<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant To Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
/ / Confidential for Use of the Commission Only (as permitted by Rule
14a-6(c)(2))
QUEST FOR VALUE FAMILY OF FUNDS
--------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
DEBORAH KABACK, ESQ.
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(Name of Person(s) Filing Proxy Statement)
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14-a6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
1Set forth the amount on which the filing fee is calculated and state
how it was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
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<PAGE>
QUEST FOR VALUE
FAMILY OF FUNDS September 19, 1995
Dear Quest for Value Officers Fund Shareholder:
Last month we advised you that Quest for Value Advisors, the adviser
of your Fund, had entered into an agreement with Oppenheimer Management
Corporation ("OMC") for the sale to OMC of mutual fund assets of Quest
for Value Advisors. The agreement contemplates that, subject to
shareholder approval, OMC will enter into an Investment Advisory
Agreement with the Fund and that OMC and Quest for Value Advisors will
enter into a Subadvisory Agreement so that the Fund's portfolio would
continue to be managed by Quest for Value Advisors. Distribution services
would be provided by Oppenheimer Funds Distributor, Inc., a subsidiary of
OMC.
A SHAREHOLDER MEETING HAS BEEN SCHEDULED FOR NOVEMBER 3 AND ALL
SHAREHOLDERS OF RECORD ON SEPTEMBER 7 ARE BEING ASKED TO VOTE EITHER IN
PERSON OR BY PROXY. ENCLOSED YOU WILL FIND SEVERAL ITEMS, INCLUDING A
NOTICE OF THE MEETING, A PROXY STATEMENT DETAILING THE PROPOSALS, A
BALLOT CARD AND A POSTAGE-PAID RETURN ENVELOPE FOR YOUR CONVENIENCE.
WHAT IS BEING PROPOSED?
In June, your Board of Trustees, which represents your interests in
the day-to-day management of the Fund, approved the proposed transaction
with OMC and the new contracts with the Fund and recommended that Fund
shareholders approve the new Investment Advisory Agreement, Subadvisory
Agreement and Distribution and Service Plan and Agreement. In addition,
Quest for Value Advisors recommended and the Board approved proposals to
change the Fund's classification from a diversified to a non-diversified
management investment company and to amend the Fund's fundamental
investment policies to permit the Fund to invest in equity securities
without limitation as to market capitalization. These proposals are
subject to shareholder approval.
WHY DOES THE BOARD AND QUEST FOR VALUE ADVISORS RECOMMEND THIS CHANGE?
The Board of Trustees believes that the proposed changes are in the
best interest of shareholders. The Fund would benefit from OMC's
outstanding distribution and shareholder servicing capabilities while
maintaining continuity of portfolio management through Quest for Value
Advisors' role as Subadvisor.
The proposed transaction will allow Quest for Value Advisors to
concentrate on what it does best -- portfolio management.
YOUR VOTE IS VERY IMPORTANT BECAUSE THESE DECISIONS WILL AFFECT YOUR
INVESTMENT. SO WE URGE YOU TO CONSIDER THESE ISSUES CAREFULLY, AND TO
MAKE YOUR VOTE COUNT.
HOW DO YOU VOTE?
No matter how large or small your investment, your vote is important,
so please review the proxy statement carefully. To cast your vote, simply
mark, sign and date the enclosed proxy ballot and return it in the
postage-paid envelope today.
Please contact your financial adviser or call us at 1-800-232-FUND if
you have any questions.
As always, we appreciate your confidence in the Quest for Value
Funds.
Sincerely
[LOGO]
Joseph M. La Motta
Chairman of the
Board and President
Quest for Value Family of Funds
<PAGE>
748
<PAGE>
QUEST FOR VALUE FAMILY OF FUNDS
OFFICERS FUND
ONE WORLD FINANCIAL CENTER, NEW YORK, N.Y. 10281
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 3, 1995
------------------------
TO THE SHAREHOLDERS:
Notice is hereby given that a special meeting of shareholders of the
Officers Fund (the "Fund"), a series of Quest for Value Family of Funds (the
"Trust"), will be held at One World Financial Center, New York, New York 10281
on the 40th floor on November 3, 1995, at 10:00 a.m., Eastern Time, for the
following purposes:
1. To approve a new Investment Advisory Agreement with Oppenheimer
Management Corporation;
2. To approve a new Subadvisory Agreement between Oppenheimer Management
Corporation and Quest for Value Advisors, the current advisor to the
Fund;
3. To approve a new Distribution and Service Plan and Agreement with
Oppenheimer Funds Distributor, Inc.;
4. To approve changes in the Fund's classification from a diversified to a
non-diversified management investment company;
5. To approve a change in the Fund's fundamental investment policies;
6. To elect Trustees; and
7. To act upon such other matters as may properly come before the meeting
or any adjournment or adjournments thereof.
The close of business on September 7, 1995 has been fixed as the record date
for the determination of shareholders entitled to notice of and to vote at the
meeting. A list of shareholders entitled to vote at the meeting will be
available for inspection by shareholders at the Trust office for ten days prior
to the meeting date.
BY ORDER OF THE BOARD OF TRUSTEES,
DEBORAH KABACK
SECRETARY
September 19, 1995
IMPORTANT
THE BOARD OF TRUSTEES URGES YOU TO MARK, SIGN AND RETURN THE ENCLOSED PROXY AS
SOON AS POSSIBLE WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON. THE
ENCLOSED ADDRESSED ENVELOPE REQUIRES NO POSTAGE AND IS PROVIDED FOR YOUR
CONVENIENCE. YOUR PROMPT RESPONSE WILL ELIMINATE THE NEED FOR ADDITIONAL AND
UNNECESSARY MAILINGS. QUEST FOR VALUE ADVISORS HAS RETAINED D. F. KING & CO.,
INC. TO ASSIST IN THE SOLICITATION OF PROXIES. SHAREHOLDERS WHO HAVE NOT VOTED
THEIR PROXIES IN A TIMELY MANNER MAY RECEIVE A TELEPHONE CALL FROM D. F. KING &
CO., INC. IN AN EFFORT TO URGE THEM TO VOTE.
<PAGE>
QUEST FOR VALUE FAMILY OF FUNDS
OFFICERS FUND
ONE WORLD FINANCIAL CENTER, NEW YORK, N.Y. 10281
PROXY STATEMENT
---------------------
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 3, 1995
---------------------
This statement is furnished to the shareholders of the Officers Fund (the
"Fund"), a series of the Quest for Value Family of Funds (the "Trust"), in
connection with the solicitation by management of proxies to be used at a
special meeting (the "meeting") of shareholders of the Fund to be held on
November 3, 1995, or any adjournment or adjournments thereof. This statement
will first be mailed to shareholders on or about September 19, 1995.
The Fund is a separate series of capital stock of the Trust. Only
shareholders of the Fund will vote with respect to approval of Proposals one,
two, three, four and five and shareholders of the Fund will vote together with
other series of capital stock of the Trust for the election of Trustees. As of
September 7, 1995, the record date, there were outstanding 278,809 shares of the
Fund. Each shareholder will be entitled to one vote for each share held on the
record date.
If the enclosed form of proxy is properly executed and returned, the shares
represented thereby will be voted at the meeting as indicated thereon with
respect to the Proposals stated therein. In the absence of choices, the shares
represented by the proxy will be voted in favor of the Proposals.
In order that your shares may be represented at the meeting or any
adjournment or adjournments thereof, you are requested to: indicate your voting
instructions on the proxy card; date and sign the proxy card; mail the proxy
card promptly in the enclosed postage-paid envelope; and allow sufficient time
for the proxy to be received on or before 10:00 a.m. on November 3, 1995.
The proxy confers discretionary authority upon the persons named therein to
vote on other business, not currently contemplated, which may come before the
meeting. In the event that a quorum (the presence in person or by proxy of the
holders of a majority of the Trust's shares entitled to vote) cannot be
obtained, an adjournment or adjournments of the meeting may be sought by the
Board of Trustees. In the event that a quorum is present at the meeting but
sufficient votes to approve a particular Proposal are not received, the persons
named as proxies may propose one or more adjournments of the meeting to permit
further solicitation of proxies. Any such adjournment would require the
affirmative vote of the holders of a majority of the shares of the Trust present
at the meeting or any adjournment thereof, in person or by proxy. The persons
named as proxies will vote those proxies which they are entitled to vote FOR any
matter in favor of such an adjournment and will vote those proxies required to
be voted AGAINST any matter that comes before the meeting against any such
adjournment.
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The proxy may be revoked at any time prior to the voting thereof by: (i)
written instructions addressed to the Secretary of the Trust at One World
Financial Center, New York, New York 10281; (ii) attendance at the meeting and
voting in person; or (iii) signing and returning a new proxy (if returned and
received in time to be voted).
It is anticipated that proxy solicitation will be made principally by mail,
although employees of Quest for Value Advisors may, without special
compensation, contact shareholders by telephone or wire. Arrangements have been
made with brokers and custodians, nominees and fiduciaries to send proxy
material to beneficial owners. In addition, Quest for Value Advisors has
retained D. F. King & Co., Inc. to assist in the solicitation of proxies
primarily by contacting shareholders by telephone and telegram. D.F. King & Co.,
Inc. may call shareholders to ask if they would be willing to have their votes
recorded by telephone. The telephone voting procedure is designed to
authenticate shareholders' identities, to allow shareholders to authorize the
voting of their shares in accordance with their instructions and to confirm that
their instructions have been recorded properly. The Fund has been advised by
counsel that these procedures are consistent with the requirements of applicable
law. Shareholders voting by telephone will be asked for their social security
number or other identifying information and will be given an opportunity to
authorize proxies to vote their shares in accordance with their instructions. To
ensure that the shareholders' instructions have been recorded correctly they
will receive a confirmation of their instructions in the mail. A special
toll-free number will be available in case the information contained in the
confirmation is incorrect. Although a shareholder's vote may be taken by
telephone, each shareholder will receive a copy of this Proxy Statement and may
vote by mail using the enclosed proxy card. The expenses of the solicitation and
meeting will be shared by Quest for Value Advisors and Oppenheimer Management
Corporation.
To the knowledge of the Fund, the following shareholders held as beneficial
or record owners 5% or more of the shares of the Fund as of the record date:
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY
OWNED NAME AND ADDRESS PERCENTAGE OF CLASS
----------------- --------------------------------- -------------------
<S> <C> <C>
20,132 Thomas O'Donnell 7.22%
311 S. Wacker Drive
Chicago, IL 60606
20,072 Joseph M. LaMotta 7.20%
RR2 Box 51
Pound Ridge, NY
20,072 Jeffrey C. Whittington 7.20%
P.O. Box 1367
Wainscott, NY 11975
14,916 George Tilghman 5.35%
33 Valentines Lane
Old Brookville, NY 11545
</TABLE>
The officers and Trustees of the Trust, as a group, owned beneficially 20%
of the shares of the Fund as of August 15, 1995.
2
<PAGE>
SUMMARY OF THE PROPOSED TRANSACTION
Oppenheimer Capital formed its subsidiary Quest for Value Advisors to offer
its institutional investment advisory services to the retail market. Its
flagship fund, the Quest for Value Fund, Inc., was established in 1980. Since
that time, Quest for Value Advisors has steadily added to its product line
through the development of new funds and by acquisitions. Quest for Value
Distributors has marketed these products through an expanding network of third
party broker dealers and with an emphasis on the retirement market. Although
Oppenheimer Capital is proud of the performance of its mutual fund products and
the benefits they have brought to shareholders, in the course of a review of its
business, it recently concluded that it should concentrate on its core
investment management business and not continue in the retail distribution of
mutual funds. The retail mutual fund market requires significant assets per fund
and in the aggregate for a mutual fund family to cover normal costs, significant
capital, investment in new products and services, financing for Class B and
Class C shares and sales support. Consequently, it has become increasingly
difficult for a relatively small mutual fund operation, with assets under $10
billion, to compete.
After this determination had been made, representatives of Oppenheimer
Management Corporation ("OMC") approached Oppenheimer Capital about acquiring
certain of its mutual fund assets. Representatives of OMC, Oppenheimer Capital,
Quest for Value Distributors and Quest for Value Advisors held meetings
beginning in April 1995 and the parties negotiated the terms of an Acquisition
Agreement (the "Acquisition Agreement") and related agreements. The Acquisition
Agreement was executed by OMC, Oppenheimer Capital, Quest for Value Distributors
and Quest for Value Advisors on August 17, 1995. It is proposed that, subject to
approval by the shareholders of the Fund and the satisfaction of certain other
conditions, OMC become the investment adviser to the Fund and that a subsidiary
of OMC, Oppenheimer Funds Distributor, Inc., become the Fund's general
distributor and enter into a distribution agreement with the Fund pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act"), and that
OMC and Quest for Value Advisors enter into a Subadvisory Agreement with respect
to the Fund, pursuant to which Quest for Value Advisors will continue to provide
investment advisory services to the Fund. Accordingly, the portfolio of the Fund
will continue to be managed by Quest for Value Advisors, although overall
management and distribution and shareholder services will be provided by OMC and
its subsidiaries. In this way, although the Fund will become part of the
OppenheimerFunds, a much larger mutual fund group, there will be continuity of
portfolio management. Oppenheimer Capital and Quest for Value Advisors believe
that the proposed transaction with OMC described in this Proxy Statement has the
potential for continued benefits for shareholders.
OMC and its subsidiaries are engaged principally in the business of
managing, distributing and servicing registered investment companies. OMC owns
all of the outstanding stock of Oppenheimer Funds Distributor, Inc., Shareholder
Services, Inc. and Shareholder Financial Services, Inc. OMC is a wholly-owned
subsidiary of Oppenheimer Acquisition Corp. ("OAC"), which is controlled by
Massachusetts Mutual Life Insurance Company ("MassMutual"), a mutual life
insurance company located at 1295 State Street, Springfield, MA 01111, that also
advises pension plans and investment companies. OAC acquired OMC on October 22,
1990. OMC is not related to Oppenheimer Capital nor its affiliate, the brokerage
firm Oppenheimer & Co., Inc. As indicated below, the common stock of OAC is
owned by (i) certain officers and/ or directors of OMC, (ii) MassMutual and
(iii) another investor. No institution or person holds 5% or more of OAC's
outstanding common stock except MassMutual. MassMutual has engaged in the life
insurance business since 1851. It is the nation's twelfth largest life insurance
company by assets and has an A.M. Best Co. rating of "A++".
3
<PAGE>
The common stock of OAC is divided into three classes. At June 30, 1995,
MassMutual held (i) all of the 2,160,000 shares of Class A voting stock, (ii)
470,021 shares of Class B voting stock, and (iii) 940,067 shares of Class C
non-voting stock. This collectively represented 81.3% of the voting power of OAC
as of that date. Certain officers and/or directors of OMC held (i) 654,788
shares of the Class B voting stock, representing 14.9% of the outstanding common
stock and 10.2% of the voting power, and (ii) options acquired without cash
payment which, when they become exercisable, allow the holders to purchase up to
810,771 shares of Class C non-voting stock. That group includes persons who will
serve as officers of the Trust if the proposed transaction described in this
Proxy Statement is consummated (Ms. Bridget A. Macaskill, Messrs. George C.
Bowen, Andrew J. Donohue and Robert C. Doll, Jr) and one of whom (Ms. Bridget A.
Macaskill) is a nominee to the Board of Trustees of the Trust. Holders of OAC
Class B and Class C common stock may put (sell) their shares and vested options
to OAC or MassMutual at a formula price (based on earnings of OMC). MassMutual
may exercise call (purchase) options on all outstanding shares of both such
classes of common stock and vested options at the same formula price, according
to a schedule that will commence on September 30, 1995. During the period
commencing November 1, 1994 to date, Ms. Macaskill surrendered to OAC 20,000
stock appreciation rights issued in tandem with the Class B OAC options, for
cash payments aggregating $1,375,800 (subject to adjustment of the formula
price) by OAC or MassMutual to be made as follows: one-third of the amount due
(i) within 30 days of the transaction, (ii) by the first anniversary following
the transaction (with interest), and (iii) by the second anniversary following
the transaction (with interest).
The principal executive officers and directors of OMC are as follows: Jon S.
Fossel, Chairman of the Board and Director; Bridget A. Macaskill, President,
Chief Executive Officer (effective September 30, 1995) and Director; Donald W.
Spiro, Chairman Emeritus and Director; Robert G. Galli, Vice Chairman; James C.
Swain, Vice Chairman of the Board and Director; Robert C. Doll, O. Leonard
Darling and James Ruff, Executive Vice Presidents; Tilghman G. Pitts III,
Executive Vice President and Director; Andrew J. Donohue, Executive Vice
President and General Counsel; Kenneth C. Eich, Executive Vice President and
Chief Financial Officer; George C. Bowen, Senior Vice President and Treasurer;
Victor Babin, Robert A. Densen, Loretta McCarthy, Robert Patterson, Nancy
Sperte, Arthur Steinmetz, Ralph Stellmacher, William L. Wilby and Robert G.
Zack, Senior Vice Presidents. The business location of all such persons is Two
World Trade Center, New York, NY except for Mr. Swain and Mr. Bowen, who are
located at OMC's office at 3410 S. Galena Street, Denver, Colorado 80231.
Shareholders of the Fund are being asked to approve the new Investment
Advisory Agreement with OMC and the new Subadvisory Agreement between OMC and
Quest for Value Advisors. A favorable shareholder vote on Proposal 1 also will
constitute a vote to approve the termination of the Fund's existing Investment
Advisory Agreement with Quest for Value Advisors.
THE TERMS OF THE ACQUISITION AGREEMENT
The Acquisition Agreement contemplates the acquisition by OMC of all of the
investment advisory and other contracts and business relationships and certain
assets and liabilities (the "Purchased Assets") of Quest for Value Advisors,
Quest for Value Distributors and Oppenheimer Capital (collectively, the
"Companies") relating to twelve Quest for Value mutual funds (the "Acquired
Funds") and the assumption by OMC of certain liabilities of the Companies with
respect to the Acquired Funds (the "Assumed Liabilities") (the foregoing is
referred to as the "Acquisition"). The Acquisition Agreement contemplates that
six of the Acquired Funds will be reorganized into certain mutual funds
currently advised by OMC (the "Reorganized
4
<PAGE>
Funds") and the remaining six Acquired Funds (including the Fund) will enter
into investment advisory agreements with OMC (or its designee) and OMC (or its
designee) will thereupon enter into subadvisory agreements with Quest for Value
Advisors for the benefit of each such fund (the "Continuing Funds").
The purchase price for the Purchased Assets will be calculated pursuant to
the formula set forth on Exhibit A thereto. If the Acquisition had been
consummated on July 31, 1995, Quest for Value Advisors estimates that the
purchase price (which includes the initial purchase payment payable at closing,
the amount of certain commissions and a deferred cash payment) would have been
approximately $50 million. The actual purchase price may be lower depending upon
changes in the net asset value of the Acquired Funds.
A condition to the obligation of OMC to close under the Acquisition
Agreement (the "Closing") is the approval of the reorganizations of the
Reorganized Funds and the approval of the investment advisory agreements and
subadvisory agreements with the Continuing Funds by shareholders that have in
the aggregate at least 75% of the closing net assets of all Acquired Funds. A
condition to the obligation of the Companies to close under the Acquisition
Agreement is that the directors or trustees of the Continuing Funds and the
Reorganized Funds have adopted a resolution that for a period of three years
after the Closing, at least 75% of the members of the board of each such fund
will not be interested persons of the investment adviser or subadviser for such
fund or interested persons of Quest for Value Advisors, the predecessor
investment adviser, as to the Continuing Funds. The Acquisition Agreement sets
forth certain other closing conditions.
The Companies have each agreed pursuant to an Agreement Not to Compete (the
"Non Compete Agreement") not to sponsor, manage or distribute any open end or
closed end management investment company registered under the 1940 Act or any
similar law in Canada (except for certain identified investment companies or
types of investment companies) and not to sell, underwrite or assist in the
distribution of shares of any such funds for a period to end on the earlier of
(i) the third anniversary of the date on which there is no effective subadvisory
agreement between OMC and Quest for Value Advisors or (ii) the eighth
anniversary of the Closing. OMC and the Companies have agreed to indemnify the
other party for certain liabilities.
PROPOSALS NO. 1 AND 2
CONSIDERATION OF NEW INVESTMENT ADVISORY AGREEMENT
WITH OPPENHEIMER MANAGEMENT CORPORATION
AND NEW SUBADVISORY AGREEMENT
BETWEEN OPPENHEIMER MANAGEMENT CORPORATION
AND QUEST FOR VALUE ADVISORS
THE PROPOSED NEW INVESTMENT ADVISORY AND SUBADVISORY AGREEMENTS
If approved by the shareholders of the Fund, the new Investment Advisory
Agreement (the "New Investment Advisory Agreement") and the New Subadvisory
Agreements (the "New Subadvisory Agreement") will become effective at the
Closing, which is anticipated to be held promptly after the shareholders'
meeting. The following summary of the New Investment Advisory and New
Subadvisory Agreements is qualified in its entirety by reference to the form of
such agreements which are attached to this proxy statement as Exhibits B and C,
respectively.
5
<PAGE>
SERVICES TO BE PERFORMED
Under the New Investment Advisory Agreement, OMC will act as the investment
adviser for the Fund and will supervise the investment program of the Fund. The
New Investment Advisory Agreement provides that OMC will provide administrative
services for the Fund including the completion and maintenance of records,
preparation and filing of reports required by the Securities and Exchange
Commission, reports to shareholders and composition of proxy statements and
registration statements required by Federal and state securities laws. OMC will
furnish the Fund with office space, facilities and equipment and arrange for its
employees to serve as officers of the Trust. The administrative services to be
provided by OMC under the New Investment Advisory Agreement will be at its own
expense except that the Fund will reimburse OMC for the costs of calculating the
Fund's daily net asset value at the same fee schedule as is currently effect for
other equity portfolios of the Trust: Class A shares -- $25,000. The Fund
currently does not pay any fees to State Street for calculating net asset value
since it recently commenced operations.
Expenses not assumed by OMC under the New Investment Advisory Agreement or
paid by Oppenheimer Funds Distributor, Inc. will be paid by the Fund including
interest, taxes, brokerage commissions, insurance premiums, compensation,
expenses and fees of non-interested Trustees, legal and audit expenses, transfer
agent and custodian fees and expenses, registration fees, expenses of printing
and mailing reports and proxy statements to shareholders, expenses of
shareholders meetings and non-recurring expenses including litigation. The New
Investment Advisory contains no expense limitation. However, independently of
the New Investment Advisory Agreement, OMC has undertaken to reimburse the Fund
to the extent that the total expenses of the Fund in any fiscal year (including
the investment advisory fee but exclusive of taxes, interest, brokerage
commissions, distribution plan payments and any extraordinary non-recurring
expenses, including litigation) exceeds the most stringent state regulatory
limitation applicable to the Fund. At present, that limitation is imposed by
California and limits expenses (with specified exclusions) to 2.5% of the first
$30 million of average annual net assets, 2% of the next $70 million and 1.5% of
average annual net assets in excess of $100 million. The current Investment
Advisory Agreement contains a similar expense limitation.
The New Investment Advisory Agreement provides that OMC may enter into sub
advisory agreements with other affiliated or unaffiliated registered investment
advisors in order to obtain specialized services for the Fund provided that the
Fund is not required to pay any additional fees for such services. The New
Subadvisory Agreement provides that Quest for Value Advisors shall regularly
provide investment advice with respect to the Fund and invest and reinvest cash,
securities and the property comprising the assets of the Fund. Under the New
Subadvisory Agreement, Quest for Value Advisors agrees not to change the
Portfolio Manager of the Fund without the written approval of OMC and to provide
assistance in the distribution and marketing of the Fund.
ADVISORY AND SUBADVISORY FEES
For the services and facilities to be provided by OMC under the New
Investment Advisory Agreement the Fund will pay a monthly fee computed as a
percentage of the Fund's average daily net assets. The fee applicable to the
Fund will be an annual fee, payable monthly, at the rate of 1.00% of daily total
net assets, which is the same rate provided in the existing Investment Advisory
Agreement. Under the New Subadvisory Agreement, OMC will pay Quest for Value
Advisors an annual fee payable monthly, based on the average daily net assets of
the Fund, equal to 40% of the investment advisory fee collected by OMC from the
Fund based on the total net assets of the Fund as of the effective date of the
New Subadvisory
6
<PAGE>
Agreement (the "base amount") plus 30% of the investment advisory fee collected
by OMC based on the total net assets of the Fund that exceed the base amount. On
the record date, the net assets of the Fund were $3,581,408.
LIMITATION OF LIABILITY
The New Investment Advisory Agreement provides that in the absence of
willful misfeasance, bad faith or gross negligence in the performance of its
duties or reckless disregard for its obligations and duties under the New
Investment Advisory Agreement, OMC will not be liable for any loss sustained by
reason of good faith errors or omissions in connection with any matters to which
the New Investment Advisory Agreement relates. The existing Investment Advisory
Agreement contains a similar provision. The New Subadvisory Agreement provides
that in the absence of willful misfeasance, bad faith, negligence or reckless
disregard of its duties or obligations, Quest for Value Advisors shall not be
liable to OMC for any act or omission in the course of or connected with
rendering services under the New Subadvisory Agreement or for any losses that
may be sustained in the purchase, holding or sale of any security.
TERMINATION
The New Investment Advisory Agreement may be terminated by OMC or by the
Fund at any time without penalty upon 60 days written notice to the other party.
Termination by the Fund must be approved by the vote of a majority of the
Trustees or by vote of a majority of the outstanding shares of the Fund. The New
Investment Advisory Agreement will terminate in the event of an "assignment," as
required by the 1940 Act. The existing Investment Advisory Agreement contains a
similar provision except that Quest for Value Advisors may terminate the
agreement on 90 days' notice. The New Subadvisory Agreement contains similar
provisions to the New Investment Advisory Agreement with respect to termination
in the event of an "assignment" and termination by the Fund.
In addition, the New Subadvisory Agreement provides that if the agreement is
terminated by OMC prior to the tenth anniversary thereof, OMC will be obligated
to pay Quest for Value Advisors an amount equal to the subadvisory fee until the
tenth anniversary unless the New Investment Advisory Agreement has been
terminated or the New Subadvisory Agreement has been terminated upon the
occurrence of any of the following events:
(1) The Fund's performance ranks in the bottom quartile for two
consecutive calendar years and earns a Morningstar, Inc. three year rating
of less than three stars;
(2) Quest for Value Advisors is disqualified from serving as an
investment adviser to the Funds under Section 9(a) of the 1940 Act;
(3) Quest for Value Advisors, Quest for Value Distributors, Oppenheimer
Capital or persons under their control cause a material violation of the Non
Compete Agreement; or
(4) Quest for Value Advisors breaches a material provision of the New
Subadvisory Agreement.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The New Investment Advisory Agreement contains provisions relating to the
selection of broker-dealers ("brokers") for the Fund's portfolio transactions.
OMC and any Subadvisor may use such brokers as may, in their best judgment based
on all relevant factors, implement the policy of the Fund to achieve best
execution of portfolio transactions. While OMC 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
7
<PAGE>
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 New
Investment Advisory Agreement. The existing Investment Advisory Agreement
contains similar provisions
The New Investment Advisory Agreement also provides that, consistent with
obtaining the best execution of the Fund's portfolio transactions, OMC and any
Subadvisor, in the interest of the Fund, may select brokers other than
affiliated brokers, because they provide brokerage and/or research services to
the Fund and/or other accounts of OMC or any Subadvisor. The commissions paid to
such brokers may be higher than another qualified broker would have charged if a
good faith determination is made by OMC or any Subadvisor that the commissions
are reasonable in relation to the services provided, viewed either in terms of
that transaction or OMC's or any Subadvisor's overall responsibilities to all
its accounts. No specific dollar value need be put on the services, some of
which may or may not be used by OMC or any Subadvisor for the benefit of the
Fund or other of its advisory clients. To show that the determinations were made
in good faith, OMC or any Subadvisor must be prepared to show that the amount of
such commissions paid over a representative period selected by the Board was
reasonable in relation to the benefits to the Fund. The New Investment Advisory
Agreement recognizes that an affiliated broker-dealer may act as one of the
regular brokers for the Fund provided that any commissions paid to such broker
are calculated in accordance with procedures adopted by the Fund's Board under
applicable SEC rules. The existing Investment Advisory Agreement contains
similar provisions.
The New Subadvisory Agreement permits Quest for Value Advisors to enter into
"soft dollar" arrangements through the agency of third parties to obtain
services for the Funds. Pursuant to these arrangements, Quest for Value Advisors
will undertake to place brokerage business with broker dealers who pay third
parties that provide services. Any such "soft dollar" arrangements will be made
in accordance with policies adopted by the Board of the Trust and in compliance
with applicable law.
THE EXISTING INVESTMENT ADVISORY AGREEMENT WITH QUEST FOR VALUE ADVISORS
Quest for Value Advisors provides investment advisory and management
services to the Fund pursuant to an Investment Advisory Agreement dated April
29, 1988, as amended. The existing Investment Advisory Agreement was approved
initially with respect to the Fund by the Board of Trustees of the Trust,
including a majority of the independent Trustees, for a period of one year on
October 25, 1994.
During the period November 8, 1994 (commencement of operations) to April 30,
1995, Quest for Value Advisors voluntarily waived its advisory fee of $10,942
and reimbursed the Fund for all other operating expenses of $12,607.
For the period November 8, 1994 (commencement of operations) to April 30,
1995, Oppenheimer & Co, Inc., an affiliated broker-dealer of the Fund, was paid
a total of $3,388 in brokerage commissions by the Fund, which amount was 41% of
the Fund's total brokerage commissions during the period.
The following tables compare current and pro forma fees based on assets and
expenses for the period November 8, 1994 (commencement of operations) to April
30, 1995. The pro forma fees are those estimated to be incurred under the New
Investment Advisory Agreement, 12b-1 plans and other agreements if the proposed
transaction is consummated.
8
<PAGE>
CURRENT
PERIOD: NOVEMBER 8, 1994 (COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1995
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
CLASS OF SHARES: A B C
--------------------------------------------------------------------------------------- -------- -------- --------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Initial Sales Load Imposed on Purchase (as a % of offering price).............. 5.50% none none
Maximum Deferred Sales Load (1)........................................................ none 5.00% 1.00%
Maximum Sales Load Imposed On Reinvested Dividends..................................... none none none
Redemption Fee......................................................................... none none none
Exchange Fee........................................................................... $5.00 $5.00 $5.00
ANNUAL FUND OPERATING EXPENSES (AS % OF AVERAGE NET ASSETS)
Management Fee (2)..................................................................... 1.00% 1.00% 1.00%
12b-1 Fee (including service fees of .25%)............................................. .50% 1.00% 1.00%
Other Expenses......................................................................... 1.15% 1.15% 1.15%
-------- -------- --------
TOTAL FUND OPERATING EXPENSES.......................................................... 2.65%(3) 3.15%(3) 3.15%(3)
-------- -------- --------
-------- -------- --------
<FN>
------------------------------
(1) Purchases of Class A shares of $1 million or more are not subject to
front-end sales charges but a contingent deferred sales charge of 1% is
imposed if the shares are redeemed within the first 12 months after the end
of the calendar month of their purchase.
(2) The management fee is higher than that paid by most other investment
companies.
(3) During the period presented above, Quest for Value Advisors waived its
entire fee and reimbursed the Fund for all operating expenses. The expenses
set forth above have been restated to reflect what expenses would have been
if Quest for Value Advisors had not waived its advisory fee and absorbed
all operating expenses.
</TABLE>
PRO FORMA
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
CLASS OF SHARES: A B C
--------------------------------------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Initial Sales Load Imposed on Purchase (as a % of offering price).............. 5.75% none none
Maximum Deferred Sales Load (1)........................................................ none 5.00% 1.00%
Maximum Sales Load Imposed On Reinvested Dividends..................................... none none none
Redemption Fee......................................................................... none none none
Exchange Fee........................................................................... none none none
ANNUAL FUND OPERATING EXPENSES (AS % OF AVERAGE NET ASSETS)
Management Fee (2)..................................................................... 1.00% 1.00% 1.00%
12b-1 Fee (including service fees of .25%)............................................. .50% 1.00% 1.00%
Other Expenses......................................................................... 1.15% 1.15% 1.15%
--------- --------- ---------
TOTAL FUND OPERATING EXPENSES.......................................................... 2.65% 3.15% 3.15%
--------- --------- ---------
--------- --------- ---------
<FN>
------------------------------
(1) Purchases of Class A shares of $1 million or more will not be subject to
front-end sales charges but a contingent deferred sales charge of 1% will
be imposed if the shares are redeemed within the first 18 months after the
end of the calendar month of their purchase.
(2) The management fee is higher than that paid by most other investment
companies.
</TABLE>
9
<PAGE>
CURRENT
EXAMPLE 1: YOU WOULD PAY THE FOLLOWING EXPENSE OVER THE INDICATED PERIODS IN
THE FUND ON A $1,000 INVESTMENT ASSUMING (A) PAYMENT OF THE MAXIMUM SALES
CHARGE, (B) A 5% ANNUAL RETURN, AND (C) RETENTION OF SHARES AT THE END OF THE
TIME PERIOD. 10-YEAR FIGURES FOR CLASS B SHARES ASSUME CONVERSION TO CLASS A
SHARES AFTER EIGHT YEARS.
<TABLE>
<CAPTION>
A B C
-------- -------- --------
<S> <C> <C> <C>
1 Year....................... $ 80 $ 32 $ 32
3 Years...................... 133 97 97
5 Years...................... 188 165 165
10 Years...................... 337 334 346
</TABLE>
EXAMPLE 2: YOU WOULD PAY THE FOLLOWING EXPENSES OVER THE INDICATED PERIODS
IN THE FUND ON A $1,000 INVESTMENT ASSUMING (A) PAYMENT OF THE MAXIMUM SALES
CHARGE, (B) A 5% ANNUAL RETURN, AND (C) REDEMPTION AT THE END OF THE TIME
PERIOD. 10-YEAR FIGURES FOR CLASS B SHARES ASSUME CONVERSION TO CLASS A SHARES
AFTER EIGHT YEARS.
<TABLE>
<CAPTION>
A B C
-------- -------- --------
<S> <C> <C> <C>
1 Year....................... $ 80 $ 82 $ 42
3 Years...................... 133 127 97
5 Years...................... 188 185 165
10 Years...................... 337 334 346
</TABLE>
PRO FORMA
EXAMPLE 1: YOU WOULD PAY THE FOLLOWING EXPENSE OVER THE INDICATED PERIODS IN
THE FUND ON A $1,000 INVESTMENT ASSUMING (A) PAYMENT OF THE MAXIMUM SALES
CHARGE, (B) A 5% ANNUAL RETURN, AND (C) RETENTION OF SHARES AT THE END OF THE
TIME PERIOD. 10-YEAR FIGURES FOR CLASS B SHARES ASSUME CONVERSION TO CLASS A
SHARES AFTER SIX YEARS.
<TABLE>
<S> <C> <C> <C>
1 Year....................... $ 83 $ 32 $ 32
3 Years...................... 135 97 97
5 Years...................... 190 165 165
10 Years...................... 339 324 346
</TABLE>
EXAMPLE 2: YOU WOULD PAY THE FOLLOWING EXPENSES OVER THE INDICATED PERIODS
IN THE FUND ON A $1,000 INVESTMENT ASSUMING (A) PAYMENT OF THE MAXIMUM SALES
CHARGE, (B) A 5% ANNUAL RETURN, AND (C) REDEMPTION AT THE END OF THE TIME
PERIOD. 10-YEAR FIGURES FOR CLASS B SHARES ASSUME CONVERSION TO CLASS A SHARES
AFTER SIX YEARS.
<TABLE>
<S> <C> <C> <C>
1 Year....................... $ 83 $ 82 $ 42
3 Years...................... 135 127 97
5 Years...................... 190 185 165
10 Years...................... 339 324 346
</TABLE>
THE EXAMPLES SHOULD NOT BE CONSIDERED INDICATIONS OF PAST OR FUTURE EXPENSES
OR PERFORMANCE AND ACTUAL EXPENSES OR PERFORMANCE MAY VARY FROM THOSE SHOWN.
INVESTORS SHOULD BE AWARE THAT OVER TIME, CLASS B AND C SHAREHOLDERS MAY PAY
MORE THAN THE EQUIVALENT OF THE MAXIMUM FRONT-END SALES CHARGES PERMITTED BY THE
NATIONAL ASSOCIATION OF SECURITIES DEALERS RULES OF FAIR PRACTICE.
10
<PAGE>
OTHER MATTERS IN CONNECTION WITH OR SUBSEQUENT TO THE CLOSING
It is a condition to the Closing that the Fund enter into a transfer agency
agreement with Shareholder Services, Inc. ("SSI"), a wholly owned subsidiary of
OMC. The fees to be paid to SSI for transfer agency and dividend disbursing
services are set at the same schedule as is currently in effect pursuant to the
Transfer Agent Agreement between the Fund and State Street Bank and Trust
Company. The Board of Trustees of the Trust approved the terms of the proposed
transfer agency agreement with SSI at a meeting held on June 22, 1995. It is
expected that on or about the time of the Closing, the Trust will elect new
officers and will appoint The Bank of New York as custodian. The Fund's current
custodian is State Street Bank and Trust Company. The Transfer Agent Agreement
and the Custodian Contract are not required to be approved by shareholders of
the Fund.
EVALUATION BY THE BOARD OF TRUSTEES
The Board of Trustees has determined that continuity and efficiency of
management services after the Acquisition can best be assured by approving the
New Investment Advisory and Subadvisory Agreements on behalf of the Fund. The
Board believes that the new Investment Advisory and Subadvisory Agreements will
enable the Fund to obtain services of high quality at costs which they deem
appropriate and reasonable and that approval of the Agreements is in the best
interests of the Fund and its shareholders.
In evaluating the New Investment Advisory and Subadvisory Agreements, the
Board of Trustees requested and reviewed, with the assistance of independent
legal counsel, materials furnished by OMC and Quest for Value Advisors. These
materials included financial statements as well as other written information
regarding OMC and its personnel, operations, and financial condition. The Board
also reviewed the same type of information about Quest for Value Advisors. The
Board also retained Management Practice, Inc., an independent consultant, to
provide data on comparable advisory fee structures. Consideration was given to
comparative information concerning other mutual funds with similar investment
objectives including information prepared by Lipper Analytical Services, Inc.
Attached to this Proxy Statement as Exhibit D is a list of other funds managed
by OMC that have similar investment objectives to those of the Fund, their net
assets and the rate of the advisory fee paid to OMC. The Board of Trustees also
reviewed and discussed the terms and provisions of the New Investment Advisory
and Subadvisory Agreements and compared them to the existing management
arrangements as well as the management arrangements of other mutual funds,
particularly with respect to the allocation of various types of expenses, levels
of fees and resulting expense ratios. The Board evaluated the nature and extent
of services provided by other investment advisers to their respective funds and
also considered the benefits OMC would obtain from its relationship with the
Fund and the economies of scale in costs and expenses to OMC associated with its
providing such services.
The Board of Trustees also considered the terms of the Acquisition Agreement
and the possible effects of the Acquisition upon OMC and its ability to provide
services to the Fund. In this regard, in May and July 1995, the non-interested
Trustees visited OMC's offices in New York to meet with OMC's senior executives
and Board members of the OppenheimerFunds and in August 1995 the non-interested
Trustees visited Shareholder Services, Inc.'s offices in Denver, Colorado, to
assess in person OMC's and its subsidiaries' capabilities and facilities. All
the non-interested Trustees participated in such visits. The Board evaluated
such factors as OMC's experience in providing various financial services to
investment companies, its experience in the investment company business, its
distribution and shareholder servicing capabilities and its reputation,
integrity, financial responsibility and stability. The Board also considered the
following factors in determining to approve the New Investment Advisory
Agreement: shareholders of the
11
<PAGE>
Fund would be able to exchange their shares after the Closing for a wider
variety of portfolios within the OppenheimerFunds family than are currently
available to shareholders of the Fund within the Quest family and the operating
expenses of the Fund on a pro forma basis for the period from November 8, 1994
(commencement of operations) to April 30, 1995 are no higher than what they
would have been had Quest for Value Advisors not voluntarily waived its fee and
absorbed all operating expenses. It determined that OMC's assumption of the
investment management function for the Fund would in all likelihood offer the
Fund continued effective advisory services and capabilities.
The Board of Trustees was advised by OMC that currently it was not
recommending change in the Fund's investment objectives and policies other than
those proposed in this Proxy Statement. The Board also noted the assurances it
received from OMC that it is adequately capitalized to enable it to provide high
quality investment management services.
Based upon its review, the Board of Trustees concluded that the terms of the
New Investment Advisory and Subadvisory Agreements are reasonable, fair and in
the best interests of the Fund and its shareholders, and that the fees provided
therein are fair and reasonable in light of the usual and customary charges made
by others for services of the same nature and quality. Accordingly, the Board
concluded that retaining OMC to serve as investment advisor and Quest for Value
Advisors as Subadvisor to the Fund after the Acquisition is desirable and in the
best interests of the Fund and its shareholders.
VOTE REQUIRED
As provided under the 1940 Act, approval of the New Investment Advisory and
Subadvisory Agreements will require the vote of a majority of the outstanding
Shares of the Fund. Under the 1940 Act, the vote of a "majority of the
outstanding voting securities" of an investment company (or a series thereof)
means the vote, at a duly-called annual or special meeting of shareholders, of
67% or more of the shares present at such meeting, if the holders of more than
50% of the outstanding shares of such company or series are present or
represented by proxy, or of more than 50% of the total outstanding shares of
such company or series, whichever is less.
THE TRUSTEES, INCLUDING THE TRUSTEES WHO ARE NOT INTERESTED PERSONS OF THE
TRUST, QUEST FOR VALUE ADVISORS OR OPPENHEIMER MANAGEMENT CORPORATION OR THEIR
AFFILIATES, UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS OF THE FUND VOTE TO
APPROVE THE NEW INVESTMENT ADVISORY AGREEMENT WITH OPPENHEIMER MANAGEMENT
CORPORATION AND THAT THE SHAREHOLDERS OF THE FUND VOTE TO APPROVE THE NEW
SUBADVISORY AGREEMENT BETWEEN OPPENHEIMER MANAGEMENT CORPORATION AND QUEST FOR
VALUE ADVISORS.
PROPOSAL NO. 3
APPROVAL OF NEW DISTRIBUTION PLAN
Although the Fund is authorized to issue three classes of shares, currently
only Class A Shares are being offered to employees of Oppenheimer Capital and
its affiliates. It is proposed that the Fund enter into an Amended and Restated
Distribution and Service Plan and Agreement (the "Plan") with Oppenheimer Funds
Distributor, Inc. with respect to Class A shares (the "New Plan"). The Plan for
Class A shares is attached as Exhibit E to this Proxy Statement. The New Plan
was approved on June 22, 1995 by the
12
<PAGE>
Trustees, including the non-interested Trustees, subject to the approval by the
shareholders. Shareholders will vote on the approval of the New Plan with
respect to Class A shares. The following is a summary of the terms of the New
Plan.
If the New Plan is approved by shareholders, the Plan will become effective
at the Closing and the corresponding current distribution plan ("Current Plan")
with Quest for Value Distributors will terminate. The Closing is conditioned
upon, among other things, approval of the New Plan by shareholders of the Fund
together with approval of similar Plans by shareholders of the other Continuing
Funds that have in the aggregate at least 75% of the closing net assets of all
such Funds.
The fees payable by Class A shares of the Fund under the New Plan will be at
the same rate as is provided in the Current Plan. The fees under the New Plan
will consist of a service fee at the annual rate of .25% of the average net
asset value of the shares and a distribution fee which will be at the annual
rate of .25% of the average net asset value of Class A shares of the Fund.
Oppenheimer Funds Distributor, Inc. will be authorized under the New Plan to
pay broker dealers, banks or other entities (the "Recipients") that render
assistance in the distribution of shares or provide administrative support with
respect to shares held by customers. The service fee payments made under the
Plan will compensate Oppenheimer Funds Distributor, Inc. and the Recipients for
providing administrative support with respect to shareholder accounts. The
distribution fee payments made under the Plan will compensate Oppenheimer Funds
Distributor, Inc. and the Recipients for providing distribution assistance in
connection with the sale of Fund shares.
The New Plan provides that payments may be made by OMC or Oppenheimer Funds
Distributor, Inc. to the Recipients from its own resources or from borrowings.
Like the current Plan, the New Plan may not be amended to increase materially
the amount of payments to be made without the approval of the relevant class of
shareholders of the Fund.
If the New Plan for Class A shares is approved by shareholders, the Plan
will remain in effect only if its continuance is specifically approved at least
annually by the vote of both a majority of the Trustees and a majority of the
non-interested Trustees who have no direct or indirect individual financial
interest in the operation of the New Plan or any agreements related thereto (the
"Qualified Trustees"). The New Plan may be terminated at any time by vote of a
majority of the Qualified Trustees or by a vote of a majority of the Class A
shareholders of the Fund. In the event of such termination, the Board including
the Qualified Trustees shall determine whether Oppenheimer Funds Distributor,
Inc. is entitled to payment by the Fund of all or a portion of the service fee
and/or the distribution fee with respect to shares sold prior to the effective
date of such termination.
The service fee and the distribution fee payable under the New Plan, like
the fees payable under the Current Plan, are subject to reduction or elimination
under the limits imposed by the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. ("NASD Rules"). The Plan is intended to
comply with NASD Rules and Rule 12b-1 adopted under the 1940 Act. Rule 12b-1
requires that the selection and nomination of Trustees who are not "interested
persons" of the Trust be committed to the discretion of the Qualified Trustees
and that the Trustees receive quarterly reports on the payments made under the
Plan and the purposes for those payments.
13
<PAGE>
THE CURRENT PLAN
The Current Plan was approved by the Board of Trustees on October 25, 1994.
At that meeting the Trustees evaluated all information deemed reasonably
necessary to make an informed determination that, in the exercise of their
reasonable business judgment and in view of their fiduciary duties, there was a
reasonable likelihood that approval of the Current Plan would benefit the Fund
and its shareholders. Since the commencement of operations of the Fund, the
entire fee under the Current Plan has been waived by Quest for Value
Distributors.
For the period November 8, 1994 (commencement of operations) to June 30,
1995, Quest for Value Distributors paid no distribution and service fees to
Oppenheimer & Co., Inc., an affiliated broker-dealer, with respect to the Fund.
CURRENT AND PROPOSED SALES ARRANGEMENTS
Class A shares of the Fund have been sold only to employees of Oppenheimer
Capital and its affiliates at net asset value. After the Closing, Class A shares
of the Fund may be exchanged for Class A shares of any Oppenheimer Fund. Any
shareholders of the Fund who are entitled to purchase Class A shares at net
asset value in accordance with the provisions of the Fund's prospectus will have
the right, after the Closing, to purchase any Class A shares of the Continuing
Funds at net asset value and will have the right to purchase any Class A shares
of the OppenheimerFunds at net asset value as soon as the prospectus for each
OppenheimerFund is updated to include such purchase provisions.
EVALUATION BY THE BOARD OF TRUSTEES
The Trustees, including the Qualified Trustees, believe the adoption of a
distribution plan under Rule 12b-1 is essential to and a part of the purpose of
Class A Shares of the Fund in selling its Shares to those persons who wish to
avail themselves of the services of a broker-dealer. In their deliberations, the
Trustees considered many pertinent factors such as the levels of fees prescribed
by the Current Plan and the New Plan. The Board also considered the potential
benefit to the Fund of the proposed method of distribution through Oppenheimer
Funds Distributor, Inc.; the potential conflicts of interest inherent in the use
of Fund assets to pay for distribution expenses; the relationship of the fees
under the New Plan to the overall cost structure of the Fund; and the potential
benefits to existing shareholders of continued asset growth, including the
potential to benefit from economies of scale.
VOTE REQUIRED
Approval of the New Plan for the Class A Shares of the Fund will require the
vote of a "majority of the outstanding voting securities" of that class of
Shares of the Fund, as defined in the next to last paragraph of Proposal 1 and 2
of this Proxy Statement.
THE TRUSTEES, INCLUDING THE QUALIFIED TRUSTEES, UNANIMOUSLY RECOMMEND THAT
THE NEW CLASS A PLAN BE APPROVED BY THE CLASS A SHAREHOLDERS.
14
<PAGE>
PROPOSAL NO. 4
APPROVAL OR DISAPPROVAL OF CHANGE IN THE FUND'S CLASSIFICATION
FROM A DIVERSIFIED MANAGEMENT INVESTMENT COMPANY TO A
NON-DIVERSIFIED MANAGEMENT INVESTMENT COMPANY
The Fund is classified under Section 5 of the 1940 Act as a diversified
management investment company which means that at least 75% of the value of its
total assets is represented by cash and cash items (including receivables),
Government securities, securities of other investment companies and other
securities limited in respect of any one issuer to an amount not greater in
value than 5% of the value of its total assets and to not more than 10% of the
outstanding voting securities of such issuer. Quest for Value Advisors and the
Fund's Board of Trustees believe that it would be desirable to change the Fund's
classification under the 1940 Act to a non-diversified management investment
company but for the Fund to continue to qualify as a "regulated investment
company" for Federal income tax purposes. If this proposal is approved, this
means that more than 5% of the Fund's total assets may be in invested in any one
issuer, but only if at the close of each fiscal quarter the aggregate amount of
such holdings will not exceed 50% of the value of its total assets and no more
than 25% of the value of its total assets will be invested in the securities of
a single issuer. Quest for Value Advisors and the Fund's Board of Trustees
believe that this proposed change will enhance the Fund's ability to pursue
appropriate investment opportunities and to take concentrated positions in
certain equity securities. As a non-diversified investment company, the Fund may
present greater risks than diversified companies because it will be able to
invest in a smaller number of issues. Section 13 of the Act provides that an
investment company may not change its classification from a diversified to a
nondiversified investment company without the approval of the holders of a
majority of its outstanding shares, as described below. The Board of Trustees
recommends that the shareholders of the Fund approve the proposed change in the
Fund's classification to a nondiversified investment management company.
VOTE REQUIRED
The favorable vote of a "majority of the outstanding voting securities" (as
defined in Proposal 1) of the Fund is required for the proposed change in the
Fund's classification under Section 5 of the Act.
The Board of Trustees unanimously recommends that the shareholders of the
Fund approve the proposed change in the Fund's classification under the Act.
PROPOSAL NO. 5
APPROVAL OR DISAPPROVAL OF CHANGE IN THE
FUND'S FUNDAMENTAL INVESTMENT POLICIES
It is a fundamental investment policy of the Fund that under normal
conditions, the Fund will invest at least 65% of its assets in equity securities
of companies with market capitalization between $500 million and $5 billion.
Quest for Value Advisors and the Fund's Board of Trustees believe that it would
be appropriate to change the fundamental investment policy of the Fund to permit
it to invest all of its net assets in securities without regard to market
capitalization. Quest for Value Advisors believes that the Fund should have the
ability to invest in large to small cap stocks in order to pursue opportunities
for capital appreciation. Smaller capitalization companies may experience higher
growth rates and higher
15
<PAGE>
failure rates than larger capitalization companies. The trading volume of
securities of smaller capitalization companies normally is less than that of
larger capitalization companies and therefore may disproportionately affect
their market price, tending to make them rise more in response to buying demand
and fall more in response to selling pressure than is the case with larger
capitalization companies.
VOTE REQUIRED
The favorable vote of a "majority of the outstanding voting securities" (as
defined in Proposal No. 1) of the Fund is required for the proposed change in
the Fund's fundamental investment policy.
The Board of Trustees unanimously recommends that the shareholders of the
Fund approve the proposed change in fundamental investment policy.
PROPOSAL NO. 6
ELECTION OF TRUSTEES
If Proposals 1, 2 and 3 are approved, proxies not indicating a contrary
intention will be voted in favor of the election of the five persons named below
as Trustees, to hold office for an indefinite period and until their successors
are elected and qualified.
OMC, Quest for Value Advisors, Quest for Value Distributors and Oppenheimer
Capital have agreed to comply and use all reasonable efforts to cause compliance
with the provisions of Section 15(f) of the 1940 Act. Section 15(f) provides, in
pertinent part, that an investment adviser and its affiliates may receive any
amount or benefit in connection with a sale of such investment adviser which
results in an assignment of an investment advisory contract if (1) for a period
of three years after the time of such event, 75% of the members of the board of
trustees or directors of the investment company which it advises are not
"interested persons" (as defined in the 1940 Act) of the new or old investment
adviser, and (2) during the two-year period after the date on which the
transactions occurs, there is no "unfair burden" imposed on the investment
company as a result of the transaction. For this purpose, "unfair burden" is
defined to include any arrangement during the two-year period after the
transactions whereby the investment adviser or predecessor or successor
investment advisers, or any interested person of any such adviser, receives or
is entitled to receive any compensation directly or indirectly (i) from any
person in connection with the purchase or sale of securities or other property
to, from, or on behalf of the investment company other than bona fide ordinary
compensation as principal underwriter for such company, or (ii) from the
investment company or its security holders for other than bona fide investment
advisory or other services. No compensation arrangements of the types described
above are contemplated in the proposed transaction. The composition of the Board
of Trustees of the Trust is presently in compliance with the 75% requirement and
will continue to be so if all the nominees named in Proposal 4 are elected.
The Board is recommending the election of four Trustees who are currently
Trustees of the Trust and are not "interested persons" of OMC, Quest for Value
Advisors, Quest for Value Distributors or Oppenheimer Capital and one Trustee,
Bridget A. Macaskill, who is an "interested person" of OMC but not of Quest for
Value Advisors. Joseph M. La Motta, who is currently the Chairman of the Board
of the Trust, is not standing for re-election and, upon the Closing, will
resign.
16
<PAGE>
Each nominee has consented to being named as a nominee in this Proxy
Statement. Should any nominee become unable or unwilling to serve, the persons
appointed as proxies shall vote for the election of such other person or persons
as the Board of Trustees of the Trust shall recommend. The Board of Trustees has
no reason to believe that any person nominated will be unable or unwilling to
serve if elected to office.
The following table shows the nominees who are standing for election and
their principal occupation which, unless specific dates are shown, are of more
than five years duration, although the titles held may not have been the same
throughout. The table also shows how long the nominee has served on the Board of
Trustees of the Trust; if no date is shown, the nominee is standing for election
for the first time at this Meeting.
<TABLE>
<CAPTION>
TRUSTEE
NAME, AGE AND ADDRESS SINCE PRINCIPAL OCCUPATION DURING PAST 5 YEARS
-------------------------------------- ----------- -----------------------------------------------------------------------
<S> <C> <C>
Paul Y. Clinton ...................... 1987 Director, External Affairs, Kravco Corporation, a national real estate
Age: 64 owner and property management corporation; formerly President of Essex
946 Morris Avenue Management Corporation, a management consulting company; Trustee of
Bryn Mawr, PA 19010 Capital Cash Management Trust, Prime Cash Fund and Short Term Asset
Reserves, each of which is a money-market fund; Director of Quest for
Value Fund, Inc., Quest for Value Global Equity Fund, Inc., Quest for
Value Global Funds, Inc. and Quest Cash Reserves, Inc., Trustee of
Quest for Value Accumulation Trust, all of which are open-end
investment companies. Formerly a general partner of Capital Growth
Fund, a venture capital partnership; formerly a general partner of
Essex Limited Partnership, an investment partnership; formerly
President of Geneve Corp., a venture capital fund; formerly Chairman
of Woodland Capital Corp., a small business investment company;
formerly Vice President of W.R. Grace & Co.
Thomas W. Courtney, C.F.A. ........... 1987 Principal of Courtney Associates, Inc., a venture capital firm; former
Age: 61 General Partner of Trivest Venture Fund, a private venture capital
P.O. Box 580 fund; former President of Investment Counseling Federated Investors,
Sewickley, PA 15143 Inc.; Trustee of Cash Assets Trust, a money market fund; Director of
Quest Cash Reserves, Inc., Quest for Value Fund, Inc., Quest for Value
Global Equity Fund, Inc. and Quest for Value Global Funds, Inc.,
Trustee of Quest for Value Accumulation Trust, all of which are
open-end investment companies; former President of Boston Company
Institutional Investors; Trustee of Hawaiian Tax-Free Trust and Tax
Free Trust of Arizona, tax-exempt bond funds; Director of several
privately owned corporations; former Director of Financial Analysts
Federation.
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
TRUSTEE
NAME, AGE AND ADDRESS SINCE PRINCIPAL OCCUPATION DURING PAST 5 YEARS
-------------------------------------- ----------- -----------------------------------------------------------------------
<S> <C> <C>
Lacy B. Herrmann ..................... 1987 President and Chairman of the Board of Aquila Management Corporation
Age: 66 (since 1984) and of Incap Management Corporation (since 1982), the
380 Madison Avenue sponsoring organizations and Administrator and/or Sub-Advisor to the
Suite 2300 following open-end investment companies, and Chairman of the Board of
New York, NY 10017 Trustees and President of each: Churchill Cash Reserves Trust (since
1985), Short Term Asset Reserves (since 1984), Cash Assets Trust
(since 1984), U.S. Treasuries Cash Assets Trust (since 1988), Tax-Free
Cash Assets Trust (since 1988), Prime Cash Fund (since 1982), Oxford
Cash Management Fund (1982-1988) and Trinity Liquid Assets Trust
(1982-1985), each of which is a money market fund, and of Churchill
Tax-Free Fund of Kentucky (since 1986), Tax-Free Fund of Colorado
(since 1986), Tax-Free Trust of Oregon (since 1985), Tax-Free Fund of
Arizona (since 1985), and Hawaiian Tax-Free Trust (since 1984), each
of which is a tax-free municipal bond fund; Vice President, Director,
Secretary, and formerly Treasurer of Aquila Distributors, Inc. (since
1981), distributor of most of the above funds; President and Chairman
of the Board of Trustees of Capital Cash Management Trust ("CCMT") a
money market fund (since 1981) and an Officer and Trustee/Director of
its predecessors (since 1974); President and Director of STCM
Management Company, Inc., sponsor and Sub-Advisor to CCMT; General
Partner of Tamarack Associates (1966-1984), a private investment
partnership and Chairman of the Board and President of various of its
subsidiaries through 1986. Director of Quest Cash Reserves, Inc.,
Quest for Value Fund, Inc., Quest for Value Global Equity Fund, Inc.
and Quest for Value Global Funds, Inc., Trustee of Quest for Value
Accumulation Trust and The Saratoga Advantage Trust, each of which is
an open-end investment company.
George Loft .......................... 1987 Private Investor; Director of Quest Cash Reserves, Inc., Quest for
Age: 80 Value Fund, Inc., Quest for Value Global Equity Fund, Inc. and Quest
51 Herrick Road for Value Global Funds, Inc., Trustee of Quest for Value Accumulation
Sharon, CT 06069 Trust and The Saratoga Advantage Trust, all of which are open-end
investment companies, and Director of Quest for Value Dual Purpose
Fund, Inc., a closed-end investment company.
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
TRUSTEE
NAME, AGE AND ADDRESS SINCE PRINCIPAL OCCUPATION DURING PAST 5 YEARS
-------------------------------------- ----------- -----------------------------------------------------------------------
<S> <C> <C>
Bridget A. Macaskill ................. Chief Executive Officer of Oppenheimer Management Corporation effective
Age: 47 September 30, 1995 and President and Chief Operating Officer of
Two World Trade Center Oppenheimer Management Corporation since 1991; prior thereto, Chief
New York, NY 10048 Operating Officer of OMC from 1989 to 1991 and Executive Vice
President of OMC from 1987-1989. Vice President, Director of
Oppenheimer Acquisition Corp., Director of Oppenheimer Partnership
Holdings, Inc., Chairman and a Director of Shareholder Services, Inc.,
Director of Main Street Advisers, Inc., Director of Harbourview Asset
Management Corporation, all of which are subsidiaries of OMC.
</TABLE>
If all five nominees are elected, four of the five Trustees (over 75%) will
not be "interested persons" of OMC, Quest for Value Advisors, Quest for Value
Distributors or Oppenheimer Capital or any of their affiliates.
As of August 15, 1995, each nominee for Trustee(1) and the current officers
and Trustees of the Trust as a group held shares of Class A of the Fund as set
forth below:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
NUMBER OF NUMBER OF SHARES AS TO SHARES AS TO
SHARES AS TO SHARES AS TO WHICH OWNERS WHICH OWNERS
WHICH OWNERS WHICH OWNERS HAVE SOLE HAVE SHARED
HAVE SOLE HAVE SHARED INVESTMENT INVESTMENT
NAME VOTING POWER VOTING POWER POWER POWER
----------------------------------------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Paul Y. Clinton............................................ 0 0 0 0
Thomas W. Courtney......................................... 0 0 0 0
Lacy B. Herrmann........................................... 0 0 0 0
George Loft................................................ 0 0 0 0
Bridget A. Macaskill....................................... 0 0 0 0
All current officers and trustees as a group............... 57,064 0 57,064 0
</TABLE>
------------------------
(1) The Fund's shares have been offered only to employees of Oppenheimer Capital
and its affiliates. The non-interested Trustees were not eligible to
purchase shares of the Fund.
During the last fiscal year of the Trust the Board of Trustees held four
regular quarterly meetings and one special meeting. The Board of Trustees' audit
committee, which consists of all Trustees who are not "interested persons," held
two meetings during the Trust's last fiscal year. That committee reviews audits,
audit procedures, financial statements and other financial and operational
matters of the Fund. The Board has neither a standing nominating committee nor a
standing compensation committee. Each Trustee attended at least 75% of the
meetings of the Board of Trustees and the meetings held by the committee of the
Board on which such Trustee served during the last fiscal year.
19
<PAGE>
REMUNERATION OF TRUSTEES
Mr. La Motta and the officers of the Fund receive no salary from the Fund.
The following table sets forth the aggregate compensation received from the Fund
and Quest for Value Advisors' Fund Complex by the Trust's independent trustees
during the fiscal year ended October 31, 1994.
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT ESTIMATED TOTAL
BENEFITS ANNUAL COMPENSATION
AGGREGATE ACCRUED AS PART BENEFITS FROM FUNDS
COMPENSATION FROM OF FUND UPON AND FUND
NAME OF PERSON THE FUND EXPENSES RETIREMENT COMPLEX
----------------------------------------- ------------------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
Paul Y. Clinton.......................... 0 None None $ 68,100
Thomas W. Courtney....................... 0 None None 66,600
Lacy B. Herrmann......................... 0 None None 67,350
George Loft.............................. 0 None None 74,800
</TABLE>
Messrs. Clinton, Courtney and Herrmann earned directors fees with respect to
18 investment companies in Quest for Value Advisors' Fund Complex and the fees
earned by Mr. Loft were with respect to 19 investment companies in the Complex.
During such periods the non-interested Trustees received fees from three
investment companies for which they no longer serve as directors and which are
no longer part of the Complex but for which Quest for Value Advisors currently
serves as subadviser. In addition, during such periods, Mr. Clinton and Mr.
Courtney each served as director with respect to three investment companies in
the Complex for which they received no fees and Mr. Loft and Mr. Herrmann each
served as director with respect to 10 investment companies in the Complex for
which they received no fees. For the purpose of this paragraph, a portfolio of
an investment company organized in series form is considered to be an investment
company. Under the fee schedule in effect for the Complex, until a portfolio has
net assets of $25 million, no Trustees fees are paid by that portfolio. When a
portfolio has net assets of at least $25 million but not more than $50 million,
the Trustees, other than Mr. La Motta, are paid an annual fee of $1,750 plus
$250 for each Trustees meeting attended and $100 for each committee meeting
attended. When a portfolio has net assets in excess of $50 million, the
Trustees, other than Mr. La Motta, are paid an annual fee of $3,500 plus $500
for each Trustees meeting attended and $100 for each committee meeting attended.
These fees are reduced when more than five funds managed by Quest for Value
Advisors have net assets in excess of $50 million.
The following table sets forth information about the current officers of the
Trust who are not Trustees.
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION DURING PAST FIVE YEARS TITLE WITH THE TRUST
---------------------------- --------------------------------------------------- ------------------------------------
<S> <C> <C>
Bernard H. Garil ........... President since 1994 and Chief Operating Officer Vice President since 1991
Age: 55 since 1990 of Quest for Value Advisors; Executive
Vice President of Quest for Value Advisors from
1990-1994.
Robert J. Bluestone ........ Managing Director since 1992 and Senior Vice Vice President since 1987
Age: 49 President from 1986 to 1992 of Oppenheimer
Capital.
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION DURING PAST FIVE YEARS TITLE WITH THE TRUST
---------------------------- --------------------------------------------------- ------------------------------------
<S> <C> <C>
Richard Glasebrook ......... Managing Director since 1994 and Senior Vice Vice President and Portfolio Manager
Age: 47 President from 1991 to 1994 of Oppenheimer since 1991
Capital; prior thereto, Partner and Portfolio
Manager of Delafield Asset Management.
Colin Glinsman ............. Senior Vice President since 1995, Vice President Vice President and Portfolio Manager
Age: 37 from 1991 to 1995 and Assistant Vice President since 1993
from 1989 to 1991 of Oppenheimer Capital.
Louis Goldstein ............ Vice President of Oppenheimer Capital since 1991; Vice President and Portfolio Manager
Age: 35 prior thereto, security analyst with David J. since January 1995
Greene & Co.
Matthew Greenwald .......... Vice President since 1992 and Assistant Vice Vice President and Portfolio Manager
Age: 41 President from 1989 to 1992 of Oppenheimer since 1993
Capital.
Vikki Hanges ............... Vice President since 1991 and Assistant Vice Vice President and Portfolio Manager
Age: 35 President and fixed income Portfolio Manager of since 1993
Oppenheimer Capital from 1987 to 1991.
Jenny B. Jones ............. Senior Vice President since 1994, Vice President Vice President and Portfolio Manager
Age: 37 from 1991 to 1994 and Assistant Vice President since 1990
from 1990 to 1991 of Oppenheimer Capital.
George B. Tilghman ......... Vice President since 1991 and Assistant Vice Vice President and Portfolio Manager
Age: 36 President from 1989 to 1991 of Oppenheimer since 1993
Capital.
Jeffrey Whittington ........ Senior Vice President of Oppenheimer Capital since Vice President and Portfolio Manager
Age: 38 1994 and from 1987 to 1991. From 1991 to 1994 he since 1994
was a portfolio manager with Oppenheimer & Co. and
then with Neuberger Berman
Sheldon M. Siegel .......... Managing Director of Oppenheimer Capital Treasurer since 1987
Age: 53
Deborah Kaback ............. Senior Vice President since 1993 and Vice President Secretary since 1992
Age: 44 from 1989 to 1993 of Oppenheimer Capital
Leslie Klein ............... Vice President of Oppenheimer Capital Assistant Treasurer since 1987
Age: 43
Thomas E. Duggan ........... Managing Director and General Counsel of Assistant Secretary since 1992
Age: 51 Oppenheimer Capital
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION DURING PAST FIVE YEARS TITLE WITH THE TRUST
---------------------------- --------------------------------------------------- ------------------------------------
<S> <C> <C>
Maria Camacho .............. Assistant Vice President since 1994 and blue sky Assistant Secretary since 1995
Age: 40 administrator of Oppenheimer Capital
</TABLE>
Upon the Closing, it is anticipated that the foregoing officers of the Trust
will resign and that OMC will propose to the Trustees that Bridget A. Macaskill
be elected Chairman of the Board and President, that George Bowen be elected
Treasurer, that Robert Doll be elected Vice President and that Andrew J. Donohue
be elected Secretary. Information about Ms. Macaskill, who is a nominee for
Trustee, is provided in the table on nominees. The address of all such proposed
officers is Oppenheimer Management Corporation, 2 World Trade Center, NY, NY
except for Mr. Bowen whose address is Oppenheimer Management Corporation, 3410
S. Galena Street, Denver, Colorado 80231. The following table provides
information about the other proposed officers:
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION DURING PAST FIVE YEARS
---------------------------- ------------------------------------------------------------------------------------------
<S> <C>
George C. Bowen ............ Senior Vice President and Treasurer of OMC; Vice President and Treasurer of Oppenheimer
Age: 59 Funds Distributor, Inc., and Harbour View Asset Management Corporation; President,
Treasurer and Director of Centennial Capital Corporation; Senior Vice President,
Treasurer and Secretary of Shareholder Services, Inc.; Vice President, Treasurer and
Secretary of Shareholder Financial Services, Inc. and an officer of various Oppenheimer
Funds.
Robert T. Doll ............. Executive Vice President and Director of Equity Investments of OMC; officer of various
Age: 41 Oppenheimer Funds.
Andrew J. Donohue .......... Executive Vice President and General Counsel of OMC and Oppenheimer Funds Distributor,
Age: 45 Inc.; officer of various Oppenheimer Funds.
</TABLE>
VOTE REQUIRED
A plurality of all the votes cast at the meeting, if a quorum is present at
the meeting, is sufficient to elect the nominees. If Proposals 1, 2 and 3 are
not approved by the shareholders, no election of Trustees will be held and the
slate of officers first named above will continue in office.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE TO ELECT
EACH OF THE NOMINEES
OTHER INFORMATION
THE CURRENT ADVISOR
Quest for Value Advisors and Oppenheimer Capital are located at One World
Financial Center, New York, New York, and all executive officers of the Advisor
have business addresses at that location.
The Advisor is a general partnership of which Oppenheimer Capital, an
investment management firm, holds a 99% interest and Oppenheimer Financial Corp.
holds a 1% interest. Oppenheimer Capital is a general partnership of which
Oppenheimer Financial Corp., a holding company, holds a 33.0% interest and
Oppenheimer Capital, L.P., a limited partnership of which Oppenheimer Financial
Corp. is the sole general partner, holds a 67.0% interest. Oppenheimer Capital
L.P. acquired a 32.3% interest in Oppenheimer Capital on July 9, 1987 for
$99,032,000 in connection with a public offering of units of limited partnership
22
<PAGE>
interest in Oppenheimer Capital. L.P. (see Registration Statement No. 33-14364
and Amendments). Additional interests were acquired subsequently as a result of
the issuance of units pursuant to the Restricted Unit and Restricted Option
Plans. An additional interest of 33.6% in Oppenheimer Capital was acquired by
Oppenheimer Capital, L.P. on April 23 and May 1, 1991 in connection with a
public offering of 6.6 million units of limited partnership interest in
Oppenheimer Capital, L.P. (see Registration Statement No. 33-39345 and
Amendments). All such units were sold by Oppenheimer Financial Corp., which is
owned by Oppenheimer Group, Inc. Oppenheimer & Co., L.P., an investment limited
partnership, controls Oppenheimer Group, Inc. and is the ultimate parent company
of Oppenheimer & Co., Inc. Mr. La Motta is Chairman of the Advisor and President
of Oppenheimer Capital, Executive Vice President of Oppenheimer & Co., Inc., and
Director and Executive Vice President of Oppenheimer Financial Corp.,
Oppenheimer Group, Inc., and Oppenheimer Holdings, Inc.
Mr. La Motta and Mr. Siegel both hold general partnership and limited
partnership interests in Oppenheimer & Co., L.P.; Mr. Bluestone, Mr. Duggan and
Mr. Garil hold limited partnership interests in Oppenheimer & Co., L.P.
RECEIPT OF SHAREHOLDER PROPOSALS, QUORUM AND VOTING
Under the proxy rules of the SEC, shareholder proposals meeting tests
contained in those rules may, under certain conditions, be included in the
Trust's proxy statement and proxy for a particular annual meeting. Those rules
require that at the time the shareholder submits the proposal the shareholder be
a record or beneficial owner of at least 1% or $1,000 in market value of
securities entitled to be voted on the proposal and have held such securities
for at least one year prior thereto, and continue to hold such shares through
the date on which such meeting is held. Another of these conditions relates to
the timely receipt by the Trust of any such proposal. Under these rules,
proposals submitted for inclusion in the Trust's proxy material for the next
annual meeting after the meeting to which this proxy statement relates must be
received by the Trust not less than 120 days before the first anniversary of the
date stated on the first page of this Proxy Statement relating to the first
mailing of this Proxy Statement. The date for such submission could change,
depending on the scheduled date for the next annual meeting.
The fact that the Trust receives a shareholder proposal in a timely manner
does not insure its inclusion in its proxy material, since there are other
requirements in the proxy rules relating to such inclusion.
Shareholders should be aware that under the law of the state in which the
Trust is established, Massachusetts, business trusts need hold no annual
meetings of shareholders as long as there is no particular requirement under the
Investment Company Act of 1940 which must be met by convening such a
shareholders' meeting. As it is the intention of the Board of Trustees not to
hold annual shareholder meetings in the future unless required to do so under
that Act, there can be no assurance that shareholder proposals validly submitted
to the Trust will be acted upon at a regularly scheduled annual shareholders'
meeting.
Shares represented in person or by proxy (including shares which abstain or
do not vote with respect to one or more of the proposals presented for
shareholder approval including "broker non-votes") will be counted for purposes
of determining whether a quorum is present at the Meeting. Abstentions will be
treated as shares that are present and entitled to vote for purposes of
determining the number of shares that are present and entitled to vote with
respect to any particular proposal, but will not be counted as a vote in favor
of such proposal. Accordingly, an abstention from voting on a proposal has the
same legal effect
23
<PAGE>
as a vote against the proposal. "Broker non votes" have the same legal effect as
a vote against the proposal. "Broker non-votes" exist where a proxy received
from a broker indicates that the broker does not have discretionary authority to
vote the shares on that matter.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP are the independent auditors of the Fund. A
representative of the firm is expected to be present at the meeting with the
opportunity to make a statement and to respond to appropriate questions.
MAILING OF ANNUAL REPORT
The Fund will furnish, without charge, a copy of its Semi-Annual Report for
the period November 8, 1994 (commencement of operations) to April 30, 1995 to a
shareholder upon request. Such request should be made to Bernard H. Garil, Quest
for Value Advisors, One World Financial Center, New York, NY 10281, or by
calling 1-800-232-3863. The report will be sent by first class mail within three
business days of the request.
OTHER BUSINESS
The management knows of no business other than the matters specified above
which will be presented at the meeting. Inasmuch as matters not known at the
time of the solicitation may come before the meeting, the proxy as solicited
confers discretionary authority with respect to such matters as may properly
come before the meeting and it is the intention of the persons named in the
proxy to vote the proxy in accordance with their judgment on such matters.
By Order of the Board of Trustees
DEBORAH KABACK
SECRETARY
24
<PAGE>
EXHIBIT A
The aggregate purchase price for the Purchased Assets will be an amount
equal to the sum of (i) the Initial Purchase Payment (as hereinafter defined)
payable in cash at the Closing, (ii) the aggregate amount of all unamortized
prepaid commissions as of the business day immediately preceding the Acquisition
Closing which relate to the Acquired Funds (excluding those with respect to
Citibank, N.A.) payable in cash at the Closing, (iii) the amount payable by OMC
in respect of the right, title and interest of Citibank, N.A. to certain
commissions and (iv) the Deferred Purchase Payment (as hereinafter defined).
The "Initial Purchase Payment" shall be an amount equal to the sum of (x)
225% of the Annualized Fee Amount (as hereinafter defined) of each Reorganized
Fund and (y) 270% of the Annualized Fee Amount of each Continuing Fund
(excluding the Quest for Value Officers Fund). The "Annualized Fee Amount" of an
Acquired Fund shall equal the product of (i) such Acquired Fund's Closing Net
Assets (as hereinafter defined) and (ii) the annual advisory fee payable to
Quest for Value Advisors by such Acquired Fund at the rate indicated in the most
recent prospectus for such Acquired Fund at the Closing (plus any applicable
annual administrative fee). "Closing Net Assets" for an Acquired Fund shall mean
the aggregate net asset value of such Acquired Fund as of the close of business
on the last business date preceding the Closing.
The "Deferred Purchase Payment" shall be an amount equal to the aggregate
amounts determined for all Reorganized Funds pursuant to the following formula:
the Closing Payment (as hereinafter defined) times the Applicable Percentage (as
hereinafter defined). The "Closing Payment" shall be the aggregate amount
calculated for all Reorganized Funds pursuant to clause (x) of the Initial
Purchase Payment formula. The "Applicable Percentage" shall be 100% if the
Continuing Net Asset Percentage (as hereinafter defined) is 75% or more, 0% if
the Continuing Net Asset Percentage is 50% or less and the percentage determined
in accordance with the following formula if the Continuing Net Asset Percentage
is between 75% and 50%: 100% - (4) (75% - Continuing Net Asset Percentage). The
"Continuing Net Asset Percentage" shall equal the percentage obtained by
dividing the Anniversary Net Assets (as hereinafter defined) by the Closing Net
Assets. The "Anniversary Net Assets" shall mean the most recently determined
aggregate net asset values of all Reorganized Funds as of 8:00 p.m. on the first
anniversary of the Closing of each account of the Reorganized Funds which are
eligible to be included in Anniversary Net Assets in accordance with the
principles set forth in the Acquisition Agreement.
A-1
<PAGE>
EXHIBIT B
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made the day of October, 1995, by and between
OPPENHEIMER/QUEST FOR VALUE FAMILY OF FUNDS, a Massachusetts business trust
(hereinafter referred to as the "Company"), and OPPENHEIMER MANAGEMENT
CORPORATION (hereinafter referred to as "OMC").
WHEREAS, the Company is an open-end, diversified management investment
company registered as such with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940 (the "Investment
Company Act"), and OMC is an investment adviser registered as such with the
Commission under the Investment Advisors Act of 1940;
WHEREAS, each of Growth and Income Fund, Small Capitalization Fund,
Opportunity Fund and Officers Fund is a separately capitalized Series (the
"Series") of the Shares of beneficial interest to be issued by the Company
("Shares") pursuant to the Company's registration statement;
WHEREAS, the Company desires that OMC shall act as its investment adviser
with respect to each Series pursuant to this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, it is agreed by and between the parties, as follows:
1. GENERAL PROVISIONS:
The Company hereby employs OMC and OMC hereby undertakes to act as the
investment adviser of the Company in connection with and for the benefit of
each Series, including any Series hereafter created and to perform for the
Company such other duties and functions in connection with each Series for
the period and on such terms as set forth in this Agreement. OMC shall, in
all matters, give to the Company and its Board of Trustees (the "Trustees")
the benefit of its best judgement, effort, advice and recommendations and
shall, at all times conform to, and use its best efforts to enable the
Company to conform to (i) the provisions of the Investment Company Act and
any rules or regulations thereunder; (ii) any other applicable provisions of
state or Federal law; (iii) the provisions of the Declaration of Trust and
By-Laws of the Company as amended from time to time; (iv) policies and
determinations of the Trustees; (v) the fundamental policies and investment
restrictions of each Series as reflected in the registration statement of
the Company under the Investment Company Act or as such policies may, from
time to time, be amended and (vi) the Prospectus and Statement of Additional
Information of each Series in effect from time to time. The appropriate
officers and employees of OMC shall be available upon reasonable notice for
consultation with any of the Trustees and officers of the Company with
respect to any matters dealing with the business and affairs of the Company
including the valuation of portfolio securities of the Company which are
either not registered for public sale or not traded on any securities
market.
2. INVESTMENT MANAGEMENT:
(a) OMC shall, subject to the direction and control by the Trustees,
(i) regularly provide investment advice and recommendations to the Company
with respect to the investments, investment policies and the purchase and
sale of securities for each Series; (ii) supervise continuously the
investment program of each Series of the Company and the composition of its
portfolio and determine what
B-1
<PAGE>
securities shall be purchased or sold by; and (iii) arrange, subject to the
provisions of paragraph 7 hereof, for the purchase of securities and other
investments for each Series of the Company and the sale of securities and
other investments held in the portfolio of each Series.
(b) Provided that the Company shall not be required to pay any
compensation for services under this Agreement other than as provided by the
terms of the Agreement and subject to the provisions of paragraph 7 hereof,
OMC may obtain investment information, research or assistance from any other
person, firm or corporation to supplement, update or otherwise improve its
investment management services including entering into sub-advisory
agreements with other affiliated or unaffiliated registered investment
advisors to obtain specialized services.
(c) Provided that nothing herein shall be deemed to protect OMC from
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or reckless disregard of its obligations and duties under this
Agreement, OMC shall not be liable for any loss sustained by reason of good
faith errors or omissions in connection with any matters to which this
Agreement relates.
(d) Nothing in this Agreement shall prevent OMC or any entity
controlling, controlled by or under common control with OMC or any officer
thereof from acting as investment adviser for any other person, firm or
corporation or in any way limit or restrict OMC or any of its directors,
officers, stockholders or employees from buying, selling or trading any
securities for its or their own account or for the account of others for
whom it or they may be acting, provided that such activities will not
adversely affect or otherwise impair the performance by OMC of its duties
and obligations under this Agreement.
3. OTHER DUTIES OF OMC:
OMC shall, at its own expense, provide and supervise the activities of
all administrative and clerical personnel as shall be required to provide
effective corporate administration for the Company, including the
compilation and maintenance of such records with respect to its operations
as may reasonably be required; the preparation and filing of such reports
with respect thereto as shall be required by the Commission; composition of
periodic reports with respect to operations of each Series of the Company
for its shareholders; composition of proxy materials for meetings of the
Company's shareholders; and the composition of such registration statements
as may be required by Federal and state securities laws for continuous
public sale of Shares of each Series and the Company. OMC shall, at its own
cost and expense, also provide the Company with adequate office space,
facilities and equipment. OMC shall, at its own expenses, provide such
officers for the Company as the Board of Trustees may request.
4. ALLOCATION OF EXPENSES:
All other costs and expenses of the Fund not expressly assumed by OMC
under this Agreement, or
to be paid by the Distributor of the Shares of the Fund, shall be paid by
the Fund, including, but not limited to: (i) interest, taxes and
governmental fees; (ii) brokerage commissions and other expenses incurred in
acquiring or disposing of the portfolio securities and other investments of
each Series; (iii) insurance premiums for fidelity and other coverage
requisite to its operations; (iv) compensation and expenses of its Trustees
other than those affiliated with OMC; (v) legal and audit expenses; (vi)
custodian and transfer agent fees and expenses; (vii) expenses incident to
the redemption of its Shares; (viii) expenses incident to the issuance of
its Shares against payment therefor by or on behalf of the subscribers
thereto; (ix) fees and expenses, other than as hereinabove provided,
incident to the
B-2
<PAGE>
registration under Federal and state securities laws of Shares of the
Company and Series for public sale; (x) expenses of printing and mailing
reports, notices and proxy materials to shareholders of the Company and each
Series; (xi) except as noted above, all other expenses incidental to holding
meetings of the Company's shareholders; and (xii) such extraordinary
non-recurring expenses as may arise, including litigation, affecting the
Company or any Series thereof and any legal obligation which the Company, or
any Series of the Company may have to indemnify its officers and Trustees
with respect thereto. Any officers or employees of OMC or any entity
controlling, controlled by, or under common control with, OMC who also serve
as officers, Trustees or employees of the Company shall not receive any
compensation from the Company or any Series thereof for their services.
5. COMPENSATION OF OMC:
The Company agrees to pay OMC and OMC agrees to accept as full
compensation for the performance of all functions and duties on its part to
be performed pursuant to the provisions hereof, a fee computed on the total
net asset value of each Series of the Company as of the close of each
business day and payable monthly at the annual rate for each Series set
forth on Schedule A hereto.
6. USE OF NAME "OPPENHEIMER" OR "QUEST FOR VALUE":
OMC hereby grants to the Company a royalty-free, non-exclusive license
to use the name "Oppenheimer" or "Quest For Value" in the name of the
Company for the duration of this Agreement and any extensions or renewals
thereof. To the extent necessary to protect OMC's rights to the name
"Oppenheimer" or "Quest For Value" under applicable law, such license shall
allow OMC to inspect and, subject to control by the Company's Board, control
the nature and quality of services offered by the Company under such name
and may, upon termination of this Agreement, be terminated by OMC, in which
event the Company shall promptly take whatever action may be necessary to
change its name and discontinue any further use of the name "Oppenheimer" or
"Quest For Value" in the name of the Company or otherwise. The name
"Oppenheimer" and "Quest For Value" may be used or licensed by OMC in
connection with any of its activities, or licensed by OMC to any other
party.
7. PORTFOLIO TRANSACTIONS AND BROKERAGE:
(a) OMC (and any Sub Advisor) is authorized, in arranging the purchase
and sale of the portfolio securities of each Series of the Company to employ
or deal with such members of securities or commodities exchanges, brokers or
dealers (hereinafter "broker-dealers"), including "affiliated"
broker-dealers (as that term is defined in the Investment Company Act), as
may, in its best judgment, implement the policy of the Fund to obtain, at
reasonable expense, the "best execution" (prompt and reliable execution at
the most favorable security price obtainable) of the portfolio transactions
of each Series of the Company as well as to obtain, consistent with the
provisions of subparagraph (c) of this paragraph 7, the benefit of such
investment information or research as will be of significant assistance to
the performance by OMC of its investment management functions.
(b) OMC (and any Sub Advisor) shall select broker-dealers to effect the
portfolio transactions of each Series of the Company on the basis of its
estimate of their ability to obtain best execution of particular and related
portfolio transactions. The abilities of a broker-dealer to obtain best
execution of particular portfolio transaction(s) will be judged by OMC (or
any Sub Advisor) on the basis of all relevant factors and considerations
including, insofar as feasible, the execution capabilities required by the
transaction or transactions; the ability and willingness of the
broker-dealer to facilitate the portfolio transactions of each Series of the
Company by participating therein for its own account; the
B-3
<PAGE>
importance to the Company of speed, efficiency or confidentiality; the
broker-dealer's apparent familiarity with sources from or to whom particular
securities might be purchased or sold; as well as any other matters relevant
to the selection of a broker-dealer for particular and related transactions
of each Series of the Company.
(c) OMC (and any Sub Advisor) shall have discretion, in the interest of
the Company and each Series, to allocate brokerage on the portfolio
transactions of each Series of the Company to broker-dealers, other than an
affiliated broker-dealers, qualified to obtain best execution of such
transactions who provide brokerage and/or research services (as such
services are defined in Section 28(e)(3) of the Securities Exchange Act of
1934) for the Fund and/or other accounts for which OMC or its affiliates (or
any Sub Advisor) exercise "investment discretion" (as that term is defined
in Section 3(a)(35) of the Securities Exchange Act of 1934) and to cause the
Company or a Series to pay such broker-dealers a commission for effecting a
portfolio transaction for the Company or a Series that is in excess of the
amount of commission another broker-dealer adequately qualified to effect
such transaction would have charged for effecting that transaction, if OMC
(or any Sub Advisor) determines, in good faith, that such commission is
reasonable in relation to the value of the brokerage and/or research
services provided by such broker-dealer viewed in terms of either that
particular transaction or the overall responsibilities of OMC or its
affiliates (or any Sub Advisor) with respect to accounts as to which they
exercise investment discretion. In reaching such determination, OMC (or any
Sub Advisor) will not be required to place or attempt to place a specific
dollar value on the brokerage and/or research services provided or being
provided by such broker-dealer. In demonstrating that such determinations
were made in good faith, OMC (and any Sub Advisor) shall be prepared to show
that all commissions were allocated for purposes contemplated by this
Agreement and that the total commissions paid by the Company and each Series
over a representative period selected by the Company's Trustees were
reasonable in relation to the benefits to the Company and each Series.
(d) OMC (or any Sub Advisor) shall have no duty or obligation to seek
advance competitive bidding for the most favorable commission rate
applicable to any particular portfolio transactions or to select any
broker-dealer on the basis of its purported or "posted" commission rate but
will, to the best of its ability, endeavor to be aware of the current level
of the charges of eligible broker-dealers and to minimize the expense
incurred by the Company and each Series for effecting its portfolio
transactions to the extent consistent with the interests and policies of the
Company and each Series as established by the determinations of the Board of
Trustees of the Company and the provisions of this paragraph 7.
(e) The Company recognizes that an affiliated broker-dealer: (i) may act
as one of the Company's regular brokers for the Company or a Series thereof
so long as it is lawful for it so to act; (ii) may be a major recipient of
brokerage commissions paid by the Company or a Series; and (iii) may effect
portfolio transactions for the Company or a Series thereof only if the
commissions, fees or other renumeration received or to be received by it are
determined in accordance with procedures contemplated by any rule,
regulation or order adopted under the Investment Company Act for determining
the permissible level of such commissions.
(f) Subject to the foregoing provisions of this paragraph 7, OMC (and
any Sub Advisor) may also consider sales of Shares of the Company, each
Series thereof and the other funds advised by OMC and its affiliates as a
factor in the selection of broker-dealers for its portfolio transactions.
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8. DURATION:
This Agreement will take effect on the date first set forth above.
Unless earlier terminated pursuant to paragraph 10 hereof, this Agreement
shall remain in effect from year to year, so long as such continuance shall
be approved at least annually by the Company's Board of Trustees, including
the vote of the majority of the Trustees of the Company who are not parties
to this Agreement or "interested persons" (as defined in the Investment
Company Act) of any such party, cast in person at a meeting called for the
purpose of voting on such approval, or by the holders of a "majority" (as
defined in the Investment Company Act) of the outstanding voting securities
of the Company, or each Series thereof, and by such a vote of the Company's
Board of Trustees.
9. DISCLAIMER OF SHAREHOLDER OR TRUSTEE LIABILITY:
OMC understands and agrees that the obligations of the Company under
this Agreement are not binding upon any shareholder or Trustee of the
Company personally, but bind only the Company and the Company's property;
OMC represents that it has notice of the provisions of the Declaration of
Trust of the Company disclaiming shareholder or Trustee liability for acts
or obligations of the Company.
10. TERMINATION.
This Agreement may be terminated (i) by OMC at any time without penalty
upon sixty days' written notice to the Company (which notice may be waived
by the Company); or (ii) by the Company at any time without penalty upon
sixty days' written notice to OMC (which notice may be waived by OMC)
provided that such termination by the Company shall be directed or approved
by the vote of a majority of all of the Trustees of the Company then in
office or by the vote of the holders of a "majority" of the outstanding
voting securities of the Company (as defined in the Investment Company Act).
11. ASSIGNMENT OR AMENDMENT:
This Agreement may not be amended or the rights of OMC hereunder sold,
transferred, pledged or otherwise in any manner encumbered without the
affirmative vote or written consent of the holders of the "majority" of the
outstanding voting securities of the Company. This Agreement shall
automatically and immediately terminate in the event of its "assignment," as
defined in the Investment Company Act.
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12. DEFINITIONS:
The terms and provisions of the Agreement shall be interpreted and
defined in a manner consistent with the provisions and definitions contained
in the Investment Company Act.
<TABLE>
<S> <C>
OPPENHEIMER/QUEST FOR VALUE
FAMILY OF FUNDS
Attest: --------------------------------------- By: ------------------------------------------
Title: ----------------------------------------
OPPENHEIMER MANAGEMENT
CORPORATION
Attest: --------------------------------------- By: ------------------------------------------
Katherine P. Feld Andrew J. Donohue
SECRETARY EXECUTIVE VICE PRESIDENT
</TABLE>
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<PAGE>
SCHEDULE A
TO
INVESTMENT ADVISORY AGREEMENT
BETWEEN
OPPENHEIMER/QUEST FOR VALUE FAMILY OF FUNDS
AND
OPPENHEIMER MANAGEMENT CORPORATION
<TABLE>
<CAPTION>
ANNUAL FEE AS A PERCENTAGE OF DAILY TOTAL
NAME OF SERIES NET ASSETS
----------------------------------- ------------------------------------------------
<S> <C>
Growth and Income Fund............. 0.85% of all net assets
Officers Fund...................... 1.00% of all net assets
Small Capitalization Fund.......... 1.00% of first $400 million of net assets
0.90% of next $400 million of net assets
0.85% of net assets over $800 million
Opportunity Fund................... 1.00% of first $400 million of net assets
0.90% of next $400 million of net assets
0.85% of net assets of $800 million
</TABLE>
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<PAGE>
EXHIBIT C
FORM OF
SUBADVISORY AGREEMENT
THIS AGREEMENT is made by and between Oppenheimer Management Corporation, a
Colorado corporation (the "Adviser"), and Advisors, a Delaware general
partnership (the "Subadviser"), as of the date set forth below.
RECITAL
WHEREAS, Oppenheimer/Quest For Value Family of Funds (the "Company") is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end, management investment company;
WHEREAS, the Adviser is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), as an investment adviser and engages in
the business of acting as an investment adviser;
WHEREAS, the Subadviser is registered under the Advisers Act as an
investment adviser and engages in the business of acting as an investment
adviser;
WHEREAS, the Company's Declaration of Trust authorizes the Board of Trustees
of the Company to classify or reclassify authorized but unissued shares of the
Company into series of shares representing interests in various investment
portfolios;
WHEREAS, pursuant to such authority, the Company has established the
Officers Fund (the "Fund");
WHEREAS, the Adviser has entered into an Investment Advisory Agreement as of
the date hereof with the Company (the "Investment Advisory Agreement"), pursuant
to which the Adviser shall act as investment advisor with respect to the Fund;
and
WHEREAS, pursuant to Paragraph of the Investment Advisory Agreement, the
Adviser wishes to retain the Subadviser for purposes of rendering investment
advisory services to the Adviser in connection with the Fund upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt of which are hereby
acknowledged, the parties hereto agree as follows:
I. APPOINTMENT AND OBLIGATIONS OF THE ADVISER.
The Adviser hereby appoints the Subadviser to render, to the Adviser with
respect to the Fund, investment research and advisory services as set forth
below in Section II, under the supervision of the Adviser and subject to the
approval and direction of the Company's Board of Trustees (the "Board"), and the
Subadviser hereby accepts such appointment, all subject to the terms and
conditions contained herein. The Subadviser shall, for all purposes herein, be
deemed an independent contractor and shall not have, unless otherwise expressly
provided or authorized, any authority to act for or represent the Company or the
Fund in any way or otherwise to serve as or be deemed an agent of the Company or
the Fund.
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II. DUTIES OF THE SUBADVISER AND THE ADVISER.
A. DUTIES OF THE SUBADVISER.
The Subadviser shall regularly provide investment advice with respect to the
Fund and shall, subject to the terms of this Agreement, continuously supervise
the investment and reinvestment of cash, securities and instruments or other
property comprising the assets of the Fund, and in furtherance thereof, the
Subadviser's duties shall include:
1. Obtaining and evaluating pertinent information about significant
developments and economic, statistical and financial data, domestic, foreign
or otherwise, whether affecting the economy generally or the Fund, and
whether concerning the individual issuers whose securities are included in
the Fund or the activities in which such issuers engage, or with respect to
securities which the Subadviser considers desirable for inclusion in the
Fund's investment portfolio;
2. Determining which securities shall be purchased, sold or exchanged
by the Fund or otherwise represented in the Fund's investment portfolio and
regularly reporting thereon to the Adviser and, at the request of the
Adviser, to the Board;
3. Formulating and implementing continuing programs for the purchases
and sales of the securities of such issuers and regularly reporting thereon
to the Adviser and, at the request of the Adviser, to the Board; and
4. Taking, on behalf of the Fund, all actions that appear to the
Subadviser necessary to carry into effect such investment program, including
the placing of purchase and sale orders, and making appropriate reports
thereon to the Adviser and the Board.
B. DUTIES OF THE ADVISER.
The Adviser shall retain responsibility for, among other things, providing
the following advice and services with respect to the Fund:
1. Without limiting the obligation of the Subadviser to so comply, the
Adviser shall monitor the investment program maintained by the Subadviser
for the Fund to ensure that the Fund's assets are invested in compliance
with this Agreement and the Fund's Registration Statement, as currently in
effect from time to time; and
2. The Adviser shall oversee matters relating to Fund promotion,
including, but not limited to, marketing materials and the Subadviser's
reports to the Board.
III. REPRESENTATIONS, WARRANTIES AND COVENANTS.
A. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SUBADVISER.
1. ORGANIZATION. The Subadviser is now, and will continue to be, a general
partnership duly formed and validly existing under the laws of its jurisdiction
of formation, fully authorized to enter into this Agreement and carry out its
duties and obligations hereunder.
2. REGISTRATION. The Subadviser is registered as an investment adviser
with the Securities and Exchange Commission (the "SEC") under the Advisers Act,
and is registered or licensed as an investment adviser under the laws of all
jurisdictions in which its activities require it to be so registered or
licensed,
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except where the failure to be so licensed would not have a material adverse
effect on the Subadviser. The Subadviser shall maintain such registration or
license in effect at all times during the term of this Agreement.
3. BEST EFFORTS. The Subadviser at all times shall provide its best
judgment and effort to the Adviser and the Fund in carrying out its obligations
hereunder.
4. OTHER COVENANTS. The Subadviser further agrees that:
a. it will use the same skill and care in providing such services as it
uses in providing services to other accounts for which it has investment
management responsibilities;
b. it will not make loans to any person to purchase or carry units of
beneficial interest in the Fund or make loans to the Fund;
c. it will report regularly to the Fund and to the Adviser and will
make appropriate persons available for the purpose of reviewing with
representatives of the Adviser on a regular basis the management of the
Fund, including, without limitation, review of the general investment
strategy of the Fund, economic considerations and general conditions
affecting the marketplace;
d. as required by applicable laws and regulations, it will maintain
books and records with respect to the Fund's securities transactions and it
will furnish to the Adviser and to the Board such periodic and special
reports as the Adviser or the Board may reasonably request;
e. it will treat confidentially and as proprietary information of the
Fund all records and other information relative to the Fund, and will not
use records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to
and approval in writing by the Fund or when so requested by the Fund or
required by law or regulation;
f. it will, on a continuing basis and at its own expense, (1) provide
the distributor of the Fund (the "Distributor") with assistance in the
distribution and marketing of the Fund in such amount and form as the
Adviser may reasonably request from time to time, and (2) use its best
efforts to cause the portfolio manager or other person who manages or is
responsible for overseeing the management of the Fund's portfolio (the
"Portfolio Manager") to provide marketing and distribution assistance to the
Distributor, including, without limitation, conference calls, meetings and
road trips, provided that each Portfolio Manager shall not be required to
devote more than 10% of his or her time to such marketing and distribution
activities;
g. it will use its reasonable best efforts (i) to retain the services
of the Portfolio Manager who manages the portfolio of the Fund, from time to
time and (ii) to promptly obtain the services of a Portfolio Manager
acceptable to the Adviser if the services of the Portfolio Manager are no
longer available to the Subadviser;
h. it will, from time to time, assure that each Portfolio Manager is
acceptable to the Adviser;
i. it will obtain the written approval of the Adviser prior to
designating a new Portfolio Manager; provided, however, that, if the
services of a Portfolio Manager are no longer available to the Subadviser
due to circumstances beyond the reasonable control of the Subadviser (e.g.,
voluntary resignation,
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<PAGE>
death or disability), the Subadviser may designate an interim Portfolio
Manager who (a) shall be reasonably acceptable to the Adviser and (b) shall
function for a reasonable period of time until the Subadviser designates an
acceptable permanent replacement; and
j. it will promptly notify the Adviser of any impending change in
Portfolio Manager, portfolio management or any other material matter that
may require disclosure to the Board, shareholders of the Fund or dealers.
B. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE ADVISER.
1. ORGANIZATION. The Adviser is now, and will continue to be, duly
organized and in good standing under the laws of its state of incorporation,
fully authorized to enter into this Agreement and carry out its duties and
obligations hereunder.
2. REGISTRATION. The Adviser is registered as an investment adviser with
the SEC under the Advisers Act, and is registered or licensed as an investment
adviser under the laws of all jurisdictions in which its activities require it
to be so registered or licensed. The Adviser shall maintain such registration or
license in effect at all times during the term of this Agreement.
3. BEST EFFORTS. The Adviser at all times shall provide its best judgment
and effort to the Fund in carrying out its obligations hereunder.
IV. COMPLIANCE WITH APPLICABLE REQUIREMENTS.
In carrying out its obligations under this Agreement, the Subadviser shall
at all times conform to:
A. all applicable provisions of the 1940 Act and any rules and
regulations adopted thereunder;
B. the provisions of the registration statement of the Company, as the
same may be amended from time to time, under the Securities Act of 1933, as
amended, and the 1940 Act;
C. the provisions of the Company's Declaration of Trust or other
governing document, as amended from time to time;
D. the provisions of the By-laws of the Company, as amended from time
to time;
E. any other applicable provisions of state or federal law; and
F. guidelines, investment restrictions, policies, procedures or
instructions adopted or issued by the Company, the Fund or the Adviser from
time to time.
The Adviser shall promptly notify the Subadviser of any changes or
amendments to the provisions of B., C., D. and F. above when such changes or
amendments relate to the obligations of the Subadviser.
V. CONTROL BY THE BOARD.
Any investment program undertaken by the Subadviser pursuant to this
Agreement, as well as any other activities undertaken by the Subadviser with
respect to the Fund, shall at all times be subject to any directives of the
Adviser and the Board.
VI. BOOKS AND RECORDS.
The Subadviser agrees that all records which it maintains for the Fund on
behalf of the Adviser are the property of the Fund and further agrees to
surrender promptly to the Fund or to the Adviser any of such records upon
request. The Subadviser further agrees to preserve for the periods prescribed by
applicable
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laws, rules and regulations all records required to be maintained by the
Subadviser on behalf of the Adviser under such applicable laws, rules and
regulations, or such longer period as the Adviser may reasonably request from
time to time.
VII. BROKER-DEALER RELATIONSHIPS.
A. PORTFOLIO TRADES.
The Subadviser, at its own expense, and to the extent appropriate, in
consultation with the Adviser, shall place all orders for the purchase and sale
of portfolio securities for the Fund with brokers or dealers selected by the
Subadviser, which may include, to the extent permitted by the Adviser and the
Fund, brokers or dealers affiliated with the Subadviser. The Subadviser shall
use its best efforts to seek to execute portfolio transactions at prices that
are advantageous to the Fund and at commission rates that are reasonable in
relation to the benefits received.
B. SELECTION OF BROKER-DEALERS.
With respect to the execution of particular transactions, the Subadviser
may, to the extent permitted by the Adviser and the Fund, select brokers or
dealers who also provide brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934, as amended) to
the Fund and/or the other accounts over which the Subadviser or its affiliates
exercise investment discretion. The Subadviser is authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Fund that is in excess of the amount
of commission another broker or dealer would have charged for effecting that
transaction if the Subadviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer. This determination may be viewed in
terms of either that particular transaction or the overall responsibilities that
the Subadviser and its affiliates have with respect to accounts over which they
exercise investment discretion. The Adviser, Subadviser and the Board shall
periodically review the commissions paid by the Fund to determine, among other
things, if the commissions paid over representative periods of time were
reasonable in relation to the benefits received.
C. SOFT DOLLAR ARRANGEMENTS.
The Subadviser may enter into "soft dollar" arrangements through the agency
of third parties on behalf of the Adviser. Soft dollar arrangements for services
may be entered into in order to facilitate an improvement in performance in
respect of the Subadviser's service to the Adviser with respect to the Fund. The
Subadviser makes no direct payments but instead undertakes to place business
with broker-dealers who in turn pay third parties who provide these services.
Soft dollar transactions will be conducted on an arm's-length basis, and the
Subadviser will secure best execution for the Adviser. Any arrangements
involving soft dollars and/or brokerage services shall be effected in compliance
with Section 28(e) of the Securities Exchange Act of 1934, as amended, and the
policies that the Adviser and the Board may adopt from time to time. The
Subadviser agrees to provide reports to the Adviser as necessary for purposes of
providing information on these arrangements to the Board.
VII. COMPENSATION.
A. AMOUNT OF COMPENSATION.
The Adviser shall pay the Subadviser, as compensation for services rendered
hereunder, from its own assets, an annual fee, payable monthly, equal to 40% of
the investment advisory fee collected by the Adviser from the Fund, based on the
total net assets of the Fund existing as of the date hereof (the "base amount"),
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<PAGE>
plus 30% of the advisory fee collected by the Adviser, based on the total net
assets of the Fund that exceed the base amount (the "marginal amount"), in each
case calculated after any waivers, voluntary or otherwise.
B. CALCULATION OF COMPENSATION.
Except as hereinafter set forth, compensation under this Agreement shall be
calculated and accrued on the same basis as the advisory fee paid to the Adviser
by the Fund. If this Agreement becomes effective subsequent to the first day of
a month or shall terminate before the last day of a month, compensation for that
part of the month this Agreement is in effect shall be prorated in a manner
consistent with the calculation of the fees set forth above.
C. PAYMENT OF COMPENSATION:
Subject to the provisions of this paragraph, payment of the Subadviser's
compensation for the preceding month shall be made within 15 days after the end
of the preceding month.
D. REORGANIZATION OF THE FUND.
If the Fund is reorganized with another investment company for which the
Subadviser does not serve as an investment adviser or subadviser, and the Fund
is the surviving entity, the subadvisory fee payable under this section shall be
adjusted in an appropriate manner as the parties may agree.
IX. ALLOCATION OF EXPENSES.
The Subadviser shall pay the expenses incurred in providing services in
connection with this Agreement, including, but not limited to, the salaries,
employment benefits and other related costs of those of its personnel engaged in
providing investment advice to the Fund hereunder, including, without
limitation, office space, office equipment, telephone and postage costs and
other expenses. In the event of an "assignment" of this Agreement, other than an
assignment resulting solely by action of the Adviser or an affiliate thereof,
the Subadviser shall be responsible for payment of all costs and expenses
incurred by the Adviser and the Fund relating thereto, including, but not
limited to, reasonable legal, accounting, printing and mailing costs related to
obtaining approval of Fund shareholders.
X. NON-EXCLUSIVITY.
The services of the Subadviser with respect to the Company and the Fund are
not to be deemed to be exclusive, and the Subadviser shall be free to render
investment advisory and administrative or other services to others (including
other investment companies) and to engage in other activities, subject to the
provisions of a certain Agreement Not to Compete dated as of , 1995
among the Adviser, Oppenheimer Capital, the Subadviser and Quest For Value
Distributors (the "Agreement Not to Compete"). It is understood and agreed that
officers or directors of the Subadviser may serve as officers or directors of
the Adviser or of the Fund; that officers or directors of the Adviser or of the
Company may serve as officers or directors of the Subadviser to the extent
permitted by law; and that the officers and directors of the Subadviser are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm or trust, including other investment advisory
companies (subject to the provisions of the Agreement Not to Compete), provided
it is permitted by applicable law and does not adversely affect the Company or
the Fund.
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<PAGE>
XI. TERM.
This Agreement shall become effective at the close of business on the date
hereof and shall remain in force and effect, subject to Paragraphs XII.A and
XII.B hereof and approval by the Fund's shareholders, for a period of two years
from the date hereof.
XII. RENEWAL.
Following the expiration of its initial two-year term, the Agreement shall
continue in full force and effect from year to year for a period of eight years,
provided that such continuance is specifically approved:
A. at least annually (1) by the Board or by the vote of a majority of
the Fund's outstanding voting securities (as defined in Section 2(a)(42) of
the 1940 Act), and (2) by the affirmative vote of a majority of the Trustees
who are not parties to this Agreement or interested persons of a party to
this Agreement (other than as a Trustee of the Fund), by votes cast in
person at a meeting specifically called for such purpose; or
B. by such method required by applicable law, rule or regulation then
in effect.
XIII. TERMINATION.
A. TERMINATION BY THE COMPANY.
This Agreement may be terminated at any time, without the payment of any
penalty, by vote of the Board or by vote of a majority of the Fund's outstanding
voting securities, on sixty (60) days' written notice. The notice provided for
herein may be waived by the party required to be notified.
B. ASSIGNMENT.
This Agreement shall automatically terminate in the event of its
"assignment," as defined in Section 2 (a) (4) of the 1940 Act. In the event of
an assignment that occurs solely due to the change in control of the Subadviser
(provided that no condition exists that permits, or, upon the consummation of
the assignment, will permit, the termination of this Agreement by the Adviser
pursuant to Section XIII.D. hereof), the Adviser and the Subadviser, at the sole
expense of the Subadviser, shall use their reasonable best efforts to obtain
shareholder approval of a successor Subadvisory Agreement on substantially the
same terms as contained in this Agreement.
C. PAYMENT OF FEES AFTER TERMINATION.
Notwithstanding the termination of this Agreement prior to the tenth
anniversary of the date hereof, the Adviser shall continue to pay to the
Subadviser the subadvisory fee for the term of this Agreement and any renewals
thereof through such tenth anniversary, if: (1) the Adviser or the Company
terminates this Agreement for a reason other than the reasons set forth in
Section XIII.D. hereof, provided the Investment Advisory Agreement remains in
effect; (2) the Fund reorganizes with another investment company advised by the
Adviser (or an affiliate of the Adviser) and for which the Subadviser does not
serve as an investment adviser or subadviser and such other investment company
is the surviving entity; or (3) the Investment Advisory Agreement terminates (i)
by reason of an "assignment;" (ii) because the Adviser is disqualified from
serving as an investment adviser; or (iii) by reason of a voluntary termination
by the Adviser; provided that the Subadviser does not serve as the investment
adviser or subadviser of the Fund after such termination of the Investment
Advisory Agreement. The amount of the subadvisory fee paid pursuant to this
section shall be calculated on the basis of the Fund's net assets measured at
the time of such
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termination or such reorganization. Notwithstanding anything to the contrary, if
the Subadviser terminates this Agreement or if this Agreement is terminated by
operation of law, due solely to an act or omission by the Subadviser,
Oppenheimer Capital ("OpCap") or their respective partners, subsidiaries,
directors, officers, employees or agents (other than by reason of an
"assignment" of this Agreement), then the Adviser shall not be liable for any
further payments under this Agreement, provided, however, that if at any time
prior to the end of the term of the Agreement Not to Compete any event that
would have permitted the termination of this Agreement by the Adviser pursuant
to Section XIII.D.(3) hereof occurs, the Adviser shall be under no further
obligation to pay any subadvisory fees.
D. TERMINATION BY THE ADVISER.
The Adviser may terminate this Agreement without penalty and without the
payment of any fee or penalty, immediately after giving written notice, upon the
occurrence of any of the following events:
1. The Fund's investment performance of the Fund's Class A shares
compared to the appropriate universe of Class A shares (or their
equivalent), as set forth on Schedule D-1, as amended from time to time,
ranks in the bottom quartile for two consecutive calendar years (beginning
with the calendar year 1995) and earns a Morningstar three-year rating of
less than three (3) stars at the time of such termination; or
2. Any of the Subadviser, OpCap, their respective partners,
subsidiaries, affiliates, directors, officers, employees or agents engages
in an action or omits to take an action that would cause the Subadviser or
OpCap to be disqualified in any manner under Section 9(a) of the 1940 Act,
if the SEC were not to grant an exemptive order under Section 9(c) thereof
or that would constitute grounds for the SEC to deny, revoke or suspend the
registration of the Subadviser as an investment adviser with the SEC;
3. Any of OpCap, the Subadviser, their respective partners,
subsidiaries, affiliates, directors, officers, employees or agents causes a
material violation of the Agreement Not to Compete which is not cured in
accordance with the provisions of that agreement; or
4. The Subadviser breaches the representations contained in Paragraph
III.A.4.i. of this Agreement or any other material provision of this
Agreement, and any such breach is not cured within a reasonable period of
time after notice thereof from the Adviser to the Subadviser. However,
consistent with its fiduciary obligations, for a period of seven months the
Adviser will not terminate this Agreement solely because the Subadviser has
failed to designate an acceptable permanent replacement to a Portfolio
Manager whose services are no longer available to the Subadviser due to
circumstances beyond the reasonable control of the Subadviser, provided that
the Subadviser uses its reasonable best efforts to promptly obtain the
services of a Portfolio Manager acceptable to the Adviser and further
provided that the Adviser has not unreasonably withheld approval of such
replacement Portfolio Manager.
E. TRANSACTIONS IN PROGRESS UPON TERMINATION.
The Adviser and Subadviser will cooperate with each other to ensure that
portfolio or other transactions in progress at the date of termination of this
Agreement shall be completed by the Adviser in accordance with the terms of such
transactions, and to this end the Subadviser shall provide the Adviser with all
necessary information and documentation to secure the implementation thereof.
C-8
<PAGE>
XIV. NON-SOLICITATION.
During the term of this Agreement, the Adviser (and its affiliates under its
control) shall not solicit or knowingly assist in the solicitation of any
Portfolio Manager of the Fund or any portfolio assistant of the Fund then
employed by the Subadviser or OpCap, provided, however, that the Adviser (or its
affiliates) may solicit or hire any such individual who (A) the Subadviser or
OpCap (or its affiliates) has terminated or (B) has voluntarily terminated his
or her employment with the Subadviser, OpCap (or its affiliates) without
inducement of the Adviser (or its affiliates under its control) prior to the
time of such solicitation. Advertising in general circulation newspapers or
industry newsletters by the Adviser shall not constitute "inducement" by the
Adviser (or its affiliates under its control).
XV. LIABILITY OF THE SUBADVISER.
In the absence of willful misfeasance, bad faith, negligence or reckless
disregard of obligations or duties hereunder on the part of the Subadviser or
any of its officers, directors or employees, the Subadviser shall not be subject
to liability to the Adviser for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security; PROVIDED, HOWEVER,
that the foregoing shall not be construed to relieve the Subadviser of any
liability it may have arising under the Agreement Not to Compete or the
Acquisition Agreement dated August 10, 1995, among the Subadviser, the Adviser
and certain affiliates of the Subadviser.
XVI. NOTICES.
Any notice or other communication required or that may be given hereunder
shall be in writing and shall be delivered personally, telecopied, sent by
certified, registered or express mail, postage prepaid or sent by national
next-day delivery service and shall be deemed given when so delivered personally
or telecopied, or if mailed, two days after the date of mailing, or if by
next-day delivery service, on the business day following delivery thereto, as
follows or to such other location as any party notifies any other party:
A. if to the Adviser, to:
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Attention: Andrew J. Donohue
Executive Vice President and General Counsel
Telecopier: 212-321-1159
B. if to the Subadviser, to:
Quest For Value Advisors
c/o Oppenheimer Capital
225 Liberty Street
New York, New York 10281
Attention: Thomas E. Duggan
Secretary and General Counsel
Telecopier: 212-349-4759
XVII. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the laws of the State of New York
applicable to agreements made and to be performed entirely within the State of
New York (without regard to any conflicts of law principles
C-9
<PAGE>
thereof). Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the 1940 Act shall be resolved by reference to such term or provision of the
1940 Act and to interpretations thereof, if any, by the United States Courts or,
in the absence of any controlling decision of any such court, by rules,
regulations or orders of the SEC issued pursuant to the 1940 Act. In addition,
where the effect of a requirement of the 1940 Act reflected in any provision of
the Agreement is revised by rule, regulation or order of the SEC, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
XVIII. FORM ADV -- DELIVERY.
The Adviser hereby acknowledges that it has received from the Subadviser a
copy of the Subadviser's Form ADV, Part II as currently filed, at least 48 hours
prior to entering into this Agreement and that it has read and understood the
disclosures set forth in the Subadviser's Form ADV, Part II.
XIX. MISCELLANEOUS.
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors.
XX. COUNTERPARTS.
This Agreement may be executed in counterparts, each of which shall
constitute an original and both of which, collectively, shall constitute one
agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers as of the day of October,
1995.
<TABLE>
<S> <C>
OPPENHEIMER MANAGEMENT CORPORATION
By:
--------------------------------------
Name: Andrew J. Donohue
Title: EXECUTIVE VICE PRESIDENT
ADVISORS
By: OPPENHEIMER FINANCIAL CORP.,
a general partner
By:
--------------------------------------
Name:
Title:
</TABLE>
C-10
<PAGE>
EXHIBIT D
INFORMATION ON COMPARABLE FUNDS
MANAGED BY OPPENHEIMER
MANAGEMENT CORPORATION
<TABLE>
<CAPTION>
ASSETS AS OF
NAME OF FUND 6/30/95 FEE SCHEDULE
----------------------------------- --------------- ----------------------------------------------------------------------
<S> <C> <C>
Oppenheimer Global Emerging Growth $ 137.3 1% of the first $50 million of average annual net assets; .75% of the
Fund next $150 million.; .72% of the next $200 million; .69% of the next
$200 million; .66% of the next $200 million and .60% of net assets in
excess of $800 million.
Oppenheimer Discovery Fund 734.7 .75% of the first $200 million of aggregate net assets; .72% of the
next $200 million; .69% of the next $200 million; .66% of the next
$200 million; and .60% of aggregate net assets over $800 million.
Oppenheimer Fund 272.5 .75% of the first $200 million of aggregate net assets; .72% of the
next $200 million; .69% of the next $200 million; .66% of the next
$200 million; and .60% of aggregate net assets over $800 million.
Oppenheimer Target Fund 684.0 .75% of the first $200 million of aggregate net assets; .72% of next
$200 million; .69% of next $200 million; .66% of next $200 million;
and .60% of aggregate net assets over $800 million.
Oppenheimer Growth Fund 905.8 .75% of first $200 million of aggregate net assets; .72% of the next
$200 million; .69% of the next $200 million; .66% of the next $200
million; and .60% of aggregate net assets over $800 million.
Oppenheimer Value Stock Fund 134.6 .75% of the first $100 million of average annual net assets; .72% of
the next $200 million; .69% of the next $200 million; and .66% of
average annual net assets in excess of $500 million.
Oppenheimer Variable Account Funds/ 237.9 .75% of the first $200 million of average annual net assets; .72% of
Oppenheimer Capital Appreciation the next $200 million; .69% of the next $200 million; .66% of the
Fund next $200 million; and .60% of average annual net assets in excess of
$800 million.
Oppenheimer Variable Account Funds/ 89.8 .75% of the first $200 million of average annual net assets; .72% of
Oppenheimer Growth Fund the next $200 million; .69% of the next $200 million; .66% of the
next $200 million; and .60% of average annual net assets in excess of
$800 million.
</TABLE>
D-1
<PAGE>
EXHIBIT E
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER/QUEST FOR VALUE FAMILY OF FUNDS
FOR CLASS A SHARES OF
OFFICERS FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the
"Plan") dated the ___ day of __95, by and between OPPENHEIMER/QUEST FOR VALUE
FAMILY OF FUNDS (the "Trust") for the account of its OFFICERS FUND (the "Fund")
and OPPENHEIMER FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. THE PLAN. This Plan is the Fund's written distribution plan for Class A
shares of the Fund (the "Shares"), contemplated by Rule 12b-1 (the "Rule") under
the Investment Company Act of 1940 (the "1940 Act"), pursuant to which the Fund
will compensate the Distributor for its services incurred in connection with the
distribution of Shares, and the personal service and maintenance of shareholder
accounts that hold Shares ("Accounts"). The Fund may act as distributor of
securities of which it is the issuer, pursuant to the Rule, according to the
terms of this Plan. The Distributor is authorized under the Plan to pay
"Recipients," as hereinafter defined, for rendering (1) distribution assistance
in connection with the sale of Shares and/or (2) administrative support services
with respect to Accounts. Such Recipients are intended to have certain rights as
third-party beneficiaries under this Plan. The terms and provisions of this Plan
shall be interpreted and defined in a manner consistent with the provisions and
definitions contained in (i) the 1940 Act, (ii) the Rule, (iii) Article III,
Section 26, of the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., or its successor (the "NASD Rules of Fair Practice")
and (iv) any conditions pertaining either to distribution-related expenses or to
a plan of distribution, to which the Fund is subject under any order on which
the Fund relies, issued at any time by the Securities and Exchange Commission.
2. DEFINITIONS. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has rendered assistance (whether direct, administrative or
both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer such questions
as may arise concerning the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the foregoing, a
majority of the Trust's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of this Plan or in any agreements relating
to this Plan (the "Independent Trustees") may remove any broker, dealer, bank or
other person or entity as a Recipient, whereupon such person's or entity's
rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such customers,
clients and/or accounts as to which such Recipient is a fiduciary or
E-1
<PAGE>
custodian or co-fiduciary or co-custodian (collectively, the "Customers"), but
in no event shall any such Shares be deemed owned by more than one Recipient for
purposes of this Plan. In the event that more than one person or entity would
otherwise qualify as Recipients as to the same Shares, the Recipient which is
the dealer of record on the Fund's books as determined by the Distributor shall
be deemed the Recipient as to such Shares for purposes of this Plan.
3. PAYMENTS FOR DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SUPPORT
SERVICES.
(a) The Fund will make payments to the Distributor (i) within forty-five
(45) days of the end of each calendar quarter, in the aggregate amount of
0.0625% (0.25% on an annual basis) of the average during the calendar quarter of
the aggregate net asset value of the Shares computed as of the close of each
business day (the "Service Fee"), plus (ii) within ten (10) days of the end of
each month, in the aggregate 0.020833% (0.25% on an annual basis) of the average
during the calendar quarter of the aggregate net asset value of the Shares
computed as of the close of each business day (the "Asset-Based Sales Charge").
Such Service Fee payments received from the Fund will compensate the Distributor
and Recipients for providing administrative support services with respect to
Accounts. Such Asset-Based Sales Charge payments received from the Fund will
compensate the Distributor and Recipients for providing distribution assistance
in connection with the sale of Shares.
The administrative support services in connection with the Accounts to be
rendered by Recipients may include, but shall not be limited to, the following:
answering routine inquiries concerning the Fund, assisting in establishing and
maintaining accounts or sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend payment options
available, and providing such other information and services in connection with
the rendering of personal services and/or the maintenance of Accounts, as the
Distributor or the Fund may reasonably request.
The distribution assistance in connection with the sale of Shares to be
rendered by the Distributor and by Recipients may include, but shall not be
limited to, the following: distributing sales literature and prospectuses other
than those furnished to current holders of the Fund's Shares ("Shareholders"),
and providing such other information and services in connection with the
distribution of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution assistance or
administrative support services qualifying for payment under the Plan if it has
Qualified Holdings of Shares to entitle it to payments under the Plan. In the
event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate distribution assistance in connection with the sale of
Shares or administrative support services for the Accounts, then the
Distributor, at the request of the Board, shall require the Recipient to provide
a written report or other information to verify that said Recipient is providing
appropriate distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either may take
appropriate steps to terminate the Recipient's status as such under the Plan,
whereupon such Recipient's rights as a third-party beneficiary hereunder shall
terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares, computed as of the
close of
E-2
<PAGE>
each business day, constituting Qualified Holdings owned beneficially or of
record by the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, to be set from time to
time by a majority of the Independent Trustees.
Alternatively, the Distributor may, at its sole option, make service fee
payments ("Advance Service Fee Payments") to any Recipient quarterly, within
forty-five (45) days of the end of each calendar quarter, at a rate not to
exceed (i) 0.25% of the average during the calendar quarter of the aggregate net
asset value of Shares, computed as of the close of business on the day such
Shares are sold, constituting Qualified Holdings sold by the Recipient during
that quarter and owned beneficially or of record by the Recipient or by its
Customers, plus (ii) 0.0625% (0.25% on an annual basis) of the average during
the calendar quarter of the aggregate net asset value of Shares computed as of
the close of each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for a period of
more than one (1) year, subject to reduction or chargeback so that the Advance
Service Fee Payments do not exceed the limits on payments to Recipients that
are, or may be, imposed by Article III, Section 26, of the NASD Rules of Fair
Practice. In the event Shares are redeemed less than one year after the date
such Shares were sold, the Recipient is obligated and will repay to the
Distributor on demand a pro rata portion of such Advance Service Fee Payments,
based on the ratio of the time such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of the preceding
sentence may, at the Distributor's sole option, be made more often than
quarterly, and sooner than the end of the calendar quarter. In addition, the
Distributor may make asset-based sales charge payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or its Customers. However, no such service fee or
asset-based sales charge payments (collectively, the "Recipient Payments") shall
be made to any Recipient for any such quarter in which its Qualified Holdings do
not equal or exceed, at the end of such quarter, the minimum amount ("Minimum
Qualified Holdings"), if any, to be set from time to time by a majority of the
Independent Trustees.
A majority of the Independent Trustees may at any time or from time to time
decrease and thereafter adjust the rate of fees to be paid to the Distributor or
to any Recipient, but not to exceed the rates set forth above, and/or direct the
Distributor to increase or decrease the Minimum Holding Period or the Minimum
Qualified Holdings. The Distributor shall notify all Recipients of the Minimum
Qualified Holdings or Minimum Holding Period, if any, and the rates of Recipient
Payments hereunder applicable to Recipients, and shall provide each Recipient
with written notice within thirty (30) days after any change in these
provisions. Inclusion of such provisions or a change in such provisions in a
revised current prospectus shall constitute sufficient notice. The Distributor
may make Plan payments to any "affiliated person" (as defined in the 1940 Act)
of the Distributor if such affiliated person qualifies as a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination of such amounts under the limits to which the
Distributor is, or may become, subject under Article III, Section 26, of the
NASD Rules of Fair Practice. The distribution assistance and administrative
support services to be rendered by the Distributor in connection with the Shares
may include, but shall not be limited to, the following: (i) paying sales
commissions to any broker, dealer, bank or other person or entity that sells
Shares, and\or paying such persons Advance Service Fee Payments in advance of,
and\or greater than, the amount provided for in Section 3(b) of this Agreement;
(ii) paying compensation to and expenses of personnel of the Distributor who
support distribution of Shares by Recipients; (iii) obtaining financing or
E-3
<PAGE>
providing such financing from its own resources, or from an affiliate, for
interest and other borrowing costs of the Distributor's unreimbursed expenses
incurred in rendering distribution assistance and administrative support
services to the Fund; (iv) paying other direct distribution costs, including
without limitation the costs of sales literature, advertising and prospectuses
(other than those furnished to current Shareholders) and state "blue sky"
registration expenses; and (v) providing any service rendered by the Distributor
that a Recipient may render pursuant to part (a) of this Section 3. Such
services include distribution assistance and administrative support services
rendered in connection with Shares acquired (i) by purchase, (ii) in exchange
for shares of another investment company for which the Distributor serves as
distributor or sub-distributor, or (iii) pursuant to a plan of reorganization to
which the Fund is a party. In the event that the Board should have reason to
believe that the Distributor may not be rendering appropriate distribution
assistance or administrative support services in connection with the sale of
Shares, then the Distributor, at the request of the Board, shall provide the
Board with a written report or other information to verify that the Distributor
is providing appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by Oppenheimer
Management Corporation ("OMC") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OMC), from its own resources, from Asset-Based
Sales Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does not
obligate or in any way make the Fund liable to make any payment whatsoever to
any person or entity other than directly to the Distributor. In no event shall
the amounts to be paid to the Distributor exceed the rate of fees to be paid by
the Fund to the Distributor set forth in paragraph (a) of this Section 3.
4. SELECTION AND NOMINATION OF TRUSTEES. While this Plan is in effect, the
selection and nomination of those persons to be Trustees of the Trust who are
not "interested persons" of the Fund or the Trust ("Disinterested Trustees")
shall be committed to the discretion of such Disinterested Trustees. Nothing
herein shall prevent the Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final decision on
any such selection and nomination is approved by a majority of the incumbent
Disinterested Trustees.
5. REPORTS. While this Plan is in effect, the Treasurer of the Trust shall
provide at least quarterly a written reports to the Trust's Board for its
review, detailing services rendered in connection with the distribution of the
Shares, the amount of all payments made and the purpose for which the payments
were made. The reports shall be provided quarterly and shall state whether all
provisions of Section 3 of this Plan have been complied with.
6. RELATED AGREEMENTS. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at any
time, without payment of any penalty, by a vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting securities of the Class, on not more than
sixty days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its assignment (as
defined in the 1940 Act); (iii) it shall go into effect when approved by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long as such
continuance is specifically approved at least annually by a vote of the Board
and its Independent Trustees cast in person at a meeting called for the purpose
of voting on such continuance.
E-4
<PAGE>
7. EFFECTIVENESS, CONTINUATION, TERMINATION AND AMENDMENT. This Amended
and Restated Plan has been approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called on June 22, 1995 for the purpose of
voting on this Plan, and shall take effect after approval by Class A
shareholders of the Fund, at which time it shall replace the Fund's Plan and
Agreement of Distribution for the Shares made as of April 28, 1988 as amended as
of December 30, 1988, August 14, 1990, October 18, 1990, August 23, 1991 and
September 1, 1993. Unless terminated as hereinafter provided, it shall continue
in effect from year to year from the date first set forth above or as the Board
may otherwise determine only so long as such continuance is specifically
approved at least annually by a vote of the Board and its Independent Trustees
cast in person at a meeting called for the purpose of voting on such
continuance. This Plan may not be amended to increase materially the amount of
payments to be made without approval of the Class A Shareholders, in the manner
described above, and all material amendments must be approved by a vote of the
Board and of the Independent Trustees. This Plan may be terminated at any time
by vote of a majority of the Independent Trustees or by the vote of the holders
of a "majority" (as defined in the 1940 Act) of the Fund's outstanding voting
securities of the Class. In the event of such termination, the Board and its
Independent Trustees shall determine whether the Distributor is entitled to
payment from the Fund of all or a portion of the Service Fee and/or the
Asset-Based Sales Charge in respect of Shares sold prior to the effective date
of such termination.
8. DISCLAIMER OF SHAREHOLDER AND TRUSTEE LIABILITY. The Distributor
understands that the obligations of the Trust and the Fund under this Plan are
not binding upon any Trustee or shareholder of the Fund personally, but bind
only the Fund and the Fund's property. The Distributor represents that it has
notice of the provisions of the Declaration of Trust of the Fund disclaiming
shareholder and Trustee liability for acts or obligations of the Trust and the
Fund.
OPPENHEIMER/QUEST FOR VALUE
FAMILY OF FUNDS
On Behalf of OFFICERS FUND
By: __________________________________
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: __________________________________
Andrew J. Donohue
EXECUTIVE VICE PRESIDENT
E-5
<PAGE>
748
<PAGE>
QUEST FOR VALUE OFFICERS FUND
PROXY FOR SHAREHOLDERS MEETING NOVEMBER 3, 1995
PROXY SOLICITED ON BEHALF OF MANAGEMENT
MANAGEMENT RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND
FOR THE PROPOSALS ON THE REVERSE. THE SHARES REPRESENTED HEREBY WILL BE
VOTED AS INDICATED OR FOR IF NO CHOICE IS INDICATED.
The undersigned shareholder of OFFICERS FUND does hereby appoint Thomas E.
Duggan and Maria Camacho and each of them, as the attorneys and proxies of the
undersigned, with full power of substitution, to attend the Special Meeting of
Shareholders of Quest for Value Family of Funds to be held on November 3, 1995
at the offices of Oppenheimer & Co., Inc., 40th Floor, One World Financial
Center at 10:00 a.m. New York time and all adjournments thereof, to vote the
number of shares of stock in the name of the undersigned on the record date for
said meeting on the matters specified in the proxy statement. As to any other
matters or if any of said nominees are not available for election, said
attorneys shall vote in accordance with their best judgment.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(s) APPEARS HEREON. When signing as
custodian, attorney, executor, administrator, trustee, guardian, etc., please
give your full title as such. Joint owners should each sign this Proxy.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
----------------------------------- ----------------------------------------
----------------------------------- ----------------------------------------
<PAGE>
/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE
1. Approval of the New Investment Advisory Agreement with Oppenheimer
Management Corporation
FOR AGAINST ABSTAIN
/ / / / / /
2. Approval of the New Subadvisory Agreement with Quest for Value Advisors
FOR AGAINST ABSTAIN
/ / / / / /
3. Approval of the New Distribution and Service Plan and Agreement with
Oppenheimer Funds Distributor, Inc.
FOR AGAINST ABSTAIN
/ / / / / /
4. Approval of change in the classification of the Fund from a diversified
management investment company to a non-diversified management investment
company
FOR AGAINST ABSTAIN
/ / / / / /
5. Approval of change in the fundamental investment policies of the Fund
FOR AGAINST ABSTAIN
/ / / / / /
6. Election of Trustees:
FOR WITHHOLD FOR ALL EXCEPT
/ / / / / /
P. CLINTON, T. COURTNEY, L. HERRMANN, G. LOFT AND B. MACASKILL
If you do not wish your shares voted "FOR" a particular nominee, mark the "For
All Except" box and strike a line through the nominee(s) name. Your shares will
be voted for the remaining nominee(s).
7. To act upon such other matters as may come before the meeting or any
adjournment or adjournments thereof.
FOR AGAINST ABSTAIN
/ / / / / /
Please be sure to sign and date this Proxy. Date
---------------
--------------------------------------------------------------------------------
Stockholder sign here Co-owner sign here
Mark box at right if comments or address change have been
noted on the reverse side of this card. / /
RECORD DATE SHARES:
DETACH CARD
