Distributor must be advised of this arrangement) and
persons who are directors or trustees of the company or trust which
is the beneficial owner of such accounts;
any unit investment trust that has entered into an
appropriate agreement with the Distributor;
a TRAC-2000 401(k) plan (sponsored by the former Quest for
Value Advisors) whose Class B or Class C shares of a Former Quest
for Value Fund were exchanged for Class A shares of that Fund due
to the termination of the Class B and Class C TRAC-2000 program on
November 24, 1995; or
qualified retirement plans that had agreed with the former
Quest for Value Advisors to purchase shares of any of the Former
Quest for Value Funds at net asset value, with such shares to be
held through DCXchange, a sub-transfer agency mutual fund
clearinghouse, provided that such arrangements are consummated and
share purchases commence by December 31, 1996.
Waivers of Initial and Contingent Deferred Sales Charges in
Certain Transactions. Class A shares issued or purchased in the
following transactions are not subject to Class A sales charges:
shares issued in plans of reorganization, such as mergers,
asset acquisitions and exchange offers, to which the Fund is a
party;
shares purchased by the reinvestment of loan repayments by
a participant in a retirement plan for which the Manager or its
affiliates acts as sponsor;
shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds
(other than Oppenheimer Cash Reserves) or unit investment trusts
for which reinvestment arrangements have been made with the
Distributor;
shares purchased and paid for with the proceeds of shares
redeemed in the past 12 months from a mutual fund (other than a
fund managed by the Manager or any of its subsidiaries) on which an
initial sales charge or contingent deferred sales charge was paid
(this waiver also applies to shares purchased by exchange of shares
of Oppenheimer Money Market Fund, Inc. that were purchased and paid
for in this manner); this waiver must be requested when the
purchase order is placed for your shares of the Fund, and the
Distributor may require evidence of your qualification for this
waiver; or
shares purchased with the proceeds of maturing principal of
units of any Qualified Unit Investment Liquid Trust Series.
Waivers of the Class A Contingent Deferred Sales Charge for
Certain Redemptions. The Class A contingent deferred sales charge
is also waived if shares that would otherwise be subject to the
contingent deferred sales charge are redeemed in the following
cases:
to make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the original account value;
involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see "Shareholder Account
Rules and Policies," below);
if, at the time a purchase order is placed for Class A
shares that would otherwise be subject to the Class A contingent
deferred sales charge, the dealer agrees in writing to accept the
dealer's portion of the commission payable on the sale in
installments of 1/18th of the commission per month (and no further
commission will be payable if the shares are redeemed within 18
months of purchase);
for distributions from a TRAC-2000 401(k) plan sponsored by
the Distributor due to the termination of the TRAC-2000 program;
for distributions from Retirement Plans, deferred
compensation plans or other employee benefit plans for any of the
following purposes: (1) following the death or disability (as
defined in the Internal Revenue Code) of the participant or
beneficiary (the death or disability must occur after the
participant's account was established); (2) to return excess
contributions; (3) to return contributions made due to a mistake of
fact; (4) hardship withdrawals, as defined in the plan; (5) under
a Qualified Domestic Relations Order, as defined in the Internal
Revenue Code; (6) to meet the minimum distribution requirements of
the Internal Revenue Code; (7) to establish "substantially equal
periodic payments" as described in Section 72(t) of the Internal
Revenue Code; (8) for retirement distributions or loans to
participants or beneficiaries; (9) separation from service; (10)
participant-directed redemptions to purchase shares of a mutual
fund (other than a fund managed by the Manager or its subsidiary)
offered as an investment option in a Retirement Plan in which
Oppenheimer funds are also offered as investment options under a
special arrangement with the Distributor; or (11) plan termination
or "in-service distributions", if the redemption proceeds are
rolled over directly to an OppenheimerFunds IRA.
Distribution and Service Plan for Class A Shares. In
connection with its conversion to an open-end investment company,
the Fund has adopted a Distribution and Service Plan for Class A
shares to reimburse the Distributor for a portion of its costs
incurred in connection with the personal service and maintenance of
shareholder accounts that hold Class A shares. Under the Plan, the
Fund pays an annual asset-based sales charge to the Distributor 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, (2) shares held for over 6 years, and (3)
shares held the longest during the 6-year period. The contingent
deferred sales charge is not imposed in the circumstances described
in "Waivers of Class B and Class C Sales Charges" below.
The amount of the contingent deferred sales charge will depend
on the number of years since you invested and the dollar amount
being redeemed, according to the following schedule:
Years Since Beginning Contingent Deferred Sales Charge
of Month In Which Purchase on Redemptions in that Year
Order was Accepted (As % of Amount Subject to Charge)
0 - 1 5.0%
1 - 2 4.0%
2 - 3 3.0%
3 - 4 3.0%
4 - 5 2.0%
5 - 6 1.0%
6 and following None
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of
the month in which the purchase was made.
Automatic Conversion of Class B Shares. 72 months after you
purchase Class B shares, those shares will automatically convert to
Class A shares. This conversion feature relieves Class B
shareholders of the asset-based sales charge that applies to Class
B shares under the Class B Distribution and Service Plan, described
below. The conversion is based on the relative net asset value of
the two classes, and no sales load or other charge is imposed. When
Class B shares convert, any other Class B shares that were acquired
by the reinvestment of dividends and distributions on the converted
shares will also convert to Class A shares. The conversion feature
is subject to the continued availability of a tax ruling described
in "Alternative Sales Arrangements - Class A, Class B and Class C
Shares" in the Statement of Additional Information.
Distribution and Service Plan for Class B Shares. The Fund
has adopted a Distribution and Service Plan for Class B shares to
compensate the Distributor for distributing Class B shares and
servicing accounts. This Plan is described below under "Buying
Class C Shares - Distribution and Service Plans for Class B and
Class C shares."<PAGE>
Waivers of Class B Sales Charges. The Class B contingent
deferred sales charge will not apply to shares purchased in certain
types of transactions, nor will it apply to shares redeemed in
certain circumstances, as described below under "Buying Class C
Shares Waivers of Class B and Class C Sales Charges."
Buying Class C Shares. Class C shares are sold at net asset value
per share without an initial sales charge. However, if Class C
shares are redeemed within 12 months of their purchase, a
contingent deferred sales charge of 1.0% will be deducted from the
redemption proceeds. That sales charge will not apply to shares
purchased by the reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge will be based
on the lesser of the net asset value of the redeemed shares at the
time of redemption or the original offering price (which is the
original net asset value). The contingent deferred sales charge is
not imposed on the amount of your account value represented by the
increase in net asset value over the initial purchase price. The
Class C contingent deferred sales charge is paid to compensate the
Distributor for its expenses of providing distribution-related
services to the Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 12 months, and (3)
shares held the longest during the 12-month period.
Distribution and Service Plans for Class B and Class C
Shares. In connection with its conversion to an open-end
investment company, the Fund has adopted Distribution and Service
Plans for Class B and Class C shares to compensate the Distributor
for its services and costs in distributing Class B and Class C
shares and servicing accounts. Under the Plans, the Fund pays the
Distributor an annual "asset-based sales charge" of 0.75% per year
on Class B shares that are outstanding for 6 years or less and on
Class C shares. The Distributor also receives a service fee of
0.25% per year under each Plan.
Under each Plan, both fees are computed on the average of the
net asset value of shares in the respective class, determined as of
the close of each regular business day during the period. The
asset-based sales charge and service fees increase Class B and
Class C expenses by up to 1.00% of the net assets per year of the
respective class.
The Distributor uses the service fees to compensate dealers
for providing personal services for accounts that hold Class B or
Class C shares. Those services are similar to those provided under
the Class A Service Plan, described above. The Distributor pays
the 0.25% service fees to dealers in advance for the first year
after Class B or Class C shares have been sold by the dealer 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 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's actual expenses in selling Class B and Class
C shares may be more than the payments it receives from contingent
deferred sales charges collected on redeemed shares and from the
Fund under the Distribution and Service Plans for Class B and Class
C shares. If either Plan is terminated by the Fund, the Board of
Directors may allow the Fund to continue payments of the service
fee and/or asset-based sales charge to the Distributor for
distributing shares before the Plan was terminated.
Waivers of Class B and Class C Sales Charges. The Class B
and Class C contingent deferred sales charges will not be applied
to shares purchased in certain types of transactions nor will it
apply to Class B or Class C shares redeemed in certain
circumstances as described below. The reasons for this policy are
in "Reduced Sales Charges" in the Statement of Additional
Information.
Waivers for Redemptions in Certain Cases. The Class B and
Class C contingent deferred sales charges will be waived for
redemptions of shares in the following cases if the Transfer Agent
is notified that these conditions apply at redemption:
distributions to participants or beneficiaries from
Retirement Plans, if the distributions are made (a) under an
Automatic Withdrawal Plan after the participant reaches age 59-1/2,
as long as the payments are no more than 10% of the account value
annually (measured from the date the Transfer Agent receives the
request), or (b) following the death or disability (as defined in
the Internal Revenue Code ("IRC")) of the participant or
beneficiary (the death or disability must have occurred after the
account was established);
redemptions from accounts other than Retirement Plans
following the death or disability of the last surviving
shareholder, including a trustee of a "grantor" trust or revocable
living trust for which the trustee is also the sole beneficiary
(the death or disability must have occurred after the account was
established, and for disability you must provide evidence of a
determination of disability by the Social Security Administration);
returns of excess contributions to Retirement Plans;
distributions from retirement plans to make "substantially
equal periodic payments" under Section 72(t) of the Internal
Revenue Code provided the distributions do not exceed 10% of the
account value annually, measured from the date the Transfer Agent
receives the request;
shares redeemed involuntarily, as described in "Shareholder
Account Rules and Policies," below; or
distributions from OppenheimerFunds prototype 401(k) plans:
(1) for hardship withdrawals; (2) under a Qualified Domestic
Relations Order, as defined in the 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; or (5)
for separation from service.
Waivers for Shares Sold or Issued in Certain Transactions.
The contingent deferred sales charge is also waived on Class B and
Class C shares sold or issued in the following cases:
shares sold to the Manager or its affiliates;
shares sold to registered management investment companies or
separate accounts of insurance companies having an agreement with
the Manager or the Distributor for that purpose; or
shares issued in plans of reorganization to which the Fund
is a party.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account
to your account at your bank or other financial institution to
enable you to send money electronically between those accounts to
perform a number of types of account transactions. These include
purchases of shares by telephone (either through a service
representative or by PhoneLink, described below), automatic
investments under Asset Builder Plans, and sending dividends and
distributions or Automatic Withdrawal Plan payments directly to
your bank account. Please 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.
Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase
shares in amounts up to $250,000 through a telephone
representative, call the Distributor at 1-800-852-8457. The
purchase payment will be debited from your bank account.
PhoneLink. PhoneLink is the OppenheimerFunds automated
telephone system that enables shareholders to perform a number of
account transactions automatically using a touch-tone phone.
PhoneLink may be used on already-established Fund accounts after
you obtain a Personal Identification Number (PIN), by calling the
special PhoneLink number: 1-800-533-3310.
Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have
established AccountLink privileges to link your bank account with
the Fund, to pay for these purchases.
Exchanging Shares. With the OppenheimerFunds exchange
privilege, described below, you can exchange shares automatically
by phone from your Fund account to another Oppenheimer funds
account you have already established by calling the special
PhoneLink number. Please refer to "How to Exchange Shares," below,
for details.
Selling Shares. You can redeem shares by telephone
automatically by calling the PhoneLink number and the Fund will
send the proceeds directly to your AccountLink bank account.
Please refer to "How to Sell Shares," below, for details.
Automatic Withdrawal and Exchange Plans. The Fund has several plans
that enable you to sell shares automatically or exchange them to
another Oppenheimer funds account on a regular basis:
Automatic Withdrawal Plans. If your Fund account is worth
$5,000 or more, you can establish an Automatic Withdrawal Plan to
receive payments of at least $50 on a monthly, quarterly, semi-
annual or annual basis. The checks may be sent to you or sent
automatically to your bank account on AccountLink. You may even set
up certain types of withdrawals of up to $1,500 per month by
telephone. You should consult the Statement of Additional
Information for more details.
Automatic Exchange Plans. You can authorize the Transfer
Agent to exchange an amount you establish in advance automatically
for shares of up to five other Oppenheimer funds on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange
Plan. The minimum purchase for each other Oppenheimer funds
account is $25. These exchanges are subject to the terms of the
exchange privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class A
or Class B shares of the Fund, you have up to 6 months to reinvest
all or part of the redemption proceeds in Class A shares of the
Fund or other Oppenheimer funds without paying a sales charge.
This privilege applies to Class A shares that you purchased subject
to an initial sales charge and to Class A or Class B shares on
which you paid a contingent deferred sales charge when you redeemed
them. This privilege does not apply to Class C shares. You must
be sure to ask the Distributor for this privilege when you send
your payment. Please consult the Statement of Additional
Information for more details.
Retirement Plans. Fund shares are available as an investment for
your retirement plans. If you participate in a plan sponsored by
your employer, the plan trustee or administrator must make the
purchase of shares for your retirement plan account. The
Distributor offers a number of different retirement plans that can
be used by individuals and employers:
Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
403(b)(7) Custodial Plans for employees of eligible tax-
exempt organizations, such as schools, hospitals and charitable
organizations
SEP-IRAs (Simplified Employee Pension Plans) for small
business owners or people with income from self-employment,
including SAR/SEP IRAs
Pension and Profit-Sharing Plans for self-employed persons
and small business owners
401(k) prototype retirement plans for businesses
Please call the Distributor for the OppenheimerFunds plan
documents, which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account 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.
Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must
submit a withholding form with your request to avoid delay. If your
retirement plan account is held for you by your employer, you must
arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the
Statement of Additional Information.
Certain Requests Require A Signature Guarantee. To protect
you and 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):
You wish to redeem more than $50,000 worth of shares and
receive a check
The redemption check is not payable to all shareholders
listed on the account statement
The redemption check is not sent to the address of record on
your account statement
Shares are being transferred to a Fund account with a
different owner or name
Shares are redeemed by someone other than the owners (such
as an Executor)
Where Can I Have My Signature Guaranteed? The Transfer
Agent will accept a guarantee of your signature by a number of
financial institutions, including: a U.S. bank, trust company,
credit union or savings association, or by a foreign bank that has
a U.S. correspondent bank, or by a U.S. registered dealer or broker
in securities, municipal securities or government securities, or by
a U.S. national securities exchange, a registered securities
association or a clearing agency. If you are signing as a fiduciary
or on behalf of a corporation, partnership or other business, you
must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that
includes:
Your name
The Fund's name
Your Fund account number (from your account statement)
The dollar amount or number of shares to be redeemed
Any special payment instructions
Any share certificates for the shares you are selling,
The signatures of all registered owners exactly as the
account is registered, and
Any special requirements or documents requested by the
Transfer Agent to assure proper authorization of the person asking
to sell shares.
Use the following address for Send courier or Express Mail
request by mail: requests to:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Ave.,
Denver, Colorado 80217 Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of
record may also sell your shares by telephone. To receive the
redemption price on a regular business day, your call must be
received by the Transfer Agent by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M. but may be earlier
on some days. Shares held in an OppenheimerFunds retirement plan
or under a share certificate may not be redeemed by telephone.
To redeem shares through a service representative, call 1-
800-852-8457
To redeem shares automatically on PhoneLink, call 1-800-533-
3310
Whichever method you use, you may have a check sent to the
address on the account statement, or, if you have linked your Fund
account to your bank account on AccountLink, you may have the
proceeds wired to that bank account.
Telephone Redemptions Paid by Check. Up to $50,000 may be
redeemed by telephone in any 7-day period. The check must be
payable to all owners of record of the shares and must be sent to
the address on the account statement. This service is not
available within 30 days of changing the address on an account.
Telephone Redemptions Through AccountLink 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 refer to "Special Arrangements for Repurchase of
Shares from Dealers and Brokers" in the Statement of Additional
Information for more details.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain
Oppenheimer funds at net asset value per share at the time of
exchange, without sales charge. To exchange shares, you must meet
several conditions:
Shares of the fund selected for exchange must be available
for sale in your state of residence
The prospectuses of this Fund and the fund whose shares you
want to buy must offer the exchange privilege
You must hold the shares you buy when you establish your
account for at least 7 days before you can exchange them; after the
account is open 7 days, you can exchange shares every regular
business day
You must meet the minimum purchase requirements for the fund
you purchase by exchange
Before exchanging into a fund, you should obtain and read
its prospectus
Shares of a particular class of the Fund may be exchanged only
for shares of the same class in the other Oppenheimer funds. For
example, you can exchange Class A shares of this Fund only for
Class A shares of another fund. At present, Oppenheimer Money
Market Fund, Inc. offers only one class of shares, which are
considered to be Class A shares for this purpose. In some cases,
sales charges may be imposed on exchange transactions. Please
refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.
Exchanges may be requested in writing or by telephone:
Written Exchange Requests. Submit an OppenheimerFunds
Exchange Request form, signed by all owners of the account. Send
it to the Transfer Agent at the addresses listed in "How to Sell
Shares."
Telephone Exchange Requests. Telephone exchange requests may
be made either by calling a service representative at 1-800-852-
8457 or by using PhoneLink for automated exchanges, by calling 1-
800-533-3310. Telephone exchanges may be made only between accounts
that are registered with the same name(s) and address. Shares held
under certificates may not be exchanged by telephone.
You can find a list of Oppenheimer funds currently available
for exchanges in the Statement of Additional Information or obtain
one by calling a service representative at 1-800-525-7048. That
list can change from time to time.
There are certain exchange policies you should be aware of:
Shares are normally redeemed from one fund and purchased
from the other fund in the exchange transaction on the same regular
business day on which the Transfer Agent receives an exchange
request that is in proper form by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M. but may be earlier
on some days. However, either fund may delay the purchase of
shares of the fund you are exchanging into up to 7 days if it
determines it would be disadvantaged by a same-day transfer of the
proceeds to buy shares. For example, the receipt of multiple
exchange requests from a dealer in a "market-timing" strategy might
require the sale of portfolio securities at a time or price
disadvantageous to the Fund.
Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange
request that will disadvantage it, or to refuse multiple exchange
requests submitted by a shareholder or dealer.
The Fund may amend, suspend or terminate the exchange
privilege at any time. Although the Fund will attempt to provide
you notice whenever it is reasonably able to do so, it may impose
these changes at any time.
For tax purposes, exchanges of shares involve a redemption
of the shares of the Fund you own and a purchase of the shares of
the other fund, which may result in a capital gain or loss. For
more information about the taxes affecting exchanges, please refer
to "How to Exchange Shares" in the Statement of Additional
Information.
If the Transfer Agent cannot exchange all the shares you
request because of a restriction cited above, only the shares
eligible for exchange will be exchanged.
Shareholder Account Rules and Policies
Net Asset Value Per Share is determined for each class of
shares as of the close of The New York Stock Exchange that day,
which is normally 4:00 P.M. but may be earlier on some days, on
each day the Exchange is open by dividing the value of the Fund's
net assets attributable to a class by the number of shares of that
class that are outstanding. The Fund's Board of Directors has
established procedures to value the Fund's securities to determine
net asset value. In general, securities values are based on market
value. There are special procedures for valuing illiquid and
restricted securities and obligations for which market values
cannot be readily obtained. These procedures are described more
completely in the Statement of Additional Information.
The offering of shares may be suspended during any period in
which the determination of net asset value is suspended, and the
offering may be suspended by the Board of Directors at any time the
Board believes it is in the Fund's best interest to do so.
Telephone Transaction Privileges for purchases, redemptions
or exchanges may be modified, suspended or terminated by the Fund
at any time. If an account has more than one owner, the Fund and
the Transfer Agent may rely on the instructions of any one owner.
Telephone privileges apply to each owner of the account and the
dealer representative of record for the account unless and until
the Transfer Agent receives cancellation instructions from an owner
of the account.
The Transfer Agent will record any telephone calls to verify
data concerning transactions and has adopted other procedures to
confirm that telephone instructions are genuine, by requiring
callers to provide tax identification numbers and other account
data or by using PINs, and by confirming such transactions in
writing. If the Transfer Agent does not use reasonable procedures
it may be liable for losses due to unauthorized transactions, but
otherwise neither the Transfer Agent nor the Fund will be liable
for losses or expenses arising out of telephone instructions
reasonably believed to be genuine. If you are unable to reach the
Transfer Agent during periods of unusual market activity, you may
not be able to complete a telephone transaction and should consider
placing your order by mail.
Redemption or transfer requests will not be honored until
the Transfer Agent receives all required documents in proper form.
From time to time, the Transfer Agent in its discretion may waive
certain of the requirements for redemptions stated in this
Prospectus.
Dealers that can perform account transactions for their
clients by participating in NETWORKING through the National
Securities Clearing Corporation are responsible for obtaining their
clients' permission to perform those transactions and are
responsible to their clients who are shareholders of the Fund if
the dealer performs any transaction erroneously or improperly.
The redemption price for shares will vary from day to day
because the value of the securities in the Fund's portfolio
fluctuates, and the redemption price, which is the net asset value
per share, will normally be different for Class A, Class B and
Class C shares. Therefore, the redemption value of your shares may
be more or less than their original cost.
Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the
shareholder under the redemption procedures described above) within
7 days after the Transfer Agent receives redemption instructions in
proper form, except under unusual circumstances determined by the
Securities and Exchange Commission delaying or suspending such
payments. For accounts registered in the name of a broker-dealer,
payment will be forwarded within 3 business days. The Transfer
Agent may delay forwarding a check or processing a payment via
AccountLink for recently purchased shares, but only until the
purchase payment has cleared. That delay may be as much as 10 days
from the date the shares were purchased. That delay may be avoided
if you purchase shares by certified check or arrange to have your
bank to provide telephone or written assurance to the Transfer
Agent that your purchase payment has cleared.
Involuntary redemptions of small accounts may be made by the
Fund if the account value has fallen below $500 (or such other
amount as may be fixed by the Board of Directors) for reasons other
than the fact that the market value of shares has dropped, and in
some cases involuntary redemptions may be made to repay the
Distributor for losses from the cancellation of share purchase
orders.
Under unusual circumstances, shares of the Fund may be
redeemed "in kind", which means that the redemption proceeds will
be paid with securities from the Fund's portfolio. Please refer to
"How to Sell Shares" in the Statement of Additional Information for
more details.
"Backup Withholding" of Federal income tax may be applied at
the rate of 31% from dividends, distributions and redemption
proceeds (including exchanges) if you fail to furnish the Fund a
certified Social Security or Employer Identification Number when
you sign your application, or if you violate Internal Revenue
Service regulations on tax reporting of dividends.
The Fund does not charge a redemption fee, but if your
dealer or broker handles your redemption, they may charge a fee.
That fee can be avoided by redeeming your Fund shares directly
through the Transfer Agent. Under the circumstances described in
"How To Buy Shares," you may be subject to a contingent deferred
sales charges when redeeming certain Class A, Class B and Class C
shares.
To avoid sending duplicate copies of materials to
households, the Fund will mail only one copy of each annual and
semi-annual report to shareholders having the same last name and
address on the Fund's records. However, each shareholder may call
the Transfer Agent at 1-800-525-7048 to ask that copies of those
materials be sent personally to that shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class
A, Class B and Class C shares from net investment income on an
annual basis and normally pays those dividends to shareholders
following the end of its fiscal year, which is December 31.
Dividends paid on Class A shares generally are expected to be
higher than for Class B and Class C shares because expenses
allocable to Class B and Class C shares will generally be higher
than for Class A shares. There is no fixed dividend rate and there
can be no assurance as to the payment of any dividends or the
realization of any gains.
Capital Gains. The Fund may make distributions annually in December
out of any net short-term or long-term capital gains, and the Fund
may make supplemental distributions of dividends and capital gains
following its fiscal year which ended December 31. Short-term
capital gains are treated as dividends for tax purposes. Long-term
capital gains will be separately identified in the tax information
the Fund sends you after the end of the calendar year. There can
be no assurances that the Fund will pay any capital gains
distributions in a particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are
reinvested. For other accounts, you have four options:
Reinvest All Distributions in the Fund. You can elect to
reinvest all dividends and long-term capital gains distributions in
additional shares of the Fund.
Reinvest Long-Term Capital Gains Only. You can elect to
reinvest long-term capital gains in the Fund while receiving
dividends by check or sent to your bank account on AccountLink.
Receive All Distributions in Cash. You can elect to receive
a check for all dividends and long-term capital gains distributions
or have them sent to your bank on AccountLink.
Reinvest Your Distributions in Another Oppenheimer Fund
Account. You can reinvest all distributions in another Oppenheimer
fund account you have established.
Taxes. If your account is not a tax-deferred retirement account,
you should be aware of the following tax implications of investing
in the Fund. Long-term capital gains are taxable as long-term
capital gains when distributed to shareholders. It does not matter
how long you have held your shares. Dividends paid from short-term
capital gains and net investment income are taxable as ordinary
income. Distributions are subject to federal income tax and may be
subject to state or local taxes. Your distributions are taxable
when paid, whether you reinvest them in additional shares or take
them in cash. Every year the Fund will send you and the IRS a
statement showing the amount of each taxable distribution you
received in the previous year.
"Buying a Dividend": When a Fund goes ex-dividend, its
share price is reduced by the amount of the distribution. If you
buy shares on or just before the ex-dividend date, or just before
the Fund declares a capital gains distribution, you will pay the
full price for the shares and then receive a portion of the price
back as a taxable dividend or capital gain.
Taxes on Transactions: Share redemptions, including
redemptions for exchanges, are subject to capital gains tax.
Generally speaking a capital gain or loss is the difference
between the price you paid for the shares and the price you receive
when you sell them.
Returns of Capital: In certain cases distributions made by
the Fund may be considered a non-taxable return of capital to
shareholders. If that occurs, it will be identified in notices to
shareholders. A non-taxable return of capital may reduce your tax
basis in your Fund shares.
This information is only a summary of certain federal tax
information about your investment. More information is contained
in the Statement of Additional Information, and in addition you
should consult with your tax adviser about the effect of an
investment in the Fund on your particular tax situation.
<PAGE>
APPENDIX A
Special Sales Charge Arrangements for Shareholders of the Fund Who
Were Shareholders of the Former Quest for Value Funds
The initial and contingent deferred sales charge rates and waivers
for Class A, Class B and Class C shares of the Fund described
elsewhere in this Prospectus are modified as described below for
those shareholders of (i) Oppenheimer Quest Value Fund, Inc.,
Oppenheimer Quest Growth & Income Value Fund, Oppenheimer Quest
Opportunity Value Fund, Oppenheimer Quest Small Cap Value Fund and
Oppenheimer Quest Global Value Fund, Inc. on November 24, 1995,
when OppenheimerFunds, Inc. became the investment adviser to those
funds, and (ii) Quest for Value U.S. Government Income Fund, Quest
for Value Investment Quality Income Fund, Quest for Global Income
Fund, Quest for Value New York Tax-Exempt Fund, Quest for Value
National Tax-Exempt Fund and Quest for Value California Tax-Exempt
Fund when those funds merged into various Oppenheimer funds on
November 24, 1995. The funds listed above are referred to in this
Prospectus as the "Former Quest for Value Funds." The waivers of
initial and contingent deferred sales charges described in this
Appendix apply to shares of the Fund acquired by such shareholder
pursuant to an exchange of shares of one of the Oppenheimer funds
that was one of the Former Quest for Value Funds.
Class A Sales Charges
Reduced Class A Initial Sales Charge Rates for Certain Former
Quest Shareholders
Purchases by Groups, Associations and Certain Qualified
Retirement Plans. The following table sets forth the initial sales
charge rates for Class A shares purchased by a "Qualified
Retirement Plan" through a single broker, dealer or financial
institution, or by members of "Associations" formed for any purpose
other than the purchase of securities if that Qualified Retirement
Plan or that Association purchased shares of any of the Former
Quest for Value Funds or received a proposal to purchase such
shares from OCC Distributors prior to November 24, 1995. For this
purpose only, a "Qualified Retirement Plan" includes any 401(k)
plan, 403(b) plan, and SEP/IRA or IRA plan for employees of a
single employer.
<TABLE>
<CAPTION>
Front-End Front-End Commission
Sales Charge Sales Charge as
as a as a Percentage
Number of Percentage Percentage of
Eligible Employees of Offering of Amount Offering
or Members Price Invested Price
<S> <C> <C> <C>
9 or fewer 2.50% 2.56% 2.00%
At least 10 but not
more than 49 2.00% 2.04% 1.60%
</TABLE>
For purchases by Qualified Retirement plans and Associations
having 50 or more eligible employees or members, there is no
initial sales charge on purchases of Class A shares, but those
shares are subject to the Class A contingent deferred sales charge
described on pages __ and __ of this Prospectus.
Purchases made under this arrangement qualify for the lower of
the sales charge rate in the table based on the number of eligible
employees in a Qualified Retirement Plan or members of an
Association or the sales charge rate that applies under the Rights
of Accumulation described above in the Prospectus. In addition,
purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they
qualified to purchase shares of any of the Former Quest For Value
Funds by virtue of projected contributions or investments of $1
million or more each year. Individuals who qualify under this
arrangement for reduced sales charge rates as members of
Associations, or as eligible employees in Qualified Retirement
Plans also may purchase shares for their individual or custodial
accounts at these reduced sales charge rates, upon request to the
Fund's Distributor.
Special Class A Contingent Deferred Sales Charge Rates
Class A shares of the Fund purchased by exchange of shares of
other Oppenheimer funds that were acquired as a result of the
merger of Former Quest for Value Funds into those Oppenheimer
funds, and which shares were subject to a Class A contingent
deferred sales charge prior to November 24, 1995 will be subject to
a contingent deferred sales charge at the following rates: if they
are redeemed within 18 months of the end of the calendar month in
which they were purchased, at a rate equal to 1.0% if the
redemption occurs within 12 months of their initial purchase and at
a rate of 0.50 of 1.0% if the redemption occurs in the subsequent
six months. Class A shares of any of the Former Quest for Value
Funds purchased without an initial sales charge on or before
November 22, 1995 will continue to be subject to the applicable
contingent deferred sales charge in effect as of that date as set
forth in the then-current prospectus for such Fund.
Waiver of Class A Sales Charges for Certain Shareholders
Class A shares of the Fund purchased by the following
investors are not subject to any Class A initial or contingent
deferred sales charges:
Shareholders of the Fund who were shareholders of the AMA
Family of Funds on February 28, 1991 and who acquired shares of any
of the Former Quest for Value Funds by merger of a portfolio of the
AMA Family of Funds.
Shareholders of the Fund who acquired shares of any Former
Quest for Value Fund by merger of any of the portfolios of the
Unified Funds.
Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions
The Class A contingent deferred sales charge will not apply to
redemptions of Class A shares of the Fund purchased by the
following investors who were shareholders of any Former Quest for
Value Fund:
Investors who purchased Class A shares from a dealer that is
not or was not permitted to receive a sales load or redemption fee
imposed on a shareholder with whom that dealer has a fiduciary
relationship under the Employee Retirement Income Security Act of
1974 and regulations adopted under that law.
Participants in Qualified Retirement Plans that purchased
shares of any of the Former Quest For Value Funds pursuant to a
special "strategic alliance" with the distributor of those funds.
The Fund's Distributor will pay a commission to the dealer for
purchases of Fund shares as described above in "Class A Contingent
Deferred Sales Charge."
Class A, Class B and Class C Contingent Deferred Sales Charge
Waivers
Waivers for Redemptions of Shares Purchased Prior to March 6,
1995
In the following cases, the contingent deferred sales charge
will be waived for redemptions of Class A, B or C shares of the
Fund acquired by exchange from an Oppenheimer Fund that was a
Former Quest for Value Fund or into which such Fund merged, if
those shares were purchased prior to March 6, 1995: in connection
with (i) distributions to participants or beneficiaries of plans
qualified under Section 401(a) of the Internal Revenue Code or from
custodial accounts under Section 403(b)(7) of the Code, Individual
Retirement Accounts, deferred compensation plans under Section 457
of the Code, and other employee benefit plans, and returns of
excess contributions made to each type of plan, (ii) withdrawals
under an automatic withdrawal plan holding only either Class B or
C shares if the annual withdrawal does not exceed 10% of the
initial value of the account, and (iii) liquidation of a
shareholder's account if the aggregate net asset value of shares
held in the account is less than the required minimum value of such
accounts.
Waivers for Redemptions of Shares Purchased on or After March 6,
1995 but Prior to November 24, 1995.
In the following cases, the contingent deferred sales charge
will be waived for redemptions of Class A, B or C shares of the
Fund acquired by exchange from an Oppenheimer Fund that was a
Former Quest For Value Fund or into which such Fund merged, if
those shares were purchased on or after March 6, 1995, but prior to
November 24, 1995: (1) distributions to participants or
beneficiaries from Individual Retirement Accounts under
Section 408(a) of the Internal Revenue Code or retirement plans
under Section 401(a), 401(k), 403(b) and 457 of the Code, if those
distributions are made either (a) to an individual participant as
a result of separation from service or (b) following the death or
disability (as defined in the Code) of the participant or
beneficiary; (2) returns of excess contributions to such retirement
plans; (3) redemptions other than from retirement plans following
the death or disability of the shareholder(s) (as evidenced by a
determination of total disability by the U.S. Social Security
Administration); (4) withdrawals under an automatic withdrawal plan
(but only for Class B or C shares) where the annual withdrawals do
not exceed 10% of the initial value of the account; and
(5) liquidation of a shareholder's account if the aggregate net
asset value of shares held in the account is less than the required
minimum account value. A shareholder's account will be credited
with the amount of any contingent deferred sales charge paid on the
redemption of any Class A, B or C shares of the Fund described in
this section if within 90 days after that redemption, the proceeds
are invested in the same Class of shares in this Fund or another
Oppenheimer Fund.
Special Dealer Arrangements
Dealers who sold Class B shares of a Former Quest for Value
Fund to Quest for Value prototype 401(k) plans that were maintained
on the TRAC-2000 recordkeeping system and that were transferred to
an OppenheimerFunds prototype 401(k) plan shall be eligible for an
additional one-time payment by the Distributor of 1% of the value
of the plan assets transferred, but that payment may not exceed
$5,000 as to any one plan.
Dealers who sold Class C shares of a Former Quest for Value
Fund to Quest for Value prototype 401(k) plans that were maintained
on the TRAC-2000 recordkeeping system and (i) the shares held by
those plans were exchanged for Class A shares, or (ii) the plan
assets were transferred to an OppenheimerFunds prototype 401(k)
plan, shall be eligible for an additional one-time payment by the
Distributor of 1% of the value of the plan assets transferred, but
that payment may not exceed $5,000.
Appendix B
DESCRIPTION OF RATINGS
Bond Ratings
Moody's Investors Service, Inc.
Aaa: Bonds which are rated "Aaa" are judged to be the best quality
and to carry the smallest degree of investment risk. Interest
payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective
elements are likely to change, the changes that can be expected are
most unlikely to impair the fundamentally strong position of such
issues.
Aa: Bonds which are rated "Aa" are judged to be of high quality by
all standards. Together with the "Aaa" group, they comprise what
are generally known as "high-grade" bonds. They are rated lower
than the best bonds because margins of protection may not be as
large as with "Aaa" securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than
those of "Aaa" securities.
A: Bonds which are rated "A" possess many favorable investment
attributes and are to be considered as upper-medium grade
obligations. Factors giving security to principal and interest are
considered adequate but elements may be present which suggest a
susceptibility to impairment sometime in the future.
Baa: Bonds which are rated "Baa" are considered medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and have
speculative characteristics as well.
Ba: Bonds which are rated "Ba" are judged to have speculative
elements; their future cannot be considered well-assured. Often
the protection of interest and principal payments may be very
moderate and not well safeguarded during both good and bad times
over the future. Uncertainty of position characterizes bonds in
this class.
B: Bonds which are rated "B" generally lack characteristics of
desirable investment. Assurance of interest and principal payments
or of maintenance of other terms of the contract over any long
period of time may be small.
Caa: Bonds which are rated "Caa" are of poor standing and may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca: Bonds which are rated "Ca" represent obligations which are
speculative in a high degree and are often in default or have other
marked shortcomings.
C: Bonds which are rated "C" can be regarded as having extremely
poor prospects of ever retaining any real investment standing.
Standard & Poor's Corporation
AAA: "AAA" is the highest rating assigned to a debt obligation and
indicates an extremely strong capacity to pay principal and
interest.
AA: Bonds rated "AA" also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the
majority of instances they differ from "AAA" issues only in small
degree.
A: Bonds rated "A" have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to adverse
effects of change in circumstances and economic conditions.
BBB: Bonds rated "BBB" are regarded as having an adequate capacity
to pay principal and interest. Whereas they normally exhibit
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
principal and interest for bonds in this category than for bonds in
the "A" category.
BB, B, CCC, CC: Bonds rated "BB," "B," "CCC" and "CC" are regarded,
on balance, as predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance
with the terms of the obligation. "BB" indicates the lowest degree
of speculation and "CC" the highest degree. While such bonds will
likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to
adverse conditions.
C, D: Bonds on which no interest is being paid are rated "C."
Bonds rated "D" are in default and payment of interest and/or
repayment of principal is in arrears.
Fitch Investors Service, Inc.
AAA Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected
by reasonably foreseeable events.
AA Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated "AAA."
Because bonds rated in the "AAA" and "AA" categories are not
significantly vulnerable to foreseeable future developments, short-
term debt of these issuers is generally rated "F-1+."
A Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal
is considered to be strong, but may be more vulnerable to adverse
changes in economic conditions and circumstances than bonds with
higher ratings.
BBB Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in
economic conditions and circumstances, however, are more likely to
have adverse impact on these bonds, and therefore impair timely
payment. The likelihood that the ratings of these bonds will fall
below investment grade is higher than for bonds with higher
ratings.
BB Bonds are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can
be identified which could assist the obligor in satisfying its debt
service requirements.
B Bonds are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the
probability of continued timely payment of principal and interest
reflects the obligor's limited margin of safety and the need for
reasonable business and economic activity through the life of the
issue.
CCC Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.
CC Bonds are minimally protected. Default in payment of interest
and/or principal seems probable over time.
C Bonds are in imminent default in payment of interest or
principal.
DDD, DD, and D Bonds are in default on interest and/or principal
payments. Such bonds are extremely speculative and should be
valued on the basis of their ultimate recovery value in liquidation
or reorganization of the obligor. "DDD" represents the highest
potential for recovery of these bonds, and "D" represents the
lowest potential for recovery.
Plus (+) Minus (-) Plus and minus signs are used with a rating
symbol to indicate the relative position of a credit within the
rating category. Plus and minus signs, however, are not used in
the "DDD," "DD," or "D" categories.
Short-Term Debt Ratings.
Moody's Investors Service, Inc. The following rating
designations for commercial paper (defined by Moody's as promissory
obligations not having original maturity in excess of nine months),
are judged by Moody's to be investment grade, and indicate the
relative repayment capacity of rated issuers:
Prime-1: Superior capacity for repayment. Capacity will normally
be evidenced by the following characteristics: (a) leveling market
positions in well-established industries; (b) high rates of return
on funds employed; (c) conservative capitalization structures with
moderate reliance on debt and ample asset protection; (d) broad
margins in earning coverage of fixed financial charges and high
internal cash generation; and (e) well established access to a
range of financial markets and assured sources of alternate
liquidity.
Prime-2: Strong capacity for repayment. This will normally be
evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound,
will be more subject to variation. Capitalization characteristics,
while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
Moody's ratings for state and municipal short-term obligations are
designated "Moody's Investment Grade" ("MIG"). Short-term notes
which have demand features may also be designated as "VMIG". These
rating categories are as follows:
MIG1/VMIG1: Best quality. There is present strong protection by
established cash flows, superior liquidity support or demonstrated
broadbased access to the market for refinancing.
MIG2/VMIG2: High quality. Margins of protection are ample
although not so large as in the preceding group.
Standard & Poor's Corporation ("S&P"): The following ratings by
S&P for commercial paper (defined by S&P as debt having an original
maturity of no more than 365 days) assess the likelihood of
payment:
A-1: Strong capacity for timely payment. Those issues determined
to possess extremely strong safety characteristics are denoted with
a plus sign (+) designation.
A-2: Satisfactory capacity for timely payment. However, the
relative degree of safety is not as high as for issues designated
"A-1".
S&P's ratings for Municipal Notes due in three years or less are:
SP-1: Very strong or strong capacity to pay principal and
interest. Those issues determined to possess overwhelming safety
characteristics will be given a plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest.
S&P assigns "dual ratings" to all municipal debt issues that have
a demand or double feature as part of their provisions. The first
rating addresses the likelihood of repayment of principal and
interest as due, and the second rating addresses only the demand
feature. With short-term demand debt, S&P's note rating symbols
are used with the commercial paper symbols (for example, "SP-1+/A-
1+").
Fitch Investors Service, Inc. Fitch assigns the following short-
term ratings to debt obligations that are payable on demand or have
original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and
municipal and investment notes:
F-1+: Exceptionally strong credit quality; the strongest degree of
assurance for timely payment.
F-1: Very strong credit quality; assurance of timely payment is
only slightly less in degree than issues rated "F-1+".
F-2: Good credit quality; satisfactory degree of assurance for
timely payment, but the margin of safety is not as great as for
issues assigned "F-1+" or "F-1" ratings.
Duff & Phelps, Inc. The following ratings are for commercial
paper (defined by Duff & Phelps as obligations with maturities,
when issued, of under one year), asset-backed commercial paper, and
certificates of deposit (the ratings cover all obligations of the
institution with maturities, when issued, of under one year,
including bankers' acceptance and letters of credit):
Duff 1+: Highest certainty of timely payment. Short-term
liquidity, including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is just
below risk-free U.S. Treasury short-term obligations.
Duff 1: Very high certainty of timely payment. Liquidity factors
are excellent and supported by good fundamental protection factors.
Risk factors are minor.
Duff 1-: High certainty of timely payment. Liquidity factors are
strong and supported by good fundamental protection factors. Risk
factors are very small.
Duff 2: Good certainty of timely payment. Liquidity factors and
company fundamentals are sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital markets is
good. Risk factors are small.
IBCA Limited or its affiliate IBCA Inc. Short-term ratings,
including commercial paper (with maturities up to 12 months), are
as follows:
A1+: Obligations supported by the highest capacity for timely
repayment.
A1: Obligations supported by a very strong capacity for timely
repayment.
A2: Obligations supported by a strong capacity for timely
repayment, although such capacity may be susceptible to adverse
changes in business, economic, or financial conditions.
Thomson BankWatch, Inc. The following short-term ratings apply
to commercial paper, certificates of deposit, unsecured notes, and
other securities having a maturity of one year or less.
TBW-1: The highest category; indicates the degree of safety
regarding timely repayment of principal and interest is very
strong.
TBW-2: The second highest rating category; while the degree of
safety regarding timely repayment of principal and interest is
strong, the relative degree of safety is not as high as for issues
rated "TBW-1".
<PAGE>
Oppenheimer Quest Capital Value Fund, Inc.
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Sub-Adviser
OpCap Advisors
One World Financial Center
New York, New York 10281
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
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.
prosp\cappsp.#2<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 Investment".
A linear graph will be included in the Prospectus of
Oppenheimer Quest Capital Value Fund, Inc. (the "Fund") depicting
the initial account value and subsequent account value of a
hypothetical $10,000 investment in the Fund. That graph will cover
the performance of the Fund's Class A shares since inception
(2/13/87)(formerly, the Capital Shares), through 12/31/96. Class
B and Class shares are not included as such shares were not
outstanding during the fiscal year ended 12/31/96.
Fiscal
Period/Year Oppenheimer Quest S&P 500
Ended Capital Value Fund, Inc. Index
02/13/87 $ 9,425 $10,000
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
<PAGE>
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
Two World Trade Center, New York, New York 10048
1-800-525-7048
Statement of Additional Information dated March 3, 1997
This Statement of Additional Information of Oppenheimer Quest
Capital Value Fund, Inc. is not a Prospectus. This document
contains additional information about the Fund and supplements
information in the Prospectus dated March 3, 1997. It should be
read together with the Prospectus, which may be obtained upon
written request to the Fund's Transfer Agent, OppenheimerFunds
Services at P.O. Box 5270, Denver, Colorado 80217, or by calling
the Transfer Agent at the toll-free number shown above.
Contents
Page
About the Fund
Investment Objective and Policies. . . . . . . . . . . . .
Investment Policies and Strategies . . . . . . . . . .
Other Investment Techniques and Strategies . . . . . .
Other Investment Restrictions. . . . . . . . . . . . . .
How the Fund is Managed . . . . . . . . . . . . . . . . .
Organization and History . . . . . . . . . . . . . . .
Directors and Officers of the Fund . . . . . . . . . . .
The Manager and Its Affiliates . . . . . . . . . . . . . .
Brokerage Policies of the Fund . . . . . . . . . . . . . .
Performance of the Fund. . . . . . . . . . . . . . . . . .
Distribution and Service Plans . . . . . . . . . . . . . .
About Your Account
How To Buy Shares. . . . . . . . . . . . . . . . . . . .
How To Sell Shares . . . . . . . . . . . . . . . . . . .
How To Exchange Shares . . . . . . . . . . . . . . . . .
Dividends, Capital Gains and Taxes . . . . . . . . . . .
Additional Information About the Fund. . . . . . . . . . .
Financial Information About the Fund
Independent Accountants' Report. . . . . . . . . . . . .
Financial Statements . . . . . . . . . . . . . . . . . . .
Appendix A: Corporate Industry Classifications . . . . A-1
<PAGE>
ABOUT THE FUND
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and
policies of the Fund are described in the Prospectus. Set forth
below is supplemental information about those policies and the
types of securities in which the Fund may invest, as well as the
strategies the Fund may use to try to achieve its objective.
Capitalized terms used in this Statement of Additional Information
have the same meaning as those terms have in the Prospectus.
Foreign Securities. 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
equities (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.
Risks of Foreign Investing. Investing in foreign securities
involves special additional risks and considerations not typically
associated with investing in securities of issuers traded in the
U.S. These include: reduction of income by foreign taxes;
fluctuation in value of foreign portfolio investments due to
changes in currency rates and control regulations (e.g., currency
blockage); transaction charges for currency exchange; lack of
public information about foreign issuers; lack of uniform
accounting, auditing and financial reporting standards comparable
to those applicable to domestic issuers; less volume on foreign
exchanges than on U.S. exchanges; greater volatility and less
liquidity on foreign markets than in the U.S.; less regulation of
foreign issuers, stock exchanges and brokers than in the U.S.;
greater difficulties in commencing lawsuits and obtaining judgments
in foreign courts; higher brokerage commission rates than in the
U.S.; increased risks of delays in settlement of portfolio
transactions or loss of certificates for portfolio securities;
possibilities in some countries of expropriation or nationalization
of assets, confiscatory taxation, political, financial or social
instability or adverse diplomatic developments; and unfavorable
differences between the U.S. economy and foreign economies. In the
past, U.S. Government policies have discouraged certain
investments abroad by U.S. investors, through taxation or other
restrictions, and it is possible that such restrictions could be
re-imposed.
Emerging Market Countries: Certain developing countries may
have relatively unstable governments, economies based on only a few
industries that are dependent upon international trade, and reduced
secondary market liquidity. Foreign investment in certain emerging
market countries is restricted or controlled in varying degrees.
In the past, securities in these countries have experienced greater
price movement, both positive and negative, than securities of
companies located in developed countries. Lower-rated high-
yielding emerging market securities may be considered to have
speculative elements.
U.S. Government Securities. Obligations of U.S. Government
agencies or instrumentalities (including mortgage-backed
securities) may or may not be guaranteed or supported by the "full
faith and credit" of the United States. Some are backed by the
right of the issuer to borrow from the U.S. Treasury; others, by
discretionary authority of the U.S. Government to purchase the
agencies' obligations; while others are supported only by the
credit of the instrumentality. All U.S. Treasury obligations are
backed by the full faith and credit of the United States. If the
securities are not backed by the full faith and credit of the
United States, the owner of the securities must look principally to
the agency issuing the obligation for repayment and may not be able
to assert a claim against the United States in the event that the
agency or instrumentality does not meet its commitment. The Fund
will invest in U.S. Government Securities of such agencies and
instrumentalities only when the Manager is satisfied that the
credit risk with respect to such instrumentality is minimal.
Money Market Securities. As stated in the Prospectus, the
Fund typically invests a part of its assets in money market
securities, and may invest up to 100% of its total assets in money
market securities for temporary defensive purposes. Money market
securities in which the Fund may invest include the following:
Time Deposits and Variable Rate Notes. The Fund may invest
in fixed time deposits, whether or not subject to withdrawal
penalties. However, investment in such deposits which are subject
to withdrawal penalties, other than overnight deposits, are subject
to the 15% limit on illiquid investments set forth in the
Prospectus for the Fund.
The commercial paper obligations which the Fund may buy are
unsecured and may include variable rate notes. The nature and
terms of a variable rate note (i.e., a "Master Note") permit the
Fund to invest fluctuating amounts at varying rates of interest
pursuant to a direct arrangement between the Fund as lender, and
the issuer, as borrower. It permits daily changes in the amounts
borrowed. The Fund has the right at any time to increase, up to
the full amount stated in the note agreement, or to decrease the
amount outstanding under the note. The issuer may prepay at any
time and without penalty any part or the full amount of the note.
The note may or may not be backed by one or more bank letters of
credit. Because these notes are direct lending arrangements
between the Fund and the issuer, it is not generally contemplated
that they will be traded; moreover, there is currently no secondary
market for them. Except as specifically provided in the Prospectus
for the Fund, there is no limitation on the type of issuer from
whom these notes will be purchased. However, in connection with
such purchase and on an ongoing basis, OpCap Advisors (the "Sub-
Adviser") will consider the earning power, cash flow and other
liquidity ratios of the issuer, and its ability to pay principal
and interest on demand, including a situation in which all holders
of such notes made demand simultaneously. The Fund will not invest
more than 5% of its total assets in variable rate notes. Variable
rate notes are subject to the Fund's investment restriction on
illiquid securities unless such notes can be put back to the issuer
on demand within seven days.
Insured Bank Obligations. The Federal Deposit Insurance
Corporation ("FDIC") insures the deposits of federally insured
banks and savings and loan associations (collectively referred to
as "banks") up to $100,000. The Fund may, within the limits set
forth in the Prospectus, purchase bank obligations which are fully
insured as to principal by the FDIC. Currently, to remain fully
insured as to principal, these investments must be limited to
$100,000 per bank. If the principal amount and accrued interest
together exceed $100,000, the excess principal and accrued interest
will not be insured. Insured bank obligations may have limited
marketability. Unless the Board of Directors determines that a
readily available market exists for such obligations, the Fund will
treat such obligations as subject to the 15% limit for illiquid
investments set forth in the Prospectus for the Fund unless such
obligations are payable at principal amount plus accrued interest
on demand or within seven days after demand.
Convertible Securities. The Fund may invest in fixed-
income securities which are convertible into common stock.
Convertible securities rank senior to common stocks in a
corporation's capital structure and, therefore, entail less risk
than the corporation's common stock. The value of a convertible
security is a function of its "investment value" (its value as if
it did not have a conversion privilege), and its "conversion value"
(the security's worth if it were to be exchanged for the underlying
security, at market value, pursuant to its conversion privilege).
To the extent that a convertible security's investment value
is greater than its conversion value, its price will be primarily
a reflection of such investment value and its price will be likely
to increase when interest rates fall and decrease when interest
rates rise, as with a fixed-income security (the credit standing of
the issuer and other factors may also have an effect on the
convertible security's value). If the conversion value exceeds the
investment value, the price of the convertible security will rise
above its investment value and, in addition, will sell at some
premium over its conversion value. (This premium represents the
price investors are willing to pay for the privilege of purchasing
a fixed-income security with a possibility of capital appreciation
due to the conversion privilege.) At such times the price of the
convertible security will tend to fluctuate directly with the price
of the underlying equity security. Convertible securities may be
purchased by the Fund at varying price levels above their
investment values and/or their conversion values in keeping with
the Fund's objectives.
Investment Risks of Fixed-Income Securities. All fixed-
income securities are subject to two types of risks: credit risk
and interest rate risk. Credit risk relates to the ability of the
issuer to meet interest or principal payments on a security as they
become due. Generally, higher yielding lower-grade bonds are
subject to credit risk to a greater extent than lower yielding,
investment grade bonds. Interest rate risk refers to the
fluctuations in value of fixed-income securities resulting solely
from the inverse relationship between price and yield of
outstanding fixed-income securities. An increase in prevailing
interest rates will generally reduce the market value of already-
issued fixed-income investments, and a decline in interest rates
will tend to increase their value. In addition, debt securities
with longer maturities, which tend to produce higher yields, are
subject to potentially greater changes in their prices from changes
in interest rates than obligations with shorter maturities.
Fluctuations in the market value of fixed-income securities after
the Fund buys them will not affect the interest payable on those
securities, nor the cash income from such securities. However,
those price fluctuations will be reflected in the valuations of
these securities and therefore the Fund's net asset values.
Lower-Grade Securities. As stated in the Prospectus, the
Fund may invest up to 25% of its net assets in bonds rated below
Baa3 by Moody's or BBB- by Standard & Poor's (commonly known as
"high yield" or "junk bonds"). The Manager will not rely solely on
the ratings assigned by rating services and may invest, without
limit, in unrated securities which offer, in the opinion of the
Manager, yields and risks comparable to those of rated securities
in which the Fund may invest.
Some of the principal risks of high yield securities include:
(i) limited liquidity and secondary market support, (ii)
substantial market price volatility resulting from changes in
prevailing interest rates, (iii) subordination of the holder's
claims to the prior claims of banks and other senior lenders in
bankruptcy proceedings, (iv) the operation of mandatory sinking
fund or call/redemption provisions during periods of declining
interest rates, whereby the holder might receive redemption
proceeds at times when only lower-yielding portfolio securities are
available for investment, (v) the possibility that earnings of the
issuer may be insufficient to meet its debt service, and (vi) the
issuer's low creditworthiness and potential for insolvency during
periods of rising interest rates and economic downturn. Some high
yield bonds pay interest in kind rather than in cash and tend to be
more volatile than securities that pay interest in cash.
As a result of the limited liquidity of high yield securities,
their prices have at times experienced significant and rapid
decline when a significant number of holders of high yield
securities simultaneously decided to sell them. A decline is also
likely in the high yield bond market during an economic downturn.
An economic downturn or an increase in interest rates could
severely disrupt the market for high yield securities and adversely
affect the value of outstanding securities and the ability of the
issuers to repay principal and interest. In addition, in recent
years there have been several Congressional attempts to limit the
use or limit tax and other advantages of high yield bonds. If
enacted, such proposals could adversely affect the value of these
securities and consequently the Fund's net asset value per share.
For example, federally insured savings and loan associations have
been required to divest their investments in high yield securities.
Warrants. The Fund may 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.
Investing in Small, Unseasoned Companies. The securities of
small, unseasoned companies may have a limited trading market,
which may adversely affect the Fund's ability to dispose of them
and can reduce the price the Fund might be able to obtain for them.
If other investment companies and investors that invest in this
type of securities trade the same securities when the Fund attempts
to dispose of its holdings, the Fund may receive lower prices than
might otherwise be obtained, because of the thinner market for such
securities.
Borrowing. The Fund may increase its ownership of
securities by borrowing 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
When-Issued Securities. The Fund may take advantage of
offerings of eligible portfolio securities on a "when-issued" basis
where delivery of and payment for such securities takes place
sometime after the transaction date on terms established on such
date. Normally, settlement on U.S. Government securities takes
place within ten days. The Fund only will make when-issued
commitments on eligible securities with the intention of actually
acquiring the securities. If the Fund chooses to dispose of the
right to acquire a when-issued security prior to its acquisition,
it could, as with the disposition of any other portfolio
obligation, incur a gain or loss due to market fluctuation. When-
issued commitments will not be made if, as a result, more than 15%
of the net assets of the Fund would be so committed.
Repurchase Agreements. The Fund may purchase securities
subject to repurchase agreements for liquidity purposes to meet
anticipated redemptions, or pending the investment of the proceeds
from sales of Fund shares, or pending the settlement of purchases
of portfolio securities. In a repurchase transaction, the Fund
purchases a security from, and simultaneously resells it to, an
approved vendor (a U.S. commercial bank or the U.S. branch of a
foreign bank having total domestic assets of at least $1 billion or
a broker-dealer with a net worth of at least $50 million and which
that has been designated a primary dealer in government securities)
that must meet credit requirements set by the Fund's Board of
Directors from time to time for delivery on an agreed-on future
date. The resale price exceeds the purchase price by an amount
that reflects an agreed-upon interest rate effective for the period
during which the repurchase agreement is in effect. The majority
of these transactions run from day to day, and delivery pursuant to
the resale typically will occur within one to five days of the
purchase. Repurchase agreements are considered "loans" under the
Investment Company Act, collateralized by the underlying security.
The Fund's repurchase agreements require that at all times while
the repurchase agreement is in effect, the value of the collateral
must equal or exceed the repurchase price to fully collateralize
the repayment obligation. Additionally, the Manager will impose
creditworthiness requirements to confirm that the vendor is
financially sound and will continuously monitor the collateral's
value.
The Fund may enter into reverse repurchase agreements. Under
a reverse repurchase agreement, the Fund sells securities and
agrees to repurchase them at a mutually agreed upon date and price.
At the time the Fund enters into a reverse repurchase agreement, it
will establish and maintain a segregated account with an approved
custodian containing liquid 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.
Illiquid and Restricted Securities. To enable the Fund to
sell restricted securities not registered under the Securities Act
of 1933, the Fund may have to cause those securities to be
registered. The expenses of registration of restricted securities
may be negotiated by the Fund with the issuer at the time such
securities are purchased by the Fund, if such registration is
required before such securities may be sold publicly. When
registration must be arranged because the Fund wishes to sell the
security, a considerable period may elapse between the time the
decision is made to sell the securities and the time the Fund would
be permitted to sell them. The Fund would bear the risks of any
downward price fluctuation during that period. The Fund may also
acquire, through private placements, securities having contractual
restrictions on their resale, which might limit the Fund's ability
to dispose of such securities and might lower the amount realizable
upon the sale of such securities.
The Fund has percentage limitations that apply to purchases of
restricted securities, as stated in the Prospectus. Those
percentage restrictions do not limit purchases of restricted
securities that are eligible for sale to qualified institutional
purchasers pursuant to Rule 144A under the Securities Act of 1933,
provided that those securities have been determined to be liquid by
the Board of Directors of the Fund or by the Sub-Adviser under
Board-approved guidelines. Those guidelines take into account the
trading activity for such securities and the availability of
reliable pricing information, among other factors. If there is a
lack of trading interest in a particular Rule 144A security, the
Fund's holding of that security may be deemed to be illiquid.
Loans of Portfolio Securities. The Fund may lend its
portfolio securities subject to the restrictions stated in the
Prospectus 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.
Short Sales Against-the-Box. In this type of short sale,
while the short position is open, the Fund must own an equal amount
of the securities sold short, or by virtue of ownership of other
securities have the right, without payment of further
consideration, to obtain an equal amount of the securities sold
short. Short sales against-the-box may be made to defer, for
Federal income tax purposes, recognition of gain or loss on the
sale of securities "in the box" until the short position is closed
out. They may also be used to protect a gain on the security "in-
the-box" when the Fund does not want to sell it and recognize a
capital gain.
Hedging With Options and Futures Contracts. The Fund may
employ one or more types of Hedging Instruments for the purposes
described in the Prospectus. When hedging to attempt to protect
against declines in the market value of the Fund's portfolio, or to
permit the Fund to retain unrealized gains in the value of
portfolio securities which have appreciated, or to facilitate
selling securities for investment reasons, the Fund may: (i) sell
Stock Index Futures, (ii) buy puts, or (iii) write covered calls
(as described in the Prospectus). When hedging to establish a
position in the equity securities markets as a temporary substitute
for the purchase of individual equity securities the Fund may: (i)
buy Stock Index Futures, or (ii) buy calls on Stock Index Futures.
Normally, the Fund would then purchase the equity securities and
terminate the hedging portion.
The Fund's strategy of hedging with Futures and options on
Futures will be incidental to the Fund's investment activities in
the underlying cash market. In the future, the Fund may employ
hedging instruments and strategies that are not presently
contemplated but which may be subsequently developed, to the extent
such investment methods are consistent with the Fund's investment
objective, and are legally permissible and disclosed in the
Prospectus. Additional information about the hedging instruments
the Fund may use is provided below.
Writing Call Options. As described in the Prospectus, the
Fund may write covered calls. When the Fund writes a call on an
investment, it receives a premium and agrees to sell the callable
investment to a purchaser of a corresponding call during the call
period (usually not more than 9 months) at a fixed exercise price
(which may differ from the market price of the underlying
investment) regardless of market price changes during the call
period. To terminate its obligation on a call it has written, the
Fund may purchase a corresponding call in a "closing purchase
transaction." A profit or loss will be realized, depending upon
whether the net of the amount of option transaction costs and the
premium received on the call the Fund has written is more or less
than the price of the call the Fund subsequently purchased. A
profit may also be realized if the call lapses unexercised because
the Fund retains the underlying investment and the premium
received. Those profits are considered short-term capital gains
for Federal income tax purposes, as are premiums on lapsed calls,
and when distributed by the Fund are taxable as ordinary income.
If the Fund could not effect a closing purchase transaction due to
the lack of a market, it would have to hold the callable investment
until the call lapsed or was exercised.
The Fund may also write calls on Futures without owning a
futures contract or deliverable securities, provided that at the
time the call is written, the Fund covers the call by segregating
in escrow an equivalent dollar value of deliverable securities or
liquid assets. The Fund will segregate additional liquid assets if
the value of the escrowed assets drops below 100% of the current
value of the Future. In no circumstances would an exercise notice
as to a Future put the Fund in a short futures position.
Writing Put Options. A put option on securities gives the
purchaser the right to sell, and the writer the obligation to buy,
the underlying investment at the exercise price during the option
period. Writing a put covered by segregated liquid assets equal to
the exercise price of the put has the same economic effect to the
Fund as writing a covered call. The premium the Fund receives from
writing a put option represents a profit, as long as the price of
the underlying investment remains above the exercise price.
However, the Fund has also assumed the obligation during the option
period to buy the underlying investment from the buyer of the put
at the exercise price, even though the value of the investment may
fall below the exercise price. If the put expires unexercised, the
Fund (as the writer of the put) realizes a gain in the amount of
the premium less transaction costs. If the put is exercised, the
Fund must fulfill its obligation to purchase the underlying
investment at the exercise price, which will usually exceed the
market value of the investment at that time. In that case, the
Fund may incur a loss, equal to the sum of the 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, to secure its
obligation to pay for the underlying security, the Fund will
deposit in escrow liquid assets with a value equal to or greater
than the exercise price of the underlying securities. The Fund
therefore forgoes the opportunity of investing the segregated
assets or writing calls against those assets. As long as the
obligation of the Fund as the put writer continues, it may be
assigned an exercise notice by the exchange or broker-dealer
through whom such option was sold, requiring the Fund to exchange
currency at the specified rate of exchange or to take delivery of
the underlying security against payment of the exercise price. The
Fund may have no control over when it may be required to purchase
the underlying security, since it may be assigned an exercise
notice at any time prior to the termination of its obligation as
the writer of the put. This obligation terminates upon expiration
of the put, or such earlier time at which the Fund effects a
closing purchase transaction by purchasing a put of the same series
as that previously sold. Once the Fund has been assigned an
exercise notice, it is thereafter not allowed to effect a closing
purchase transaction.
The Fund may effect a closing purchase transaction to realize
a profit on an outstanding put option it has written or to prevent
an underlying security from being put. Furthermore, effecting such
a closing purchase transaction will permit the Fund to write
another put option to the extent that the exercise price thereof is
secured by the deposited assets, or to utilize the proceeds from
the sale of such assets for other investments by the Fund. The
Fund will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the
premium received from writing the option. As above for writing
covered calls, any and all such profits described herein from
writing puts are considered short-term capital gains for Federal
tax purposes, and when distributed by the Fund, are taxable as
ordinary income.
Purchasing Puts and Calls. The Fund may purchase calls to
protect against the possibility that the Fund's portfolio will not
participate in an anticipated rise in the securities market. When
the Fund purchases a call (other than in a closing purchase
transaction), it pays a premium and, except as to calls on stock
indices, has the right to buy the underlying investment from a
seller of a corresponding call on the same investment during the
call period at a fixed exercise price. In purchasing a call, the
Fund benefits only if the call is sold at a profit or if, during
the call period, the market price of the underlying investment is
above the sum of the exercise price, transaction costs, and the
premium paid, and the call is exercised. If the call is not
exercised or sold (whether or not at a profit), it will become
worthless at its expiration date and the Fund will lose its premium
payment and the right to purchase the underlying investment. When
the Fund purchases a call on a stock index, it pays a premium, but
settlement is in cash rather than by delivery of the underlying
investment to the Fund.
When the Fund purchases a put, it pays a premium and, except
as to puts on stock indices, has the right to sell the underlying
investment to a seller of a corresponding put on the same
investment during the put period at a fixed exercise price. Buying
a put on an investment the Fund owns (a "protective put") enables
the Fund to attempt to protect itself during the put period against
a decline in the value of the underlying investment below the
exercise price by selling the underlying investment at the exercise
price to a seller of a corresponding put. If the market price of
the underlying investment is equal to or above the exercise price
and as a result the put is not exercised or resold, the put will
become worthless at its expiration and the Fund will lose the
premium payment and the right to sell the underlying investment.
However, the put may be sold prior to expiration (whether or not at
a profit).
Buying a put on an investment it does not own, either a put on
an index or a put on a Stock Index Future not held by the Fund,
permits the Fund either to resell the put or buy the underlying
investment and sell it at the exercise price. The resale price of
the put will vary inversely with the price of the underlying
investment. If the market price of the underlying investment is
above the exercise price and as a result the put is not exercised,
the put will become worthless on its expiration date. In the event
of a decline in the stock market, the Fund could exercise or sell
the put at a profit to attempt to offset some or all of its loss on
its portfolio securities. When the Fund purchases a put on an
index, or on a Future not held by it, the put protects the Fund to
the extent that the index or Future moves in a similar pattern to
the securities held. In the case of a put on an index or Future,
settlement is in cash rather than by delivery by the Fund of the
underlying investment.
Puts and calls on broadly-based stock indices or Stock Index
Futures are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss
depends on changes in the index in question (and thus on price
movements in the stock market generally) rather than on price
movements of individual securities or futures contracts. When the
Fund buys a call on a stock index or Stock Index Future, it pays a
premium. If the Fund exercises the call during the call period, a
seller of a corresponding call on the same investment will pay the
Fund an amount of cash to settle the call if the closing level of
the stock index or Future upon which the call is based is greater
than the exercise price of the call. That cash payment is equal to
the difference between the closing price of the call and the
exercise price of the call times a specified multiple (the
"multiplier") which determines the total dollar value for each
point of difference. When the Fund buys a put on a stock index or
Stock Index Future, it pays a premium and has the right during the
put period to require a seller of a corresponding put, upon the
Fund's exercise of its put, to deliver cash to the Fund to settle
the put if the closing level of the stock index or Stock Index
Future upon which the put is based is less than the exercise price
of the put. That cash payment is determined by the multiplier, in
the same manner as described above as to calls.
When the Fund purchases a put on a stock index, or on a Stock
Index Future not owned by it, the put protects the Fund to the
extent that the index moves in a similar pattern to the securities,
the Fund holds. The Fund can either resell the put or, in the case
of a put on a Stock Index Future, buy the underlying investment and
sell it at the exercise price. The resale price of the put will
vary inversely with the price of the underlying investment. If the
market price of the underlying investment is above the exercise
price, and as a result the put is not exercised, the put will
become worthless on the expiration date. In the event of a decline
in price of the underlying investment, the Fund could exercise or
sell the put at a profit to attempt to offset some or all of its
loss on its portfolio securities.
The Fund's option activities may affect its portfolio turnover
rate and brokerage commissions. The exercise of calls written by
the Fund may cause the Fund to sell related portfolio securities,
thus increasing its turnover rate. The exercise by the Fund of
puts on securities will cause the sale of underlying investments,
increasing portfolio turnover. Although the decision whether to
exercise a put it holds is within the Fund's control, holding a put
might cause the Fund to sell the related investments for reasons
that would not exist in the absence of the put. The Fund will pay
a brokerage commission each time it buys or sells a call, put or an
underlying investment in connection with the exercise of a put or
call. Those commissions may be higher than the commissions for
direct purchases or sales of the underlying investments.
Premiums paid for options are small in relation to the market
value of the underlying investments and, consequently, put and call
options offer large amounts of leverage. The leverage offered by
trading in options could result in the Fund's net asset value being
more sensitive to changes in the value of the underlying
investments.
Stock Index Futures. As described in the Prospectus, the
Fund may invest in Stock Index Futures only if they relate to
broadly-based stock indices. A stock index is considered to be
broadly-based if it includes stocks that are not limited to issuers
in any particular industry or group of industries. A stock index
assigns relative values to the common stocks included in the index
and fluctuates with the changes in the market value of those
stocks. Stock indices cannot be purchased or sold directly.
Stock index futures are contracts based on the future value of
the basket of securities that comprise the underlying stock index.
The contracts obligate the seller to deliver, and the purchaser to
take, cash to settle the futures transaction or to enter into an
offsetting contract. No physical delivery of the securities
underlying the index is made on settling the futures obligation. No
monetary amount is paid or received by the Fund on the purchase or
sale of a Stock Index Future. Upon entering into a Futures
transaction, the Fund will be required to deposit an initial margin
payment, in cash or U.S. Treasury bills, with the futures
commission merchant (the "futures broker"). Initial margin
payments will be deposited with the Fund's Custodian in an account
registered in the futures broker's name; however, the futures
broker can gain access to that account only under certain specified
conditions. As the Future is marked to market (that is, its value
on the Fund's books is changed) to reflect changes in its market
value, subsequent margin payments, called variation margin, will be
paid to or by the futures broker on a daily basis.
At any time prior to the expiration of the Future, the Fund
may elect to close out its position by taking an opposite position,
at which time a final determination of variation margin is made and
additional cash is required to be paid by or released to the Fund.
Any gain or loss is then realized by the Fund on the Future for tax
purposes. Although Stock Index Futures by their terms call for
settlement by the delivery of cash, in most cases the settlement
obligation is fulfilled without such delivery by entering into an
offsetting transaction. All futures transactions are effected
through a clearing house associated with the exchange on which the
contracts are traded.
Regulatory Aspects of Hedging Instruments. The Fund is
required to operate within certain guidelines and restrictions with
respect to its use of futures and options thereon as established by
the Commodities Futures Trading Commission ("CFTC"). In
particular, the Fund is excluded from registration as a "commodity
pool operator" if it complies with the requirements of Rule 4.5
(the "Rule") adopted by the CFTC. Under this Rule, the Fund is not
limited regarding the percentage of its assets committed to futures
margins and related options premiums subject to a hedge position.
However, 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 considered bona
fide hedging strategies under the Rule. Under the Rule the Fund
also must use short future 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
exchanges or through one or more brokers. Thus the number of
options which the Fund may write or hold may be affected by options
written or held by other entities, including other investment
companies having the same adviser as the Fund (or an adviser that
is an affiliate of the Fund's adviser). The exchanges also impose
position limits on Futures transactions. An exchange may order the
liquidation of positions found to be in violation of those limits
and may impose certain other sanctions.
Due to requirements under the Investment Company Act, when the
Fund purchases a Stock Index Future, the Fund will maintain, in a
segregated account or accounts with its custodian, cash or readily-
marketable, short-term (maturing in one year or less) debt
instruments in an amount equal to the market value of the
securities underlying such Future, less the margin deposit
applicable to it.
Additional Information About Hedging Instruments and Their
Use. The Fund's Custodian, or a securities depository acting for
the Custodian, will act as the Fund's escrow agent, through the
facilities of the Options Clearing Corporation ("OCC"), as to the
investments on which the Fund has written options traded on
exchanges or as to other acceptable escrow securities, so that no
margin will be required for such transactions. OCC will release
the securities on the expiration of the option or upon the Fund's
entering into a closing transaction. An option position may be
closed out only on a market which provides secondary trading for
options of the same series, and there is no assurance that a liquid
secondary market will exist for any particular option.
When the Fund writes an over-the-counter ("OTC") option, it
will enter into an arrangement with a primary U.S. Government
securities dealer, which would establish a formula price at which
the Fund would have the absolute right to repurchase that OTC
option. That formula price would generally be based on a multiple
of the premium received for the option, plus the amount by which
the option is exercisable below the market price of the underlying
security (that is, the extent to which the option is "in-the-
money"). When the Fund writes an OTC option, it will treat as
illiquid (for purposes of the limit on its assets that may be
invested in the illiquid securities, stated in the Prospectus) the
mark-to-market value of any OTC option held by it. The Securities
and Exchange Commission ("SEC") is evaluating whether OTC options
should be considered liquid securities, and the procedure described
above could be affected by the outcome of that evaluation.
The Fund's option activities may affect its turnover rate and
brokerage commissions. The exercise of calls written by the Fund
may cause the Fund to sell related portfolio securities, thus
increasing its turnover rate in a manner beyond the Fund's control.
The exercise by the Fund of puts on securities will cause the sale
of related investments, increasing portfolio turnover. Although
such exercise is within the Fund's control, holding a put might
cause the Fund to sell the related investments for reasons which
would not exist in the absence of the put. The Fund will pay a
brokerage commission each time it buys a put or call, sells a call,
or buys or sells an underlying investment in connection with the
exercise of a put or call. Such commissions may be higher than
those which would apply to direct purchases or sales of such
underlying investments. Premiums paid for options are small in
relation to the market value of the related investments, and
consequently, put and call options offer large amounts of leverage.
The leverage offered by trading options could result in the Fund's
net asset value being more sensitive to changes in the value of the
underlying investments.
Tax Aspects of Covered Calls and Hedging Instruments. The
Fund intends to qualify as a "regulated investment company" under
the Internal Revenue Code (although it reserves the right not to
qualify). That qualification enables the Fund to "pass through"
its income and realized capital gains to shareholders without the
Fund having to pay tax on them. This avoids a "double tax" on that
income and capital gains, since shareholders normally will be taxed
on the dividends and capital gains they receive from the Fund
(unless the Fund's shares are held in a retirement account or the
shareholder is otherwise exempt from tax). One of the tests for
the Fund's qualification as a regulated investment company is that
less than 30% of its gross income must be derived from gains
realized on the sale of securities held for less than three months.
To comply with this 30% cap, the Fund will limit the extent to
which it engages in the following activities, but will not be
precluded from them: (i) selling investments, including Stock Index
Futures, held for less than three months, whether or not they were
purchased on the exercise of a call held by the Fund; (ii)
purchasing options which expire in less than three months; (iii)
effecting closing transactions with respect to calls or puts
written or purchased less than three months previously; (iv)
exercising puts or calls held by the Fund for less than three
months; or (v) writing calls on investments held less than three
months.
Certain foreign currency exchange contracts ("Forward
Contracts") in which the Fund may invest are treated as "section
1256 contracts." Gains or losses relating to section 1256
contracts generally are characterized under the Internal Revenue
Code as 60% long-term and 40% short-term capital gains or losses.
However, foreign currency gains or losses arising from certain
section 1256 contracts (including Forward Contracts) generally are
treated as ordinary income or loss. In addition, section 1256
contracts held by the Fund at the end of each taxable year are
"marked-to-market" with the result that unrealized gains or losses
are treated as though they were realized. These contracts also may
be marked-to-market for purposes of the excise tax applicable to
investment company distributions and for other purposes under rules
prescribed pursuant to the Internal Revenue Code. An election can
be made by the Fund to exempt these transactions from this marked-
to-market treatment.
Certain Forward Contracts entered into by the Fund may result
in "straddles" for Federal income tax purposes. The straddle rules
may affect the character 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.
Additional Risk Factors in Hedging. An option position may
be closed out only on a market that provides secondary trading for
options of the same series, and there is no assurance that a liquid
secondary market will exist for any particular option. An option
position may be closed out only on a market that provides secondary
trading for options of the same series, and there is no assurance
that a liquid secondary market will exist for any particular
option. In addition to the risks with respect to options discussed
in the Prospectus and above, there is a risk in using short hedging
by (i) selling Stock Index Futures or (ii) purchasing puts on stock
indices or Stock Index Futures to attempt to protect against
declines in the value of the Fund's equity securities. The risk is
that the prices of Stock Index Futures will correlate imperfectly
with the behavior of the cash (i.e., market value) prices of the
Fund's equity securities. The ordinary spreads between prices in
the cash and futures markets are subject to distortions, due to
differences in the natures of those markets. First, all
participants in the futures markets are subject to margin deposit
and maintenance requirements. Rather than meeting additional
margin deposit requirements, investors may close out futures
contracts through offsetting transactions which could distort the
normal relationship between the cash and futures markets. Second,
the liquidity of the futures markets depends on participants
entering into offsetting transactions rather than making or taking
delivery. To the extent participants decide to make or take
delivery, liquidity in the futures markets could be reduced, thus
producing distortion. Third, from the point of view of
speculators, the deposit requirements in the futures markets are
less onerous than margin requirements in the securities markets.
Therefore, increased participation by speculators in the futures
markets may cause temporary price distortions.
The risk of imperfect correlation increases as the composition
of the Fund's portfolio diverges from the securities included in
the applicable index. To compensate for the imperfect correlation
of movements in the price of the equity securities being hedged and
movements in the price of the hedging instruments, the Fund may use
hedging instruments in a greater dollar amount than the dollar
amount of equity securities being hedged if the historical
volatility of the prices of the equity securities being hedged is
more than the historical volatility of the applicable index. It is
also possible that if the Fund has used hedging instruments in a
short hedge, the market may advance and the value of equity
securities held in the Fund's portfolio may decline. If that
occurred, the Fund would lose money on the hedging instruments and
also experience a decline in value in its portfolio securities.
However, while this could occur for a very brief period or to a
very small degree, over time the value of a diversified portfolio
of equity securities will tend to move in the same direction as the
indices upon which the hedging instruments are based.
If the Fund uses hedging instruments to establish a position
in the equities markets as a temporary substitute for the purchase
of individual equity securities (long hedging) by buying Stock
Index Futures and/or calls on such Futures, on securities or on
stock indices, it is possible that the market may decline. If the
Fund then concludes not to invest in equity securities at that time
because of concerns as to a possible further market decline or for
other reasons, the Fund will realize a loss on the hedging
instruments that is not offset by a reduction in the price of the
equity securities purchased.
Other Investment Restrictions
The Fund's most significant investment restrictions are set
forth in the Prospectus. There are additional investment
restrictions that the Fund must follow that are also fundamental
policies. Fundamental policies and the Fund's investment objective
cannot be changed without the vote of a "majority" of the Fund's
outstanding voting securities. Under the Investment Company Act,
such a majority vote is defined as the vote of the holders of the
lesser of: (i) 67% or more of the shares present or represented by
proxy at a shareholder meeting, if the holders of more than 50% of
the outstanding shares are present or represented by proxy, or (ii)
more than 50% of the outstanding shares.
Under these additional restrictions, the Fund cannot:
Purchase shares of other investment companies in an
amount exceeding the limitations set forth in Section 12(d) of the
1940 Act and the rules thereunder, except as part of a plan of
reorganization, merger, consolidation or an offer of exchange;
Purchase securities on margin, except such short-term
credits as may be necessary for the clearance of transactions;
Invest for the purpose of exercising control over
management of any company;
Purchase or retain securities of any company if, to the
knowledge of the Fund, any officer or director of the Fund, 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;
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);
Underwrite the securities of other issuers, except to the
extent that in connection with the disposition of portfolio
securities or the sale of its own shares the Fund may be deemed to
be an underwriter;
Purchase real estate or interests therein, although the
Fund may purchase or sell securities of companies which deal in
real estate or interests therein;
Purchase or sell commodities or commodity futures
contracts except stock index futures and options on such futures
under policies adopted by the Fund's board of directors and
disclosed to shareholders;
Mortgage, hypothecate or pledge any of its assets, except
to the extent that the Fund may pledge assets to secure permitted
borrowings and in connection with collateral arrangements with
respect to options or futures; and
Issue senior securities, as defined in the 1940 Act,
except that the Fund may enter into repurchase agreements, lend its
portfolio securities and borrow money from banks for temporary or
emergency purposes.
As a non-fundamental policy, the Fund may not (i) purchase
oil, gas or other mineral leases, rights or royalty contracts or
exploration or development programs except that the Fund may invest
in the securities of companies which invest in or sponsor such
programs and (ii) make short sales of securities except short sales
"against-the-box" but no more than 15% of the Fund's net assets
(taken at current value) may be held as collateral for such short
sales at any time. For purposes of the Fund's policy not to invest
more than 25% of its assets in any one industry as described in the
Prospectus, the Fund has adopted, as a matter of non-fundamental
policy, the corporate industry classifications set forth in
Appendix A to this Statement of Additional Information.
How the Fund is Managed
Organization and History. The Fund is organized as a Maryland
corporation which currently operates as a diversified open-end
management investment company. The Fund originally commenced
operations as a closed-end investment company. Pursuant to
shareholder approval received on December 20, 1996, the Fund
converted to an open-end investment company effective as of the
date of this Statement of Additional Information.
As a Maryland corporation, the Fund is not required to hold,
and does not plan to hold, regular annual meetings of shareholders.
The Fund will hold meetings when required to do so by the
Investment Company Act or other applicable law, or when a
shareholder meeting is called by the Trustees or upon proper
request of the shareholders. Each share of the Fund represents an
interest in the Fund proportionately equal to the interest of each
other share of the same class and entitles the holder to one vote
per share (and a fractional vote for a fractional share) on matters
submitted to their vote at shareholders' meetings. Shareholders of
the Fund vote together in the aggregate on certain matters at
shareholders' meetings, such as the election of Directors and
ratification of appointment of auditors for the Fund. Shareholders
of a particular class vote separately on proposals which affect
that class, and shareholders of a class which is not affected by
that matter are not entitled to vote on the proposal. For example,
only shareholders of a class of a series vote on certain amendments
to the Distribution and/or Service Plans if the amendments affect
that class.
Directors and Officers of the Fund. The Fund's Directors and
officers, and the Fund's portfolio manager (who is not an officer),
are listed below, together with principal occupations and business
affiliations during the past five years. The address of each is
Two World Trade Center, New York, New York 10048, except as noted.
All of the Directors are also directors or trustees of the
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. (the "Oppenheimer Quest Funds"), and Rochester Fund
Municipals, Rochester Portfolio Series - Limited Term New York
Municipal Fund and Bond Fund Series - Oppenheimer Bond Fund for
Growth (the "Oppenheimer Rochester Funds"). As of February 14,
1997, the Directors and officers of the Fund as a group owned less
than 1% of the Fund's issued and outstanding shares. The foregoing
does not include shares held of record by an employee benefit plan
for employees of the Manager (for which one of the officers listed
below, Mr. Donohue, is a trustee), other than the shares
beneficially owned under that plan by officers of the Fund listed
below.
Bridget A. Macaskill, Chairman of the Board of Directors and
President*; Age: 48.
President, Chief Executive Officer and a Director of the Manager
and HarbourView Asset Management Corporation ("HarbourView"), a
subsidiary of the Manager; President and a Director of Oppenheimer
Acquisition Corp. ("OAC"), the Manager's parent holding company,
and Oppenheimer Partnership Holdings, Inc.; Chairman and a Director
of Shareholder Services, Inc. ("SSI"), a transfer agent subsidiary
of the Manager and Shareholder Financial Services, Inc. ("SFSI");
and a director of Oppenheimer Real Asset Management, Inc.
_________________________
* A Director who is an "interested person" as defined in the 1940 Act.
<PAGE>
Paul Y. Clinton, Director; Age: 66
39 Blossom Avenue, Osterville, Massachusetts 02655
Principal of Clinton Management Associates, a financial and venture
capital consulting firm; Trustee of Capital Cash Management Trust,
a money-market fund and Narraganssett Tax-Free Fund, a tax-exempt
bond fund; Director of OCC Cash Reserves, Inc. and Trustee of OCC
Accumulation Trust, all of which are open-end investment companies.
Formerly: Director, External Affairs, Kravco Corporation, a
national real estate owner and property management corporation;
President of Essex Management Corporation, a management consulting
company; a general partner of Capital Growth Fund, a venture
capital partnership; a general partner of Essex Limited
Partnership, an investment partnership; President of Geneve Corp.,
a venture capital fund; Chairman of Woodland Capital Corp., a small
business investment company; and Vice President of W.R. Grace & Co.
Thomas W, Courtney, Director; Age: 63
P.O. Box 580, Sewickley, Pennsylvania 15143
Principal of Courtney Associates, Inc. (venture capital firm);
former General Partner of Trivest Venture Fund (private venture
capital fund); former President of Investment Counseling Federated
Investors, Inc.; Trustee of Cash Assets Trust, a money market fund;
Director of OCC Cash Reserves, Inc., and Trustee of OCC
Accumulation Trust, all of which are open-end investment companies;
former President of Boston Company Institutional Investors; Trustee
of Hawaiian Tax-Free Trust and Tax Free Trust of Arizona, tax-
exempt bond funds; Director of several privately owned corpora-
tions; former Director of Financial Analysts Federation.
Lacy B. Herrmann, Director; Age: 67
380 Madison Avenue, Suite 2300, New York, New York 10017
President and Chairman of the Board of Aquila Management
Corporation, the sponsoring organization and Administrator and/or
Sub-Adviser to the following open-end investment companies, and
Chairman of the Board of Trustees and President of each: Churchill
Cash Reserves Trust, Short Term Asset Reserves, Pacific Capital
Cash Assets Trust, Pacific Capital U.S. Treasuries Cash Assets
Trust, Pacific Capital Tax-Free Cash Assets Trust, Prime Cash Fund,
Narragansett Insured Tax-Free Income Fund, Tax-Free Fund For Utah,
Churchill Tax-Free Fund of Kentucky, Tax-Free Fund of Colorado,
Tax-Free Trust of Oregon, Tax-Free Trust of Arizona, Hawaiian Tax-
Free Trust, and Aquila Rocky Mountain Equity Fund; Vice President,
Director, Secretary, and formerly Treasurer of Aquila Distributors,
Inc., distributor of the above funds; President and Chairman of the
Board of Trustees of Capital Cash Management Trust ("CCMT"), and an
Officer and Trustee/Director of its predecessors; President and
Director of STCM Management Company, Inc., sponsor and adviser to
CCMT; Chairman, President and a Director of InCap Management
Corporation, formerly sub-adviser and administrator of Prime Cash
Fund and Short Term Asset Reserves; Director of OCC Cash Reserves,
Inc., and Trustee of OCC Accumulation Trust and The Saratoga
Advantage Trust, each of which is an open-end investment company;
Trustee of Brown University.
George Loft, Director; Age: 82
51 Herrick Road, Sharon, Connecticut 06069
Private Investor; Director of OCC Cash Reserves, Inc., and Trustee
of OCC Accumulation Trust and The Saratoga Advantage Trust, all of
which are open-end investment companies.
Robert C. Doll, Jr., Vice President; Age: 42
Executive Vice President and Director of Equity Investments of the
Manager; a Vice President and director of OAC an officer and
Portfolio Manager of other Oppenheimer funds.
Jeffrey C. Whittington, Portfolio Manager; Age 38
One World Financial Center, 200 Liberty Street, New York, New York
10281
Senior Vice President of Oppenheimer Capital; formerly a portfolio
manager at Neuberger & Berman and prior thereto, a portfolio
manager at Oppenheimer & Co., Inc.
Andrew J. Donohue, Secretary; Age: 46
Executive Vice President, General Counsel and a director of the
Manager, OppenheimerFunds Distributor, Inc. (the "Distributor"),
HarbourView, SSI, SFSI, Oppenheimer Partnership Holdings, Inc. and
MultiSource Services, Inc., (a broker-dealer); President and a
director of Centennial; President and a director of Oppenheimer
Real Asset Management, Inc.; General Counsel of OAC; an officer of
other Oppenheimer funds.
George C. Bowen, Treasurer; Age: 60
6803 South Tucson Way, Englewood, Colorado, 80112
Senior Vice President and Treasurer of the Manager; Vice President
and Treasurer of the Distributor and HarbourView; Senior Vice
President, Treasurer, Assistant Secretary and a director of
Centennial Asset Management Corporation, an investment advisory
subsidiary of the Manager; President, Treasurer and a director of
Centennial Capital Corporation; Vice President, Treasurer and
Secretary of SFSI; Senior Vice President, Treasurer and Secretary
of SSI, Vice President and Treasurer of Oppenheimer Real Asset
Management, Inc.; Chief Executive Officer, Treasurer and a director
of MultiSource Services, Inc.; an officer of other Oppenheimer
funds.
Robert G. Zack, Assistant Secretary; Age: 48
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; an officer of other
Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer; Age: 38
6803 South Tucson Way, Englewood, Colorado, 80112
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly a Fund Controller for the
Manager.
Scott Farrar, Assistant Treasurer; Age: 31
6803 South Tucson Way, Englewood, Colorado, 80112
Vice President of the Manager/Mutual Fund Accounting, an officer of
other Oppenheimer funds; previously a Fund Controller for the
Manager .
Remuneration of Directors. All officers of the Fund and
Ms. Macaskill, a Director, are officers or directors of the Manager
and receive no salary or fee from the Fund. The remaining
Directors of the Fund received the total amounts shown below from
(i) the Fund during its fiscal year ended December 31, 1996 and
(ii) other investment companies (or series thereof) managed by the
Manager and the Sub-Adviser during the calendar year ended December
31, 1996. The Sub-Adviser served as the investment adviser to the
Fund from its inception to 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.
<TABLE>
<CAPTION>
Pension or
Retirement
Aggregate Benefits Estimated Total
Compensation Accrued as Annual Compensation
from the Part of Fund Benefits Upon From Fund
Name of Person Fund(1) Expenses Retirement Complex(2)
<S> <C> <C> <C> <C>
Paul Y. Clinton None None None $90,225
Thomas W. CourtneyNone None None $87,525
Lacy B. Herrmann None None None $90,225
George Loft $5,475 None None $95,700
(1) Messrs. Clinton, Courtney and Herrmann were not directors of the Fund during the
fiscal year ended December 31, 1996.
(2) For the purpose of the chart above, "Fund Complex" includes the Fund, the other
Oppenheimer Quest Funds, the Oppenheimer Rochester Funds and two funds advised by the
Sub-Adviser. For these purposes each series constitutes a separate fund. Messrs.
Clinton, Courtney, Herrmann and Loft received $38,550, $35,850, $38,550 and $44,025,
respectively, for their services as director or trustee of the Sub-Adviser Funds.
</TABLE>
Major Shareholders. As of February 14, 1997, no person owned
of record or was known by the Fund to own beneficially 5% or more
of the Fund's outstanding Class A shares except Cede & Co . as
nominee for Depository Trust Co., which held of record 17,355,453
(96.4%) of such shares for the benefit of clients. No Class B or
Class C shares were issued and outstanding as of such date.
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.
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. 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 the Fund and supervises the investment
program of the Fund. The Investment Advisory Agreement provides
that the Manager will provide administrative services for the Fund,
including completion and maintenance of records, preparation and
filing of reports required by the Securities and Exchange
Commission, reports to shareholders, and composition of proxy
statements and registration statements required by Federal laws.
The Manager will furnish the Fund with office space, facilities and
equipment and arrange for its employees to serve as officers of the
Fund. The administrative services to be provided by the Manager
under the Investment Advisory Agreement will be at its own expense.
Expenses not assumed by the Manager under the Investment
Advisory Agreement or paid by the Distributor under the General
Distributor's Agreement will be paid by the Fund. Certain expenses
are further allocated to certain classes of shares of a series as
explained in the Prospectus and under "How to Buy Shares," below.
The Investment Advisory Agreement lists examples of expenses paid
by the Fund, including interest, taxes, brokerage commissions,
insurance premiums, fees of non-interested Directors, legal and
audit expenses, transfer agent and custodian expenses, share
issuance costs, certain printing and registration costs, and non-
recurring expenses, including litigation.
The Investment Advisory Agreement provides that for a period
of two years from the date thereof, the Manager will waive the
following portion of the advisory fee: 0.15% of the first $200
million of average daily net assets, 0.40% of the next $200
million, 0.30% of the next $400 million and 0.25% of average daily
net assets over $800 million. Pursuant to the foregoing, the
Manager's fee at the end of any month will be reduced or eliminated
such that there will not be any accrued but unpaid liability under
this fee waiver. Any waiver of fees would lower the Fund's overall
expense ratio and increase its total return during any period in
which they are in effect.
The Investment Advisory Agreement provides that in the absence
of willful misfeasance, bad faith, or gross negligence in the
performance of its duty, or reckless disregard for its obligations
and duties under the advisory agreement, the Manager is not liable
for any loss resulting from good faith errors or omissions on its
part with respect to any of its duties thereunder. The Investment
Advisory Agreement permits the Fund to use the name Oppenheimer
or Quest For Value in the name of the Fund for the duration of
the Agreement. Pursuant to the Investment Advisory Agreement, the
Manager may act as investment adviser for any other person, firm or
corporation and may use the name "Oppenheimer" and Quest For
Value in connection with its other investment companies for which
it may act as an investment adviser or general distributor. If the
Manager shall no longer act as investment adviser to a Fund, the
right of the Fund to use "Oppenheimer" or Quest For Value as part
of its name may be withdrawn.
The Investment Advisory Agreement provides that the Manager
may enter into sub-advisory agreements with other affiliated or
unaffiliated registered investment advisers in order to obtain
specialized services for the Funds provided that the Fund is not
required to pay any additional fees for such services. The Manager
has retained the Sub-Adviser pursuant to a separate Subadvisory
Agreement, dated as of February 28, 1997, with respect to the Fund.
Fees Paid Under the Prior Investment Advisory Agreement and
Administration Agreement. The Sub-Adviser served as investment
adviser to the Fund from its inception until February 28, 1997.
Under the prior Investment Advisory Agreement, the total advisory
fees accrued or paid by the Fund were $4,022,621, $4,418,791, and
$4,916,973 for the fiscal years ended December 31, 1994, 1995 and
1996, respectively.
For the fiscal years ended December 31, 1994, 1995 and 1996,
the Fund paid or accrued administration fees to Oppenheimer Capital
in the amounts of $704,524, $783,758 and $883,395, respectively.
The Administration Agreement between the Fund and Oppenheimer
Capital was terminated as of February 28, 1997; the services
previously provided thereunder will be provided by the Manager
under the Investment Advisory Agreement.
The Subadvisory Agreement. The Subadvisory Agreement provides
that the Sub-Adviser shall regularly provide investment advice with
respect to the Fund and invest and reinvest cash, securities and
the property comprising the assets of the Fund. Under the
Subadvisory Agreement, the Sub-Adviser agrees to use its reasonable
best efforts to retain the services of the Portfolio Manager and
agrees not to change the Portfolio Manager of the Fund without the
written approval of the Manager. In addition the Portfolio Manager
will provide assistance in the distribution and marketing of the
Fund. The Subadvisory Agreement was approved by the Board of
Directors, including a majority of the Directors who are not
"interested persons" of the Fund (as defined in the 1940 Act) and
who have no direct or indirect financial interest in such
agreement, on September 17, 1996 and by the shareholders of the
Fund at a meeting held for that purpose on December 20, 1996.
Under the Subadvisory Agreement, the Manager will pay the Sub-
Adviser an annual fee payable monthly, based on the average daily
net assets of the Fund, equal to 40% of the investment advisory fee
collected by the Manager from the Fund based on the total net
assets of the Fund as of the effective date of the Subadvisory
Agreement and remaining 120 days later (the "base amount") plus 30%
of the investment advisory fee collected by the Manager based on
the total net assets of the Fund that exceed the base amount, in
each case calculated after any waivers, voluntary or otherwise.
The Subadvisory Agreement provides that in the absence of
willful misfeasance, bad faith, negligence or reckless disregard of
its duties or obligations, the Sub-Adviser shall not be liable to
the Manager for any act or omission in the course of or connected
with rendering services under the Subadvisory Agreement or for any
losses that may be sustained in the purchase, holding or sale of
any security.
The Distributor. Under a General Distributor s Agreement
with the Fund dated as of 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. For
additional information about distribution of the Fund's shares and
the expenses connected with such activities, please refer to
"Distribution and Service Plans" below.
The Transfer Agent. OppenheimerFunds Services, a division
of the Manager, acts as the Fund's Transfer Agent pursuant to a
Transfer Agency and Service Agency Agreement dated February 28,
1997. Pursuant to the Agreement, the Transfer Agent is
responsible for maintaining the Fund's shareholder registry and
shareholder accounting records and for shareholder servicing and
administrative functions. As compensation therefor, the Fund is
obligated to pay the Transfer Agent an annual maintenance fee for
each Fund shareholder account and reimburse the Transfer Agent for
its out of pocket expenses.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory and Subadvisory
Agreement. The Investment Advisory Agreement contains provisions
relating to the selection of broker-dealers ("brokers") for the
Fund's portfolio transactions. The Manager and the Sub-Adviser may
use such brokers as may, in their best judgment based on all
relevant factors, implement the policy of the Fund to achieve best
execution of portfolio transactions. While the Manager need not
seek advance competitive bidding or base its selection on posted
rates, it is expected to be aware of the current rates of most
eligible brokers and to minimize the commissions paid to the extent
consistent with the interests and policies of the Fund as
established by its Board and the provisions of the Investment
Advisory Agreement.
The Investment Advisory Agreement also provides that,
consistent with obtaining the best execution of the Fund's
portfolio transactions, the Manager and the Sub-Adviser, in the
interest of the Fund, may select brokers other than affiliated
brokers, because they provide brokerage and/or research services to
the Fund and/or other accounts of the Manager or the Sub-Adviser.
The commissions paid to such brokers may be higher than another
qualified broker would have charged if a good faith determination
is made by the Manager or the Sub-Adviser that the commissions are
reasonable in relation to the services provided, viewed either in
terms of that transaction or the Manager s or the Sub-Adviser s
overall responsibilities to all its accounts. No specific dollar
value need be put on the services, some of which may or may not be
used by the Manager or the Sub-Adviser for the benefit of the Fund
or other of its advisory clients. To show that the determinations
were made in good faith, the Manager or any Sub-Adviser must be
prepared to show that the amount of such commissions paid over a
representative period selected by the Board was reasonable in
relation to the benefits to the Fund. The Investment Advisory
Agreement recognizes that an affiliated broker-dealer may act as
one of the regular brokers for the Fund provided that any
commissions paid to such broker are calculated in accordance with
procedures adopted by the Fund s Board under applicable rules of the
Securities and Exchange Commission.
In addition, the Subadvisory Agreement permits the Sub-Adviser
to enter into "soft dollar" arrangements through the agency of
third parties on behalf of the Manager. Soft dollar arrangements
for services may be entered into in order to facilitate an
improvement in performance in respect of the Sub-Adviser's service
to the Manager with respect to the Fund. Pursuant to these
arrangements, the Sub-Adviser will undertake to place brokerage
business with broker-dealers who pay third parties that provide
these services. Any such soft dollar arrangements will be made in
accordance with policies adopted by the Manager and the Board of
the Fund and in compliance with Section 28(e) of the Securities
Exchange Act of 1934, as amended.
Description of Brokerage Practices. Portfolio decisions are based
upon recommendations of the portfolio manager and the judgment of
the portfolio managers. The Fund will pay brokerage commissions on
transactions in listed options and equity securities. Prices of
portfolio securities purchased from underwriters of new issues
include a commission or concession paid by the issuer to the
underwriter, and prices of debt securities purchased from dealers
include a spread between the bid and asked prices.
Transactions may be directed to dealers during the course of
an underwriting in return for their brokerage and research
services, which are intangible and on which no dollar value can be
placed. There is no formula for such allocation. The research
information may or may not be useful to one or more of the Fund
and/or other accounts of the Manager or the Sub-Adviser;
information received in connection with directed orders of other
accounts managed by the Manager or the Sub-Adviser or its
affiliates may or may not be useful to one or more of the Funds.
Such information may be in written or oral form and includes
information on particular companies and industries as well as
market, economic or institutional activity areas. It serves to
broaden the scope and supplement the research activities of the
Manager or the Sub-Adviser, to make available additional views for
consideration and comparison, and to enable the Manager or the Sub-
Adviser to obtain market information for the valuation of
securities held in the Fund's assets.
Sales of shares of the Fund, subject to applicable rules
covering the Distributor's activities in this area, will also be
considered as a factor in the direction of portfolio transactions
to dealers, but only in conformity with the price, execution and
other considerations and practices discussed above. The Fund will
not purchase any securities from or sell any securities to an
affiliated broker-dealer including Oppenheimer & Co., Inc.
("Opco"), an affiliate of the Sub-Adviser, acting as principal for
its own account.
The Sub-Adviser currently serves as investment manager to a
number of clients, including other investment companies, and may in
the future act as investment manager or advisor to others. It is
the practice of the Sub-Adviser to cause purchase or sale
transactions to be allocated among the Fund and others whose assets
it manages in such manner as it deems equitable. In making such
allocations among the Fund and other client accounts, the main
factors considered are the respective investment objectives, the
relative size of portfolio holdings of the same or comparable
securities, the availability of cash for investment, the size of
investment commitments generally held and the opinions of the
persons responsible for managing the portfolios of each Fund and
other client accounts. When orders to purchase or sell the same
security on identical terms are placed by more than one of the
funds and/or other advisory accounts managed by the Sub-Adviser or
its affiliates, the transactions are generally executed as
received, although a fund or advisory account that does not direct
trades to a specific broker ("free trades") usually will have its
order executed first. Purchases are combined where possible for
the purpose of negotiating brokerage commissions, which in some
cases might have a detrimental effect on the price or volume of the
security in a particular transaction as far as the Fund is
concerned. Orders placed by accounts that direct trades to a
specific broker will generally be executed after the free trades.
All orders placed on behalf of the Fund are considered free trades.
However, having an order placed first in the market does not
necessarily guarantee the most favorable price.
The following table presents information as to the allocation
of brokerage commissions paid by the Fund for the fiscal years
ended December 31, 1994, 1995 and 1996:
<TABLE>
<CAPTION>
Total Amount of
Total Transactions Where
For the Brokerage Brokerage Commissions Brokerage
Fiscal Year Commissions Paid to Opco Paid to Opco
Ended December 31 Paid Dollar Amount % Dollar Amount %
<S> <C> <C> <C> <C> <C>
1994 $ 667,465 $250,361 37.5% $183,726,135 40.6%
1995 $1,051,545 $267,394 25.4% $251,309,982 31.3%
1996 $1,040,957 $319,406 30.7% $245,963,037 31.0%
</TABLE>
During the Fund's fiscal year ended December 31, 1996, $80,243
paid by the Fund to brokers as commissions in return for research
services; the aggregate dollar amount of those transactions was
$67,851,055.
Performance of the Fund
Total Return Information. As described in the Prospectus, from
time to time the "average annual total return," "cumulative total
return" and "total return at net asset value" of an investment in
a class of shares of the Fund may be advertised. An explanation of
how these total returns are calculated for each class and the
components of those calculations is set forth below.
The Fund's advertisements of its performance data must, under
applicable rules of the SEC, include the average annual total
returns for each advertised class of shares of the Fund for the 1,
5, and 10-year periods (or the life of the class, if less) ending
as of the most recently-ended calendar quarter prior to the
publication of the advertisement. This enables an investor to
compare the Fund's performance to the performance of other funds
for the same periods. However, a number of factors should be
considered before using such information as a basis for comparison
with other investments. An investment in the Fund is not insured;
its returns and share prices are not guaranteed and normally will
fluctuate on a daily basis. When redeemed, an investor's shares
may be worth more or less than their original cost. Returns for
any given past period are not a prediction or representation by the
Fund of future returns. The returns of Class A, Class B and Class
C shares of the Fund are affected by portfolio quality, the type of
investments the Fund holds and its operating expenses allocated to
the particular class. Class B and Class C shares were not publicly
offered during the Fund's fiscal year ended December 31, 1996;
accordingly, no performance information for such classes of shares
is set forth below.
Prior to the date of this Statement of Additional Information,
the Fund operated as a closed-end investment company with a dual
purpose structure and with dual investment objectives of (a) long-
term capital appreciation and preservation of capital and (b)
current income and long-term growth of income, and had common stock
(the Capital Shares ) and preferred stock (the Income Shares )
outstanding. The Income Shares were redeemed by the Fund on January
31, 1997 and the Fund s dual purpose structure terminated. With
respect to the Capital Shares, the Fund s Board of Directors
determined that it was in the best interests of the holders of the
Capital Shares to convert the Fund to an open-end investment
company and approved the submission of this proposal to such
shareholders. Pursuant to shareholder approval received on
December 20, 1996, effective as of the date of this Prospectus, the
Fund was converted to an open-end investment company with a single
investment objective of capital appreciation. The outstanding
Capital Shares of the Fund became Class A shares of common stock
and will now bear their allocable share of the Fund s expenses.
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 the date
of this Statement of Additional Information without giving effect
to any fee waivers.
Average Annual Total Returns. The "average annual total
return" of each class is an average annual compounded rate of
return for each year in a specified number of years. It is the
rate of return based on the change in value of a hypothetical
initial investment of $1,000 ("P" in the formula below) held for a
number of years ("n") to achieve an Ending Redeemable Value ("ERV")
of that investment, according to the following formula:
1/n
(ERV)
(---) -1 = Average Annual Total Return
( P )
Cumulative Total Returns. The cumulative "total return"
calculation measures the change in value of a hypothetical
investment of $1,000 over an entire period of years. Its
calculation uses some of the same factors as average annual total
return, but it does not average the rate of return on an annual
basis. Cumulative total return is determined as follows:
ERV - P
------- = Total Return
P
In calculating total returns for Class A shares, the current
maximum sales charge of 5.75% (as a percentage of the offering
price) is deducted from the initial investment ("P") (unless the
return is shown at net asset value, as described below). Prior to
the date hereof, the Fund operated as a closed-end investment
company and no initial sales charge was imposed on Fund shares.
Total returns also assume that all dividends and capital gains
distributions during the period are reinvested to buy additional
shares at net asset value per share, and that the investment is
redeemed at the end of the period. As discussed above, total
returns 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 December 31, 1996 and for the
period from February 13, 1987 (commencement of operations) to
December 31, 1996 (all of which preceded the open-end conversion)
were 13.57%, 14.80% and 16.28%, respectively.
The "cumulative total return" on Class A shares for the period
from February 13, 1987 (commencement of operations) to December 31,
1996 was 344.04%.
Total Returns at Net Asset Value. From time to time the
Fund may also quote an "average annual total return at net asset
value" or a "cumulative total return at net asset value" for Class
A, Class B or Class C shares. Each is based on the difference in
net asset value per share at the beginning and the end of the
period for a hypothetical investment in that class of shares
(without considering front-end or contingent deferred sales
charges) and takes into consideration the reinvestment of dividends
and capital gains distributions.
The cumulative total return at net asset value on the Fund's
Class A shares for the period from February 13, 1987 (commencement
of operations) to December 31, 1996 was 371.14%. The average
annual total return at net asset value for Class A shares for the
one and five year periods ended December 31, 1996 and for the
period from February 13, 1987 through December 31, 1996 were
20.50%, 16.17% and 16.98%, 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 or Class C shares by
Morningstar Inc., 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 capital appreciation funds.
Investment return measure 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.
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.
From time to time, the Fund's performance also may be compared
to other mutual funds tracked by financial or business publications
and periodicals. For example, the Fund may quote Morningstar, Inc.
in its advertising materials. Morningstar, Inc. is a mutual fund
rating service that rates mutual funds on the basis of risk-
adjusted performance.
The total return on an investment in the Fund's Class A, Class
B and Class C shares may be compared with performance for the same
period of the S&P 500 Index as described in the Prospectus. The
performance of the index includes a factor for the reinvestment of
income dividends, but does not reflect reinvestment of capital
gains, expenses or taxes.
The performance of the Fund's Class A, Class B, or Class C
shares may also be compared in publications to (i) the performance
of various market indices or to other investments for which
reliable performance data is available, and (ii) to averages,
performance rankings or other benchmarks prepared by recognized
mutual fund statistical services.
Total return information, may be useful to investors in
reviewing the performance of the Fund's Class A, Class B or Class
C shares. However, when comparing total return of an investment in
Class A, Class B and Class C shares of the Fund, a number of
factors should be considered before using such information as a
basis for comparison with other investments. For example, an
investor may also wish to compare the Fund's Class A, Class B or
Class C shares may also wish to compare the Fund's Class A, Class
B or Class C return to the returns on fixed income investments
available from banks and thrift institutions, such as certificates
of deposit, ordinary interest-paying checking and savings accounts,
and other forms of fixed or variable time deposits, and various
other instruments such as Treasury bills. However, the Fund's
returns and share price are not guaranteed or insured by the FDIC
or any other agency and will fluctuate daily, while bank depository
obligations may be insured by the FDIC and may provide fixed rates
of return, and Treasury bills are guaranteed as to principal and
interest by the U.S. government.
From time to time, the Fund's Manager may publish rankings or
ratings of the Manager (or Transfer Agent) or the investor services
provided by them to shareholders of the Oppenheimer funds, other
than performance rankings of the Oppenheimer funds themselves.
Those ratings or rankings of shareholder/investor services by third
parties may compare the Oppenheimer funds' services to those of
other mutual fund families selected by the rating or ranking
services and may be based upon the opinions of the rating or
ranking service itself, based on its research or judgment, or based
upon surveys of investors, brokers, shareholders or others.
Distribution and Service Plans
The Fund has adopted separate Distribution and Service Plans
and Agreements for Class A, Class B and Class C shares of the Fund
under Rule 12b-1 of the Investment Company Act pursuant to which
the Fund will compensate the Distributor for all or a portion of
its costs incurred in connection with the distribution and/or
servicing of the shares of that class, as described in the
Prospectus. Each Plan has been approved by a vote of (i) the Board
of Directors of the Fund, including a majority of the Directors
who are not "interested persons" (as defined in the Investment
Company Act) of the Fund and who have no direct or indirect
financial interest in the operation of the Fund's 12b-1 plans or in
any related agreement ("Independent Directors"), cast in person at
a meeting on September 17, 1996 called for the purpose, among
others, of voting on that Plan, and (ii) the holders of a
"majority" (as defined in the 1940 Act) of the shares of each
class. For the Class A Plan Fund, shareholder approval was
received on 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 the date of this
Statement of Additional Information the Fund operated as a closed-
end investment company and did not have Distribution and Service
Plans and Agreements.
In addition, under the Plans the Manager and the Distributor,
in their sole discretion, from time to time may use their own
resources (which, in the case of the Manager, may include profits
from the advisory fee it receives from the Fund) to make payments
to brokers, dealers or other financial institutions (each is
referred to as a "Recipient" under the Plans) for distribution and
administrative services they perform at no cost to the fund. The
Distributor and the Manager may, in their sole discretion, increase
or decrease the amount of payments they make from their own
resources to Recipients.
Unless terminated as described below, each plan continues in
effect from year to year but only as long as such continuance is
specifically approved at least annually by the Fund's Board of
Directors and its "Independent Directors" by a vote cast in person
at a meeting called for the purpose of voting on such continuance.
Any Plan may be terminated at any time by the vote of a majority of
the Independent Directors or by the vote of the holders of a
"majority" (as defined in the Investment Company Act) of the
outstanding shares of that class. No Plan may be amended to
increase materially the amount of payments to be made unless such
amendment is approved by shareholders of the class affected by the
amendment. In addition, because Class B shares of the Fund
automatically convert into Class A shares after six years, the Fund
is required by a Securities and Exchange Commission 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 on the amount of all payments made pursuant to
each Plan, the purpose for which the payments were made and the
identity of each Recipient that received any such payment. The
reports shall also include the distribution costs for that quarter,
and such costs for previous fiscal periods that are carried
forward, as explained in the Prospectus and below. Those reports,
including the allocations on which they are based, will be subject
to the review and approval of the Independent Directors in the
exercise of their fiduciary duty. Each Plan further provides that
while it is in effect, the selection and nomination of those
Directors of the Fund who are not "interested persons" of the Fund
is committed to the discretion of the Independent Directors. This
does not prevent the involvement of others in such selection and
nomination if the final decision on any such selection or
nomination is approved by a majority of the Independent Directors.
Under the Plans, no payment will be made to any Recipient in
any quarter if the aggregate net asset value of all Fund shares
held by the Recipient for itself and its customers did not exceed
a minimum amount, if any, that may be determined from time to time
by a majority of the Fund's Independent Directors. Initially, the
Board of Directors has set the fee at the maximum rate and set no
requirement for a minimum amount.
The Plans allow the service fee payments to be paid by the
Distributor to Recipients in advance for the first year Class A,
Class B and Class C shares are outstanding, and thereafter on a
quarterly basis, as described in the Prospectus. The advance
payment is based on the net assets of the 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.
The Plans provide for the Distributor to be compensated at a
flat rate, whether the Distributor's expenses are more or less than
the amounts paid by the Fund during that period. The asset-based
sales charges paid to the Distributor by the Fund under the Plans
are intended to allow the Distributor to recoup the cost of sales
commissions paid to authorized brokers and dealers at the time of
sale, plus financing costs, as described in the Prospectus. Such
payments may also be used to pay for the following expenses in
connection with the distribution of shares: (i) financing the
advance of the service fee payment to Recipients under the Plan,
(ii) compensation and expenses of personnel employed by the
Distributor to support distribution of shares, and (iii) costs of
sales literature, advertising and prospectuses (other than those
furnished to current shareholders).
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A, Class B and Class C
Shares. The Fund is authorized to issue three different classes of
shares. The availability of three classes of shares permits the
individual investor to choose the method of purchasing shares that
is more beneficial to the investor depending on the amount of the
purchase, the length of time the investor expects to hold shares
and other relevant circumstances. Investors should understand that
the purpose and function of the deferred sales charge and asset-
based sales charge with respect to Class B and Class C shares are
the same as those of the initial sales charge with respect to Class
A shares. Any salesperson or other person entitled to receive
compensation for selling Fund shares may receive different
compensation with respect to one class of shares than another. The
Distributor will not generally accept any order for $500,000 or
more of Class B shares or $1 million or more of Class C shares on
behalf of a single investor (not including dealer "street name" or
omnibus accounts) because generally it will be more advantageous
for that investor to purchase Class A shares of the Fund instead.
The three classes of shares each represent an interest in the
same portfolio investments of the Fund. However, each class has
different shareholder privileges and features. The net income
attributable to Class B and Class C shares and the dividends
payable on Class B and Class C shares will be reduced by
incremental expenses borne solely by that class, respectively,
including the asset-based sales charges to which Class B and Class
C shares are subject.
The conversion of Class B shares to Class A shares after six
years is subject to the continuing availability of a private letter
ruling from the Internal Revenue Service, or an opinion of counsel
or tax adviser, to the effect that the conversion of Class B shares
does not constitute a taxable event for the holder under Federal
income tax law. If such a revenue ruling or opinion is no longer
available, the automatic conversion feature may be suspended, in
which event no further conversions of Class B shares would occur
while such suspension remained in effect. Although Class B shares
could then be exchanged for Class A shares on the basis of relative
net asset value of the two classes, without the imposition of a
sales charge or fee, such exchange could constitute a taxable event
for the holder, and absent such exchange, Class B shares might
continue to be subject to the asset-based sales charge for longer
than six years.
The methodology for calculating the net asset value, dividends
and distributions of the Fund's Class A, Class B and Class C shares
recognizes two types of expenses. General expenses that do not
pertain specifically to any class are allocated pro rata to the
shares of each class, based on the percentage of the net assets of
such class to the Fund's total net assets, and then equally to each
outstanding share within a given class. Such general expenses
include (i) management fees, (ii) legal, bookkeeping and audit
fees, (iii) printing and mailing costs of shareholder reports,
Prospectuses, Statements of Additional Information and other
materials for current shareholders, (iv) fees to Independent
Directors, (v) custodian expenses, (vi) share issuance costs, (vii)
organization and start-up costs, (viii) interest, taxes and
brokerage commissions, and ( ix) non-recurring expenses, such as
litigation costs. Other expenses that are directly attributable to
a class are allocated equally to each outstanding share within that
class. Such expenses include (a) Distribution Plan fees, (b)
incremental transfer and shareholder servicing agent fees and
expenses, (c) registration fees and (d) shareholder meeting
expenses, to the extent that such expenses pertain to a specific
class rather than to the Fund as a whole.
Determination of Net Asset Values Per Share. The net asset values
per share of Class A, Class B and Class C shares of the Fund are
determined as of the close of business of The New York Stock
Exchange (the "Exchange") on each day that the Exchange is open, by
dividing the value of the Fund's net assets attributable to that
class by the total number of Fund shares of that class outstanding.
The Exchange normally closes at 4:00 P.M. New York time, but may
close earlier on some other days (for example, in case of weather
emergencies or on days falling before a holiday). The Exchange's
most recent annual announcement (which is subject to change) states
that it will close on New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. It may also close on other days. The Fund may
invest a substantial portion of its assets in foreign securities
primarily listed on foreign exchanges which may trade on Saturdays
or customary U.S. business holidays on which the Exchange is
closed. Because the Fund's net asset values will not be calculated
on those days, the Fund's net asset value per share may be
significantly affected on such days when shareholders may not
purchase or redeem shares.
The Fund's Board of Directors has established procedures for
the valuation of the Fund's securities, generally as follows: (i)
equity securities traded on a U.S. securities exchange or on the
Automated Quotation System ( NASDAQ ) of the Nasdaq Stock Market,
Inc. for which last sale information is regularly reported are
valued at the last reported sale price on their primary exchange or
NASDAQ that day (or, in the absence of sales that day, at values
based on the last sale prices of the preceding trading day, or
closing bid prices that day); (ii) securities traded on a foreign
securities 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 debt securities that had a
maturity of less than 397 days when issued that have a remaining
maturity of 60 days or less are valued at cost, adjusted for
amortization of premiums and accretion of discounts; and (vi)
securities (including restricted securities) not having readily-
available market quotations are valued at fair value determined
under the Board's procedures. If the Manager is unable to locate
two market makers willing to give quotes (see (ii), (iii) and (iv)
above), the security may be priced at the mean between the "bid"
and "asked" prices provided by a single active market maker (which
in certain cases may be the bid price if no ask price is
available).
In the case of U.S. Government securities and mortgage-backed
securities, where last sale information is not generally available,
such pricing procedures may include a "matrix" comparison to the
prices for comparable instruments on the basis of quality, yield,
maturity and other special factors involved. The Manager may use
pricing services approved by the Board of Directors to price any of
the types of securities described above to price U.S. Government
securities, mortgage-backed securities, foreign government
securities and corporate bonds. The Manager will monitor the
accuracy of such pricing services, which may include comparing
prices used for portfolio evaluation to actual prices of selected
securities.
Trading in securities on European and Asian exchanges and
over-the-counter markets is normally completed before the close of
the Exchange. Events affecting the values of foreign securities
traded in such securities markets that occur between the time their
prices are determined and the close of the Exchange will not be
reflected in the Fund's calculation of its net asset value unless
the Board of Directors or the Manager, under procedures established
by the Board, determines that the particular event is likely to
effect a material change in the value of such security. Foreign
currency, including forward contracts, will be valued at the
closing price in the London foreign exchange market that day as
provided by a reliable bank, dealer or pricing service. The values
of securities denominated in foreign currency will be converted to
U.S. dollars at the closing price in the London foreign exchange
market that day as provided by a reliable bank, dealer or pricing
service.
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. In the case of U.S. government
securities and corporate bonds, where last sale information is not
generally available, such pricing procedures may include "matrix"
comparisons to the prices for comparable instruments on the basis
of quality, yield, maturity and other special factors involved.
The Directors will monitor the accuracy of pricing services by
comparing prices used for portfolio evaluation to actual sales
prices of selected securities.
Puts, calls and Futures are valued at the last sales price on
the principal exchanges on which they are traded or on NASDAQ, as
applicable, as determined by a pricing service approved by the
Board of Directors or by the Manager. If 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 is included in the Fund's Statement of Assets and
Liabilities as an asset, and an equivalent credit is included in
the liability section. Credit is adjusted ("marked-to-market") to
reflect the current market value of the option. In determining the
Fund's gain on investments, if a call or put written by the Fund is
exercised, the proceeds are increased by the premium received. If
a call or put written by the Fund expires, the Fund has a gain in
the amount of the premium; if the Fund enters into a closing
purchase transaction, it will have a gain or loss depending on
whether the premium received was more or less than the cost of the
closing transaction. If the Fund exercises a put it holds, the
amount the Fund receives on its sale of the underlying investment
is reduced by the amount of premium paid by the Fund.
AccountLink. When shares are purchased through AccountLink, each
purchase must be at least $25.00. Shares will be purchased on the
regular business day the Distributor is instructed to initiate the
Automated Clearing House ("ACH") transfer to buy the shares.
Dividends will begin to accrue on shares purchased by the proceeds
of ACH transfers on the business day the Fund receives Federal
Funds for the purchase through the ACH system before the close of
The New York Stock Exchange. The Exchange normally closes at 4:00
P.M., but may close earlier on certain days. If Federal Funds are
received on a business day after the close of the Exchange, the
shares will be purchased and dividends will begin to accrue on the
next regular business day. The proceeds of ACH transfers are
normally received by the Fund 3 days after the transfers are
initiated. The Distributor and the Fund are not responsible for
any delays in purchasing shares resulting from delays in ACH
transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced
sales charge rate may be obtained for Class A shares under Rights
of Accumulation and Letters of Intent because of the economies of
sales efforts and reduction in expenses realized by the
Distributor, dealers and brokers making such sales. No sales
charge is imposed in certain other circumstances described in the
Prospectus because the Distributor 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.
The Oppenheimer Funds. The Oppenheimer funds are those
mutual funds for which the Distributor acts as the distributor or
the sub-distributor and include the following:
Oppenheimer Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer California Municipal Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer Insured Municipal Fund
Oppenheimer Main Street California Municipal Fund
Oppenheimer Florida Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock 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 Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer International Bond Fund
Oppenheimer Enterprise Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Capital 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
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
________
* Shares of the Fund are not presently exchangeable for shares
of these funds.
There is an initial sales charge on the purchase of Class A
shares of each of the Oppenheimer funds except Money Market Funds
(under certain circumstances described herein, redemption proceeds
of Money Market Fund shares may be subject to a contingent
deferred sales charge).
Letters of Intent. A Letter of Intent ("Letter") is the
investor's statement in writing to the Distributor of the intention
to purchase Class A shares or Class A and Class B shares (or shares
of either class) of the Fund (and other eligible Oppenheimer funds)
during the 13-month period from the investor's first purchase
pursuant to the Letter (the "Letter of Intent period"), which may,
at the investor's request, include purchases made up to 90 days
prior to the date of the Letter. The Letter states the investor's
intention to make the aggregate amount of purchases (excluding any
purchases made by reinvestment of dividends or distributions or
purchases made at net asset value without sales charge), which
together with the investor's holdings of such funds (calculated at
their respective public offering prices calculated on the date of
the Letter) will equal or exceed the amount specified in the
Letter. This enables the investor to count the shares to be
purchased under the Letter of Intent to obtain the reduced sales
charge rate on purchases of Class A shares of the Fund (and other
Oppenheimer funds) that applies under the Right of Accumulation to
current purchases of Class A shares. Each purchase of Class A
shares under the Letter will be made at the public offering price
(including the sales charge) that applies to a single lump-sum
purchase of shares in the amount intended to be purchased under the
Letter.
In submitting a Letter, the investor makes no commitment to
purchase shares, but if the investor's purchases of shares within
the Letter of Intent period, when added to the value (at offering
price) of the investor's holdings of shares on the last day of that
period, do not equal or exceed the intended purchase amount, the
investor agrees to pay the additional amount of sales charge
applicable to such purchases, as set forth in "Terms of Escrow,"
below (as those terms may be amended from time to time). The
investor agrees that shares equal in value to 5% of the intended
purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be
bound by the terms of the Prospectus, this Statement of Additional
Information and the Application used for such Letter of Intent, and
if such terms are amended, as they may be from time to time by the
Fund, that those amendments will apply automatically to existing
Letters of Intent.
For purchases of shares of the Fund and other Oppenheimer
funds by OppenheimerFunds prototype 401(k) plans under a Letter of
Intent, the Transfer Agent will not hold shares in escrow. If the
intended purchase amount under the Letter entered into by an
OppenheimerFunds prototype 401(k) plan is not purchased by the plan
by the end of the Letter of Intent period, there will be no
adjustment of commissions paid to the broker-dealer or financial
institution of record for accounts held in the name of that plan.
If the total eligible purchases made during the Letter of
Intent period do not equal or exceed the intended purchase amount,
the commissions previously paid to the dealer of record for the
account and the amount of sales charge retained by the Distributor
will be adjusted to the rates applicable to actual total purchases.
If total eligible purchases during the Letter of Intent period
exceed the intended purchase amount and exceed the amount needed to
qualify for the next sales charge rate reduction set forth in the
applicable prospectus, the sales charges paid will be adjusted to
the lower rate, but only if and when the dealer returns to the
Distributor the excess of the amount of commissions allowed or paid
to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the
Distributor will be used to purchase additional shares for the
investor's account at the net asset value per share in effect on
the date of such purchase, promptly after the Distributor's receipt
thereof.
In determining the total amount of purchases made under a
Letter, shares redeemed by the investor prior to the termination of
the Letter of Intent period will be deducted. It is the
responsibility of the dealer of record and/or the investor to
advise the Distributor about the Letter in placing any purchase
orders for the investor during the Letter of Intent period. All
of such purchases must be made through the Distributor.
Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in
value up to 5% of the intended purchase amount specified in the
Letter shall be held in escrow by the Transfer Agent. For example,
if the intended purchase amount is $50,000, the escrow shall be
shares valued in the amount of $2,500 (computed at the public
offering price adjusted for a $50,000 purchase). Any dividends and
capital gains distributions on the escrowed shares will be credited
to the investor's account.
2. If the total minimum investment purchase amount specified
under the Letter is completed within the thirteen-month Letter of
Intent period, the escrowed shares will be promptly released to the
investor.
3. If, at the end of the thirteen-month Letter of Intent
period the total purchases pursuant to the Letter are less than the
intended purchase amount specified in the Letter, the investor must
remit to the Distributor an amount equal to the difference between
the dollar amount of sales charges actually paid and the amount of
sales charges which would have been paid if the total amount
purchased had been made at a single time. Such sales charge
adjustment will apply to any shares redeemed prior to the
completion of the Letter. If such difference in sales charges is
not paid within twenty days after a request from the Distributor or
the dealer, the Distributor will, within sixty days of the
expiration of the Letter, redeem the number of escrowed shares
necessary to realize such difference in sales charges. Full and
fractional shares remaining after such redemption will be released
from escrow. If a request is received to redeem escrowed shares
prior to the payment of such additional sales charge, the sales
charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably
constitutes and appoints the Transfer Agent as attorney-in-fact to
surrender for redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the
holding of which may be counted toward completion of a Letter)
include (a) Class A shares sold with a front-end sales charge or
subject to a Class A contingent deferred sales charge, (b) Class B
shares of other Oppenheimer funds acquired subject to a contingent
deferred sales charge, and (c) Class A shares or Class B shares
acquired in exchange for either (i) Class A shares of one of the
other Oppenheimer funds that were acquired subject to a Class A
initial or contingent deferred sales charge or (ii) Class B shares
of one of the other Oppenheimer funds that were acquired subject to
a contingent deferred sales charge.
6. Shares held in escrow hereunder will automatically be
exchanged for shares of another fund to which an exchange is
requested, as described in the section of the Prospectus entitled
"How to Exchange Shares," and the escrow will be transferred to
that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a
bank account, a check (minimum $25) for the initial purchase must
accompany the application. Shares purchased by Asset Builder Plan
payments from bank accounts are subject to the redemption
restrictions for recent purchases described in "Shareholder Account
Rules and Policies," in the Prospectus. Asset Builder Plans also
enable shareholders of Oppenheimer Cash Reserves to use those
accounts for monthly automatic purchases of shares of up to four
other Oppenheimer funds. 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, 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 has made special
arrangements with the Distributor and all members of the group
participating in the plan purchase Class A shares of the Fund
through a single investment dealer, broker or other financial
institution designated by the group.
How To Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and
conditions for redemptions set forth in the Prospectus.
Involuntary Redemptions. The Fund's Board of Directors has
the right to cause the involuntary redemption of the shares held in
any Fund account if the aggregate net asset value of those shares
is less than $500 or such 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 on which you paid a contingent deferred sales charge when
you redeemed them. This privilege does not apply to Class C
shares. The reinvestment may be made without sales charge only in
Class A shares of the Fund or any of the other Oppenheimer funds
into which shares of the Fund are exchangeable as described in "How
to Exchange Shares" below, at the net asset value next computed
after the Transfer Agent receives the reinvestment order. The
shareholder must ask the Distributor for that privilege at the time
of reinvestment. Any capital gain that was realized when the
shares were redeemed is taxable, and reinvestment will not alter
any capital gains tax payable on that gain. If there has been a
capital loss on the redemption, some or all of the loss may not be
tax deductible, depending on the timing and amount of the
reinvestment. Under the Internal Revenue Code, if the redemption
proceeds of Fund shares on which a sales charge was paid are
reinvested in shares of the Fund or another of the Oppenheimer
funds within 90 days of payment of the sales charge, the
shareholder's basis in the shares of the Fund that were redeemed
may not include the amount of the sales charge paid. That would
reduce the loss or increase the gain recognized from the
redemption. However, in that case the sales charge would be added
to the basis of the shares acquired by the reinvestment of the
redemption proceeds. The Fund may amend, suspend or cease offering
this reinvestment privilege at any time as to shares redeemed after
the date of such amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of any class at the time of
transfer to the name of another person or entity (whether the
transfer occurs by absolute assignment, gift or bequest, not
involving, directly or indirectly, a public sale). The transferred
shares will remain subject to the contingent deferred sales charge,
calculated as if the transferee shareholder had acquired the
transferred shares in the same manner and at the same time as the
transferring shareholder. If less than all shares held in an
account are transferred, and some but not all shares in the account
would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus
under "How to Buy Shares" for the imposition of the Class B or
Class C contingent deferred sales charge will be followed in
determining the order in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions
from OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans,
401(k) plans, or pension or profit-sharing plans should be
addressed to "Trustee, OppenheimerFunds Retirement Plans," c/o the
Transfer Agent at its address listed in "How To Sell Shares" in the
Prospectus or on the back cover of the Statement of Additional
Information. The request must: (i) state the reason for the
distribution; (ii) state the owner's awareness of tax penalties if
the distribution is premature; and (iii) conform to the
requirements of the plan and the Fund's other redemption
requirements. Participants, other than self-employed persons
maintaining a plan account in their own name, in OppenheimerFunds-
sponsored prototype pension or profit-sharing or 401(k) plans may
not directly redeem or exchange shares held for their account under
those plans. The employer or plan administrator must sign the
request. Distributions from pension plans, 401(k) or profit
sharing plans are subject to special requirements under the
Internal Revenue Code and certain documents (available from the
Transfer Agent) must be completed before the distribution may be
made. Distributions from retirement plans are subject to
withholding requirements under the Internal Revenue Code, and IRS
Form W-4P (available from the Transfer Agent) must be submitted to
the Transfer Agent with the distribution request, or the
distribution may be delayed. Unless the shareholder has provided
the Transfer Agent with a certified tax identification number, the
Internal Revenue Code requires that tax be withheld from any
distribution even if the shareholder elects not to have tax
withheld. The Fund, the Manager, the Distributor, the Trustee and
the Transfer Agent assume no responsibility to determine whether a
distribution satisfies the conditions of applicable tax laws and
will not be responsible for any tax penalties assessed in
connection with a distribution.
Special Arrangements for Repurchase of Shares from Dealers and
Brokers. The Distributor is the Fund's agent to repurchase its
shares from authorized dealers or brokers on behalf of their
customers. The shareholder should contact the broker or dealer to
arrange this type of redemption. The repurchase price per share
will be the net asset value next computed after the Distributor
receives the order placed by the dealer or broker, except that if
the Distributor receives a repurchase order from the dealer or
broker after the close of The New York Stock Exchange on a regular
business day, it will be processed at that day's net asset value,
if the order was received by the dealer or broker from its customer
prior to the time the Exchange closes (normally, that is 4:00 P.M.,
but may be earlier on some days) and the order was transmitted to
and received by the Distributor prior to its close of business that
day (normally 5:00 P.M.). Ordinarily, for accounts redeemed by a
broker-dealer under this procedure, payment will be made within
three business days after the shares have been redeemed upon the
Distributor's receipt of the required redemption documents in
proper form, with the signature(s) of the registered owners
guaranteed on the redemption document as described in the
Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares
of the Fund valued at $5,000 or more can authorize the Transfer
Agent to redeem shares (minimum $50) automatically on a monthly,
quarterly, semi-annual or annual basis under an Automatic
Withdrawal Plan. Shares will be redeemed three business days prior
to the date requested by the shareholder for receipt of the
payment. Automatic withdrawals of up to $1,500 per month may be
requested by telephone if payments are to be made by check payable
to all shareholders of record and sent to the address of record for
the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on
this basis. Payments are normally made by check, but shareholders
having AccountLink privileges (see "How To Buy Shares") may arrange
to have Automatic Withdrawal Plan payments transferred to the bank
account designated on the OppenheimerFunds New Account Application
or signature-guaranteed instructions. Shares are normally redeemed
pursuant to an Automatic Withdrawal Plan three 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 deducted 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 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.
Automatic Exchange Plans. Shareholders can authorize the
Transfer Agent (on the OppenheimerFunds Application or signature-
guaranteed instructions) to exchange a pre-determined amount of
shares of the Fund for shares (of the same class) of other
Oppenheimer funds automatically on a monthly, quarterly, semi-
annual or annual basis under an Automatic Exchange Plan. The
minimum amount that may be exchanged to each other fund account is
$25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "How to
Exchange Shares" in the Prospectus and below in this Statement of
Additional Information.
Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a
sales charge will be redeemed first and shares acquired with
reinvested dividends and capital gains distributions will be
redeemed next, followed by shares acquired with a sales charge, to
the extent necessary to make withdrawal payments. Depending upon
the amount withdrawn, the investor's principal may be depleted.
Payments made under withdrawal plans should not be considered as a
yield or income on your investment. It may not be desirable to
purchase additional Class A shares while making automatic
withdrawals because of the sales charges that apply to purchases
when made. Accordingly, a shareholder normally may not maintain an
Automatic Withdrawal Plan while simultaneously making regular
purchases of Class A shares.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the
"Planholder") who executed the Plan authorization and application
submitted to the Transfer Agent. Neither 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 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, including Rochester Fund Municipals and Limited Term New
York Municipal Fund. Class A shares of Rochester Fund Municipals
or Limited Term New York Municipal Fund acquired on the exchange of
Class M shares of Oppenheimer Bond Fund for Growth may be exchanged
for Class M shares of that fund. For accounts of Oppenheimer Bond
Fund for Growth established after March 8, 1996, Class M shares may
be exchanged for Class A shares of other Oppenheimer funds except
Rochester Fund Municipals and Limited-Term New York Municipals.
Exchanges to Class M shares of Oppenheimer Bond Fund for Growth are
permitted from Class A shares of Oppenheimer Money Market Fund,
Inc. or Oppenheimer Cash Reserves that were acquired by exchange
from Class M shares. Otherwise no exchanges of any class of any
Oppenheimer fund into Class M shares are permitted.
Class A shares of Oppenheimer funds may be exchanged at net
asset value for shares of any Money Market Fund. Shares of any
Money Market Fund purchased without a sales charge may be exchanged
for shares of Oppenheimer funds offered with a sales charge upon
payment of the sales charge (or, if applicable, may be used to
purchase shares of Oppenheimer funds subject to a contingent
deferred sales charge). However, shares of Oppenheimer Money
Market Fund, Inc. purchased with the redemption proceeds of shares
of other mutual funds (other than funds managed by the Manager or
its subsidiaries) redeemed within the 12 months prior to that
purchase may subsequently be exchanged for shares of other
Oppenheimer funds without being subject to an initial or contingent
deferred sales charge, whichever is applicable. To qualify for
that privilege, the investor or the investor's dealer must notify
the Distributor of eligibility for this privilege at the time the
shares of Oppenheimer Money Market Fund, Inc. are purchased, and,
if requested, must supply proof of entitlement to this privilege.
Shares of the Fund acquired by reinvestment of dividends or
distributions from any other of the Oppenheimer funds (except
Oppenheimer Cash Reserves) or from any unit investment trust for
which reinvestment arrangements have been made with the Distributor
may be exchanged at net asset value for shares of any of the
Oppenheimer funds. No contingent deferred sales charge is imposed
on exchanges of shares of any class purchased subject to a
contingent deferred sales charge. However, when Class A shares
acquired by exchange of Class A shares of other Oppenheimer funds
purchased subject to a Class A contingent deferred sales charge are
redeemed within 18 months of the end of the calendar month of the
initial purchase of the exchanged Class A shares, the Class A
contingent deferred sales charge is imposed on the redeemed shares
(see "Class A Contingent Deferred Sales Charge" in the Prospectus).
The Class B contingent deferred sales charge is imposed on Class B
shares acquired by exchange if they are redeemed within six years
of the initial purchase of the exchanged Class B shares. The Class
C contingent deferred sales charge is imposed on Class C shares
acquired by exchange if they are redeemed within 12 months of the
initial purchase of the exchanged Class C shares.
When Class B or Class C shares are redeemed to effect an
exchange, the priorities described in "How To Buy Shares" in the
Prospectus for the imposition of the Class B and Class C contingent
deferred sales charges will be followed in determining the order in
which the shares are exchanged. Shareholders should take into
account the effect of any exchange on the applicability and rate of
any contingent deferred sales charge that might be imposed in the
subsequent redemption of remaining shares. Shareholders owning
shares of more than one class must specify whether they intend to
exchange Class A, Class B or Class C shares.
The Fund reserves the right to reject telephone or written
exchange requests submitted in bulk by anyone on behalf of more
than one account. The Fund may accept requests for exchanges of up
to 50 accounts per day from representatives of authorized dealers
that qualify for this privilege. In connection with any exchange
request, the number of shares exchanged may be less than the number
requested if the exchange or the number requested would include
shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information or would include shares covered
by a share certificate that is not tendered with the request. In
those cases, only the shares available for exchange without
restriction will be exchanged.
When exchanging shares by telephone, a shareholder must either
have an existing account in, or obtain and acknowledge receipt of
a prospectus of, the fund to which the exchange is to be made. For
full or partial exchanges of an account made by telephone, any
special account features such as Asset Builder Plans, Automatic
Withdrawal Plans and retirement plan contributions will be switched
to the new account unless the Transfer Agent is instructed
otherwise. If all telephone lines are busy (which might occur, for
example, during periods of substantial market fluctuations),
shareholders might not be able to request exchanges by telephone
and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business
day the Transfer Agent receives an exchange request in proper form
(the "Redemption Date"). Normally, shares of the fund to be
acquired are purchased on the Redemption Date, but such purchases
may be delayed by either fund up to five business days if it
determines that it would be disadvantaged by an immediate transfer
of the redemption proceeds. The Fund reserves the right, in its
discretion, to refuse any exchange request that may disadvantage it
(for example, if the receipt of multiple exchange requests from a
dealer might require the disposition of portfolio securities at a
time or at a price that might be disadvantageous to the Fund).
The different Oppenheimer funds available for exchange have
different investment objectives, policies and risks, and a
shareholder should assure that the Fund selected is appropriate for
his or her investment and should be aware of the tax consequences
of an exchange. For federal income tax purposes, an exchange
transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. "Reinvestment Privilege," above,
discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and
the Transfer Agent are unable to provide investment, tax or legal
advice to a shareholder in connection with an exchange request or
any other investment transaction.
Dividends, Capital Gains and Taxes
Tax Status of the Fund's Dividends and Distributions. The Federal
tax treatment of the Fund's dividends and capital gains
distributions is explained in the Prospectus under the caption
"Dividends, Capital Gains and Taxes." Special provisions of the
Internal Revenue Code govern the eligibility of the Fund's
dividends for the dividends-received deduction for corporate
shareholders. Long-term capital gains distributions are not
eligible for the deduction. In addition, the amount of dividends
paid by the Fund which may qualify for the deduction is limited to
the aggregate amount of qualifying dividends that the Fund derives
from its portfolio investments that the Fund has held for a minimum
period, usually 46 days. A corporate shareholder will not be
eligible for the deduction on dividends paid on Fund shares held
for 45 days or less. To the extent the Fund's dividends are
derived from gross income from option premiums, interest income or
short-term gains from the sale of securities or dividends from
foreign corporations, those dividends will not qualify for the
deduction.
Under the Internal Revenue Code, by December 31 each year, the
Fund must distribute 98% of its taxable investment income earned
from January 1 through December 31 of that year and 98% of its
capital gains realized in the period from November 1 of the prior
year through October 31 of the current year, or else the Fund must
pay an excise tax on the amounts not distributed. While it is
presently anticipated that the Fund will meet those requirements,
the Board of Directors and the Manager might determine in a
particular year that it would be in the best interest of
shareholders for the Fund not to make such distributions at the
required levels and to pay the excise tax on the undistributed
amounts. That would reduce the amount of income or capital gains
available for distribution to shareholders.
If the Fund qualifies as a "regulated investment company"
under the Internal Revenue Code, it will not be liable for Federal
income taxes on amounts paid by it as dividends and distributions.
The Fund qualified during its last fiscal year, and intends to
qualify in current and future years, but reserves the right not to
do so. The Internal Revenue Code contains a number of complex
tests to determine whether the Fund will qualify, and the Fund
might not meet those tests in a particular year. For example, if
the Fund derives 30% or more of its gross income from the sale of
securities held less than three months, it may fail to qualify (see
"Tax Aspects of Covered Calls and Hedging Instruments," above). If
it did not so qualify, the Fund would be treated for tax purposes
as an ordinary corporation and receive no tax deduction for
payments made to shareholders.
The amount of a class's distributions may vary from time to
time depending on market conditions, the composition of the Fund's
portfolio, and expenses borne by the Fund or borne separately by a
class, as described in "Alternative Sales Arrangements -- Class A,
Class B and Class C Shares," above. Dividends are calculated in
the same manner, at the same time and on the same day for shares of
each class. However, dividends on Class B and Class C shares are
expected to be lower as a result of the asset-based sales charge on
Class B and Class C shares, and Class B and Class C dividends will
also differ in amount as a consequence of any difference in net
asset value between the classes.
Dividends, distributions and the proceeds of the redemption of
Fund shares represented by checks returned to the Transfer Agent by
the Postal Service as undeliverable will be invested in shares of
Oppenheimer Money Market Fund, Inc., as promptly as possible after
the return of such checks to the Transfer Agent, to enable the
investor to earn a return on otherwise idle funds.
Dividend Reinvestment in Another Fund. Shareholders of the Fund
may elect to reinvest all dividends and/or capital gains
distributions in shares of the same class of any of the other
Oppenheimer funds listed in "Reduced Sales Charges," above, at net
asset value without sales charge. To elect this option, a
shareholder must notify the Transfer Agent in writing and 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 auditing the
annual financial statements of the Fund as well as other related
services.
<PAGE>
QUEST FOR VALUE DUAL PURPOSE FUND, INC.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
Quest for Value Dual Purpose Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations, of
changes in net assets and of changes in undistributed net investment income,
realized and unrealized gains (losses) and the financial highlights present
fairly, in all material respects, the financial position of Quest for Value Dual
Purpose Fund, Inc. (the 'Fund') at December 31, 1996, the results of its
operations for the year then ended, the changes in its net assets and the
changes in its undistributed net investment income, realized and unrealized
gains (losses) for each of the two years in the period then ended and the
financial highlights for each of the five years in the period then ended, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as 'financial
statements') are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1996 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
As described in Notes 7 and 8, the Income Shares of the Fund will be redeemed on
January 31, 1997 at $11.60 per share, plus accumulated and unpaid dividends and
on February 28, 1997 the Capital Shares will be converted into Class A shares of
an open-end management investment company.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
January 22, 1997,
except as to the last paragraph of Note 8, which is as of
February 20, 1997.
<PAGE>
QUEST FOR VALUE DUAL PURPOSE FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
PRINCIPAL
AMOUNT VALUE
- ------------- ------------
REPURCHASE AGREEMENT--1.5%
$ 13,185,000 Lehman Brothers, 6.85%, 1/2/97, (dated
12/31/96, proceeds at maturity:
$13,190,018, collateralized by
$13,000,000 par, $13,448,909 value,
U.S. Treasury Notes, 6.50%, 8/31/01)
(cost--$13,185,000)................... $ 13,185,000
------------
SHORT-TERM CORPORATE NOTES--13.6%
Automotive--2.3%
$ 20,000,000 Ford Credit Europe Plc.
5.40%, 1/8/97......................... $ 19,979,000
------------
Computers--3.9%
35,000,000 IBM Credit Corp.
5.33%, 1/29/97........................ 34,854,905
------------
Miscellaneous Financial
Services--7.4%
30,000,000 Household Finance Corp.
5.35%, 1/21/97........................ 29,910,833
15,000,000 Merrill Lynch & Co., Inc.
5.70%, 1/6/97......................... 14,988,125
20,000,000 Morgan Stanley Group, Inc.
5.43%, 1/15/97........................ 19,957,767
------------
64,856,725
------------
Total Short-Term Corporate
Notes (cost--$119,690,630)............ $119,690,630
------------
U.S. TREASURY
BOND--11.5%
$ 100,000,000 6.75%, 8/15/26
(cost--$102,355,632).................. $100,750,000
------------
CORPORATE NOTE--0.6%
Casinos/Gaming
$ 5,000,000 Trump Holdings & Funding
Sr. Sub. Notes
15.50%, 6/15/05
(cost--$5,090,359).................... $ 5,700,000
------------
CONVERTIBLE CORPORATE BOND--2.5%
Real Estate
$ 18,442,152 Security Capital Group, Inc.
Conv. Sub. Deb.
12.00%, 6/30/14 (A)
(cost--$17,383,098)................... $ 22,310,258
------------
SHARES VALUE
- ------------- ------------
CONVERTIBLE PREFERRED STOCKS--2.3%
Media/Broadcasting--1.0%
200,000 American Radio Systems Corp.
$3.50 Conv. Exch. Pfd................. $ 9,300,000
------------
Miscellaneous Financial
Services--1.3%
500,000 Merrill Lynch & Co., Inc.
Cox--STRYPES**
$1.37 Conv. Exch. Pfd................. 11,125,000
------------
Total Convertible Preferred Stocks
(cost--$21,599,768)................... $ 20,425,000
------------
COMMON STOCKS--74.5%
Automotive--6.0%
1,380,000 LucasVarity Plc.*....................... $ 52,440,000
------------
Casinos/Gaming--1.6%
1,200,000 Trump Hotels & Casino
Resorts, Inc.*........................ 14,400,000
------------
Conglomerates--6.6%
2,200,000 Canadian Pacific, Ltd................... 58,300,000
------------
Electronics--4.6%
1,080,100 UCAR International, Inc.*............... 40,638,762
------------
Insurance--27.2%
1,000,000 ACE, Ltd................................ 60,125,000
1,327,000 EXEL Ltd................................ 50,260,125
1,150,000 Mid Ocean Ltd........................... 60,375,000
1,035,000 PartnerRe Ltd........................... 35,190,000
500,000 Progressive Corp., Ohio................. 33,687,500
------------
239,637,625
------------
Miscellaneous Financial
Services--4.4%
1,346,900 Countrywide Credit
Industries, Inc....................... 38,555,013
------------
Oil/Gas--7.8%
466,600 Chesapeake Energy Corp.................. 25,954,625
875,040 Triton Energy Ltd. (Class A)*........... 42,439,440
------------
68,394,065
------------
Real Estate--3.5%
24,346 Security Capital Group, Inc. (A)........ 30,305,502
------------
Telecommunications--5.9%
2,000,000 WorldCom, Inc.*......................... 52,126,000
------------
SHARES VALUE
- ------------- ------------
COMMON STOCKS (cont'd)
Tobacco/Beverages/Food Products--6.9%
250,000 Philip Morris Companies, Inc............ $ 28,156,250
1,000,000 UST, Inc................................ 32,375,000
------------
60,531,250
------------
Total Common Stocks
(cost--$513,198,649).................. $655,328,217
------------
VALUE
------------
TOTAL INVESTMENTS
(cost--$792,503,136).................. 106.5% $937,389,105
Other Liabilities in Excess of
Other Assets.......................... (6.5) (57,454,954)
----- ------------
TOTAL NET ASSETS........................ 100.0% $879,934,151
----- ------------
----- ------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
* Non-income producing security.
** Structured yield product exchangeable for common stock.
NOTES TO SCHEDULE OF INVESTMENTS:
(A) Restricted Securities (The Fund will not bear any costs, including those
involved in registration under the Securities Act of 1933, in connection
with the disposition of these securities.):
<TABLE>
<CAPTION>
FAIR VALUE
DATE OF PAR AVERAGE AS OF
DESCRIPTION ACQUISITION AMOUNT SHARES COST DECEMBER 31, 1996
- ----------------------------------- ----------- ----------- ------------ ------- -----------------
<S> <C> <C> <C> <C> <C>
Security Capital Group, Inc.(1)
12.00%, 6/30/14.................. 6/16/94 $18,442,153 -- $ 94 $ 121
Security Capital Group, Inc.
Common Stock..................... 8/02/93 -- 24,346 699 1,245
</TABLE>
- ------------------
(1) At December 31, 1996, this security had $1,059,480 worth of deferred
interest accrued which is included as part of dividends and interest
receivable on the Statement of Assets and Liabilities.
<PAGE>
QUEST FOR VALUE DUAL PURPOSE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<S> <C> <C>
ASSETS
Investments, at value (cost--$792,503,136)........................................ $937,389,105
Cash.............................................................................. 910
Dividends and interest receivable................................................. 6,588,500
Income tax receivable............................................................. 377,087
Prepaid expenses and other assets................................................. 15,938
------------
Total assets.................................................................... $944,371,540
LIABILITIES
Long-term capital gains tax payable............................................... 59,139,583
Dividends payable to Income Shareholders.......................................... 5,131,226
Other payables and accrued expenses............................................... 166,580
------------
Total liabilities............................................................... 64,437,389
------------
NET ASSETS
(Shareholders' Equity)
Net assets applicable to 18,004,302 Income Shares outstanding of
$.01 par value................................................................. $209,327,886
Net assets applicable to 18,004,302 Capital Shares outstanding of
$.01 par value................................................................. 670,606,265
------------
Total Net Assets................................................................ $879,934,151
------------
------------
INCOME CAPITAL
SHARES SHARES
------------ ------------
Net asset value per share......................................................... $ 11.63 $ 37.25
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
<PAGE>
QUEST FOR VALUE DUAL PURPOSE FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest......................................................................... $16,424,805
Dividends........................................................................ 14,786,008
-----------
Total investment income....................................................... $ 31,210,813
OPERATING EXPENSES:
Investment advisory fees (note 2a)............................................... $ 4,916,973
Administration fees (note 2b).................................................... 883,395
Reports and notices to shareholders.............................................. 184,107
Custodian fees................................................................... 84,899
Auditing, consulting and tax return preparation fees............................. 62,400
Transfer and dividend disbursing agent fees...................................... 52,832
Directors' fees and expenses..................................................... 42,500
Exchange fees.................................................................... 40,844
Legal fees....................................................................... 17,000
Miscellaneous.................................................................... 50,941
-----------
Total operating expenses...................................................... 6,335,891
Less: Expense offset arrangement (note 2d).................................... (13,092)
-----------
Net operating expenses...................................................... 6,322,799
------------
Net investment income....................................................... 24,888,014
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS--NET:
Net realized gain on investments................................................. $173,198,410
Net change in unrealized appreciation (depreciation) on investments.............. (48,825,541)
------------
Net realized gain and change in unrealized appreciation (depreciation) on
investments before provision for corporate income taxes on net long-term
capital gains retained....................................................... 124,372,869
Provision for corporate income taxes (including $429,916 for state and local
taxes) on net long-term capital gains retained (note 1b)..................... (59,569,499)
------------
Net realized gain and change in unrealized appreciation (depreciation) on
investments after provision for corporate income taxes on net long-term
capital gains retained....................................................... 64,803,370
------------
Net increase in net assets resulting from operations............................... $ 89,691,384
------------
------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
<PAGE>
QUEST FOR VALUE DUAL PURPOSE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1996 1995
------------ ------------
<S> <C> <C>
Net investment income............................................................. $ 24,888,014 $ 25,044,472
Net realized gain on investments, options and futures transactions................ 173,198,410 75,958,250
Net change in unrealized appreciation (depreciation) on investments, options and
futures transactions........................................................... (48,825,541) 94,400,856
Provision for income taxes on capital gains retained (note 1b).................... (59,569,499) (28,346,378)
------------ ------------
Net increase in net assets resulting from operations............................ 89,691,384 167,057,200
Dividends to Income Shareholders
($1.385 and $1.39 per share, respectively)..................................... (24,935,959) (25,025,980)
Distributions to Capital Shareholders
($0 and $.033 per share, respectively)......................................... -- (594,142)
------------ ------------
Total increase in net assets.................................................... 64,755,425 141,437,078
Net Assets:
Beginning of year............................................................... 815,178,726 673,741,648
------------ ------------
End of year (including undistributed net investment income
of $469,962 and $517,907, respectively)...................................... $879,934,151 $815,178,726
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
<PAGE>
QUEST FOR VALUE DUAL PURPOSE FUND, INC.
STATEMENT OF CHANGES IN UNDISTRIBUTED NET INVESTMENT INCOME,
REALIZED AND UNREALIZED GAINS (LOSSES)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1996 1995
------------ ------------
<S> <C> <C>
Net investment income available for distribution:
Balance, beginning of year....................................................... $ 517,907 $ 499,415
Net investment income............................................................ 24,888,014 25,044,472
Dividends to Income Shareholders
($1.385 and $1.39 per share, respectively).................................... (24,935,959) (25,025,980)
------------ ------------
Balance, end of year.......................................................... $ 469,962 $ 517,907
------------ ------------
------------ ------------
Accumulated net realized gains:
Balance, beginning of year....................................................... $203,233,461 $156,215,731
Net realized gain on investments, options and futures transactions............... 173,198,410 75,958,250
Provision for income taxes on net long-term capital gains retained (note 1b)..... (59,569,499) (28,346,378)
Distributions to Capital Shareholders
($0 and $.033 per share, respectively)........................................ -- (594,142)
------------ ------------
Balance, end of year.......................................................... $316,862,372 $203,233,461
------------ ------------
------------ ------------
Net unrealized appreciation (depreciation) on investments:
Balance, beginning of year....................................................... $193,711,510 $ 99,310,654
Net change in unrealized appreciation (depreciation) on investments,
options and futures transactions.............................................. (48,825,541) 94,400,856
------------ ------------
Balance, end of year.......................................................... $144,885,969 $193,711,510
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
<PAGE>
QUEST FOR VALUE DUAL PURPOSE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Quest for Value Dual Purpose Fund, Inc. (the 'Fund') is a diversified,
closed-end, 'dual-purpose' investment company. The Fund commenced investment
operations on February 13, 1987. OpCap Advisors (the 'Adviser'), a majority-
owned (99%) subsidiary of Oppenheimer Capital, serves as the Fund's investment
adviser. Oppenheimer Capital (the 'Administrator') serves as the Fund's
administrator. The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates. The
following is a summary of significant accounting policies consistently followed
by the Fund:
(A) VALUATION OF INVESTMENTS
Investment securities listed on a national securities exchange and
securities traded in the over-the-counter National Market System are valued at
the last reported sale price on the valuation date; if there are no such
reported sales, the securities are valued at their last quoted bid price. Other
securities traded over-the-counter and not part of the National Market System
are valued at the last quoted bid price. Investment debt securities (other than
short-term obligations) are valued each day by an independent pricing service
using methods which include current market quotations from a major market maker
in the securities and trader-reviewed 'matrix' prices. Short-term debt
securities having a remaining maturity of sixty days or less are valued at
amortized cost or amortized value, which approximates market value. Any
securities or other assets for which market quotations are not readily available
are valued at their fair value as determined in good faith under procedures
established by the Fund's Board of Directors. At December 31, 1996, securities
with an aggregate value of $52,615,760 (6.0% of net assets) were valued in such
manner. The ability of issuers of debt instruments to meet their obligations may
be affected by economic developments in a specific industry or region.
(B) FEDERAL INCOME TAXES
It is the Fund's intention to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its taxable ordinary income to its shareholders;
accordingly, no Federal income tax provision is required. Net realized long-term
capital gains, if any, on investment transactions are retained and applicable
taxes thereon were accrued at the end of the Fund's fiscal year.
(C) INVESTMENT TRANSACTIONS AND OTHER INCOME
Investment transactions are accounted for on the trade date. In determining
the gain or loss from the sale of investments, the cost of investments sold has
been determined on the basis of identified cost. Dividend income is recorded on
the ex-dividend date and interest income is accrued as earned. Discounts or
premiums on debt securities are accreted or amortized to interest income over
the lives of the respective securities.
(D) REPURCHASE AGREEMENTS
The Fund enters into repurchase agreements as part of its investment
program. The Fund's custodian takes possession of collateral pledged by the
counterparty. The collateral is marked-to market daily to ensure that the value,
plus accrued interest, is at least equal to the repurchase price. In the event
of default of the obligor to repurchase, the Fund has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. Under
certain circumstances, in the event of default or bankruptcy by the counterparty
to the agreement, realization and/or retention of the collateral or proceeds may
be subject to legal proceedings.
(E) DIVIDENDS AND DISTRIBUTIONS
The Fund distributes its net investment income to holders of the Income
Shares at a fixed monthly rate (currently $.10 a share) with any excess net
investment income generally declared by year end. Income Shares are entitled to
cumulative dividends in an amount equivalent to net investment income with a
minimum annual rate of $.875 per share.
To the extent that any such minimum cumulative dividend cannot be satisfied
from net investment income, it will be paid from any tax basis net realized
short-term or long-term capital gains. Capital Shares will not be entitled to
receive dividends from net investment income as long as Income Shares are
outstanding.
<PAGE>
QUEST FOR VALUE DUAL PURPOSE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
The Fund declared dividends of $1.385 per Income Share during the year ended
December 31, 1996. To the extent not needed to pay the Income Shares' minimum
cumulative dividends, distributions from tax basis net realized short-term
capital gains, if any, may be paid to holders of the Capital Shares. The Fund
will not distribute tax basis net realized long-term capital gains except to the
limited extent described previously. Dividends and distributions to shareholders
are recorded on the ex-dividend date.
On January 31, 1997 Income Shares will be redeemed at $11.60 per share, plus
accumulated and unpaid dividends amounting to $.0813 per share.
(2) INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND OTHER TRANSACTIONS WITH
AFFILIATES
(a) The investment advisory fee is payable monthly to the Adviser and is
computed on the average weekly net assets of the Fund as of the close of
business each week at the following annual rates: .75% on the first $200
million; and .50% on net assets in excess of $200 million.
(b) The administration fee is payable monthly to the Administrator and is
computed on the average weekly net assets of the Fund as of the close of
business each week at the annual rate of .10%.
(c) Total brokerage commissions paid by the Fund during the year ended
December 31, 1996 amounted to $1,040,957 of which Oppenheimer & Co., Inc., an
affiliate of the Adviser, received $319,406.
(d) The Fund benefits from an expense offset arrangement with its custodian
bank where uninvested cash balances earn credits that reduce monthly fees. Had
these cash balances been invested in income producing securities, they would
have generated income for the Fund.
(3) PURCHASES AND SALES OF SECURITIES
During the year ended December 31, 1996, purchases and sales of investment
securities, other than short-term securities, aggregated $634,222,148 and
$787,797,418, respectively.
(4) FEDERAL INCOME TAXES
(A) COST OF INVESTMENTS
At December 31, 1996, the cost of investments for Federal income tax
purposes was $792,698,292. Aggregate gross unrealized appreciation (all
securities in which there is an excess of value over tax cost) amounted to
$161,949,524 and aggregate gross unrealized depreciation (all securities in
which there is an excess of tax cost over value) amounted to $17,258,711,
resulting in net unrealized appreciation of $144,690,813.
(B) LONG-TERM CAPITAL GAINS
For the year ended December 31, 1996, the Fund retained net tax basis
realized long-term capital gains of $168,970,238 and accrued Federal income
taxes of $59,139,583.
(5) CAPITAL STOCK
The Fund is authorized to issue 20 million Capital Shares and 20 million
Income Shares at $.01 par value, respectively. Each class of shares has
18,004,302 issued and outstanding, representing $180,043 at par and $208,677,881
paid-in-excess of par.
<PAGE>
QUEST FOR VALUE DUAL PURPOSE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
(6) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
REALIZED AND UNREALIZED
NET GAIN (LOSS) ON
INVESTMENT INVESTMENT INVESTMENTS,
INCOME INCOME OPTIONS AND FUTURES--NET
-------------------- -------------------- --------------------------
PER PER PER
QUARTER ENDED TOTAL SHARE TOTAL SHARE TOTAL SHARE
- ------------------------------------------------ ----------- ----- ----------- ----- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
March 31, 1996.................................. $ 7,608,934 $0.42 $ 6,096,637 $0.34 $ 58,115,335 $ 3.23
June 30, 1996................................... 8,261,241 0.46 6,684,414 0.37 35,666,898 1.98
September 30, 1996.............................. 7,554,467 0.42 5,973,296 0.33 (20,628,310) (1.15)
December 31, 1996............................... 7,786,171 0.43 6,133,667 0.34 (8,350,553)* (0.46)
----------- ----- ----------- ----- ------------ ----------
$31,210,813 $1.73 $24,888,014 $1.38 $ 64,803,370* $ 3.60
----------- ----- ----------- ----- ------------ ----------
----------- ----- ----------- ----- ------------ ----------
March 31, 1995.................................. $ 7,638,860 $0.43 $ 6,365,976 $0.35 $ 57,584,502 $ 3.20
June 30, 1995................................... 7,777,455 0.43 6,387,012 0.36 60,006,065 3.33
September 30, 1995.............................. 6,404,802 0.35 4,899,611 0.27 60,450,460 3.36
December 31, 1995............................... 8,932,620 0.50 7,391,873 0.41 (36,028,299)* (2.00)
----------- ----- ----------- ----- ------------ ----------
$30,753,737 $1.71 $25,044,472 $1.39 $142,012,728* $ 7.89
----------- ----- ----------- ----- ------------ ----------
----------- ----- ----------- ----- ------------ ----------
</TABLE>
- ------------------
* After provision for income taxes accrued on net realized long-term capital
gains.
(7) SPECIAL MEETING OF THE CAPITAL SHAREHOLDERS
On December 20, 1996, Capital Shareholders approved a change in the Fund's
subclassification under the Investment Company Act of 1940 from a closed-end
management investment company to an open-end management investment company. The
Fund also approved a new Investment Advisory Agreement with OppenheimerFunds,
Inc. ('OFI'), a new Subadvisory Agreement between OFI and OpCap Advisors, a new
Distribution and Service Plan and Agreement with OFI in respect to Class A
shares, approved the Fund's Articles of Amendment and Restatement, a change in
the Fund's fundamental investment objective to capital appreciation, changes to
certain of the Fund's fundamental investment restrictions and the election of
Directors. The Fund will pay OFI under the new Investment Advisory Agreement a
fee at the rate of 1.00% of the first $400 million of net assets, .90% of the
next $400 million of net assets and .85% of net assets over $800 million. For a
two year period after the effective date of the new Investment Advisory
Agreement, OFI will waive the following portion of the advisory fee--.15% of the
first $200 million of net assets; .40% of the next $200 million of net assets;
.30% of the next $400 million of net assets and .25% of net assets over $800
million. The fee under the new Distribution and Service Plan and Agreement with
respect to Class A shares will consist of a service fee of .25% of net assets
and a distribution fee of .25% of net assets. For the first two years after the
effective date of the Class A Plan, the new Distributor has agreed to waive .15%
of the distribution fee payable under the Class A Plan. OFI will pay OpCap
Advisors' fee under the new Subadvisory Agreement. The approved changes become
effective at the close of business February 28, 1997.
(8) SUBSEQUENT EVENTS
Trading on the NYSE and all transfer books will permanently cease after the
close of business on January 24, 1997 for the Income Shares and February 28,
1997 for the Capital Shares.
Once the Income Shares are redeemed on January 31, 1997, the Capital Shares
will bear all Fund operating expenses. Additionally, Capital Shares will bear a
portion of the expenses associated with their conversion to an open-end fund and
are estimated to be $102,000.
Oppenheimer Financial Corp., a holding company, holds a one-third
interest in Oppenheimer Capital and Oppenheimer Capital, L.P.,
a Delaware limited partnership whose units are traded on the
New York Stock Exchange and of which Oppenheimer Financial Corp.
is the sole general partner, owns the remaining two-thirds interest.
On February 13, 1997 PIMCO Advisors L.P., a registered investment
adviser, signed a definitive agreement with Oppenheimer Group, Inc.
and its subsidiary Oppenheimer Financial Corp. for PIMCO Advisors
L.P. and its affiliate, Thomson Advisory Group, Inc., to acquire
the one-third managing general partner interest in Oppenheimer
Capital and the 1.0% general partner interest in Oppenheimer
Capital L.P. The completion of the transaction is subject
to certain client, lender, IRS and other approvals.
<PAGE>
QUEST FOR VALUE DUAL PURPOSE FUND, INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------
1996 1995 1994 1993 1992
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Income Shares:
Net Asset Value, Beginning of Year................ $ 11.63 $ 11.63 $ 11.61 $ 11.61 $ 11.60
Net investment income............................. 1.38 1.39 1.36 1.30 1.35
Dividends from net investment income.............. (1.38) (1.39) (1.34) (1.30) (1.34)
------------ ------------ ------------ ------------ ------------
Net Asset Value, End of Year...................... $ 11.63 $ 11.63 $ 11.63 $ 11.61 $ 11.61
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Market Value, End of Year......................... $ 11.500 $ 12.000 $ 12.125 $ 13.25 $ 13.00
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Total Investment Return (1)....................... 7.8% 10.9% 1.8% 12.3% 7.4%
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Capital Shares:
Net Asset Value, Beginning of Year................ $ 33.65 $ 25.79 $ 27.09 $ 26.29 $ 22.59
Net realized and unrealized gain (loss) on
investments, options and futures transactions... 6.91 9.46 (0.38) 2.45 6.09
Provision for corporate income taxes on net
realized long-term capital gains................ (3.31) (1.57) (0.53) (1.43) (1.10)
Distributions from net realized short-term
capital gains................................... -- (0.03) (0.39) (0.22) (1.29)
------------ ------------ ------------ ------------ ------------
Net Asset Value, End of Year...................... $ 37.25 $ 33.65 $ 25.79 $ 27.09 $ 26.29
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Market Value, End of Year......................... $ 36.125 $ 31.875 $ 23.00 $ 23.75 $ 23.00
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Total Investment Return (2)....................... 23.6% 45.6% 0.9% 10.5% 44.6%
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Year........................... $879,934,151 $815,178,726 $673,741,648 $696,802,938 $682,373,943
------------ ------------ ------------ ------------ ------------
Ratio of Operating Expenses to Average Net
Assets.......................................... 0.72%(3,4) 0.73% 0.74% 0.74% 0.74%
------------ ------------ ------------ ------------ ------------
Ratio of Net Investment Income to Average Net
Assets.......................................... 2.82%(3) 3.20% 3.47% 3.29% 3.61%
------------ ------------ ------------ ------------ ------------
Portfolio Turnover Rate........................... 74% 72% 45% 51% 45%
------------ ------------ ------------ ------------ ------------
Average Commission Rate........................... $ 0.05 -- -- -- --
------------ ------------ ------------ ------------ ------------
Number of each class of Income and Capital Shares
outstanding at the end of year.................. 18,004,302 18,004,302 18,004,302 18,004,302 18,004,302
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
</TABLE>
- ------------------
(1) Change in market price assuming reinvestment of dividends on payable date
(at market).
(2) Change in market price assuming reinvestment of short-term capital gains
distributions, if any, on payable date and federal taxes paid on long-term
capital gains on year end (both at market).
(3) Average net assets for the year ended December 31, 1996 were $883,394,597.
(4) Gross of expense offsets (see note 2d in Notes to Financial Statements).
Appendix A
Corporate Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
<PAGE>
Food
Gas Transmission*
Gas Utilities*
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking<PAGE>
_________________
* For purposes of the Fund's investment policy not to concentrate
in securities of issuers in the same industry, gas utilities and
gas transmission utilities each will be considered a separate
industry.
<PAGE>
Oppenheimer Quest Capital Value Fund, Inc.
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Sub-Adviser
OpCap Advisors
One World Financial Center
New York, New York 10281
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
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
prosp\capsai.#2
<PAGE>
QUEST FOR VALUE DUAL PURPOSE FUND, INC.
Part C
Other Information
Item 24. Financial Statements and Exhibits
- ------- ---------------------------------
(a) Financial Statements:
--------------------
(1) Financial Highlights - See Parts A and B: Filed
herewith.
(2) Independent Accountants' Report - Filed herewith.
(3) Statement of Investments at 12/31/96 (audited)- Filed
herewith.
(4) Statement of Assets and Liabilities at 12/31/96
(audited)- See Part B: Filed herewith.
(5) Statement of Operations at 12/31/96 (audited) - See Part
B: Filed herewith.
(6) Statement of Changes in Net Assets at 12/31/96 (audited)
- - See Part B: Filed herewith.
(7) Notes to Financial Statements at 12/31/96 (audited) -
See Part B: Filed herewith.
(8) Independent Accountants' Consent: Filed herewith.
b) Exhibits:
--------
(1)Articles of Amendment and Restatement of the Fund: Filed
herewith.
(2)Amended By Laws: 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.
(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)Form of Investment Advisory Agreement: Previously filed
with Registrant's Registration Statement on Form N-1A, 11/27/96,
and incorporated herein by reference.
(b)Form of Subadvisory Agreement: Previously filed with
Registrant's Registration Statement on Form N-1A, 11/27/96, and
incorporated herein by reference.
(6)(a) Form of General Distributor s Agreement: Previously filed
with Registrant's Registration Statement on Form N-1A, 11/27/96,
and incorporated herein by reference.
(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 herewith.
(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 herewith.
(11)Not Applicable.
(12)Not Applicable.
(13)(a) Investment Letter of Quest for Value Advisors, Inc.:
Previously filed as Exhibit 1 to Post-Effective Amendment No. 1 and
refiled herewith pursuant to Item 102 or Regulation S-T, and
incorporated herein by reference.
(b) Investment Letter of OppenheimerFunds, Inc.: 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) Form of Distribution and Service Plan and Agreement with
respect to Class A shares: Previously filed with Registrant's
Registration Statement on Form N-1A, 11/27/96, and incorporated
herein by reference.
(b) Form of Distribution and Service Plan and Agreement with
respect to Class B shares: Previously filed with Registrant's
Registration Statement on Form N-1A, 11/27/96, and incorporated
herein by reference.
(c) Form of Distribution and Service Plan and Agreement with
respect to Class C shares: Previously filed with Registrant's
Registration Statement on Form N-1A, 11/27/96, and incorporated
herein by reference.
(16) Performance Computation Schedule: Filed herewith.
(17)(1) Financial Data Schedule for Class A shares: Filed
herewith.
(2) Financial Data Schedule for Class B shares: Not
applicable.
(3) Financial Data Schedule for Class C shares: Not
applicable.
(18)Oppenheimer Funds Multiple Class Plan under Rule 18f-3
dated 10/24/95: Filed with Post-Effective Amendment No. 12 to the
Registration Statement of Oppenheimer California Tax-Exempt Fund
(33-23566), 11/1/95, and incorporated herein by reference.
-- Powers of Attorney and Certified Board Resolutions
signed by Registrant's Directors: To be filed by Amendment.
Item 25.Persons Controlled by or Under Common Control with
Registrant
- ----------------------------------------------------------------
No person is presently controlled by or under common control
with Registrant.
Item 26. Number of Holders of Securities
- --------------------------------------
Number of Record
Holders as of
Title of Class February 14, 1997
- -------------- ----------------
Shares of Beneficial Interest
Class A 14,000
Class B 0
Class C 0
Item 27. Indemnification
- ------- ---------------
Reference is made to the provisions of Article SEVEN of
Registrant's Articles of Amendment and Restatement filed as Exhibit
24(b)(1) to this Registration Statement.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of Registrant pursuant to the foregoing
provisions or otherwise, Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by Registrant of expenses incurred or paid
by a director, officer or controlling person of Registrant in the
successful defense of any action, suit or proceeding) is asserted
by such trustee, officer or controlling person, Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933
and will be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
- -------- ----------------------------------------------------
(a) OppenheimerFunds, Inc. is the investment adviser of the
Registrant; it and certain subsidiaries and affiliates act in the
same capacity to other registered investment companies as
described in Parts A and B hereof and listed in Item 28(b) below.
(a) The directors and executive officers of OpCap Advisors,
their positions and their other business affiliations and
business experience for the past two years are listed in Item
28(b) below.
(b) There is set forth below information as to any other
business, profession, vocation or employment of a substantial
nature in which each officer and director of OppenheimerFunds,
Inc. is, or at any time during the past two fiscal years has
been, engaged for his/her own account or in the capacity of
director, officer, employee, partner or trustee.
Name & Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- ---------------------------
Mark J.P. Anson,
Vice President Vice President of Oppenheimer
Real Asset Management, Inc.
("ORAMI"); formerly Vice
President of Equity Derivatives
at Salomon Brothers, Inc.
Peter M. Antos,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; a Chartered Financial
Analyst; Senior Vice President
of HarbourView; prior to March,
1996 he was the senior equity
portfolio manager for the
Panorama Series Fund, Inc. (the
"Company") and other mutual
funds and pension funds managed
by G.R. Phelps & Co. Inc.
("G.R. Phelps"), the Company's
former investment adviser,
which was a subsidiary of
Connecticut Mutual Life
Insurance Company; was also
responsible for managing the
common stock department and
common stock investments of
Connecticut Mutual Life
Insurance Co.
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
Bruce Bartlett,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; formerly a Vice
President and Senior Portfolio
Manager at First of America
Investment Corp.
Ellen Batt,
Assistant Vice President None
Kathleen Beichert,
Assistant Vice President Formerly employed by Smith
Barney, Inc.
David Bernard,
Vice President Previously a Regional Sales
Director for Retirement Plan
Services at Charles Schwab &
Co., Inc.
Rajeev Bhaman,
Assistant Vice President Formerly Vice President of
Asian Equities for Barclays de
Zoete Wedd, Inc.
Robert J. Bishop,
Vice President Assistant Treasurer of the
Oppenheimer Funds (listed
below); previously a Fund
Controller for
OppenheimerFunds, Inc. (the
"Manager").
George Bowen,
Senior Vice President Treasurer of the New York-based
& Treasurer Oppenheimer Funds; Vice
President, Assistant Secretary
and Treasurer of the Denver-
based Oppenheimer Funds. Vice
President and Treasurer of
OppenheimerFunds Distributor,
Inc. (the "Distributor") and
HarbourView Asset Management
Corporation ("HarbourView"), an
investment adviser subsidiary
of the Manager; Senior Vice
President, Treasurer, Assistant
Secretary and a director of
Centennial Asset Management
Corporation ("Centennial"), an
investment adviser subsidiary
of the Manager; Vice President,
Treasurer and Secretary of
Shareholder Services, Inc.
("SSI") and Shareholder
Financial Services, Inc.
("SFSI"), transfer agent
subsidiaries of the Manager;
Director, Treasurer and Chief
Executive Officer of
MultiSource Services, Inc.;
Vice President and Treasurer of
Oppenheimer Real Asset
Management, Inc.; President,
Treasurer and Director of
Centennial Capital Corporation;
Vice President and Treasurer of
Main Street Advisers.
Scott Brooks,
Assistant Vice President None.
Susan Burton,
Assistant Vice President Previously a Director of
Educational Services for H.D.
Vest Investment Securities,
Inc.
Michael A. Carbuto,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; Vice President of
Centennial.
Ruxandra Chivu,
Assistant Vice President None.
O. Leonard Darling,
Executive Vice President Formerly Co-Director of Fixed
Income for State Street
Research & Management Co.
Robert A. Densen,
Senior Vice President None.
Sheri Devereux,
Assistant Vice President None.
Robert Doll, Jr.,
Executive Vice President and
Director An officer and/or portfolio
manager of certain Oppenheimer
funds.
John Doney,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
Andrew J. Donohue,
Executive Vice President,
General Counsel and Director Secretary of the New York-
based Oppenheimer Funds; Vice
President and Secretary of the
Denver-based Oppenheimer Funds;
Secretary of the Oppenheimer
Quest and Oppenheimer Rochester
Funds; Executive Vice
President, Director and General
Counsel of the Distributor;
President and a Director of
Centennial; Chief Legal Officer
and a Director of MultiSource
Services, Inc.; President and a
Director of Oppenheimer Real
Asset Management, Inc.;
Executive Vice President,
General Counsel and Director of
SFSI and SSI; formerly Senior
Vice President and Associate
General Counsel of the Manager
and the Distributor.
George Evans,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
Scott Farrar,
Vice President Assistant Treasurer of the New
York-based and Denver-based
Oppenheimer funds.
Leslie A. Falconio,
Assistant Vice President None.
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary of
OppenheimerFunds Distributor,
Inc.; Secretary of HarbourView
Asset Management Corporation,
MultiSource Services, Inc. and
Centennial Asset Management
Corporation; Secretary, Vice
President and Director of
Centennial Capital Corporation;
Vice President and Secretary of
ORAMI.
Ronald H. Fielding,
Senior Vice President; Chairman:
Rochester Division An officer, Director and/or
portfolio manager of certain
Oppenheimer funds. Formerly
Chairman of the Board and
Director of Rochester Fund
Distributors, Inc. ("RFD"),
President and Director of
Fielding Management Company,
Inc. ("FMC"), President and
Director of Rochester Capital
Advisors, Inc. ("RCAI"),
Managing Partner of Rochester
Capital Advisors, L.P.,
President and Director of
Rochester Fund Services, Inc.
("RFS"), President and Director
of Rochester Tax Managed Fund,
Inc.
John Fortuna,
Vice President None.
Patricia Foster,
Vice President Formerly she held the following
positions: An officer of
certain Oppenheimer funds;
Secretary and General Counsel
of Rochester Capital Advisors,
L.P. and Secretary of Rochester
Tax Managed Fund, Inc.
Jennifer Foxson,
Assistant Vice President None.
Robert G. Galli,
Vice Chairman Trustee of the New York-based
Oppenheimer Funds; Vice
President and Counsel of OAC;
formerly he held the following
positions: Vice President and a
director of HarbourView and
Centennial, a director of SFSI
and SSI, an officer of other
Oppenheimer Funds.
Linda Gardner,
Assistant Vice President None.
Jill Glazerman, None.
Assistant Vice President
Ginger Gonzalez,
Vice President, Director of
Marketing Communications Formerly 1st Vice President /
Director of Graphic and Print
Communications for Shearson
Lehman Brothers.
Mildred Gottlieb,
Assistant Vice President Formerly served as a Strategy
Consultant for the Private
Client Division of Merrill
Lynch.
Caryn Halbrecht,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; formerly Vice President
of Fixed Income Portfolio
Management at Bankers Trust.
Barbara Hennigar,
Executive Vice President and
President and Chief Executive
Officer of OppenheimerFunds
Services, a division of the
Manager President and Director of SFSI;
President and Chief Executive
Officer of SSI.
Dorothy Hirshman,
Assistant Vice President None.
Alan Hoden,
Vice President None.
Merryl Hoffman,
Vice President None.
Scott T. Huebl,
Assistant Vice President None.
Richard Hymes,
Assistant Vice President None.
Jane Ingalls,
Assistant Vice President Formerly a Senior Associate
with Robinson, Lake/Sawyer
Miller.
Ronald Jamison,
Vice President Formerly Vice President and
Associate General Counsel at
Prudential Securities, Inc.
Frank Jennings,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds. Formerly a Managing
Director of Global Equities at
Paine Webber's Mitchell
Hutchins division.
Heidi Kagan,
Assistant Vice President None.
Thomas W. Keffer,
Vice President Formerly Senior Managing
Director of Van Eck Global.
Avram Kornberg,
Vice President Formerly a Vice President with
Bankers Trust.
Joseph Krist,
Assistant Vice President None.
Paul LaRocco,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds. Formerly a Securities
Analyst for Columbus Circle
Investors.
Michael Levine,
Assistant Vice President None.
Shanquan Li,
Assistant 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 of certain Oppenheimer
funds; a Chartered Financial
Analyst; a Vice President of
HarbourView; prior to March,
1996 he was the senior bond
portfolio manager for Panorama
Series Fund, Inc., other mutual
funds and pension accounts
managed by G.R. Phelps; was
also responsible for managing
the public fixed-income
securities department at
Connecticut Mutual Life
Insurance Co.
Mitchell J. Lindauer,
Vice President None.
Loretta McCarthy,
Executive Vice President None.
Bridget Macaskill,
President, Chief Executive Officer
and Director President, Director and Trustee
of the New York-based and the
Denver-based Oppenheimer funds;
President and a Director of
OAC, HarbourView and
Oppenheimer Partnership
Holdings, Inc.; Director of
ORAMI; Chairman and Director of
SSI; a Director of Oppenheimer
Real Asset Management, Inc.
Timothy Martin,
Assistant Vice President Formerly Vice President,
Mortgage Trading, at S.N.
Phleps & Co
Salomon Brothers, and Kidder
Peabody.
Sally Marzouk,
Vice President None.
Michelle McCann,
Assistant Vice President Formerly Vice President, Quest
for Value Distributors,
Oppenheimer Capital
Corporation.
Lisa Migan,
Assistant Vice President, None.
Robert J. Milnamow,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds. Formerly a Portfolio
Manager with Phoenix Securities
Group.
Denis R. Molleur,
Vice President None.
Linda Moore,
Vice President Formerly Marketing Manager
(July, 1995 - November, 1996)
for Chase Investment Services
Corp.
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.
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 Chairman and Director of the
Distributor.
Jane Putnam,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds. Formerly Senior
Investment Officer and
Portfolio Manager with Chemical
Bank.
Russell Read,
Vice President Consultant for Prudential
Insurance on behalf of the
General Motors Pension Plan.
Thomas Reedy,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds. Formerly a Securities
Analyst for the Manager.
David Robertson,
Vice President None.
Adam Rochlin,
Vice President Formerly a Product Manager for
Metropolitan Life Insurance
Company.
Michael S. Rosen
Vice President; President:
Rochester Division An officer and/or portfolio
manager of certain Oppenheimer
funds. Formerly Vice President
of RFS, President and Director
of RFD, Vice President and
Director of FMC, Vice President
and director of RCAI, General
Partner of RCA, an officer
and/or portfolio manager of
certain Oppenheimer funds.
David Rosenberg,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
Richard H. Rubinstein,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; formerly Vice President
and Portfolio Manager/Security
Analyst for Oppenheimer Capital
Corp., an investment adviser.
Lawrence Rudnick,
Assistant Vice President Formerly Vice President of
Dollar Dry Dock Bank.
James Ruff,
Executive Vice President None.
Valerie Sanders,
Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Stephanie Seminara,
Vice President Formerly Vice President of
Citicorp Investment Services.
Diane Sobin,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; formerly a Vice
President and Senior Portfolio
Manager for Dean Witter
InterCapital, Inc.
Richard A. Soper, None.
Assistant Vice President
Nancy Sperte,
Executive Vice President
None.
Donald W. Spiro,
Chairman Emeritus and Director Vice Chairman and Trustee of
the New York-based Oppenheimer
Funds; formerly Chairman of the
Manager and the Distributor.
Arthur Steinmetz,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
Ralph Stellmacher,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
John Stoma,
Senior Vice President,
Director Retirement Plans Formerly Vice President of U.S.
Group Pension Strategy and
Marketing for Manulife
Financial.
Michael C. Strathearn,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; a Chartered Financial
Analyst; a Vice President of
HarbourView; prior to March,
1996 he was an equity portfolio
manager for Panorama Series
Fund, Inc. and other mutual
funds and pension accounts
managed by G.R. Phelps.
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee,
Director or Managing Partner of
the Denver-based Oppenheimer
Funds; President and a Director
of Centennial; formerly
President and Director of OAMC,
and Chairman of the Board of
SSI.
James Tobin,
Vice President None.
Jay Tracey,
Vice President Vice President of the Manager;
Vice President and Portfolio
Manager of Oppenheimer
Discovery Fund, Oppenheimer
Global Emerging Growth Fund and
Oppenheimer Enterprise Fund.
Formerly Managing Director of
Buckingham Capital Management.
Gary Tyc,
Vice President, Assistant
Secretary and Assistant
Treasurer Assistant Treasurer of the
Distributor and SFSI.
Ashwin Vasan,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
Dorothy Warmack,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
Jerry A. Webman,
Senior Vice President Director of New York-based tax-
exempt fixed income Oppenheimer
Funds; Formerly Managing
Director and Chief Fixed Income
Strategist at Prudential Mutual
Funds.
Christine Wells,
Vice President None.
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 he was an equity portfolio
manager for Panorama Series
Fund, Inc. and other mutual
funds and pension funds managed
by G.R. Phelps.
William L. Wilby,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; Vice President of
HarbourView.
Carol Wolf,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; Vice President of
Centennial; Vice President,
Finance and Accounting and
member of the Board of
Directors of the Junior League
of Denver, Inc.
Robert G. Zack,
Senior Vice President and
Assistant Secretary Associate General Counsel of
the Manager; Assistant
Secretary of the Oppenheimer
Funds; Assistant Secretary of
SSI, SFSI; an officer of other
Oppenheimer Funds.
Arthur J. Zimmer,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; Vice President of
Centennial.
The Oppenheimer Funds include the New York-based Oppenheimer
Funds, the Denver-based Oppenheimer Funds, and the
Quest/Rochester Funds, 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 Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Municipal Trust
Oppenheimer New York Municipal Fund
Oppenheimer Fund
Oppenheimer Series Fund, Inc.
Oppenheimer Municipal Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer World Bond Fund
Oppenheimer Developing Markets Fund
Denver-based Oppenheimer Funds
- ------------------------------
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Municipal Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Quest/Rochester Funds
- ---------------------------------
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest For Value Funds
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Bond Fund For Growth
Rochester Fund Municipals
Limited-Term New York Municipal Fund
The address of OppenheimerFunds, Inc., the New York-based
Oppenheimer Funds, 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 Oppenheimer Real Asset
Management, Inc. is 6803 South Tuscon Way, Englewood, Colorado
80112.
The address of MultiSource Services, Inc. is 1700 Lincoln
Street, Denver, Colorado 80203.
The address of Oppenheimer Bond Fund For Growth, Rochester
Fund Municipals and Limited Term New York Municipal Fund is 350
Linden Oaks, Rochester, New York 14625-2807.
Name & Current Position with Other Business and
Connections
OpCap Advisors During the Past Two Years
- ------------------------ ---------------------------
Robert J. Bluestone,
Director of Fixed Income
Management Managing Director of
Oppenheimer Capital;
Director of Oppenheimer
Capital Trust Company.
Pierre Dariron,
Portfolio Manager President, Oppenheimer
Capital International
Division.
Thomas E. Duggan,
General Counsel & Secretary Managing Director & General
Counsel of Oppenheimer
Capital; Assistant
Secretary of Oppenheimer
Financial Corp; General
Counsel of Oppenheimer
Capital Limited.
Linda S. Ferrante,
Portfolio Manager Managing Director of
Oppenheimer Capital.
Bernard H. Garil,
President Senior Vice President of
Oppenheimer Capital and
Oppenheimer & Co., Inc;
Director of Oppenheimer
Capital Trust Company.
John Giusio,
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
Oppen-heimer Capital.
Louis Goldstein,
Assistant Portfolio Manager Senior Vice President of
Oppen-heimer Capital.
Matthew Greenwald,
Portfolio Manager Vice President of
Oppenheimer Capital.
Vikki Y. Hanges,
Portfolio Manager Vice President of
Oppenheimer Capital.
Joseph M. LaMotta,
Chairman Chairman and Chief
Executive Officer of
Oppenheimer Capital;
Director & Executive Vice
President of Oppenheimer
Financial Corp. and
Oppenheimer Group, Inc.;
General Partner of
Oppenheimer & Co., L.P.;
Director of Oppenheimer
Capital Trust Company;
Director and President of
Oppenheimer Capital
Limited.
George A. Long,
Chief Investment Officer President of Oppenheimer
Capital.
Elisa A. Mazen,
Portfolio Manager Vice President of
Oppenheimer Capital
International Division.
Timothy McCormack,
Portfolio Manager Vice President of
Oppenheimer Capital;
formerly Assistant Vice
President of Oppenheimer
Capital.
Susan Murphy,
President of an affiliate President of OCC Cash
Management Services
Division and Oppenheimer
Capital Trust Company;
Senior Vice President of
Oppenheimer Capital.
Eileen Rominger,
Portfolio Manager Managing Director of
Oppenheimer Capital.
Sheldon M. Siegel,
Treasurer and Chief Financial
Officer Managing
Director/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 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:
<TABLE>
<CAPTION> Positions
and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- ---------
<S> <C> <C>
George Clarence Bowen+ Vice President &
Treasurer
Vice President and
Treasurer of the NY-
based Oppenheimer
funds / Vice
President, Secretary
and Treasurer of the
Denver-based
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* Senior Vice President - None
Director - Financial
Institution Div.
Robert Coli Vice President None
12 White Tail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce DeLeon Ave.
Decatur, GA 30030
Bill Coughlin Vice President None
3425-1/2 Irving Avenue So.
Minneapolis, MN 55408
Mary Crooks+ Senior Vice President None
E. Drew Devereaux ++ Assistant Vice
President None
Andrew John Donohue* Executive
Vice Secretary of President,
General the New York-
Counsel and Director based
Oppenheimer funds/Vice
President of the Denver-
based Oppenheimer
funds
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
Katherine P. Feld* Vice President & Secretary None
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding++ Vice President;
Chairman:
Rochester Division None
Reed F. Finley Vice President - None
320 E. Maple, Ste. 254 Financial
Institution Div.
Birmingham, MI 48009
Wendy Fishler* Vice President - None
Financial Institution Div.
Ronald R. Foster Senior Vice President None
139 Avant Lane
Cincinatti, OH 45249
Patricia Gadecki Vice President None
3906 Americana Drive
Tampa, FL 3334
Luiggino Galletto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President - None
5506 Bryn Mawr Financial Institution Div.
Dallas, TX 75209
Ralph Grant* Vice President/National None
Sales Manager - Financial
Institution Div.
Sharon Hamilton Vice President None
720 N. Juanita Ave. - #1
Redondo Beach, CA 90277
Mark D. Johnson Vice President None
7512 Cromwell Dr. Apt 1
Clayton, MO 63105
Michael Keogh* Vice President None
Richard Klein Vice President None
4820 Fremont Avenue So.
Minneapolis, MN 55409
Ilene Kutno* Vice President - None
Director - Regional Sales
Wayne A. LeBlang Senior Vice President - None
23 Fox Trail Director Eastern Div.
Lincolnshire, IL 60069
Dawn Lind Vice President - None
7 Maize Court Financial Institution Div.
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
John McDonough Vice President None
P.O. Box 760
50 Riverview Road
New Castle, NH 03854
Laura Mulhall* Senior Vice President - None
Director of Key Accounts
Charles Murray Vice President None
50 Deerwood Drive
Littleton, CO 80127
Wendy Murray Vice President None
114-B Larchmont Acres West
Larchmont, NY 10538
Joseph Norton Vice President None
2518 Fillmore Street
Apt. 1
San Francisco, CA 94115
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Kevin Parchinski Vice President None
1105 Harney St., #310
Omaha, NE 68102
Randall Payne Vice President - None
1307 Wandering Way Dr. Financial
Institution Div.
Charlotte, NC 28226
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice President None
1777 Larimer St. #807
Denver, CO 80202
Tilghman G. Pitts, III* Chairman &
Director None
Elaine Puleo* Vice President - None
Financial Institution Div.,
Director -
Key Accounts
Minnie Ra Vice President - None
0895 Thirty-First Ave. Financial
Institution Div.
Apt. 4
San Francisco, CA 94121
Michael Raso Vice President None
30 Hommocks Road
Apt. 30
Larchmont, NY 10538
John C. Reinhardt ++ Vice
President None
Ian Robertson Vice President None
4204 Summit Way
Marietta, GA 30066
Michael S. Rosen++ Vice President, President:
Rochester Division None
Kenneth Rosenson Vice President None
3802 Knickerbocker Place
Apt. 3D
Indianapolis, IN 46240
James Ruff* President None
Timothy Schoeffler Vice President None
1717 Fox Hall Road
Wasington, DC 20007
Michael Sciortino Vice President None
3114 Hickory Run
Sugarland, TX 77479
Robert Shore Vice President - None
26 Baroness Lane Financial Institution Div.
Laguna Niguel, CA 92677
Peggy Spilker ++ Vice President None
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Scott McGregor Tatum Vice
President None
7123 Cornelia Lane
Dallas, TX 75214
David G. Thomas Vice President - None
111 South Joliet Circle Financial
Institution Div.
#304
Aurora, CO 80112
Philip Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Gary Paul Tyc+ Assistant Treasurer None
Mark Stephen Vandehey+ Vice
President None
</TABLE>
* Two World Trade Center, New York, NY 10048-0203
+ 6803 South Tuscon Way, Englewood, CO 80112
++ 350 Linden Oaks, Rochester, NY 14625-2807 (the "Rochester
Division")
(c) Not applicable.
Item 30. Location of Accounts and Records
- -------- --------------------------------
The accounts, books and other documents required to be maintained
by Registrant pursuant to Section 31(a) of the Investment Company
Act of 1940 and rules promulgated thereunder are in the
possession of OppenheimerFunds, Inc. at its offices at 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 19th day of February, 1997.
QUEST FOR VALUE DUAL PURPOSE FUND, INC.
By: /s/ Joseph La Motta
Joseph La Motta, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:
<TABLE>
<CAPTION>
Signatures Title Date
<S> <C> <C>
/s/ Joseph La Motta Chairman of the February 19, 1997
______________________ Board of Directors,
Joseph La Motta Principal Executive
Officer and President
/s/ Sheldon Siegel
______________________ Treasurer and Principal February 19, 1997
Sheldon Siegel Financial and Accounting
Officer
/s/ Eugene Brody
______________________ Director February 19, 1997
Eugene Brody
/s/ George D. Langdon
______________________ Director February 19, 1997
George D. Langdon
/s/ George Loft
______________________ Director February 19, 1997
George Loft
/s/ Pamela W. McCann
______________________ Director February 19, 1997
Pamela W. McCann
/s/ Thomas W. Murnane
______________________ Director February 19, 1997
Thomas W. Murnane
/s/ Lawrence M. Sherman
______________________ Director February 19, 1997
Lawrence M. Sherman
</TABLE>
<PAGE>
QUEST FOR VALUE DUAL PURPOSE FUND, INC.
INDEX TO EXHIBITS
Exhibit Number Description
24(a)(8) Independent Accountants' Consent
24(b)(1) Articles of Amendment and Restatement
24(b)(2) Amended By-Laws
24(b)(8) Custody Agreement
24(b)(10)(b) Opinion and Consent of Counsel
24(b)(13)(b) Investment Letter
24(b)(16) Performance Computation Schedule
24(b)(17)(1) Financial Data Schedule (Unaudited)
Consent of Independent Accountants
We hereby consent to the use in the Statement of Additional
Information constituting part of this Pre-Effective Amendment No.
2 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated January 22, 1997, relating to the
financial statements and financial highlights of Quest for Value
Dual Purpose Fund, Inc. (to be named Oppenheimer Quest Capital
Value Fund, Inc.) which appears in such Statement of Additional
Information, and to the incorporation by reference of our report
into the Prospectus which constitutes part of this Registration
Statement. We also consent to the reference to us under the
heading and to the reference to us under the heading "Financial
Highlights" in such Prospectus.
/s/ Price Waterhouse LLP
- --------------------------
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
February 20, 1997
PROSP\capitcon.#1
ARTICLES OF AMENDMENT AND
RESTATEMENT OF
QUEST FOR VALUE DUAL PURPOSE FUND, INC.
Quest for Value Dual Purpose Fund, Inc., a Maryland
corporation (the Corporation), hereby certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby amended by:
Changing and reclassifying each of the shares of Common Stock
(par value $.01 per share) of the Corporation, which is issued at
the close of business on the effective date of this amendment, into
one share of Common Stock of the Oppenheimer Quest Capital Value
Fund Series of Common Stock (par value $.0001 per share) and by
transferring to the account designated capital in excess of par
value $.0099 for each share of Common Stock outstanding
immediately after the change and reclassification.
SECOND: The charter of the Corporation is hereby amended
and restated to read in its entirety as follows:
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.
ARTICLES OF INCORPORATION
ARTICLE I
The name of the Corporation is Oppenheimer Quest Capital
Value Fund, Inc.
ARTICLE II
(a) The purposes for which the Corporation is formed and the
business and objects to be carried on and promoted by it are:
(1) To engage primarily in the business of investing,
reinvesting or trading in securities as an investment company
classified under the Investment Company Act of 1940 as an open-end,
management company.
(2) To engage in any one or more businesses or transactions,
or to acquire all or any portion of any entity engaged in any one
or more businesses or transactions, which the Board of Directors
may from time to time authorize or approve, whether or not related
to the business described elsewhere in this article or to any other
business at the time or theretofore engaged in by the Corporation.
(b) The foregoing enumerated purposes and objects shall be in
no way limited or restricted by reference to, or inference from,
the terms of any other clause of this or any other Article of the
Charter of the Corporation, and each shall be regarded as
independent; and they are intended to be and shall be construed as
powers as well as purposes and objects of the Corporation and shall
be in addition to and not in limitation of the general powers of
corporations under the General Laws of the State of Maryland.
ARTICLE III
The post office address of the principal office of the
Corporation in this State is c/o The Corporation Trust
Incorporated, 32 South Street, Baltimore, Maryland 21202.
ARTICLE IV
THE name of the resident agent of the Corporation in this
State is The Corporation Trust Incorporated, a corporation of this
state and the post office address of the resident agent is 32 South
Street, Baltimore, Maryland 21202.
ARTICLE V
(a) The total number of shares of stock of all classes and
series which the Corporation initially has authority to issue is
1,000,000,000 (one billion) shares of common stock (par value
$.0001 per share), amounting in aggregate par value to $100,000
(one hundred thousand). Of the authorized shares of capital stock
of the Corporation, 500,000,000 (five hundred million) shares are
further initially classified as a series of Common Stock designated
the Oppenheimer Quest Capital Value Fund . This series of Common
Stock shall initially have three classes of shares, designated
Class A, Class B and Class C, consisting, until further changed, of
300,000,000 (three hundred million) Class A shares, 100,000,000(one
hundred million) Class B shares and 100,000,000 (one hundred
million) Class C shares. The Board of Directors may classify and
reclassify any unissued shares of capital stock by setting or
changing in any one or more respects the preferences, conversion or
other rights, voting powers, restrictions, limitations as to
dividends, qualifications, or terms or conditions of redemption of
such shares of stock.
(b) Unless otherwise prohibited by law, so long as the
Corporation is registered as an open-end company under the
Investment Company Act of 1940, the Board of Directors shall have
the power and authority, without the approval of the holders of any
outstanding shares, to increase or decrease the number of shares of
capital stock, or the number of shares of capital stock of any
class or series, that the Corporation has authority to issue.
(c) The following is a description of the preferences,
conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and
conditions of redemption of the Oppenheimer Quest Capital Value
Fund, and any additional series of Common Stock of the Corporation
(unless otherwise provided in the articles supplementary or other
charter document classifying or reclassifying such series) and
Class A, Class B and Class C of each series of Common Stock of the
Corporation.
(1) All consideration received by the Corporation from the
issue or sale of shares of a particular series of Common Stock,
together with all assets in which such consideration is invested
or reinvested, all income, earnings, profits and proceeds thereof,
including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from
any investment or reinvestment of such proceeds in whatever form
the same may be, shall irrevocably belong to that series for all
purposes and shall be so recorded upon the books of account of the
Corporation. Such consideration, assets, income, earnings, profits
and proceeds, together with any items allocated as provided in the
following sentence, are hereinafter referred to collectively as the
assets belonging to that series. In the event that there are any
assets, income, profits or proceeds which are not identifiable as
belonging to a particular series of Common Stock, such items shall
be allocated by or under the supervision of the Board of Directors
to and among one or more of the series of Common Stock from time to
time classified or reclassified, in such manner and on such basis
as the Board of Directors, in it sole discretion, deems fair and
equitable. Each such allocation shall be conclusive and binding
for all purposes. No holder of a particular series of Common Stock
shall have any right or claim against the assets belonging to any
other series, except as a holder of the shares of such other
series.
(2) The assets belonging to each series of Common Stock shall
be charged with the liabilities of the Corporation in respect of
that series and all expenses, costs, charges and reserves
attributable to that series. Any liabilities, expenses, costs,
charges or reserves of the Corporation which are attributable to
more than one series of Common Stock, or are not identifiable as
pertaining to any series, shall be allocated and charged by or
under the supervision of the Board of Directors to and among one or
more of the series of Common Stock from time to time classified or
reclassified, in such manner and on such basis as the Board of
Directors, in its sole discretion, deems fair and equitable. Each
such allocation shall be conclusive and binding for all purposes.
The liabilities, expenses, costs, charges and reserves charged to
a series of Common Stock are hereinafter referred to collectively
as the liabilities of that series. All persons who have extended
credit with respect to, or who have a claim or contract in respect
of, a particular series of Common Stock shall look only to the
assets belonging to that series for payment or satisfaction of such
credit, claim or contract.
(3) The net asset value per share of a particular series of
Common Stock shall be the quotient obtained by dividing the value
of the net assets of the series (being the value of the assets
belonging to that series less the liabilities of that series) by
the total number of shares of that series outstanding, all as
determined by or under the discretion of the Board of Directors in
accordance with generally accepted accounting principles and the
Investment Company Act of 1940. Subject to the applicable
provisions of the Investment Company Act of 1940, the Board of
Directors, in its sole discretion, may prescribe and shall set
forth in the by-laws of the Corporation, or in a duly adopted
resolution of the Board of Directors, such bases and times for
determining the current net asset value per share of each series of
Common Stock and the net income attributable to such series, as the
Board of Directors deems necessary or desirable. The Board of
Directors shall have full discretion, to the extent not
inconsistent with the Investment Company Act of 1940, to determine
whether any moneys or other assets received by the Corporation
shall be treated as income or capital and whether any item of
expense shall be charged to income or capital, and each such
determination shall be conclusive and binding for all purposes.
(4) Subject to the provisions of law and any preferences of
any class or series of stock from time to time classified or
reclassified, dividends, including dividends payable in shares of
another class or series of the Corporation s stock, may be paid on
a particular class or series of Common Stock of the Corporation at
such time and in such amounts as the Board of Directors may deem
advisable. Dividends and other distributions on the shares of a
particular series of Common Stock shall be paid only out of the
assets belonging to that series after providing for the liabilities
of that series.
(5) Each holder of Common Stock shall have one vote for each
share standing in his name on the books of the Corporation,
irrespective of the class or series thereof, and the exclusive
voting power for all purposes shall be vested in the holders of the
Common Stock. All classes and series of Common Stock shall vote
together as a single class; provided, however, that as to any
matter with respect to which a separate vote of a particular class
or series is required by the Investment Company Act of 1940 or the
Maryland General Corporation Law, such requirement shall apply
and, in that event, the other classes and series entitled to vote
on the matter shall vote together as a single class; and provided,
further, that the holders of a particular class or series of
Common Stock shall not be entitled to vote on any matter which does
not affect any interest of that class or series (as determined by
the Board of Directors in its sole discretion), including
liquidation of another class or series, except as otherwise
required by the Investment Company Act of 1940 or the Maryland
General Corporation Law.
(6) Each holder of Common Stock shall have the right to
require the Corporation to redeem all or any part of his shares of
any class or series at a redemption price equal to the current net
asset value per share of that class or series which is next
computed after receipt of a tender of such shares for redemption,
less such redemption fee or deferred sales charge, if any, as the
Board of Directors may from time to time establish in accordance
with the Investment Company Act of 1940 and the Rules of Fair
Practice adopted by the National Association of Securities Dealers,
Inc. Payment of the redemption price shall be made by the
Corporation only from the assets belonging to the series whose
shares are being redeemed. The redemption price shall be paid in
cash; provided, however, that if the Board of Directors determines,
which determination shall be conclusive, that conditions exist
which make payment wholly in cash unwise or undesirable, the
Corporation may, to the extent and in the manner permitted by law,
make payment wholly or partly in securities or other assets, at the
value of such securities or other assets used in such determination
of current net asset value. Notwithstanding the foregoing, the
Corporation may suspend the right of holders of any series of
Common Stock to require the Corporation to redeem their shares, or
postpone the date of payment or satisfaction upon such redemption
for more than seven days after tender of such shares for
redemption, during any period or at any time when and to the extent
permitted under the Investment Company Act of 1940.
(7) To the extent and in the manner permitted by the
Investment Company Act of 1940 and the Maryland General Corporation
Law, the Board of Directors may cause the Corporation to redeem, at
their current net asset value, the shares of any series of Common
Stock held in the account of any stockholder having, because of
redemptions or exchanges, an aggregate net asset value which is
less than the minimum initial investment in that series specified
by the Board of Directors from time to time in its sole discretion.
The Board of Directors of the Corporation may also, from time to
time in its discretion, authorize the Corporation to require the
redemption of all or any part of the outstanding shares of its
capital stock of any series for the proportionate interest in the
assets of the Corporation represented by those shares or the cash
equivalent thereof (which shall be the net asset value of those
shares determined as provided hereof), upon the sending of written
or telegraphic notice of redemption to each holder whose shares are
so redeemed and upon such terms and conditions as the Board of
Directors of the Corporation shall deem advisable.
(8) In the event of any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, or of the
liquidation of a particular series of Common Stock, the holders of
each series that is being liquidated shall be entitled, after
payment or provision for payment of the liabilities of that series
and the amount to which the holders of any class of that series
shall be entitled, as a class, to share ratably in the remaining
assets belonging to the series. The holders of shares of any
particular series shall not be entitled thereby to any distribution
upon the liquidation of any other series. The liquidation of any
series of Common Stock of which there are shares then outstanding
shall be approved by the vote of a majority (as defined in the
Investment Company Act of 1940) of the outstanding shares of that
series, and without the vote of the holders of shares of any other
series of Common Stock.
(9) Subject to compliance with the Investment Company Act of
1940, the Board of Directors shall have authority to provide that
holders of any series of Common Stock shall have the right to
exchange their shares for shares of one or more other series in
accordance with such requirements and procedures as may be
established by the Board of Directors.
(10) Except to the extent provided otherwise by the charter
of the Corporation, the Class A, Class B and Class C shares of each
series of Common Stock shall represent an equal proportionate
interest in the assets belonging to that series (subject to the
liabilities of that series) and each share of a particular series
shall have identical voting, dividend, liquidation and other
rights; provided, however, that notwithstanding anything in the
charter of the Corporation to the contrary:
(i) The Class A, Class B and Class C shares may be
issued and sold subject to such different sales or charges, whether
initial, deferred or contingent, or any combination thereof, as the
Board of Directors may from time to time establish in accordance
with the Investment Company Act of 1940 and the Rules of Fair
Practice adopted by the National Association of Securities Dealers,
Inc.
(ii) Expenses, costs and charges which are determined by
or under the supervision of the Board of Directors to be
attributable to a particular class of a series may be charged to
that class and appropriately reflected in the net asset value of,
or dividends payable on, the shares of that class of the series.
(iii) The Class A, Class B and Class C shares of a
particular series may have such different exchange and conversion
rights as the Board of Directors shall provide in compliance with
the Investment Company Act of 1940.
(d) Subject to the foregoing and to the Investment Company
Act of 1940, the power of the Board of Directors to classify and
reclassify any of the shares of capital stock shall include,
without limitation, subject to the provisions of the charter of the
Corporation, authority to classify or reclassify any unissued
shares of such stock into one or more classes or series of
preferred stock, preference stock, special stock or other stock,
and to divide and classify shares of any class or series into one
or more classes or series of such class or series, by determining,
fixing or altering one or more of the following:
(1) The distinctive designation of such class or series and
the number of shares to constitute such class or series; provided
that, unless otherwise prohibited by the terms of such or any other
class or series, the number of shares of any class or series may
be decreased by the Board of Directors in connection with any
classification or reclassification of unissued shares and the
number of shares of such class or series may be increased by the
Board of Directors in connection with any such classification or
reclassification, and any shares of any class or series which have
been redeemed, purchased, otherwise acquired or converted into
shares of any other class or series shall become part of the
authorized capital stock and be subject to classification and
reclassification as herein provided.
(2) Whether or not and, if so, the rates, amounts and times
at which, and the conditions under which, dividends shall be
payable on shares of such class or series, whether any such
dividends shall rank senior or junior to or on a parity with the
dividends payable on any other class or series of stock, and the
status of any such dividends as cumulative, cumulative to a limited
extent or non-cumulative and as participating or non-participating.
(3) Whether or not shares of such class or series shall have
voting rights, in addition to any voting rights provided by law
and, if so, the terms of such voting rights.
(4) Whether or not shares of such class or series shall have
conversion or exchange privileges and, if so, the terms and
conditions thereof, including provision for adjustment of the
conversion or exchange rate in such events or at such times as the
Board of Directors shall determine.
(5) Whether or not shares of such class or series shall be
subject to redemption and, if so, the terms and conditions of such
redemption, including the date or dates upon or after which they
shall be redeemable and the amount per share payable in case of
redemption, which amount may vary under different conditions and at
different redemption dates; and whether or not there shall be any
sinking fund or purchase account in respect thereof and, if so, the
terms thereof.
(6) The rights of the holders of shares of such class or
series upon the liquidation, dissolution or winding up of the
affairs of, or upon any distribution of the assets of, the
Corporation, which rights may vary depending upon whether such
liquidation, dissolution or winding up is voluntary or involuntary
and, if voluntary, may vary at different dates, and whether such
rights shall rank senior or junior to or on a parity with such
rights of any other class or series of stock.
(7) Whether or not there shall be any limitations applicable,
while shares of such class or series are outstanding, upon the
payment of dividends or making of distributions on, or the
acquisition of, or the use of monies for purchase or redemption of,
any stock of the Corporation, or upon any other action of the
Corporation, including action under this paragraph and, if so, the
terms and conditions thereof.
(8) Any other preferences, rights, restrictions, including
restrictions on transferability, and qualifications of shares of
such class or series, not inconsistent with law and the charter of
the Corporation.
(e) For the purposes hereof and of any articles supplementary
to the charter providing for the classification or reclassification
of any shares of capital stock or of any other charter document of
the Corporation (unless otherwise provided in any such articles or
document), any class or series of stock of the Corporation shall be
deemed to rank:
(1) prior to another class or series either as to dividends
or upon liquidation, if the holders of such class or series be
entitled to the receipt of dividends or of amounts distributable on
liquidation, dissolution or winding up, as the case may be, in
preference or priority to holders of such other class or series;
(2) on a parity with another class or series either as to
dividends or upon liquidation, whether or not the dividend rates,
dividend payment dates or redemption or liquidation price per share
thereof be different from those of such others, if the holders of
such class or series of stock shall be entitled to receipt of
dividends or amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in proportion to their respective
dividend rates or redemption or liquidation prices, without
preference or priority over the holders of such other class or
series; and
(3) junior to another class or series either as to dividends
or upon liquidation, if the rights of the holders of such class or
series shall be subject or subordinate to the rights of the holders
of such other class or series in respect of the receipt of
dividends or the amounts distributable upon liquidation,
dissolution or winding up, as the case may be.
(f) The Corporation may issue and sell fractions of shares of
capital stock having pro rata all the rights of full shares,
including, without limitation, the right to vote and to receive
dividends, and wherever the words share or shares are used in
the charter or by-laws of the Corporation, they shall be deemed to
include fractions of shares where the context does not clearly
indicate that only full shares are intended.
(g) The Corporation shall not be obligated to issue
certificates representing shares of capital stock of any class or
series. At the time of issue or transfer of shares without
certificates, the Corporation shall provide the stockholder with
such information as may be required under the Maryland General
Corporation Law.
ARTICLE SIX
The number of directors of the Corporation shall be five,
which number may be increased or decreased pursuant to the by-
laws of the Corporation, but shall never be less than the minimum
number permitted by the General Laws of the State of Maryland now
or hereafter in force. The names of the directors who will serve
until the next annual meeting and until their successors are
elected and qualified are as follows:
Paul Clinton
Thomas Courtney
Lacy Herrmann
George Loft
Bridget A. Macaskill
ARTICLE SEVEN
(a) The following provisions are hereby adopted for the purpose of
defining, limiting and regulating the powers of the Corporation and
of the directors and stockholders:
(1) The Board of Directors is hereby empowered to authorize
the issuance from time to time of shares of its stock of any class
or series, whether now or hereafter authorized, or securities
convertible into shares of its stock of any class or series,
whether now or hereafter authorized, for such consideration as may
be deemed advisable by the Board of Directors and without any
action by the stockholders.
(2) No holder of any stock or any other securities of the
Corporation, whether now or hereafter authorized, shall have any
preemptive right to subscribe for or purchase any stock or any
other securities of the Corporation other than such, if any, as the
Board of Directors, in its sole discretion, may determine and at
such price or prices and upon such other terms as the Board of
Directors, in its sole discretion, may fix; and any stock or other
securities which the Board of Directors may determine to offer for
subscription may, as the Board of Directors in its sole discretion
shall determine, be offered to the holders of any class, series or
type of stock or other securities at the time outstanding to the
exclusion of the holders of any or all other classes, series or
types of stock or other securities at the time outstanding.
(3) The Board of Directors of the Corporation shall,
consistent with applicable law, have power in its sole discretion
to determine from time to time in accordance with sound accounting
practice or other reasonable valuation methods what constitutes
annual or other net profits, earnings, surplus or net assets in
excess of capital; to determine that retained earnings or surplus
shall remain in the hands of the Corporation; to set apart out of
any funds of the Corporation such reserve or reserves in such
amount or amounts and for such proper purpose or purposes as it
shall determine and to abolish any such reserve or any part
thereof; to distribute and pay distributions or dividends in stock,
cash or other securities or property, out of surplus or any other
funds or amounts legally available therefor, at such times and to
the stockholders of record on such dates as it may, from time to
time, determine; and to determine whether and to what extent and at
what times and places and under what conditions and regulations the
books, accounts and documents of the Corporation, or any of them,
shall be open to the inspection of stockholders, except as
otherwise provided by statue of the by-laws of the Corporation,
and, except as so provided, no stockholder shall have any right to
inspect any book, account or document of the Corporation unless
authorized to do so by resolution of the Board of Directors.
(4) Notwithstanding any provision of law requiring the
authorization of any action by a greater proportion than a majority
of the total number of shares of capital stock or of any class or
series of capital stock, such action shall be valid and effective
if authorized by the affirmative vote of the holders of a majority
of the total number of shares of capital stock or of such class or
series, as the case may be, outstanding and entitled to vote
thereon, except as otherwise provided in the charter of the
Corporation. At a meeting of stockholders the presence in person
or by proxy of stockholders entitled to cast a majority of all the
votes entitled to be cast on any matter with respect to which one
or more classes or series of capital stock are entitled to vote as
a separate class shall constitute a quorum of such separate class
for action on that matter. Whether or not a quorum of such a
separate class for action on any such matter is present, a meeting
of stockholders convened on the date for which it was called may be
adjourned as to that matter from time to time without further
notice by a majority vote of the stockholders of the separate class
present in person or by proxy to a date not more than 120 days
after the original record date.
(5) The Corporation shall indemnify (i) its currently acting
and its former directors and officers, whether serving the
Corporation or at its request any other entity, to the full extent
required or permitted by the General Laws of the State of
Maryland now or hereafter in force, including the advance of
expenses under the procedures and to the full extent permitted by
law, and (ii) other employees and agents to such extent as shall
be authorized by the Board of Directors or the by-laws of the
Corporation and as permitted by law. The foregoing rights of
indemnification shall not be exclusive of any other rights to which
those seeking indemnification may be entitled. The Board of
Directors may take such action as is necessary to carry out these
indemnification provisions and is expressly empowered to adopt,
approve and amend from time to time such by-laws, resolutions or
contracts implementing such provisions or such further
indemnification arrangements as may be permitted by law. The right
of indemnification provided hereunder shall not be construed to
protect any director or officer of the Corporation against any
liability to the Corporation or its security holders to which he
would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
(6) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, no director or officer
of the Corporation shall be personally liable to the Corporation or
its stockholders for money damages; provided, however, that this
provision shall not be construed to protect any director or officer
against any liability to the Corporation or its security holders to
which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office. No amendment,
modification or repeal of this provision shall adversely affect
any right or protection provided hereunder that exists at the time
of such amendment, modification or repeal.
(7) The Corporation reserves the right from time to time to
make any amendments of its charter which may now or hereafter be
authorized by law, including any amendments changing the terms or
contract rights, as expressly set forth in its charter, of any of
its outstanding stock by classification, reclassification or
otherwise.
(b) The enumeration and definition of particular powers of
the Board of Directors included in the foregoing shall in no way
be limited or restricted by reference to or inference from the
terms of any other clause of this or any other article of the
charter of the Corporation, or construed as or deemed by
inference or otherwise in any manner to exclude or limit any
powers conferred upon the Board of Directors under the General
Laws of the State of Maryland now or hereafter in force.
ARTICLE EIGHT
The duration of the Corporation shall be perpetual.
THIRD: The provisions hereunder set forth are all the
provisions of the charter of the Corporation currently in effect.
FOURTH:
(a) As of immediately before the amendment the total number
of shares of stock of all classes which the Corporation has
authority to issue is 40,000,000 shares of capital stock, of
which 20,000,000 shares are Income Shares (par value $.01 per
share) and 20,000,000 shares are Capital Shares (par value $.01
per share).
(b) As amended the total number of shares of stock of all
classes which the Corporation has authority to issue is
1,000,000,000 shares, of which 500,000,000 shares are Common
Stock --- Oppenheimer Quest Capital Value Fund Series (par value
$.0001 per share), consisting of 300,000,000 Class A shares,
100,000,000 Class B shares and 100,000,000 Class C shares and
500,000,000 shares are undesignated as to class or series (par
value $.0001 per share).
(c) The aggregate par value of all shares having a par
value is $400,000 before the amendment and $100,000 as amended.
(d) The preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of each
class of capital stock of the Corporation have been changed to
provide that all shares of capital stock are redeemable shares of
an open-end management investment company and as specified in
Article V above.
FIFTH: In accordance with the provisions of section 2-604
of the General Corporation Law of the State of Maryland, the
foregoing amendment was duly approved by a majority of the
entire Board of Directors and by a vote of two-thirds (2/3) of
the outstanding stock entitled to vote on the matter.
SIXTH: These Articles of Amendment and Restatement shall
become effective upon the latter to occur of (1) 12:01 a.m. on
March 3, 1997 or (2) the effectiveness of the Corporation's
Registration Statement on Form N-1A (file no. 333-16881), as
conclusively determined by the U.S. Securities and Exchange
Commission (the "Commission"); provided, however, that these
Articles of Amendment and Restatement may be abandoned by a
majority vote of the Corporation's Board of Directors on or
before March __, 1997 if such registration shall not have been
declared effective by the Commission by the time such abandonment
is approved.
IN WITNESS WHEREOF, the Corporation has caused these present
to be signed in its name and on its behalf by its President and
witnessed by its Secretary on this _____ day of __________, 1996.
QUEST FOR VALUE DUAL PURPOSE
FUND, INC.
By: /s/ Joseph LaMotta
Joseph LaMotta, President
Witness:
/s/ Deborah Kaback
Deborah Kaback, Secretary
THE UNDERSIGNED, President of Quest For Value Dual
Purpose Fund, Inc., who executed on behalf of the Corporation the
foregoing Articles of Amendment and Restatement of which this
certificate is made a part, hereby acknowledges in the name and
on behalf of said Corporation the foregoing Articles of Amendment
and Restatement to be the corporate act of said Corporation and
hereby certifies that to the best of his knowledge, information
and belief the matters set forth therein with respect to the
authorization and approval thereof are true in all material
respects under the penalties of perjury.
/s/ Joseph M. LaMotta
Joseph M. LaMotta
President
orgzn\qcap.cha
(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 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 sixty 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
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 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. 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 or of such committee, as
the case may be, and such written consent is filed with the minutes
of proceedings of the board or committee.
Section 10. Committees. The board of directors may by
resolution passed by a majority of the entire board appoint from
among its members an executive committee and other committees
composed of two or more directors, and may delegate to such
committees, in the intervals between meetings of the board of
directors, any or all of the powers of the board of directors in
the management of the business and affairs of the Corporation,
except the powers to declare dividends, to issue stock or to
recommend to stockholders any action requiring stockholder
approval.
Section 11. Action of Committees. In the absence of an
appropriate resolution of the board of directors, each committee
may adopt such rules and regulations governing the proceedings,
quorum and manner of acting as it shall deem proper and desirable,
provided that the quorum shall not be less than two directors. The
committees shall keep minutes of their proceedings and shall report
the same to the board of directors at the meeting next succeeding,
and any action by the committee shall be subject to revision and
alteration by the board of directors, provided that no rights of
third persons shall be affected by any such revision or alteration.
In the absence of any member of such committee the members thereof
present at any meeting, whether or not they constitute a quorum,
may appoint a member of the board of directors to act in the place
of such absent member.
Section 12. Compensation. Any director, whether or not he
is a salaried officer or employee of the Corporation, may be
compensated for his services as director or as a member of a
committee of directors, or as chairman of the board or chairman of
a committee by fixed periodic payments or by fees for attendance at
meetings or by both, and in addition may be reimbursed for
transportation and other expenses, all in such manner and amounts
as the board of directors may from time to time determine.
ARTICLE IV
Notices
Section 1. Form. Notices to stockholders shall be in
writing and delivered personally or mailed to the stockholders at
their addresses appearing on the books of the Corporation. Notices
to directors shall be oral or by telephone or telegram or in
writing delivered personally or mailed to the directors at their
addresses appearing on the books of the Corporation. Notice by
mail shall be deemed to be given at the time when the same shall be
mailed. Notice to directors need not state the purpose of a
regular or special meeting.
Section 2. Waiver. Whenever any notice of the time, place
or purpose of any meeting of stockholders, directors or a committee
is required to be given under the provisions of Maryland law or
under the provisions of the Articles of Incorporation or these By-
laws, a waiver thereof in writing, signed by the person or persons
entitled to such notice and filed with the records of the meeting,
whether before or after the holding thereof, or actual attendance
at the meeting of stockholders in person or by proxy, or at the
meeting of directors of committee in person, shall be deemed
equivalent to the giving of such notice to such persons.
ARTICLE V
Officers
Section 1. Executive Officers. The officers of the
Corporation shall be chosen by the board of directors and shall
include a president, who shall be a director, a secretary and a
treasurer. The board of directors may, from time to time, elect or
appoint a controller, one or more vice presidents, assistant
secretaries and assistant treasurers. The board of directors, at
its discretion, may also appoint a director as chairman of the
board who shall perform and execute such executive and
administrative duties and powers as the board of directors shall
from time to time prescribe. The same person may hold two or more
offices, except that no person shall be both president and
secretary and no officer shall execute, acknowledge or verify any
instrument in more than one capacity, if such instrument is
required by law, the Articles of Incorporation or these By-laws to
be executed, acknowledged or verified by two or more officers.
Section 2. Election. The board of directors shall choose
a president, a secretary and a treasurer at its first meeting and
thereafter at the next meeting following a stockholders' meeting at
which directors were elected.
Section 3. Other Officers. The board of directors from
time to time may appoint such other officers and agents as it shall
deem advisable, who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be
determined from time to time by the board. The board of directors
from time to time may delegate to one or more officers or agents
the power to appoint any such subordinate officers or agent and to
prescribe their respective rights, terms of office, authorities and
duties.
Section 4. Compensation. The salaries or other
compensation of all officers and agents of the Corporation shall be
fixed by the board of directors, except that the board of directors
may delegate to any person or group of persons the power to fix the
salary or other compensation of any subordinate officers or agents
appointed pursuant to Section 3 of this Article V.
Section 5. Tenure. The officers of the Corporation shall
serve for one year and until their successors are chosen and shall
qualify. Any officer or agent may be removed by the affirmative
vote of a majority of the board of directors whenever, in its
judgment, the best interests of the Corporation will be served
thereby. In addition, any officer or agent appointed pursuant to
Section 3 of this Article V may be removed, either with or without
cause, by any officer upon whom such power of removal shall have
been conferred by the board of directors. Any vacancy occurring in
any office of the Corporation by death, resignation, removal or
otherwise shall be filled by the board of directors, unless
pursuant to Section 3 of this Article V the power of appointment
has been conferred by the board of directors on any other officer.
Section 6. President. The president, unless the chairman
has been so designated, shall be the chief executive officer of the
Corporation. He shall preside at all meetings of the stockholders
and directors, and shall see that all orders and resolutions of the
board are carried into effect. The president, unless the chairman
has been so designated, shall also be the chief administrative
officer of the Corporation and shall perform such other duties and
have such other powers as the board of directors may from time to
time prescribe.
Section 7. Chairman of the Board. The chairman of the
board, if one shall be chosen, shall preside at all meetings of the
board of directors and stockholders, and shall perform and execute
such executive duties and administrative powers as the board of
directors shall from time to time prescribe.
Section 8. Vice-President. The vice-presidents, in the
order of their seniority, shall, in the absence or disability of
the president, perform the duties and exercise the powers of the
president and shall perform such other duties as the board of
directors of the chief executive officer may from time to time
prescribe.
Section 9. Secretary. The secretary shall attend all
meetings of the board of directors and all meetings of the
stockholders and record all the proceedings thereof and shall
perform like duties for any committee when required. He shall
give, or cause to be given, notice of meetings of the stockholders
and of the board of directors, shall have charge of the records of
the Corporation, including the stock books, and shall perform such
other duties as may be prescribed by the board of directors or
chief executive officer, under whose supervision he shall be. He
shall keep in safe custody the seal of the Corporation and, when
authorized by the board of directors, shall affix and attest the
same to any instrument requiring it. The board of directors may
give general authority to any officer to affix the seal of the
Corporation and to attest the affixing by his signature.
Section 10. Assistant Secretaries. The assistant
secretaries in order of their seniority, shall, in the absence or
disability of the secretary, perform the duties and exercise the
powers of the secretary and shall perform such other duties as the
board of directors shall prescribe.
Section 11. Treasurer. The treasurer, unless another
officer has been so designated, shall be the chief financial
officer of the Corporation. He shall have general supervision of
the funds and property of the Corporation and of the performance by
the custodian of its duties with respect thereto. He shall render
to the board of directors whenever directed by the board, an
account of the financial condition of the Corporation and of all
his transactions as Treasurer; and as soon as possible after the
close of each financial year he shall make and submit to the board
of directors a like report for such financial year. He shall
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. 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 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 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 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
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
CUSTODIAN CONTRACT
Between
QUEST FOR VALUE DUAL PURPOSE FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held By It . . . . . . . .1
2. Duties of the Custodian with Respect to Property of the
Fund Held by the Custodian. . . . . . . . . . . . . . . . . . . . . .1
2.1 Holding Securities. . . . . . . . . . . . . . . . . . . . . . . . . .1
2.2 Delivery of Securities. . . . . . . . . . . . . . . . . . . . . . . .2
2.3 Registration of Securities. . . . . . . . . . . . . . . . . . . . . .4
2.4 Bank Accounts4 .
2.5 Availability of Federal Funds . . . . . . . . . . . . . . . . . . . .5
2.6 Collection of Income. . . . . . . . . . . . . . . . . . . . . . . . .5
2.7 Payment of Fund Monies. . . . . . . . . . . . . . . . . . . . . . . .6
2.8 Liability for Payment in Advance of Receipt
of Securities Purchased . . . . . . . . . . . . . . . . . . . . . . .7
2.9 Appointment of Agents . . . . . . . . . . . . . . . . . . . . . . . .7
2.10 Deposit of Fund Assets in Securities System . . . . . . . . . . . . .7
2.10AFund Assets Held in the Custodian's Direct
Paper System. . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
2.11 Segregated Account. . . . . . . . . . . . . . . . . . . . . . . . . 10
2.12 Ownership Certificates for Tax Purposes . . . . . . . . . . . . . . 11
2.13 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.14 Communications Relating to Fund Portfolio Securities. . . . . . . . 11
2.15 Proper Instructions . . . . . . . . . . . . . . . . . . . . . . . . 12
2.16 Actions Permitted Without Express Authority . . . . . . . . . . . . 12
2.17 Evidence of Authority . . . . . . . . . . . . . . . . . . . . . . . 12
3. Duties of the Custodian with Respect to the Books
of Account and Calculation of Net Asset Value and
Net Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5. Opinion of Fund's Independent Accountant. . . . . . . . . . . . . . 14
6. Reports to Fund by Independent Public Accountants . . . . . . . . . 14
7. Compensation of Custodian . . . . . . . . . . . . . . . . . . . . . 14
8. Responsibility of Custodian . . . . . . . . . . . . . . . . . . . . 14
9. Effective Period, Termination and Amendment . . . . . . . . . . . . 15
10. Successor Custodian . . . . . . . . . . . . . . . . . . . . . . . . 16
11. Interpretive and Additional Provisions. . . . . . . . . . . . . . . 17
12. Massachusetts Law to Apply. . . . . . . . . . . . . . . . . . . . . 17
13. Prior Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 17<PAGE>
CUSTODIAN CONTRACT
This Contract between Quest for Value Dual Purpose Fund,
Inc., a corporation organized and existing under the laws of
Maryland, having its principal place of business at 200 Liberty
Street, New York, New York 10281, hereinafter called the "Fund,"
and State Street Bank and Trust Company, a Massachusetts trust
company, having its principal place of business at 225 Franklin
Street, Boston, Massachusetts 02110, hereinafter called the
"Custodian,"
WITNESSETH: that in consideration of the mutual covenants
and agreements hereinafter contained, the parties hereto agree as
follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of
its assets pursuant to the provisions of the Articles of
Incorporation. The Fund agrees to deliver to the Custodian all
securities and cash owned by it, and all payments of income,
payments of principal or capital distributions received by it
with respect to all securities owned by the Fund from time to
time, and the cash consideration received by it for such new or
treasury shares of capital stock, $.01 par value, ("Shares") of
the Fund as may be issued or sold from time to time. The
Custodian shall not be responsible for any property of the Fund
held or received by the Fund and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of
Section 2.15), the Custodian shall from time to time employ one
or more sub-custodians, but only in accordance with an applicable
vote by the Board of Directors of the Fund, and provided that the
Custodian shall have no more or less responsibility or liability
to the Fund on account of any actions or omissions of any sub-
custodian so employed than any such sub-custodian has to the
Custodian.
2. Duties of the Custodian with Respect to Property of the Fund
Held By the Custodian
2.1 Holding Securities. The Custodian shall hold and physically
segregate for the account of the Fund all non-cash property,
including all securities owned by the Fund, other than (a)
securities which are maintained pursuant to Section 2.10 in
a clearing agency which acts as a securities depository or
in a book-entry system authorized by the U.S. Department of
the Treasury, collectively referred to herein as "Securities
System" and (b) commercial paper of an issuer for which
State Street Bank and Trust Company acts as issuing and
paying agent ("Direct Paper") which is deposited and/or
maintained in the Direct Paper System of the Custodian
pursuant to Section 2.10A.
2.2 Delivery of Securities. The Custodian shall release and
deliver securities owned by the Fund held by the Custodian
or in a Securities System account of the Custodian or in the
Custodian's Direct Paper book-entry system account ("Direct
Paper System Account") only upon receipt of Proper
Instructions, which may be continuing instructions when
deemed appropriate by the parties, and only in the following
cases:
(1) Upon sale of such securities for the account of the
Fund and receipt of payment therefor;
(2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered
into by the Fund;
(3) In the case of a sale effected through a Securities
System, in accordance with the provisions of Section
2.10 hereof;
(4) To the depository agent in connection with tender or
other similar offers for portfolio securities of the
Fund;
(5) To the issuer thereof or its agent when such securities
are called, redeemed, retired or otherwise become
payable; provided that, in any such case, the cash or
other consideration is to be delivered to the
Custodian;
(6) To the issuer thereof, or its agent, for transfer into
the name of the Fund or into the name of any nominee or
nominees of the Custodian or into the name or nominee
name of any agent appointed pursuant to Section 2.9 or
into the name or nominee name of any sub-custodian
appointed pursuant to Article 1; or for exchange for a
different number of bonds, certificates or other
evidence representing the same aggregate face amount or
number of units; provided that, in any such case, the
new securities are to be delivered to the Custodian;
(7) Upon the sale of such securities for the account of the
Fund, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street
delivery" custom; provided that in any such case, the
Custodian shall have no responsibility or liability for
any loss arising from the delivery of such securities
prior to receiving payment for such securities except
as may arise from the Custodian's own negligence or
willful misconduct;
(8) For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization, reorganization
or readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion
contained in such securities, or pursuant to any
deposit agreement; provided that, in any such case, the
new securities and cash, if any, are to be delivered to
the Custodian;
(9) In the case of warrants, rights or similar securities,
the surrender thereof in the exercise of such warrants,
rights or similar securities or the surrender of
interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the
Custodian;
(10) For delivery in connection with any loans of securities
made by the Fund, but only against receipt of adequate
collateral as agreed upon from time to time by the
Custodian and the Fund, which may be in the form of
cash or obligations issued by the United States
government, its agencies or instrumentalities, except
that in connection with any loans for which collateral
is to be credited to the Custodian's account in the
book-entry system authorized by the U.S. Department of
the Treasury, the Custodian will not be held liable or
responsible for the delivery of securities owned by the
Fund prior to the receipt of such collateral;
(11) For delivery as security in connection with any
borrowings by the Fund requiring a pledge of assets by
the Fund, but only against receipt of amounts borrowed;
(12) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian and a broker-
dealer registered under the Securities Exchange Act of
1934 (the "Exchange Act") and a member of The National
Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options
Clearing Corporation and of any registered national
securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements
in connection with transactions by the Fund;
(13) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian, and a Futures
Commission Merchant registered under the Commodity
Exchange Act, relating to compliance with the rules of
the Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization or
organizations, regarding account deposits in connection
with transactions by the Fund;
(14) For any other proper corporate purpose, but only upon
receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board of
Directors or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or
an Assistant Secretary, specifying the securities to be
delivered, setting forth the purpose for which such
delivery is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or
persons to whom delivery of such securities shall be
made.
2.3 Registration of Securities. Securities held by the
Custodian (other than bearer securities) shall be registered
in the name of the Fund or in the name of any nominee of the
Fund or of any nominee of the Custodian which nominee shall
be assigned exclusively to the Fund, unless the Fund has
authorized in writing the appointment of a nominee to be
used in common with other registered investment companies
having the same investment adviser as the Fund, or in the
name or nominee name of any agent appointed pursuant to
Section 2.9 or in the name or nominee name of any sub-
custodian appointed pursuant to Article 1. All securities
accepted by the Custodian on behalf of the Fund under the
terms of this Contract shall be in "street name" or other
good delivery form. If, however, the Fund directs the
Custodian to maintain securities in "street name," the
Custodian shall utilize its best efforts only to timely
collect income due the Fund on such securities and to notify
the Fund on a best efforts basis only of relevant corporate
actions including, without limitation, pendency of calls,
maturities, tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a
separate bank account or accounts in the name of the Fund,
subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in
such account or accounts, subject to the provisions hereof,
all cash received by it from or for the account of the Fund,
other than cash maintained by the Fund in a bank account
established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940. Funds held by the Custodian
for the Fund may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in
such other banks or trust companies as it may in its
discretion deem necessary or desirable; provided, however,
that every such bank or trust company shall be qualified to
act as a custodian under the Investment Company Act of 1940
and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall be
approved by vote of a majority of the Board of Directors of
the Fund. Such funds shall be deposited by the Custodian in
its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement
between the Fund and the Custodian, the Custodian shall,
upon the receipt of Proper Instructions, make federal funds
available to the Fund as of specified times agreed upon from
time to time by the Fund and the Custodian in the amount of
checks received in payment for Shares of the Fund which are
deposited into the Fund's account.
2.6 Collection of Income. Subject to the provisions of Section
2.3, the Custodian shall collect on a timely basis all
income and other payments with respect to registered
securities held hereunder to which the Fund shall be
entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all
income and other payments with respect to bearer securities
if, on the date of payment by the issuer, such securities
are held by the Custodian or its agent thereof and shall
credit such income, as collected, to the Fund's custodian
account. Without limiting the generality of the foregoing,
the Custodian shall detach and present for payment all
coupons and other income items requiring presentation as and
when they become due and shall collect interest when due on
securities held hereunder. Income due the Fund securities
loaned pursuant to the provisions of Section 2.2 (10) shall
be the responsibility of the Fund. The Custodian will have
no duty or responsibility in connection therewith, other
than to provide the Fund with such information or data as
may be necessary to assist the Fund in arranging for the
timely delivery to the Custodian of the income to which the
Fund is properly entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper
Instructions, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall pay
out monies of the Fund in the following cases only:
(1) Upon the purchase of securities, options, futures
contracts or options on futures contracts for the
account of the Fund but only (a) against the delivery
of such securities, or evidence of title to such
options, futures contracts or options on futures
contracts to the Custodian (or any bank, banking firm
or trust company doing business in the United States or
abroad which is qualified under the Investment Company
Act of 1940, as amended, to act as a custodian and has
been designated by the Custodian as its agent for this
purpose) registered in the name of the Fund or in the
name of a nominee of the Custodian referred to in
Section 2.3 hereof or in proper form for transfer; (b)
in the case of a purchase effected through a Securities
System, in accordance with the conditions set forth in
Section 2.10 hereof; (c) in the case of a purchase
involving the Direct Paper System, in accordance with
the conditions set forth in Section 2.10A; (d) in the
case of repurchase agreements entered into between the
Fund and the Custodian, or another bank, or a broker-
dealer which is a member of the NASD, (i) against
delivery of the securities either in certificate form
or through an entry crediting the Custodian's account
at the Federal Reserve Bank with such securities or
(ii) against delivery of the receipt evidencing
purchase by the Fund of securities owned by the
Custodian along with written evidence of the agreement
by the Custodian to repurchase such securities from the
Fund or (e) for transfer to a time deposit account of
the Fund in any bank, whether domestic or foreign; such
transfer may be effected prior to receipt of a
confirmation from a broker and/or the applicable bank
pursuant to Proper Instructions from the Fund as
defined in Section 2.15;
(2) In connection with conversion, exchange or surrender of
securities owned by the Fund as set forth in Section
2.2 hereof;
(3) For the payment of any expense or liability incurred by
the Fund, including but not limited to the following
payments for the account of the Fund: interest, taxes,
management, accounting, transfer agent and legal fees,
and operating expenses of the Fund whether or not such
expenses are to be in whole or part capitalized or
treated as deferred expenses;
(4) For the payment of any dividends declared pursuant to
the governing documents of the Fund;
(5) For payment of the amount of dividends received in
respect of securities sold short;
(6) For any other proper purpose, but only upon receipt of,
in addition to Proper Instructions, a certified copy of
a resolution of the Board of Directors or of the
Executive Committee of the Fund signed by an officer of
the Fund and certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment,
setting forth the purpose for which such payment is to
be made, declaring such purpose to be a proper purpose,
and naming the person or persons to whom such payment
is to be made.
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased.
Except as specifically stated otherwise in this
Contract, in any and every case where payment for
purchase of securities for the account of the Fund is
made by the Custodian in advance of receipt of the
securities purchased in the absence of specific written
instructions from the Fund to so pay in advance, the
Custodian shall be absolutely liable to the Fund for
such securities to the same extent as if the securities
had been received by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time
or times in its discretion appoint (and may at any time
remove) any other bank or trust company which is itself
qualified under the Investment Company Act of 1940, as
amended, to act as a custodian, as its agent to carry
out such of the provisions of this Article 2 as the
Custodian may from time to time direct; provided,
however, that the appointment of any agent shall not
relieve the Custodian of its responsibilities or
liabilities hereunder.
2.10 Deposit of Fund Assets in Securities Systems. The
Custodian may deposit and/or maintain securities owned
by the Fund in a clearing agency registered with the
Securities and Exchange Commission under Section 17A of
the Securities Exchange Act of 1934, which acts as a
securities depository, or in the book-entry system
authorized by the U.S. Department of the Treasury and
certain federal agencies, collectively referred to
herein as "Securities System" in accordance with
applicable Federal Reserve Board and Securities and
Exchange Commission rules and regulations, if any, and
subject to the following provisions:
(1) The Custodian may keep securities of the Fund in a
Securities System provided that such securities
are represented in an account ("Account") of the
Custodian in the Securities System which shall not
include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise
for customers;
(2) The records of the Custodian with respect to
securities of the Fund which are maintained in a
Securities System shall identify by book-entry
those securities belonging to the Fund;
(3) The Custodian shall pay for securities purchased
for the account of the Fund upon (i) receipt of
advice from the Securities System that such
securities have been transferred to the Account,
and (ii) the making of an entry on the records of
the Custodian to reflect such payment and transfer
for the account of the Fund. The Custodian shall
transfer securities sold for the account of the
Fund upon (i) receipt of advice from the
Securities System that payment for such securities
has been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian
to reflect such transfer and payment for the
account of the Fund. Copies of all advices from
the Securities System of transfers of securities
for the account of the Fund shall identify the
Fund, be maintained for the Fund by the Custodian
and be provided to the Fund at its request. Upon
request, the Custodian shall furnish the Fund
confirmation of each transfer to or from the
account of the Fund in the form of a written
advice or notice and shall furnish to the Fund
copies of daily transaction sheets reflecting each
day's transactions in the Securities System for
the account of the Fund.
(4) The Custodian shall provide the Fund with any
report obtained by the Custodian on the Securities
System's accounting system, internal accounting
control and procedures for safeguarding domestic
securities deposited in the Securities System;
(5) The Custodian shall have received the initial or
annual certificate, as the case may be, required
by Article 9 hereof;
(6) Anything to the contrary in this Contract
notwithstanding, the Custodian shall be liable to
the Fund for any loss or damage to the Fund
resulting from use of the Securities System by
reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents
or of any of its or their employees or from
failure of the Custodian or any such agent to
enforce effectively such rights as it may have
against the Securities System; at the election of
the Fund, it shall be entitled to be subrogated to
the rights of the Custodian with respect to any
claim against the Securities System or any other
person which the Custodian may have as a
consequence of any such loss or damage if and to
the extent that the Fund has not been made whole
for any such loss or damage.
2.10A Fund Assets Held in the Custodian's Direct Paper System
The Custodian may deposit and/or maintain securities
owned by the Fund in the Direct Paper System of the
Custodian subject to the following provisions:
(1) No transaction relating to securities in the
Direct Paper System will be effected in the
absence of Proper Instructions;
(2) The Custodian may keep securities of the Fund in
the Direct Paper System only if such securities
are represented in an account ("Account") of the
Custodian in the Direct Paper System which shall
not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise
for customers;
(3) The records of the Custodian with respect to
securities of the Fund which are maintained in the
Direct Paper System shall identify by book-entry
those securities belonging to the Fund;
(4) The Custodian shall pay for securities purchased
for the account of the Fund upon the making of an
entry on the records of the Custodian to reflect
such payment and transfer of securities to the
account of the Fund. The Custodian shall transfer
securities sold for the account of the Fund upon
the making of an entry on the records of the
Custodian to reflect such transfer and receipt of
payment for the account of the Fund;
(5) The Custodian shall furnish the Fund confirmation
of each transfer to or from the account of the
Fund, in the form of a written advice or notice,
of Direct Paper on the next business day following
such transfer and shall furnish to the Fund copies
of daily transaction sheets reflecting each day's
transactions in the Securities System for the
account of the Fund;
(6) The Custodian shall provide the Fund with any
report on its system of internal accounting
control as the Fund may reasonably request from
time to time;
2.11 Segregated Account. The Custodian shall upon receipt of
Proper Instructions establish and maintain a segregated
account or accounts for and on behalf of the Fund, into
which account or accounts may be transferred cash and/or
securities, including securities maintained in an account by
the Custodian pursuant to Section 2.10 hereof, (i) in
accordance with the provisions of any agreement among the
Fund, the Custodian and a broker-dealer registered under the
Exchange Act and a member of the NASD (or any futures
commission merchant registered under the Commodity Exchange
Act), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national
securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any
similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by the
Fund, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or
written by the Fund or commodity futures contracts or
options thereon purchased or sold by the Fund, (iii) for the
purposes of compliance by the Fund with the procedures
required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies and
(iv) for other proper corporate purposes, but only, in the
case of clause (iv), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the Board
of Directors or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or an
Assistant Secretary, setting forth the purpose or purposes
of such segregated account and declaring such purposes to be
proper corporate purposes.
2.12 Ownership Certificates for Tax Purposes. The Custodian
shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in
connection with receipt of income or other payments with
respect to securities of the Fund held by it and in
connection with transfers of such securities.
2.13 Proxies. The Custodian shall, with respect to the
securities held hereunder, cause to be promptly executed by
the registered holder of such securities, if the securities
are registered otherwise than in the name of the Fund or a
nominee of the Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall
promptly deliver to the Fund such proxies, all proxy
soliciting materials and all notices relating to such
securities.
2.14 Communications Relating to Fund Portfolio Securities
Subject to the provisions of Section 2.3, the Custodian
shall transmit promptly to the Fund all written information
(including, without limitation, pendency of calls and
maturities of securities and expirations of rights in
connection therewith and notices of exercise of call and put
options' written by the Fund and the maturity of futures
contracts purchased or sold by the Fund) received by the
Custodian from issuers of the securities being held for the
Fund. With respect to tender or exchange offers, the
Custodian shall transmit promptly to the Fund all written
information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the
party (or his agents) making the tender or exchange offer.
If the Fund desires to take action with respect to any
tender offer, exchange offer or any other similar
transaction, the Fund shall notify the Custodian at least
three business days prior to the date on which the Custodian
is to take such action.
2.15 Proper Instructions. Proper Instructions as used throughout
this Article 2 means a writing signed or initialled by one
or more person or persons as the Board of Directors shall
have from time to time authorized. Each such writing shall
set forth the specific transaction or type of transaction
involved, including a specific statement of the purpose for
which such action is requested. Oral instructions will be
considered Proper Instructions if the Custodian reasonably
believes them to have been given by a person authorized to
give such instructions with respect to the transaction
involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the
Secretary or an Assistant Secretary as to the authorization
by the Board of Directors of the Fund accompanied by a
detailed description of procedures approved by the Board of
Directors, Proper Instructions may include communications
effected directly between electro-mechanical or electronic
devices provided that the Board of Directors and the
Custodian are satisfied that such procedures afford adequate
safeguards for the Fund's assets. For purposes of this
Section, Proper Instructions shall include instructions
received by the Custodian pursuant to any three-party
agreement which requires a segregated asset account in
accordance with Section 2.11.
2.16 Actions Permitted without Express Authority. The Custodian
may in its discretion, without express authority from the
Fund:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to
its duties under this Contract, provided that all such
payments shall be accounted for to the Fund;
2) surrender securities in temporary form for securities
in definitive form;
3) endorse for collection, in the name of the Fund,
checks, drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution,
purchase, transfer and other dealings with the
securities and property of the Fund except as otherwise
directed by the Board of Directors of the Fund.
2.17 Evidence of Authority. The Custodian shall be protected in
acting upon any instructions, notice, request, consent,
certificate or other instrument or paper believed by it to
be genuine and to have been properly executed by or on
behalf of the Fund. The Custodian may receive and accept a
certified copy of a vote of the Board of Directors of the
Fund as conclusive evidence (a) of the authority of any
person to act in accordance with such vote or (b) of any
determination or of any action by the Board of Directors
pursuant to the Articles of Incorporation as described in
such vote, and such vote may be considered as in full force
and effect until receipt by the Custodian of written notice
to the contrary.
3. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Board
of Directors of the Fund to keep the books of account of the
Fund and/or compute the net asset value per share of the
outstanding shares of the Fund or, if directed in writing to
do so by the Fund, shall itself keep such books of account
and/or compute such net asset value per share. If so
directed, the Custodian shall also calculate weekly the net
income of the Fund as described in the Fund's currently
effective prospectus and shall advise the Fund and the
Transfer Agent weekly of the total amounts of such net
income and, if instructed in writing by an officer of the
Fund to do so, shall advise the Transfer Agent periodically
of the division of such net income among its various
components. The calculations of the net asset value per
share and the weekly income of the Fund shall be made at the
time of times described form time to time in the Fund's
currently effective prospectus.
4. Records
The Custodian shall create and maintain all records relating
to its activities and obligations under this Contract in
such manner as will meet the obligations of the Fund under
the Investment Company of 1940, with particular attention to
Section 31 thereof and Rules 31a-1 and 31a-2 thereunder,
applicable federal and state tax laws and any other law or
administrative rules or procedures which may be applicable
to the Fund. All such records shall be the property of the
Fund and shall at all times during the regular business
hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Fund and
employees and agents of the Securities and Exchange
Commission. The Custodian shall, at the Fund's request,
supply the Fund with a tabulation of securities owned by the
Fund and held by the Custodian and shall, when requested to
do so by the Fund and for such compensation as shall be
agreed upon between the Fund and the Custodian, include
certificate numbers in such tabulations.
5. Opinion of Fund's Independent Account
The Custodian shall take all reasonable action, as the Fund
may from time to time request, to obtain from year to year
favorable opinions from the Fund's independent accountants
with respect to its activities hereunder in connection with
the preparation of the Fund's Form N-2, and Form N-SAR or
other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of
such Commission.
6. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, at such times as the
Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal
accounting control and procedures for safeguarding
securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained
in a Securities System, relating to the services provided by
the Custodian under this Contract; such reports, shall be of
sufficient scope and in sufficient detail, as may reasonably
be required by the Fund to provide reasonable assurance that
any material inadequacies would be disclosed by such
examination, and, if there are no such inadequacies, the
reports shall so state.
7. Compensation of Custodian.
The Custodian shall be entitled to reasonable compensation
for its services and expenses as Custodian, as agreed upon
from time to time between the Fund and the Custodian.
8. Responsibility of Custodian.
So long as and to the extent that it is in the exercise of
reasonable care, the Custodian shall not be responsible for
the title, validity or genuineness of any property or
evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in
acting upon any notice, request, consent, certificate or
other instrument reasonably believed by it to be genuine and
to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of
a three-party futures or options agreement. The Custodian
shall be held to the exercise of reasonable care in carrying
out the provisions of this Contract, but shall be kept
indemnified by and shall be without liability to the Fund
for any action taken or omitted by it in good faith without
negligence. It shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for the Fund) on
all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
If the Fund requires the Custodian to take any action with
respect to securities, which action involves the payment of
money or which action may, in the opinion of the Custodian,
result in the Custodian or its nominee assigned to the Fund
being liable for the payment of money or incurring liability
of some other form, the Fund, as a prerequisite to requiring
the Custodian to take such action, shall provide indemnity
to the Custodian in an amount and form satisfactory to it.
If the Fund requires the Custodian to advance cash or
securities for any purpose or in the event that the
Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities
in connection with the performance of this Contract, except
such as may arise from its or its nominee's own negligent
action, negligent failure to act or willful misconduct, any
property at any time held for the account of the Fund shall
be security therefor and should the Fund fail to repay the
Custodian promptly, the Custodian shall be entitled to
utilize available cash and to dispose of the Fund assets to
the extent necessary to obtain reimbursement.
9. Effective Period, Termination and Amendment.
This Contract shall become effective as of its execution,
shall continue in full force and effect until terminated as
hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or
mailed, postage prepaid to the other party, such termination
to take effect not sooner than thirty (30) days after the
date of such delivery or mailing; provided, however that the
Custodian shall not act under Section 2.10 hereof in the
absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of
Directors of the Fund has approved the initial use of a
particular Securities System and the receipt of an annual
certificate of the Secretary or an Assistant Secretary that
the Board of Directors has reviewed the use by the Fund of
such Securities System, as required in each case by Rule
17f-4 under the Investment Company Act of 1940, as amended
and that the Custodian shall not act under Section 2.10A
hereof in the absence of receipt of an initial certificate
of the Secretary or an Assistant Secretary that the Board of
Directors has approved the initial use of the Direct Paper
System and the receipt of an annual certificate of the
Secretary or an Assistant Secretary that the Board of
Directors has reviewed the use by the Fund of the Direct
Paper System; provided further, however, that the Fund shall
not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of
the Articles of Incorporation, and further provided, that
the Fund may at any time by action of its Board of Directors
(i) substitute another bank or trust company for the
Custodian by giving notice as described above to the
Custodian, or (ii) immediately terminate this Contract in
the event of the appointment of a conservator or receiver
for the Custodian by the Comptroller of the Currency or upon
the happening of a like event at the direction of an
appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Fund shall pay to the
Custodian such compensation as may be due as of the date of
such termination and shall likewise reimburse the Custodian
for its costs, expenses and disbursements.
10. Successor Custodian.
If a successor custodian shall be appointed by the Board of
Directors of the Fund, the Custodian shall, upon
termination, deliver to such successor custodian at the
office of the Custodian, duly endorsed and in the form for
transfer, all securities then held by it hereunder and shall
transfer to an account of the successor custodian all of the
Fund's securities held in a Securities System.
If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified
copy of a vote of the Board of Directors of the Fund,
deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with
such vote.
In the event that no written order designating a successor
custodian or certified copy of a vote of the Board of
Directors shall have been delivered to the Custodian on or
before the date when such termination shall become
effective, then the Custodian shall have the right to
deliver to a bank or trust company, which is a "bank" as
defined in the Investment Company Act of 1940, doing
business in Boston, Massachusetts, of its own selection,
having an aggregate capital, surplus, and undivided profits,
as shown by its last published report, of not less than
$25,000,000, all securities, funds and other properties held
by the Custodian and all instruments held by the Custodian
relative thereto and all other property held by it under
this Contract and to transfer to an account of such
successor custodian all of the Fund's securities held in any
Securities System. Thereafter, such bank or trust company
shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties
remain in the possession of the Custodian after the date of
termination hereof owing to failure of the Fund to procure
the certified copy of the vote referred to or of the Board
of Directors to appoint a successor custodian, the Custodian
shall be entitled to fair compensation for its services
during such period as the Custodian retains possession of
such securities, funds and other properties and the
provisions of this Contract relating to the duties and
obligations of the Custodian shall remain in full force and
effect.
11. Interpretive and Additional Provisions.
In connection with the operation of this Contract, the
Custodian and the Fund may from time to time agree on such
provisions interpretive of or in addition to the provisions
of this Contract as may in their joint opinion be consistent
with the general tenor of this Contract. Any such
interpretive or additional provisions shall be in writing
signed by both parties and shall be annexed hereto, provided
that no such interpretive or additional provisions shall
contravene any applicable federal or state regulations or
any provision of the Articles of Incorporation of the Fund.
No interpretive or additional provisions made as provided in
the preceding sentence shall be deemed to be an amendment of
this Contract.
12. Massachusetts Law to Apply.
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of the
Commonwealth of Massachusetts.
13. Prior Contracts.
This Contract supersedes and terminates, as of the date
hereof, all prior contracts between the Fund and the
Custodian relating to the custody of the Fund's assets.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed as
of the 1st day of November, 1989.
QUEST FOR VALUE DUAL PURPOSE FUND, INC.
ATTEST
__________________________ By: ___________________________
ATTEST STATE STREET BANK AND TRUST COMPANY
__________________________ By: ____________________________
Assistant Secretary Vice President
CUSTODY\CAPITAL.CUS
[Letterhead of Gordon Altman Butowsky Weitzen Shalov & Wein]
February 21, 1997
Oppenheimer Quest Capital Value Fund, Inc.
Two World Trade Center
New York, NY 10048-0203
Dear Sir/Madam:
This opinion is being furnished in connection with the
registration by Oppenheimer Quest Capital Value Fund, Inc., a
Maryland corporation (the "Company"), of an indefinite number of
shares of its Common Stock, $.0001 par value (the "Shares"),
pursuant to a registration statement on Form N-1A (File No. 333-
16881), as amended (the "Registration Statement"), under the
Securities Act of 1933, as amended and the Investment Company Act
of 1940, as amended. The Registration Statement was filed under
the name Quest for Value Dual Purpose Fund, Inc. The Company's
shareholders have approved an amendment to the Company's Articles
of Incorporation, changing the name to Oppenheimer Quest Capital
Value Fund, Inc., which amendment will be effective prior to
issuance of the Shares.
As counsel for the Company, we have examined such Company
records, certificates and other documents and reviewed such
questions of law as we have considered necessary or appropriate for
purposes of this opinion.
As to matters of Maryland law contained in this opinion, we
have relied upon the opinion of Piper & Marbury dated February 21,
1997.
Based upon the foregoing, we are of the opinion that the
Shares, upon issuance and sale in the manner referred to in the
Registration Statement, will be duly and validly issued, fully paid
and non-assessable by the Company.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the use of our name in the
prospectus constituting a part thereof. In giving this consent, we
do not thereby admit that we are within the category of person
whose consent is required under Section 7 of the 1933 Act or the
rules and regulations of the Securities and Exchange Commission
promulgated thereunder.
Very truly yours,
Gordon Altman Butowsky Weitzen
Shalov & Wein
opinion/capital.op
February 28, 1997
The Board of Directors
Oppenheimer Quest Capital Value Fund, Inc.
Two World Trade Center
New York, New York 10048-0203
To the Board of Directors:
OppenheimerFunds, Inc.("OFI") herewith purchases an amount of
Class B shares and Class C shares of Oppenheimer Quest Capital
Value Fund, Inc. (the "Fund") equal in each case to $1,000 divided
by the net asset value per share of a Class A share of the Fund as
of the close of business on February 28, 1997.
In connection with such purchase, OFI represents that such
purchase is made for investment purposes by OFI without any present
intention of redeeming or selling such shares.
Very truly yours,
OppenheimerFunds, Inc.
By: /s/ Merryl Hoffman
Merryl Hoffman
Vice President
ADVISORY/capital.LTR
Oppenheimer Dual Purpose Fund 2
Exhibit 24(b)(16) to Form N-1A
Performance Data Computation Schedule
The Fund's average annual total returns and total returns
are calculated as described below, on the basis of the Fund's
distributions, for the past 10 years which are as follows:
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares
10/31/87 0.0000000 0.1561000 9.230
11/16/87 0.0000000 0.6743000 8.120
12/24/87 0.0000000 0.0930000 9.200
12/29/89 0.0000000 0.3130000 17.330
12/24/90 0.0000000 0.6966000 15.470
12/31/90 0.0000000 0.0156000 15.390
01/14/91 0.0000000 0.0140000 16.110
12/31/91 0.0000000 0.6018000 21.180
12/24/92 0.0000000 1.2950000 24.320
12/31/92 0.0000000 0.0349000 24.390
12/27/93 0.0000000 0.2160000 25.000
12/31/93 0.0000000 1.4305000 24.670
02/09/94 0.0000000 0.0693000 25.620
12/23/94 0.0000000 0.3200000 23.180
12/30/94 0.0000000 0.5616000 23.050
02/07/95 0.0000000 0.0330000 25.610
12/29/95 0.0000000 1.5599000 30.100
12/31/96 0.0000000 3.2848000 33.020
Oppenheimer Dual Purpose Fund 2
Page 2
1. Average Annual Total Returns for the Periods Ended 12/31/96:
The formula for calculating average annual total return is as follows:
1 ERV n
- --------------- = n (---) - 1 = average annual total return
number of years P
Where: ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year
$1,135.66 1 $1,994.21 .2
(---------) - 1 = 13.57% (---------) - 1 = 14.80%
$1,000 $1,000
Inception
$4,440.43 .1012
(---------) - 1 = 16.28%
$1,000
Examples at NAV:
Class A Shares
One Year Five Year
$1,204.97 1 $2,115.82 .2
(---------) - 1 = 20.50% (---------) - 1 = 16.17%
$1,000 $1,000
Inception
$4,711.36 .1012
(---------) - 1 = 16.98%
$1,000
Oppenheimer Dual Purpose Fund 2
Page 3
2. Cumulative Total Returns for the Periods Ended 12/31/96:
The formula for calculating cumulative total return is as follows:
ERV - P
------- = Cumulative Total Return
P
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year
$1,135.66 - $1,000 $1,994.21 - $1,000
- ------------------ = 13.57% ------------------ = 99.42%
$1,000 $1,000
Inception
$4,440.43 - $1,000
------------------ = 344.04%
$1,000
Examples at NAV:
Class A Shares
One Year Five Year
$1,204.97 - $1,000 $2,115.82 - $1,000
- ------------------ = 20.50%------------------ = 111.58%
$1,000 $1,000
Inception
$4,711.36 - $1,000
------------------ = 236.55%
$1,000
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Quest for Value Dual Purpose Fund, Inc.
Annual report dated December 31, 1996.
Capital Shares.
</LEGEND>
<CIK> 0000799029
<NAME> QUEST FOR VALUE DUAL PURPOSE FUND, INC.
<SERIES>
<NUMBER> 1
<NAME> CAPITAL SHARES
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 792503136
<INVESTMENTS-AT-VALUE> 937389105
<RECEIVABLES> 6965587
<ASSETS-OTHER> 16848
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 944371540
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 64437389
<TOTAL-LIABILITIES> 64437389
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 208857924
<SHARES-COMMON-STOCK> 18004302
<SHARES-COMMON-PRIOR> 18004302
<ACCUMULATED-NII-CURRENT> 469962
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 316862372
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 144885969
<NET-ASSETS> 879934151
<DIVIDEND-INCOME> 14786008
<INTEREST-INCOME> 16424805
<OTHER-INCOME> 0
<EXPENSES-NET> (6322799)
<NET-INVESTMENT-INCOME> 24888014
<REALIZED-GAINS-CURRENT> 173198410
<APPREC-INCREASE-CURRENT> (48825541)
<NET-CHANGE-FROM-OPS> 149260883
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (59569499)<F1>
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 64755425
<ACCUMULATED-NII-PRIOR> 517907
<ACCUMULATED-GAINS-PRIOR> 203233461
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4916973
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6335891
<AVERAGE-NET-ASSETS> 883394597<F2>
<PER-SHARE-NAV-BEGIN> 33.65
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 6.91
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> (3.31)
<PER-SHARE-NAV-END> 37.25
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Taxes paid on Retained L/T Capital Gains.
<F2>Net Assets of both Income & Capital shares.
Quest for Value Dual Purpose Fund, Inc.
Annual Report dated December 31, 1996.
Income shares.
[/LEGEND]
<CIK> 0000799029
<NAME> QUEST FOR VALUE DUAL PURPOSE FUND, INC.
<SERIES>
[NUMBER] 2
<NAME> INCOME SHARES
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
[INVESTMENTS-AT-COST] 792503136
[INVESTMENTS-AT-VALUE] 937389105
[RECEIVABLES] 6965587
[ASSETS-OTHER] 16848
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 944371540
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 64437389
[TOTAL-LIABILITIES] 64437389
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 208857924<F2>
[SHARES-COMMON-STOCK] 18004302<F2>
[SHARES-COMMON-PRIOR] 18004302<F2>
[ACCUMULATED-NII-CURRENT] 469962
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 316862372
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 144885969
[NET-ASSETS] 879934151
[DIVIDEND-INCOME] 14786008
[INTEREST-INCOME] 16424805
[OTHER-INCOME] 0
[EXPENSES-NET] (6322799)
[NET-INVESTMENT-INCOME] 24888014
[REALIZED-GAINS-CURRENT] 173198410
[APPREC-INCREASE-CURRENT] (48825541)
[NET-CHANGE-FROM-OPS] 149260803
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (24935959)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 0
[NUMBER-OF-SHARES-REDEEMED] 0
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 64755425
[ACCUMULATED-NII-PRIOR] 517907
[ACCUMULATED-GAINS-PRIOR] 203233461
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 4916973
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 6335891
[AVERAGE-NET-ASSETS] 883394597<F1>
[PER-SHARE-NAV-BEGIN] 11.63
[PER-SHARE-NII] 1.38
[PER-SHARE-GAIN-APPREC] 0
[PER-SHARE-DIVIDEND] (1.38)
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.63
[EXPENSE-RATIO] .72
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<FN>
<F1>Net Assets of both Income & Capital shares.
<F2>Preferred shares.
</FN>
</TABLE>
