OPPENHEIMER QUEST OFFICERS VALUE FUND, INC.
Supplement dated February 23, 1996 to the
Prospectus dated February 15, 1996
The Prospectus dated February 15, 1996 is hereby amended
by eliminating the following paragraph from the section captioned
"Investment Objective and Policies - Other Investment
Restrictions":
- With respect to 75% of its total assets,
invest more than 5% of the value of its total
assets in the securities of any one issuer
(except that the Fund may in the future invest
all of its investable assets in an open-end
management investment company with
substantially the same investment objective
and restrictions as the Fund).
February 23, 1996 PS0229.002
Oppenheimer Quest Officers Value Fund
Prospectus dated February 15, 1996
Oppenheimer Quest Officers Value Fund (the "Fund"), a series
of Oppenheimer Quest for Value Funds, is a mutual fund that seeks
capital appreciation through investment in securities (primarily
equity securities) of companies believed by the Manager to be
undervalued in the marketplace in relation to factors such as the
companies' assets, earnings, growth potential and cash flows
through a non-diversified portfolio. The Fund may invest its
assets in equity securities of companies without limit as to market
capitalization. The Fund may invest up to 25% of its net assets in
bonds rated below Baa3 by Moody's Investors Service, Inc. or BBB-
by Standard & Poor's Corporation (commonly known as "high yield" or
"junk bonds"). Please refer to "Investment Objective and Policies"
for more information about the types of securities the Fund invests
in and the risks of investing in the Fund.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and
keep it for future reference. You can find more detailed
information about the Fund in the February 15, 1996 Statement of
Additional Information. For a free copy, call OppenheimerFunds
Services, the Fund's Transfer Agent, at 1-800-525-7048, or write to
the Transfer Agent at the address on the back cover. The Statement
of Additional Information has been filed with the Securities and
Exchange Commission and is incorporated into this Prospectus by
reference (which means that it is legally part of this Prospectus).
Shares of the Fund are not deposits or obligations of any bank, are
not guaranteed by any bank, are not insured by the F.D.I.C. or any
other agency, and involve investment risks, including the possible
loss of the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
Contents
ABOUT THE FUND
Expenses
A Brief Overview of the Fund
Financial Highlights
Investment Objective and Policies
How the Fund is Managed
Performance of the Fund
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Appendix A: Special Sales Charge Arrangements for Shareholders
of the Former Quest for Value Funds Appendix B:
Description of Ratings
<PAGE>
ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for management of
its assets, administration, distribution of its shares and other
services, and those expenses are subtracted from the Fund's assets
to calculate the Fund's net asset value per share. All
shareholders therefore pay those expenses indirectly. Shareholders
pay other expenses directly, such as sales charges and account
transaction charges. The following tables are provided to help you
understand your direct expenses of investing in the Fund and your
share of the Fund's business operating expenses that you might
expect to bear indirectly, based upon the Fund's fees and expenses
in effect as of the date of this Prospectus after giving effect to
the acquisition by OppenheimerFunds, Inc. (formerly, Oppenheimer
Management Corporation) described below.
-- Shareholder Transaction Expenses are charges you pay when
you buy or sell shares of the Fund. Please refer to "About Your
Account," from pages through , for an explanation of how and
when these charges apply.
Class Class Class
A Shares B Shares C Shares
Maximum Sales Charge
on Purchases
(as a % of
offering price) 5.75% None None
Sales Charge on
Reinvested Dividends None None None
Deferred Sales Charge
(as a % of the
lower of the
original purchase
price or redemption
proceeds) None(1) 5% in the first 1% if
year, declining redeemed
to 1% in the within 12
sixth year months of
and eliminated purchase(2)
thereafter(2)
Exchange Fee None None None
(1) If you invest $1 million or more ($500,000 or more for
purchases by OppenheimerFunds prototype 401(k) plans) in Class
A shares, you may have to pay a sales charge of up to 1% if
you sell your shares within 12, 18 or 24 calendar months from
the end of the calendar month during which you purchased those
shares, depending upon when you purchased such shares. See
"How to Buy Shares - Class A Shares," below.
(2) See "How to Buy Shares - Class B Shares" and "How to Buy
Shares - Class C Shares" below, for more information on the
contingent deferred sales charges.
-- Annual Fund Operating Expenses are paid out of the Fund's
assets and represent the Fund's expenses in operating its business.
For example, the Fund pays management fees to its investment
adviser, OppenheimerFunds, Inc. (referred to in this Prospectus as
the "Manager"). The rates of the Manager's fees are set forth in
"How the Fund is Managed," below. The Fund has other regular
expenses for services, such as transfer agent fees, custodial fees
paid to the bank that holds its portfolio securities, audit fees
and legal expenses. Those expenses are detailed in the Fund's
Financial Statements in the Statement of Additional Information.
The numbers in the table below are projections of the Fund's
business expenses based on the Fund's expenses in its fiscal year
ended October 31, 1995. These amounts are shown as a percentage of
the average net assets of Class A shares of the Fund for that year.
Class B and C shares have not been issued as of this date;
accordingly, expense information for Class B and Class C shares is
not set forth in the table below.
The fees and expenses in the table below have been restated to
reflect the elimination, effective as of February 1, 1996, of
certain voluntary fee waivers and expense assumptions. Had the
voluntary fee waivers and expense assumptions remained in effect,
the "Management Fees," "12b-1 Distribution Plan Fees" and "Other
Expenses" Class A shares would have been either waived in its
entirety or reimbursed in full, and "Total Fund Operating Expenses"
would have been zero. The 12b-1 Fees for Class A shares are
service fees (the maximum fee is 0.25% of average annual net assets
of that class) and the asset-based sales charge of 0.25% of the
average annual net assets of that class. This plan and the plans
for Class B and Class C shares are described in greater detail in
"How to Buy Shares."
The actual expenses for each class of shares in future years
may be more or less than the numbers in the table, depending on a
number of factors, including changes in the actual value of the
Fund's assets represented by each class of shares.
Class
A Shares
Management Fees 1.00%
12b-1 Distribution .50%
Plan Fees
Other Expenses .97%
-----
Total Fund Operating
Expenses (Restated) 2.47%
-- Examples. To try to show the effect of these expenses on
an investment over time, we have created the hypothetical examples
shown below. Assume that you make a $1,000 investment in Class A
shares of the Fund, and the Fund's annual return is 5%, and that
its operating expenses for Class A shares are the ones shown in the
Annual Fund Operating Expenses table above. If you were to redeem
your shares at the end of each period shown below, your investment
would incur the following expenses by the end of 1, 3, 5 and 10
years:
1 year 3 years 5 years 10 years
Class A Shares $25 $77 $132 $281
If you did not redeem your investment, it would incur the
following expenses:
Class A Shares $25 $77 $132 $281
These examples show the effect of expenses on an investment,
but are not meant to state or predict actual or expected costs or
investment returns of the Fund, all of which will vary.
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized
below, with references to the section of this Prospectus where more
complete information can be found. You should carefully read the
entire Prospectus before making a decision about investing in the
Fund. Keep the Prospectus for reference after you invest,
particularly for information about your account, such as how to
sell or exchange shares.
-- What is the Fund's Investment Objective? The Fund seeks
capital appreciation through investment in securities (primarily
equity securities) of companies believed by the Manager to be
undervalued in the marketplace in relation to factors such as the
companies' assets, earnings, growth potential and cash flows
through a non-diversified portfolio.
-- What Does the Fund Invest in? The Fund invests primarily
in equity securities including common stocks and preferred stocks;
bonds, debentures and notes convertible into common stock and
depository receipts for such securities. The Fund may invest its
assets in equity securities of companies with no limit as to market
capitalization. The Fund may invest up to 25% of its net assets in
bonds rated below Baa 3 by Moody's Investors Service, Inc. or BBB-
by Standard & Poor's Corporation (commonly known as "high yield" or
"junk bonds"). To provide liquidity, the Fund typically invests a
part of its assets in various types of U.S. government securities
and money market instruments. For temporary defensive purposes,
the Fund may invest up to 100% of its assets in such securities.
These investments are more fully explained in "Investment Objective
and Policies," starting on page .
-- Who Manages the Fund? The Fund's investment adviser (the
"Manager") is OppenheimerFunds, Inc., which supervises the Fund's
investment program and handles its day-to-day business. The
Manager (including a subsidiary) manages investment company
portfolios having over $40 billion in assets as of December 31,
1995. The Manager is paid an advisory fee by the Fund, based on
its net assets. The Fund's sub-adviser is OpCap Advisors (the
"Sub-Adviser"), a subsidiary of Oppenheimer Capital, which is paid
a fee by the Manager. The Sub-Adviser provides day-to-day
portfolio management of the Fund. The Fund's portfolio manager is
employed by the Sub-Adviser and is primarily responsible for the
selection of the Fund's securities. The Fund's Board of Trustees,
elected by shareholders, oversees the Manager, the Sub-Adviser and
the portfolio manager. Please refer to "How the Fund is Managed,"
starting on page for more information about the Manager, the
Sub-Adviser and their fees.
-- How Risky is the Fund? All investments carry risks to
some degree. It is important to remember that the Fund is designed
for long-term investors. The Fund's investments in stocks and
bonds are subject to changes in their value from a number of
factors such as changes in general stock and bond market movements,
the change in value of particular stocks because of an event
affecting the issuer or changes in interest rates that can affect
bond prices. These changes affect the value of the Fund's
investments and its price per share. The Fund's investments in
foreign securities involve additional risks not associated with
investments in domestic securities, including risks associated with
changes in currency rates. While the Manager tries to reduce risks
by diversifying investments, by carefully researching securities
before they are purchased for the portfolio, and in some cases by
using hedging techniques, there is no guarantee of success in
achieving the Fund's objective, and your shares may be worth more
or less than their original cost when you redeem them. Please
refer to "Investment Objective and Policies" starting on page for
a more complete discussion of the Fund's investment risks.
-- How Can I Buy Shares? You can buy shares through your
dealer or financial institution, or you can purchase shares
directly through the Distributor by completing an Application or by
using an Automatic Investment Plan under AccountLink. Please refer
to "How To Buy Shares" on page __ for more details.
-- Will I Pay a Sales Charge to Buy Shares? The Fund has
three classes of shares. All classes have the same investment
portfolio but have different expenses. Class A shares are offered
with a front-end sales charge, starting at 5.75%, and reduced for
larger purchases. Purchases of $1 million or more of Class A shares
have no initial sales charge but are subject to a contingent
deferred sales charge of up to 1% if held for less than 12, 18 or
24 months, depending upon when you purchased such shares. Class B
and Class C shares are offered without a front-end sales charge,
but may be subject to a contingent deferred sales charge if
redeemed within six years or 12 months, respectively, of buying
them. There is also an annual asset-based sales charge on each
class of shares. Please review "How To Buy Shares" starting on
page for more details, including a discussion about factors you
and your financial advisor should consider in determining which
class may be appropriate for you.
-- How Can I Sell My Shares? Shares can be redeemed by mail
or by telephone call to the Transfer Agent on any business day, or
through your dealer. Please refer to "How To Sell Shares" on page
. The Fund also offers exchange privileges to other Oppenheimer
funds, described in "How to Exchange Shares" on page .
-- How Has the Fund Performed? The Fund measures its
performance by quoting its average annual total return and
cumulative total return, which measure historical performance.
Those returns can be compared to the returns (over similar periods)
of other funds. Of course, other funds may have different
objectives, investments, and levels of risk. The Fund's
performance can also be compared to a broad stock market index,
which we have done on page __. Please remember that past
performance does not guarantee future results.
Financial Highlights
The table below presents selected financial information about
the Fund, including per share data, expense ratios and other data
based on the Fund's average net assets. This information has been
audited by KPMG Peat Marwick LLP, the Fund's independent auditors
for such period, whose report on the Fund's financial statements
for the fiscal year ended October 31, 1995 is included in the
Statement of Additional Information.
<PAGE>
FINANCIAL HIGHLIGHTS
PERIOD ENDED
OCTOBER 31,
1995(1)
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.00(2)
- --------------------------------------------------------
Income from investment operations:
Net investment income 0.24
Net realized and unrealized
gain on investments 2.10
------
Total income from investment
operations 2.34
- --------------------------------------------------------
Dividends and distributions
to shareholders:
Dividends to shareholders from net
investment income (0.04)
- --------------------------------------------------------
Net asset value, end of period $12.30
======
========================================================
TOTAL RETURN, AT NET ASSET VALUE(3) 23.44%
========================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $3,647
- --------------------------------------------------------
Ratios to average net assets:
Net investment income(4,5) 2.44%(6)
Expenses(4,5) 0.00%(6)
- --------------------------------------------------------
Portfolio turnover rate(7) 108.0%
1. For the period from November 8, 1994 (commencement of
operations) to October 31, 1995.
2. Offering price.
3.Assumes reinvestment of all dividends. Aggregate (not annualized)
total return is shown.
4. During the period presented above, the Adviser has voluntarily
waived all of its fees and reimbursed the Fund for all of its
operating expenses. If such waivers and reimbursements had not been
in effect, the annualized ratio of net investment income to average
daily net assets and the annualized ratio of expenses to average
daily net assets would have been 0.47% and 1.97%, respectively.
5. Average net assets for the period November 8, 1994 (commencement
of operations) to October 31, 1995 were $2,873,318.
6. Annualized.
7. The lesser of purchases or sales of portfolio securities for a
period, divided by the monthly average of the market value of
portfolio securities owned during the period. Securities with a
maturity or expiration date at the time of acquisition of one year
or less are excluded from the calculation. Purchases and sales of
investment securities (excluding short-term securities) for the
period ended October 31, 1995 were $3,805,864 and $2,226,410,
respectively.
<PAGE>
Investment Objective and Policies
Objective. The Fund seeks capital appreciation through investment
in securities (primarily equity securities) of companies believed
by the Manager to be undervalued in the marketplace in relation to
factors such as the companies' assets, earnings, growth potential
and cash flows through a non-diversified portfolio.
Investment Policies and Strategies. The Sub-Adviser, OpCap Advisors
(formerly known as Quest for Value Advisors), manages the Fund in
accordance with the Fund's investment objective and policies
described below pursuant to a Subadvisory Agreement with the
Manager. The Fund may invest its assets in equity securities of
companies with no limit as to market capitalization. The Fund may
invest up to 25% of its net assets in bonds rated below Baa 3 by
Moody's Investors Service, Inc. ("Moody's") or BBB- by Standard &
Poor's Corporation ("S&P")(commonly known as "high yield" or "junk
bonds"). For the purposes of this Prospectus the term equity
securities is defined as common stocks and preferred stocks; bonds,
debentures and notes convertible into common stocks; and depository
receipts for such securities.
To provide liquidity for the purchase of new instruments and
to effect redemptions of shares, the Fund typically invests a part
of its assets in various types of U.S. government securities and
high quality, short-term debt securities with remaining maturities
of one year or less such as government obligations, certificates of
deposit, bankers' acceptances, commercial paper, short-term
corporate securities and repurchase agreements ("money market
instruments"). For temporary defensive purposes, the Fund may
invest up to 100% of its assets in such securities. At any time
that the Fund for temporary defensive purposes invests in such
securities, to the extent of such investments, it is not pursuing
its investment objective.
-- Can the Fund's Investment Objective and Policies Change?
The Fund has an investment objective, which is described above, as
well as investment policies it follows to try to achieve its
objective. Additionally, the Fund uses certain investment
techniques and strategies in carrying out those investment
policies. Except as indicated, the investment objective and
policies described above are fundamental policies; the Fund's
investment policies and practices described elsewhere in this
Prospectus or in the Statement of Additional Information are not
"fundamental" unless stated to be "fundamental".
Fundamental policies are those that cannot be changed without
the approval of a "majority" of the Fund's outstanding voting
shares. The term "majority" is defined in the Investment Company
Act to be a particular percentage of outstanding voting shares (and
this term is explained in the Statement of Additional Information).
The Fund's Board of Trustees may change non-fundamental policies
without shareholder approval, although significant changes will be
described in amendments to this Prospectus.
-- Stock Investment Risks. Because the Fund normally invests
a substantial portion of its assets in stocks, the value of the
Fund's portfolio will be affected by changes in the stock markets.
At times, the stock markets can be volatile and stock prices can
change substantially. This market risk will affect the Fund's net
asset value per share, which will fluctuate as the values of the
Fund's portfolio securities change. Not all stock prices change
uniformly or at the same time and not all stock markets move in the
same direction at the same time. Other factors can affect a
particular stock's prices, such as poor earnings reports by an
issuer, loss of major customers, major litigation against an
issuer, or changes in government regulations affecting an industry.
Not all of these factors can be predicted.
The Fund attempts to limit market risks by diversifying its
investments, that is, by not holding a substantial amount of the
stock of any one company and by not investing too great a
percentage of the Fund's assets in any one company. Because
changes in market prices can occur at any time, there is no
assurance that the Fund will achieve its investment objective, and
when you redeem your shares, they may be worth more or less than
what you paid for them.
-- Foreign Securities. The Fund may purchase foreign
securities that are listed on a domestic or foreign securities
exchange, traded in domestic or foreign over-the-counter markets or
represented by American Depository Receipts, European Depository
Receipts or Global Depository Receipts. There is no limit to the
amount of foreign securities the Fund may acquire. The Fund does
not intend to speculate in foreign currency in connection with the
purchase or sale of securities on a foreign securities exchange
but, as described below in "Hedging", may enter into foreign
currency contracts to hedge its foreign currency exposure.
- Foreign securities have special risks. For example,
foreign issuers are not subject to the same accounting and
disclosure requirements that U.S. companies are subject to. The
value of foreign investments may be affected by changes in foreign
currency rates, exchange control regulations, expropriation or
nationalization of a company's assets, foreign taxes, delays in
settlement of transactions, changes in governmental economic or
monetary policy in the U.S. or abroad, or other political and
economic factors. The Fund may invest in emerging market countries;
such countries may have relatively unstable governments, economies
based on only a few industries that are dependent upon
international trade and reduced secondary market liquidity. More
information about the risks and potential rewards of investing in
foreign securities is contained in the Statement of Additional
Information.
-- Risks of Fixed-Income Securities. The Fund may invest in
debt obligations with remaining maturities of one year or more of
U.S. or foreign corporate, governmental or bank issuers. In
addition to credit risks, described below, debt securities are
subject to changes in their value due to changes in prevailing
interest rates. When prevailing interest rates fall, the value of
already-issued debt securities generally rise. When interest rates
rise, the values of already-issued debt securities generally
decline. The magnitude of these fluctuations will often be greater
for longer-term debt securities than shorter-term debt securities.
Changes in the value of securities held by the Fund mean that the
Fund's share prices can go up or down when interest rates change
because of the effect of the change on the value of the Fund's
portfolio of debt securities. Credit risk relates to the ability
of the issuer to meet interest or principal payments on a security
as they become due. Generally, higher yielding lower-grade bonds,
described below, are subject to credit risks to a greater extent
than lower yielding, investment grade bonds.
The Fund may invest up to 25% of its net assets in high-yield,
"lower-grade" bonds (or high-yielding unrated bonds), commonly
known as "junk bonds." The Fund is not obligated to dispose of
securities that are downgraded below investment grade after the
Fund buys them. "Lower-grade" debt securities are those rated
below "investment grade," which means they have a rating lower than
"Baa3" by Moody's Investors Service, Inc. ("Moody's") or lower than
"BBB-" by Standard & Poor's Corporation ("S&P"). Appendix B to
this Prospectus describes these rating categories. If a debt
security is rated below investment grade by one rating agency and
as investment grade by a different rating agency, Op Cap Advisors
will make a determination as to the debt security's investment
grade quality. High yield, lower-grade securities, whether rated
or unrated, often have speculative characteristics and special
risks that make them riskier investments than investment grade
securities. They may be subject to greater market fluctuations and
risk of loss of income and principal than lower yielding,
investment grade securities. There may be less of a market for
them and therefore they may be harder to sell at an acceptable
price. There is a relatively greater possibility that the issuer's
earnings may be insufficient to make the payments of interest due
on the bonds. The issuer's low creditworthiness may increase the
potential for its insolvency. More information about investment in
fixed-income securities, including convertible securities, is
contained in the Statement of Additional Information.
-- Warrants and Rights. Warrants basically are options to
purchase stock at set prices that are valid for a limited period of
time. Rights are similar to warrants but normally have a short
duration and are distributed directly by the issuer to its
shareholders. The Fund may invest up to 5% of its total assets in
warrants or rights. For further details about these investments,
please refer to "Warrants and Rights" in the Statement of
Additional Information.
-- Portfolio Turnover. A change in the securities held by the
Fund is known as "portfolio turnover." The Fund ordinarily does not
engage in short-term trading to try to achieve its objective. As a
result, the Fund's portfolio turnover (excluding turnover of
securities having a maturity of one year or less) is not expected
to be more than 100% each year. The "Financial Highlights" table
above, shows the Fund's portfolio turnover rate during past fiscal
years.
Portfolio turnover affects brokerage costs, dealer markups and
other transaction costs, and results in the Fund's realization of
capital gains or losses for tax purposes. It may also affect the
Fund's ability to qualify as a "regulated investment company" under
the Internal Revenue Code for tax deductions for dividends and
capital gains distributions the Fund pays to shareholders. The
Fund qualified in its last fiscal year and intends to do so in the
coming year, although it reserves the right not to qualify.
Other Investment Techniques and Strategies. The Fund may also use
the investment techniques and strategies described below. These
techniques involve certain risks. The Statement of Additional
Information contains more information about these practices,
including limitations on their use that may help to reduce some of
the risks.
-- Investing in Small, Unseasoned Companies. The Fund may
invest in securities of small, unseasoned companies. These are
companies that have been in continuous operation for less than
three years, counting the operations of any predecessors.
Securities of these companies may have limited liquidity (which
means that the Fund may have difficulty selling them at an
acceptable price when it wants to) and the prices of these
securities may be volatile. The Fund may not invest more than 5% of
its total assets in securities of small, unseasoned issuers. See
"Investing in Small, Unseasoned Companies" in the Statement of
Additional Information for a further discussion of the risks
involved in such investments.
-- Hedging. As described below, the Fund may purchase and
sell certain kinds of futures contracts, forward contracts, and
options on futures and broadly-based stock indices. These are all
referred to as "hedging instruments." The Fund does not use
hedging instruments for speculative purposes, and has limits on the
use of them, described below. The hedging instruments the Fund may
use are described below and in greater detail in "Other Investment
Techniques and Strategies" in the Statement of Additional
Information.
The Fund may buy and sell options, futures and forward
contracts for a number of purposes. It may do so to try to manage
its exposure to the possibility that the prices of its portfolio
securities may decline, or to establish a position in the
securities market as a temporary substitute for purchasing
individual securities. It may do so to try to manage its exposure
to changing interest rates. Some of these strategies, such as
selling futures, buying puts and writing covered calls, hedge the
Fund's portfolio against price fluctuations. Other hedging
strategies, such as buying futures and call options, tend to
increase the Fund's exposure to the securities market.
Forward contracts are used to try to manage foreign currency
risks on the Fund's foreign investments. Foreign currency options
are used to try to protect against declines in the dollar value of
foreign securities the Fund owns, or to protect against an increase
in the dollar cost of buying foreign securities.
- Futures. The Fund may buy and sell futures contracts that
relate to broadly-based stock indices (these are referred to as
Stock Index Futures) or foreign currencies (these are called
Forward Contracts and are discussed below).
- Put and Call Options. The Fund may buy and sell put options
(puts) and call options (calls) on broadly-based stock indices,
foreign currencies or on Stock Index Futures. All options
purchased or sold by the Fund will be traded on a U.S. or foreign
commodities exchange or will result from separate, privately
negotiated transactions with a primary government securities dealer
recognized by the Board of Governors of the Federal Reserve System
or with other broker-dealers approved by the Board of Trustees.
When the Fund writes (that is, sells) a call, it receives cash
(called a premium). The call gives the buyer the ability to buy
the investment on which the call was written from the Fund at the
call price during the period in which the call may be exercised.
If the value of the investment does not rise above the call price,
it is likely that the call will lapse without being exercised,
while the Fund keeps the cash premium (and the investment). Each
call the Fund writes must be "covered" while it is outstanding.
That means the Fund must own the investment on which the call was
written or it must own other securities that are acceptable for the
escrow arrangements required for calls. The Fund may write calls
on Futures contracts it owns, but these calls must be covered by
securities or other liquid assets the Fund owns and segregated to
enable it to satisfy its obligations if the call is exercised.
The Fund may purchase and sell put options. Buying a put on
an investment gives the Fund the right to sell the investment at a
set price to a seller of a put on that investment. The Fund can
buy only those puts that relate to broadly-based stock indices,
foreign currencies or Stock Index Futures. The Fund can buy a put
on a Stock Index Future whether or not the Fund owns the particular
Stock Index Future in its portfolio. The Fund may write puts on
broadly-based stock indices, foreign currencies or Stock Index
Futures, but only if those puts are covered by segregated liquid
assets. The Fund will not write a put if it will require more than
25% of the Fund's total assets to be segregated.
- Forward Contracts. Forward contracts are foreign currency
exchange contracts. They are used to buy or sell foreign currency
for future delivery at a fixed price. The Fund uses them to try to
"lock in" the U.S. dollar price of a security denominated in a
foreign currency that the Fund has bought or sold, or to protect
against possible losses from changes in the relative values of the
U.S. dollar and foreign currency. The Fund limits its exposure in
foreign currency exchange contracts in a particular foreign
currency to the amount of its assets denominated in that currency
or in a closely-correlated currency.
- Hedging instruments can be volatile investments and may
involve special risks. The use of hedging instruments requires
special skills and knowledge of investment techniques that are
different than what is required for normal portfolio management.
If the Manager uses a hedging instrument at the wrong time or
judges market conditions incorrectly, hedging strategies may reduce
the Fund's return. The Fund could also experience losses if the
prices of its futures and options positions were not correlated
with its other investments or if it could not close out a position
because of an illiquid market for the future or option.
Options trading involves the payment of premiums and has
special tax effects on the Fund. There are also special risks in
particular hedging strategies. If a covered call written by the
Fund is exercised on an investment that has increased in value, the
Fund will be required to sell the investment at the call price and
will not be able to realize any profit if the investment has
increased in value above the call price. In writing a put, there
is a risk that the Fund may be required to buy the underlying
security at a disadvantageous price. The use of forward contracts
may reduce the gain that would otherwise result from a change in
the relationship between the U.S. dollar and a foreign currency.
These risks are described in greater detail in the Statement of
Additional Information.
-- Illiquid and Restricted Securities. Under the policies and
procedures established by the Fund's Board of Trustees, the Manager
determines the liquidity of certain of the Fund's investments.
Investments may be illiquid because of the absence of an active
trading market, making it difficult to value them or dispose of
them promptly at an acceptable price. A restricted security is one
that has a contractual restriction on its resale or which cannot be
sold publicly until it is registered under the Securities Act of
1933. As a matter of fundamental policy, the Fund will not invest
more than 15% of its total assets in illiquid securities, including
securities for which there is no readily available market,
repurchase agreements which have a maturity of longer than seven
days, securities subject to legal or contractual restrictions and
certain over-the-counter options. The Fund's percentage limitation
on illiquid and restricted investments does not apply to certain
restricted securities that are eligible for resale to qualified
institutional purchasers.
-- Loans of Portfolio Securities. To attempt to raise cash
for liquidity purposes, the Fund may lend its portfolio securities
to certain types of eligible borrowers approved by the Board of
Trustees. Each loan must be collateralized in accordance with
applicable regulatory requirements. After any loan, the value of
the securities loaned, is not expected to exceed 33-1/3% of the
value of the total assets of the Fund. Other conditions to which
loans are subject are described in the Statement of Additional
Information. There are some risks in connection with securities
lending. The Fund might experience a delay in receiving additional
collateral to secure a loan or a delay in recovery of the loaned
securities.
-- Repurchase Agreements. The Fund may enter into repurchase
agreements. In a repurchase transaction, the Fund buys a security
and simultaneously sells it to the vendor for delivery at a future
date. They are used primarily for liquidity purposes. Repurchase
agreements must be fully collateralized. However, if the vendor
fails to pay the resale price on the delivery date, the Fund may
incur costs in disposing of the collateral and may experience
losses if there is any delay in its ability to do so.
The Fund may enter into reverse repurchase agreements.
Reverse repurchase agreements involve the risk that the market
value of the securities retained in lieu of sale by the Fund may
decline more than or appreciate less than the securities the Fund
has sold but is obligated to repurchase. In the event the buyer of
securities under a reverse repurchase agreement files for
bankruptcy or becomes insolvent, such buyer or its trustee or
receiver may receive an extension of time to determine whether to
enforce the Fund's obligation to repurchase the securities and the
Fund's use of the proceeds of the reverse repurchase agreements may
effectively be restricted pending such decisions. Reverse
repurchase agreements create leverage, a speculative factor, and
will be considered borrowings by the Fund.
Investment in repurchase agreements having a maturity beyond
seven days is subject to the limitations set forth above under
"Illiquid and Restricted Securities." There is no limit on the
amount of the Fund's net assets that may be subject to repurchase
agreements of seven days or less.
-- "When-Issued" and Delayed Delivery Transactions. The Fund
may purchase securities on a "when-issued" basis and may purchase
or sell securities on a "delayed delivery" basis or on a "firm
commitment" basis. These terms refer to securities that have been
created and for which a market exists, but which are not available
for immediate delivery. There may be a risk of loss to the Fund if
the value of the security declines prior to the settlement date.
-- Non-diversification. The Fund is classified as a "non-
diversified" investment company under the Investment Company Act of
1940 so that the proportion of the Fund's assets that may be
invested in the securities of a single issuer is not limited by the
Investment Company Act. An investment in the Fund therefore will
entail greater risk than an investment in a diversified investment
company because a higher percentage of investments among fewer
issuers may result in greater fluctuation in the total market value
of the Fund's portfolio, and economic, political or regulatory
developments may have a greater impact on the value of the Fund's
portfolio than would be the case if the portfolio were diversified
among more issuers. However, the Fund intends to conduct its
operations so as to qualify as "regulated investment company" for
purposes of the Internal Revenue Code, which will relieve the Fund
from liability for Federal income tax to the extent that more than
90% of its earnings are distributed to shareholders. Among the
requirements for such qualification are that: (1) not more than
25% of the market value of the Fund's total assets will be invested
in securities of a single issuer, and (2) with respect to 50% of
the market value of its total assets, not more than 5% of the
market value of its total assets may be invested in the securities
of a single issuer and the Fund must not own more than 10% of the
outstanding voting securities of a single issuer.
Other Investment Restrictions. The Fund has other investment
restrictions which are fundamental policies. Under these
fundamental policies, the Fund cannot do any of the following:
- - With respect to 75% of its total assets, invest more than 5% of
the value of its total assets in the securities of any one issuer
(except that the Fund may in the future invest all of its
investable assets in an open-end management investment company with
substantially the same investment objective and restrictions as the
Fund).
- - With respect to 75% of its total assets, purchase more than 10%
of the voting securities of any one issuer (this restriction does
not apply to U.S. government securities).
- - Purchase more than 10% of any class of security of any issuer,
with all outstanding debt securities and all preferred stock of an
issuer each being considered as one class (this restriction does
not apply to U.S. government securities).
- - Concentrate its investments in any particular industry, but if
deemed appropriate for attaining its investment objective, the Fund
may invest up to 25% of its total assets (valued at the time of
investment) in any one industry classification used by the Fund for
investment purposes (for this purpose, a foreign government is
considered an industry); (this restriction does not apply to U.S.
government securities).
- - Borrow money in excess of 33 1/3% of the value of the Fund's
total assets; the Fund may borrow only from banks and only as a
temporary measure for extraordinary or emergency purposes and will
make no additional investments while such borrowings exceed 5% of
the total assets.
- - Invest more than 15% of the Fund's total assets in illiquid
securities, including securities for which there is no readily
available market, repurchase agreements which have a maturity of
longer than seven days, securities subject to legal or contractual
restrictions and certain over-the-counter options. Notwithstanding
this investment restriction, the Fund may purchase securities which
are not registered under the Securities Act of 1933 ("1933 Act")
but which can be sold to "qualified institutional buyers" in
accordance with Rule 144A under the 1933 Act. Any such security
will not be considered illiquid so long as it is determined by the
Board of Trustees or the Sub-Adviser, acting under guidelines
approved and monitored by the Board, which has the ultimate
responsibility for any determination regarding liquidity, that an
adequate trading market exists for that security.
- - Invest more than 5% of the Fund's total assets in securities of
issuers having a record, together with predecessors, of less than
three years of continuous operation. (This restriction is not a
fundamental policy of the Fund, but was adopted to comply with a
state's securities laws).
All of the percentage restrictions described above and
elsewhere in this Prospectus apply only at the time the Fund
purchases a security, and the Fund need not dispose of a security
merely because the size of the Fund's assets has changed or the
security has increased in value relative to the size of the Fund.
There are other fundamental policies discussed in the Statement of
Additional Information.
How the Fund is Managed
Organization and History. The Fund was organized in November, 1994
as an open-end management investment company and is one of four
investment portfolios or "series" of Oppenheimer Quest for Value
Funds (the "Trust"). The Trust is an open-end management
investment company organized on April 17, 1987 as a Massachusetts
business trust, with an unlimited number of authorized shares of
beneficial interest. Each of the four series of the Trust is a
fund that issues its own shares, has its own investment portfolio
and its own assets and liabilities.
The Fund is governed by a Board of Trustees, which is
responsible for protecting the interests of shareholders under
Massachusetts law. The Trustees meet periodically throughout the
year to oversee the Fund's activities, review its performance, and
review the actions of the Manager and the Sub-Adviser. "Trustees
and Officers of the Fund" in the Statement of Additional
Information names the Trustees and officers of the Fund and
provides more information about them. Although the Fund is not
required by law to hold annual meetings, it may hold shareholder
meetings from time to time on important matters, and shareholders
have the right to call a meeting to remove a Trustee to take other
action described in the Declaration of Trust of the Trust.
The Board of Trustees has the power, without shareholder
approval, to divide unissued shares of the Fund into two or more
classes. The Board has done so, and the Fund currently has three
classes of shares, Class A, Class B and Class C. All classes
invest in the same investment portfolio. Each class has its own
dividends and distributions and pays certain expenses which may be
different for the different classes. Each class may have a
different net asset value. Each share has one vote at shareholder
meetings, with fractional shares voting proportionally. Only
shares of a particular class vote as a class on matters that affect
that class alone. Shares are freely transferrable.
The Manager. The Fund is managed by the Manager, OppenheimerFunds,
Inc., which supervises the Fund s investment program and handles its
day-to-day business. The Manager carries out its duties, subject
to the policies established by the Board of Trustees, under an
Investment Advisory Agreement with the Fund which states the
Manager s responsibilities. The Agreement sets forth the fees paid
by the Fund to the Manager and describes the expenses that the Fund
pays to conduct its business.
The Manager has operated as an investment adviser since 1959.
The Manager (including a subsidiary) currently manages investment
companies, including other Oppenheimer funds, with assets of more
than $40 billion as of December 31, 1995, and with more than 2.8
million shareholder accounts. The Manager is owned by Oppenheimer
Acquisition Corp., a holding company that is owned in part by
senior officers of the Manager and controlled by Massachusetts
Mutual Life Insurance Company.
The Sub-Adviser. The Manager has retained OpCap Advisors, the Sub-
Adviser, to provide day-to-day portfolio management of the Fund.
The Sub-Adviser is a majority-owned subsidiary of Oppenheimer
Capital, a registered investment advisor, whose employees perform
all investment advisory services provided to the Fund by the Sub-
Adviser. Oppenheimer Financial Corp., a holding company, holds a
33% interest in Oppenheimer Capital, a registered investment
advisor. Oppenheimer Capital, L.P., a Delaware limited partnership
whose units are traded on the New York Stock Exchange and of which
Oppenheimer Financial Corp. is the sole general partner, owns the
remaining 67% interest. Oppenheimer Capital has operated as an
investment advisor since 1968.
Prior to November 22, 1995, OpCap Advisors was named Quest for
Value Advisors and was the investment adviser to the Fund.
Effective as of such date, the Manager acquired the investment
advisory and other contracts and business relationships and certain
assets and liabilities of Quest for Value Advisors, Quest for Value
Distributors and Oppenheimer Capital relating to twelve Quest for
Value mutual funds, including the Fund. Pursuant to this
acquisition and Fund shareholder approval received on November 3,
1995, the Fund entered into the following agreements on November
22, 1995: the Investment Advisory Agreement between the Fund and
the Manager, and the distribution and service plans and agreements
between the Fund and the Distributor. Further, the Manager entered
into a subadvisory agreement with the Sub-Adviser for the benefit
of the Fund. These agreements are described below.
-- Portfolio Manager. The Fund's portfolio manager, Mr.
Jeffrey C. Whittington, is employed by the Sub-Adviser and is
primarily responsible for the selection of the Fund's securities.
Mr. Whittington, who is also a Senior Vice President of Oppenheimer
Capital, has been the Fund's portfolio manager since its inception
and has been a portfolio manager at Oppenheimer Capital since
August, 1994, and from June 1986 to May 1991. From August 1993 to
July 1994 he was a portfolio manager with Neuberger & Berman. From
October 1991 to July 1993, he was a portfolio manager with
Oppenheimer & Co., Inc.
The Sub-Adviser's equity investment policy is overseen by
George Long, Managing Director and Chief Investment Officer for
Oppenheimer Capital, the parent of the Sub-Adviser. Mr. Long has
been with Oppenheimer Capital since 1981.
-- Fees and Expenses. Under the Investment Advisory
Agreement, the Fund pays the Manager an annual fee of 1.0% of the
Fund's average net assets. This management fee is higher than that
paid by most other investment companies. The Fund pays expenses
related to its daily operations, such as custodian fees, Trustees'
fees, transfer agency fees, legal and auditing costs; the Fund also
reimburses the Manager for bookkeeping and accounting services
performed on behalf of the Fund. Those expenses are paid out of
the Fund's assets and are not paid directly by shareholders.
However, those expenses reduce the net asset value of shares, and
therefore are indirectly borne by shareholders through their
investment. More information about the investment advisory
agreement and the other expenses paid by the Fund is contained in
the Statement of Additional Information.
The Manager will pay the Sub-Adviser an annual fee based on
the average daily net assets of the Fund equal to 40% of the
advisory fee collected by the Manager based on the total net assets
of the Fund as of November 22, 1995 (the "Base Amount") plus 30% of
the investment advisory fee collected by the Manager based on the
total net assets of the Fund that exceed the Base Amount.
OpCap Advisors may select its affiliate Oppenheimer & Co.,
Inc. ("Opco"), a registered broker-dealer to execute transactions
for the Fund, provided that the commissions, fees or other
remuneration received by Opco are reasonable and fair compared to
those paid to other brokers in connection with comparable
transactions. When selecting broker-dealers other than Opco, the
Sub-Adviser may consider their record of sales of shares of the
Fund. Further information about the Fund's brokerage policies and
practices are set forth in "Brokerage Policies of the Fund" in the
Statement of Additional Information.
-- The Distributor. The Fund's shares are sold through
dealers and brokers that have a sales agreement with
OppenheimerFunds Distributor, Inc., a subsidiary of the Manager
that acts as the Fund's Distributor. The Distributor also
distributes the shares of the other Oppenheimer funds managed by
the Manager and is sub-distributor for funds managed by a
subsidiary of the Manager.
-- The Transfer Agent. The Fund's transfer agent is
OppenheimerFunds Services, a division of the Manager, which acts as
the shareholder servicing agent for the Fund. It also acts as the
shareholder servicing agent for certain other Oppenheimer funds.
Shareholders should direct inquiries about their accounts to the
Transfer Agent at the address and toll-free number shown below in
this Prospectus and on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms
"total return" and "average annual total return" to illustrate its
performance. The performance of each class of shares is shown
separately, because the performance of each class will usually be
different as a result of the different kinds of expenses each class
bears. These returns measure the performance of a hypothetical
account in the Fund over various periods, and do not show the
performance of each shareholder's account (which will vary if
dividends are received in cash, or shares are sold or purchased).
The Fund's performance information may help you see how well your
investment in the Fund has done over time and to compare it to
other funds or market indices, as we have done below.
It is important to understand that the Fund's total returns
represent past performance and should not be considered to be
predictions of future returns or performance. This performance
data is described below, but more detailed information about how
total returns are calculated is contained in the Statement of
Additional Information, which also contains information about other
ways to measure and compare the Fund's performance. The Fund's
investment performance will vary over time, depending on market
conditions, the composition of the portfolio, expenses and which
class of shares you purchase.
-- Total Returns. There are different types of total returns
used to measure the Fund's performance. Total return is the change
in value of a hypothetical investment in the Fund over a given
period, assuming that all dividends and capital gains distributions
are reinvested in additional shares. The cumulative total return
measures the change in value over the entire period (for example,
ten years). An average annual total return shows the average rate
of return for each year in a period that would produce the
cumulative total return over the entire period. However, average
annual total returns do not show the Fund's actual year-by-year
performance.
When total returns are quoted for Class A shares, they reflect
the payment of the current maximum initial sales charge. When
total returns are shown for Class B shares, they reflect the effect
of the contingent deferred sales charge that applies to the period
for which total return is shown. When total returns are shown for
a one-year period (or less) for Class C shares, they reflect the
effect of the contingent deferred sales charge. Total returns may
also be quoted at net asset value, without including the sales
charge, and those returns would be reduced if sales charges were
deducted.
How Has the Fund Performed? Below is a discussion by the Manager of
the Fund's performance during its fiscal year ended October 31,
1995, followed by a graphical comparison of the Fund's performance
to an appropriate broad-based stock market index.
-- Management's Discussion of Performance. During the Fund's
first fiscal year, the domestic stock market reached record highs.
The Fund was substantially invested in equity securities during
this time (approximately 59% as of October 31, 1995) and
participated in the stock market's strong performance. During the
fiscal year, the Sub-Adviser sought investments in the following
major industry sectors: insurance; tobacco, beverage and food; oil
and gas; and automotive. The remainder of the Fund's assets were
invested in short-term government agency and corporate notes.
-- Comparing the Fund's Performance to the Market. The graph
below shows the performance of a hypothetical $10,000 investment in
Class A shares of the Fund held from inception (November 8, 1994)
until October 31, 1995. Class B and C shares have not been issued
as of this date; consequently, no information on such classes is
included in the graph.
The Fund's performance is compared to the performance of the
Standard & Poor's 400 Mid-Cap Index, a capitalization-weighted
index of 400 U.S. issuers whose common stocks are traded on the New
York and American Stock Exchanges and the NASDAQ and is recognized
as a measure of the performance of "mid-capitalization" stocks.
Index performance reflects the reinvestment of dividends but does
not consider the effect of capital gains or transaction costs, and
none of the data below shows the effect of taxes. The Fund's
performance reflects the deduction of the current maximum sales
charge of 5.75% for Class A shares and the reinvestment of all
dividends and capital gains distributions, and the effect of Fund
business and operating expenses. While index comparisons may be
useful to provide a benchmark for the Fund's performance, it must
be noted that the Fund's investments are not limited to the
securities in the S&P Mid-Cap 400 index. Moreover, the index
performance data does not reflect any assessment of the risk of the
investments included in the index.
Oppenheimer Quest Officers Value Fund
Comparison of Change in Value
of $10,000 Hypothetical Investments
in Oppenheimer Quest Officers Value Fund and
the S&P 400 Mid-Cap Index
[Graph]
Past performance is not predictive of future performance.
Average Annual Total Returns
of the Fund at 10/31/95
Class A Shares(1)
Life
16.35%
- -------------------
(1) The average annual total return and the ending account value in
the graph reflect reinvestment of all dividends and capital gains
distributions and are shown net of the current applicable 5.75%
maximum initial sales charge. The Fund commenced operations on
November 8, 1994.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors three different
classes of shares. Currently, the only class of shares offered is
Class A shares, and such Class A shares are only offered to the
following individuals and entities at this time: (i) officers,
directors, trustees and employees (and members of their "immediate
families", as hereinafter defined) of the Fund, the Manager and its
affiliates, and retirement plans established by them for their
employees and (ii) officers, directors, trustees and employees of
Oppenheimer Capital, and its affiliates, their relatives or any
trust, pension, profit sharing or other benefit plan for any of
them.
The different classes of shares represent investments in the same
portfolio of securities but are subject to different expenses and
will likely have different share prices.
-- Class A Shares. If you buy Class A shares, you may pay an
initial sales charge on investments up to $1 million (up to
$500,000 for purchases by OppenheimerFunds prototype 401(k) plans).
If you purchase Class A shares as part of an investment of at least
$1 million ($500,000 for OppenheimerFunds prototype 401(k) plans)
in shares of one or more Oppenheimer funds or Former Quest for
Value Funds (as defined below), you will not pay an initial sales
charge, but if you sell any of those shares within 12, 18 or 24
months of buying them, you may pay a contingent deferred sales
charge in an amount that depends upon when you bought such shares.
The amount of that sales charge will vary depending on the amount
you invested. Sales charges are described in "Buying Class A
Shares" below.
-- Class B Shares. If you buy Class B shares, you pay no
sales charge at the time of purchase, but if you sell your shares
within six years you will normally pay a contingent deferred sales
charge that varies, depending on how long you have owned your
shares. It is described in "Buying Class B Shares" below.
-- Class C Shares. When you buy Class C shares, you pay no
sales charge at the time of purchase, but if you sell your shares
within 12 months of buying them, you will normally pay a contingent
deferred sales charge of 1%. It is described in "Buying Class C
Shares" below.
Which Class of Shares Should You Choose? Once you decide that the
Fund is an appropriate investment for you, the decision as to which
class of shares is better suited to your needs depends on a number
of factors which you should discuss with your financial advisor.
The Fund's operating costs that apply to a class of shares and the
effect of the different types of sales charges on your investment
will vary your investment results over time. The most important
factors are how much you plan to invest, how long you plan to hold
your investment, and whether you anticipate exchanging your shares
for shares of other Oppenheimer funds (not all of which currently
offer Class B and Class C shares). If your goals and objectives
change over time and you plan to purchase additional shares, you
should re-evaluate those factors to see if you should consider
another class of shares.
In the following discussion, to help provide you and your
financial advisor with a framework in which to choose a class, we
have made some assumptions using a hypothetical investment in the
Fund. We used the sales charge rates that apply to each class, and
considered the effect of the asset-based sales charges on Class B
and Class C expenses (which will affect your investment return).
For the sake of comparison, we have assumed that there is a 10%
rate of appreciation in the investment each year. Of course, the
actual performance of your investment cannot be predicted and will
vary, based on the Fund's actual investment returns and the
operating expenses borne by each class of shares, and which class
you invest in.
The factors discussed below are not intended to be investment
advice or recommendations, because each investor's financial
considerations are different. The discussion below of the factors
to consider in purchasing a particular class of shares assumes that
you will purchase only one class of shares and not a combination of
shares of different classes.
-- How Long Do You Expect to Hold Your Investment? While
future financial needs cannot be predicted with certainty, knowing
how long you expect to hold your investment will assist you in
selecting the appropriate class of shares. Because of the effect
of class-based expenses, your choice will also depend on how much
you plan to invest. For example, the reduced sales charges
available for larger purchases of Class A shares may, over time,
offset the effect of paying an initial sales charge on your
investment (which reduces the amount of your investment dollars
used to buy shares for your account), compared to the effect over
time of higher class-based expenses on Class B or C shares for
which no initial sales charge is paid.
Investing for the Short Term. If you have a short-term
investment horizon (that is, you plan to hold your shares for not
more than six years), you should probably consider purchasing Class
A or Class C shares rather than Class B shares, because of the
effect of the Class B contingent deferred sales charge if you
redeem within 6 years, as well as the effect of the Class B asset-
based sales charge on the investment return for that class in the
short-term. Class C shares might be the appropriate choice
(especially for investments of less than $100,000), because there
is no initial sales charge on Class C Shares, and the contingent
deferred sales charge does not apply to amounts you sell after
holding them one year.
However, if you plan to invest more than $100,000 for the
shorter term, then the more you invest and the more your investment
horizon increases toward six years, Class C shares might not be as
advantageous as Class A shares. That is because the annual asset-
based sales charge on Class C shares will have a greater impact on
your account over the longer term than the reduced front-end sales
charge available for larger purchases of Class A shares. For
example, Class A might be more advantageous than Class C (as well
as Class B) for investments of more than $100,000 expected to be
held for 5 or 6 years (or more). For investments over $250,000
expected to be held 4 to 6 years (or more), Class A shares may
become more advantageous than Class C (and B). If investing
$500,000 or more, Class A may be more advantageous as your
investment horizon approaches 3 years or more.
And for most investors who invest $1 million or more, in most
cases Class A shares will be the most advantageous choice, no
matter how long you intend to hold your shares. For that reason,
the Distributor normally will not accept purchase orders of
$500,000 or $1 million or more of Class B or C shares respectively
from a single investor.
Investing for the Longer Term. If you are investing for the
longer term, for example, for retirement, and do not expect to need
access to your money for seven years or more, Class B shares may be
an appropriate consideration, if you plan to invest less than
$100,000. If you plan to invest more than $100,000 over the long
term, Class A shares will likely be more advantageous than Class B
shares or C shares, as discussed above, because of the effect of
the expected lower expenses for class A shares and the reduced
initial sales charges available for larger investments in Class A
shares under the Funds Right of Accumulation.
Of course, these examples are based on approximations of the
effect of current sales charges and expenses on a hypothetical
investment over time, using the assumed annual performance return
stated above, and therefore should not be relied on as rigid
guidelines.
-- Are There Differences in Account Features That Matter to
You? Because some account features may not be available for Class
B or Class C shareholders, you should carefully review how you plan
to use your investment account before deciding which class of
shares is better for you. For example, share certificates are not
available for Class B or Class C shares, and if you are considering
using your shares as collateral for a loan, that may be a factor to
consider. Additionally, dividends payable to Class B and Class C
shareholders will be reduced by the additional expenses borne
solely by those classes, such as the asset-based sales charges
described below and in the Statement of Additional Information.
-- How Does It Affect Payments to My Broker? A salesperson,
such as a broker, or any other person who is entitled to receive
compensation for selling Fund shares may receive different
compensation for selling one class rather than another class. It
is important that investors understand that the purpose of the
contingent deferred sales charges and asset-based sales charges for
Class B and Class C shares are the same as the purpose of the
front-end sales charge on sales of Class A shares: to compensate
the Distributor for commissions it pays to dealers and financial
institutions for selling shares.
How Much Must You Invest? You can open a Fund account with a
minimum initial investment of $1,000 and make additional
investments at any time with as little as $25. There are reduced
minimum investments under special investment plans:
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7)
custodial plans and military allotment plans, you can make initial
and subsequent investments of as little as $25; and subsequent
purchases of at least $25 can be made by telephone through
AccountLink.
Under pension and profit-sharing plans and Individual
Retirement Accounts (IRAs), you can make an initial investment of
as little as $250 (if your IRA is established under an Asset
Builder Plan, the $25 minimum applies), and subsequent investments
may be as little as $25.
There is no minimum investment requirement if you are buying
shares by reinvesting dividends from the Fund or other
OppenheimerFunds (a list of them appears in the Statement of
Additional Information, or you can ask your dealer or call the
Transfer Agent), or by reinvesting distributions from unit
investment trusts that have made arrangements with the Distributor.
-- How Are Shares Purchased? You can buy shares several ways:
through any dealer, broker or financial institution that has a
sales agreement with the Distributor, directly through the
Distributor, or automatically from your bank account through an
Asset Builder Plan under the OppenheimerFunds AccountLink service.
When you buy shares, be sure to specify Class A, Class B or Class
C shares. If you do not choose, your investment will be made in
Class A shares.
-- Buying Shares Through Your Dealer. Your dealer will place
your order with the Distributor on your behalf.
-- Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "OppenheimerFunds Distributor, Inc." Mail it to P.O. Box
5270, Denver, Colorado 80217. If you don't list a dealer on the
application, the Distributor will act as your agent in buying the
shares. However, we recommend that you discuss your investment
first with a financial advisor, to be sure it is appropriate for
you.
-- Buying Shares Through OppenheimerFunds AccountLink. You
can use AccountLink to link your Fund account with an account at a
U.S. bank or other financial institution that is an Automated
Clearing House (ACH) member, to transmit funds electronically to
purchase shares, to have the Transfer Agent send redemption
proceeds, or to transmit dividends and distributions.
Shares are purchased for your account on the regular business
day the Distributor is instructed by you to initiate the ACH
transfer to buy shares. You can provide those instructions
automatically, under an Asset Builder Plan, described below, or by
telephone instructions using OppenheimerFunds PhoneLink, also
described below. You should request AccountLink privileges on the
application or dealer settlement instructions used to establish
your account. Please refer to "AccountLink" below for more details.
-- Asset Builder Plans. You may purchase shares of the Fund
(and up to four other OppenheimerFunds) automatically each month
from your account at a bank or other financial institution under an
Asset Builder Plan with AccountLink. Details are on the Application
and in the Statement of Additional Information.
-- At What Price Are Shares Sold? Shares are sold at the
public offering price based on the net asset value (and any initial
sales charge that applies) that is next determined after the
Distributor receives the purchase order in Denver. In most cases,
to enable you to receive that day's offering price, the Distributor
must receive your order by the time of day the New York Stock
Exchange closes, which is normally 4:00 P.M., New York time, but
may be earlier on some days (all references to time in this
Prospectus mean "New York time"). The net asset value of each
class of shares is determined as of that time on each day the New
York Stock Exchange is open (which is a "regular business day").
If you buy shares through a dealer, the dealer must receive
your order by the regular close of business of the New York Stock
Exchange on a regular business day and transmit it to the
Distributor so that it is received before the Distributor's close
of business that day, which is normally 5:00 P.M. The Distributor
may reject any purchase order for the Fund's shares, in its sole
discretion.
Special Sales Charge Arrangements for Certain Persons. Appendix A
to this Prospectus sets forth conditions for the waiver of, or
exemption from, sales charges or the special sales charge rates
that apply to shareholders of the Former Quest for Value Funds (as
defined in that Appendix), including the Fund.
Buying Class A Shares. Class A shares are sold at their offering
price, which is normally net asset value plus an initial sales
charge. However, in some cases, described below, where purchases
are not subject to an initial sales charge, the offering price may
be net asset value. In some cases, reduced sales charges may be
available, as described below. Out of the amount you invest, the
Fund receives the net asset value to invest for your account. The
sales charge varies depending on the amount of your purchase. A
portion of the sales charge may be retained by the Distributor and
allocated to your dealer as commission. The current sales charge
rates and commissions paid to dealers and brokers are as follows:
- -----------------------------------------------------------------
Front-End Sales Charge Commission
As a Percentage of as Percentage
Offering Amount of Offering
Amount of Purchase Price Invested Price
- ----------------------------------------------------------------
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
The Distributor reserves the right to reallow the entire commission
to dealers. If that occurs, the dealer may be considered an
"underwriter" under Federal securities laws.
-- Class A Contingent Deferred Sales Charge. There is no
initial sales charge on purchases of Class A shares of any one or
more of the OppenheimerFunds in the following cases:
- Purchases aggregating $1 million or more, or
- Purchases by an OppenheimerFunds prototype 401(k) plan that:
(1) buys shares costing $500,000 or more, or (2) has, at the time
of purchase, 100 or more eligible participants, or (3) certifies
that it projects to have annual plan purchases of $200,000 or more.
Shares of any of the OppenheimerFunds that offer only one
class of shares that has no designation are considered "Class A
shares" for this purpose. The Distributor pays dealers of record
commissions on those purchases in an amount equal to the sum of
1.0% of the first $2.5 million, plus 0.50% of the next $2.5
million, plus 0.25% of purchases over $5 million. That commission
will be paid only on the amount of those purchases in excess of $1
million ($500,000 for purchases by OppenheimerFunds 401(k)
prototype plans) that were not previously subject to a front-end
sales charge and dealer commission.
If you redeem any of those shares within 18 months of the end
of the calendar month of their purchase, a contingent deferred
sales charge (called the "Class A contingent deferred sales
charge") will be deducted from the redemption proceeds. That sales
charge will be equal to 1.0% of (1) the aggregate net asset value
of the redeemed shares (not including shares purchased by
reinvestment of dividends or capital gain distributions) or (2) the
original cost of the shares, whichever is less. However, the Class
A contingent deferred sales charge will not exceed the aggregate
commissions the Distributor paid to your dealer on all Class A
shares of all OppenheimerFunds you purchased subject to the Class
A contingent deferred sales charge. Class A shares of the Fund
purchased without a contingent deferred sales charge on or prior to
the date of this Prospectus will be subject to a contingent
deferred sales charge at the applicable rate set forth in Appendix
A to this Prospectus.
In determining whether a contingent deferred sales charge is
payable, the Fund will first redeem shares that are not subject to
the sales charge, including shares purchased by reinvestment of
dividends and capital gains, and then will redeem other shares in
the order that you purchased them. The Class A contingent deferred
sales charge is waived in certain cases described in "Waivers of
Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on
exchanges of shares under the Fund's exchange privilege (described
below). However, if the shares acquired by exchange are redeemed
within 12, 18 or 24 months of the end of the calendar month of the
purchase of the exchanged shares, depending upon the date of
purchase the sales charge will apply.
-- Special Arrangements With Dealers. The Distributor may
advance up to 13 months' commissions to dealers that have
established special arrangements with the Distributor for Asset
Builder Plans for their clients. Dealers whose sales of Class A
shares of OppenheimerFunds (other than money market funds) under
OppenheimerFunds-sponsored 403(b)(7) custodial plans exceed $5
million per year (calculated per quarter), will receive monthly
one-half of the Distributor's retained commissions on those sales,
and if those sales exceed $10 million per year, those dealers will
receive the Distributor's entire retained commission on those
sales.
Reduced Sales Charges for Class A Share Purchases. You may be
eligible to buy Class A shares at reduced sales charge rates in one
or more of the following ways:
-- Right of Accumulation. To qualify for the lower sales
charge rates that apply to larger purchases of Class A shares, you
and your spouse can add together Class A and Class B shares you
purchase for your individual accounts, or jointly, or for trust or
custodial accounts on behalf of your children who are minors. A
fiduciary can cumulate shares purchased for a trust, estate or
other fiduciary account (including one or more employee benefit
plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class
A and Class B shares of the Fund and other OppenheimerFunds to
reduce the sales charge rate that applies to current purchases of
Class A shares. You can also count Class A and Class B shares of
OppenheimerFunds you previously purchased subject to an initial or
contingent deferred sales charge to reduce the sales charge rate
for current purchases of Class A shares, provided that you still
hold that investment in one of the OppenheimerFunds. The value of
those shares will be based on the greater of the amount you paid
for the shares or their current value (at offering price). The
OppenheimerFunds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from
the Transfer Agent. The reduced sales charge will apply only to
current purchases and must be requested when you buy your shares.
-- Letter of Intent. Under a Letter of Intent, if you
purchase Class A shares or Class A and Class B shares of the Fund
and other OppenheimerFunds during a 13-month period, you can reduce
the sales charge rate that applies to your purchases of Class A
shares. The total amount of your intended purchases of both Class
A and Class B shares will determine the reduced sales charge rate
for the Class A shares purchased during that period. This can
include purchases made up to 90 days before the date of the Letter.
More information is contained in the Application and in "Reduced
Sales Charges" in the Statement of Additional Information.
-- Waivers of Class A Sales Charges. The Class A sales
charges are not imposed in the circumstances described below.
There is an explanation of this policy in "Reduced Sales Charges"
in the Statement of Additional Information.
Waivers of Initial and Contingent Deferred Sales Charges for
Certain Purchasers. Class A shares purchased by the following
investors are not subject to any Class A sales charges:
- the Manager or its affiliates;
- present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced
Sales Charges" in the Statement of Additional Information) of the
Fund, the Manager and its affiliates, and retirement plans
established by them for their employees;
- registered management investment companies, or separate
accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose;
- dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
- employees and registered representatives (and their spouses)
of dealers or brokers described above or financial institutions
that have entered into sales arrangements with such dealers or
brokers (and are identified to the Distributor) or with the
Distributor; the purchaser must certify to the Distributor at the
time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor
children);
- dealers, brokers or registered investment advisers that have
entered into an agreement with the Distributor providing
specifically for the use of shares of the Fund in particular
investment products made available to their clients;
- dealers, brokers or registered investment advisers that have
entered into an agreement with the Distributor to sell shares of
defined contribution employee retirement plans for which the
dealer, broker or investment adviser provides administrative
services;
- directors, trustees, officers or full time employees of
OpCap Advisors or its affiliates, their relatives or any trust,
pension, profit sharing or other benefit plan which beneficially
owns shares for those persons;
- accounts for which Oppenheimer Capital is the investment
adviser (the Distributor must be advised of this arrangement) and
persons who are directors or trustees of the company or trust which
is the beneficial owner of such accounts;
- any unit investment trust that has entered into an
appropriate agreement with the Distributor;
- a TRAC-2000 401(k) plan (sponsored by the former Quest for
Value Advisors) whose Class B or Class C shares of a Former Quest
for Value Fund were exchanged for Class A shares of that Fund due
to the termination of the Class B and C TRAC-2000 program on
November 24, 1995; or
- qualified retirement plans that had agreed with the former
Quest for Value Advisors to purchase shares of any of the Former
Quest for Value Funds at net asset value, with such shares to be
held through DCXchange, a sub-transfer agency mutual fund
clearinghouse, provided that such arrangements are consummated and
share purchases commence by March 31, 1996.
Waivers of Initial and Contingent Deferred Sales Charges in
Certain Transactions. Class A shares issued or purchased in the
following transactions are not subject to Class A sales charges:
- shares issued in plans of reorganization, such as mergers,
asset acquisitions and exchange offers, to which the Fund is a
party;
- shares purchased by the reinvestment of loan repayments by
a participant in a retirement plan for which the Manager or its
affiliates acts as sponsor;
- shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other OppenheimerFunds
(other than Oppenheimer Cash Reserves) or unit investment trusts
for which reinvestment arrangements have been made with the
Distributor;
- shares purchased and paid for with the proceeds of shares
redeemed in the prior 12 months from a mutual fund (other than a
fund managed by the Manager or any of its subsidiaries) on which an
initial sales charge or contingent deferred sales charge was paid
(this waiver also applies to shares purchased by exchange of shares
of Oppenheimer Money Market Fund, Inc. that were purchased and paid
for in this manner); this waiver must be requested when the
purchase order is placed for your shares of the Fund, and the
Distributor may require evidence of your qualification for this
waiver; or
- shares purchased with the proceeds of maturing principal of
units of any Qualified Unit Investment Liquid Trust Series.
Waivers of the Class A Contingent Deferred Sales Charge for
Certain Redemptions. The Class A contingent deferred sales charge
does not apply to purchases of Class A shares at net asset value
without sales charge as described in the two sections above. It is
also waived if shares that would otherwise be subject to the
contingent deferred sales charge are redeemed in the following
cases:
- for retirement distributions or loans to participants or
beneficiaries from qualified retirement plans, deferred
compensation plans or other employee benefit plans, including
OppenheimerFunds prototype 401(k) plans (these are all referred to
as "Retirement Plans");
- to return excess contributions made to Retirement Plans;
- to make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the original account value;
- involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see "Shareholder Account
Rules and Policies," below);
- if, at the time a purchase order is placed for Class A
shares that would otherwise be subject to the Class A contingent
deferred sales charge, the dealer agrees to accept the dealer's
portion of the commission payable on the sale in installments of
1/18th of the commission per month (and no further commission will
be payable if the shares are redeemed within 18 months of
purchase); or
- for distributions from OppenheimerFunds prototype 401(k)
plans for any of the following cases or purposes: (1) following
the death or disability (as defined in the Internal Revenue Code)
of the participant or beneficiary (the death or disability must
occur after the participant's account was established); (2)
hardship withdrawals, as defined in the plan; (3) under a
Qualified Domestic Relations Order, as defined in the Internal
Revenue Code; (4) to meet the minimum distribution requirements of
the Internal Revenue Code; (5) to establish "substantially equal
periodic payments" as described in Section 72(t) of the Internal
Revenue Code, or (6) separation from service.
-- Distribution and Service Plan for Class A Shares. The Fund
has adopted a Distribution and Service Plan for Class A shares to
reimburse the Distributor for a portion of its costs incurred in
connection with the personal service and maintenance of shareholder
accounts that hold Class A shares. Under the Plan, the Fund pays
an annual asset-based sales charge to the Distributor of 0.25% of
the average annual net assets of the class. The Fund also pays a
service fee to the Distributor of 0.25% of the average annual net
assets of the class. The Distributor uses all of the service fee
and a portion of the asset-based sales charge (equal to 0.15%
annually for Class A shares purchased prior to September 1, 1993
and 0.10% for Class A shares purchased on or after September 1,
1993) to compensate dealers, brokers, banks and other financial
institutions quarterly for providing personal service and
maintenance of accounts of their customers that hold Class A
shares. The Distributor retains the balance of the asset-based
sales charge to reimburse itself for its other expenditures under
the Plan.
Services to be provided include, among others, answering
customer inquiries about the Fund, assisting in establishing and
maintaining accounts in the Fund, making the Fund's investment
plans available and providing other services at the request of the
Fund or the Distributor. The payments under the Plan increase the
annual expenses of Class A shares. For more details, please refer
to "Distribution and Service Plans" in the Statement of Additional
Information.
Buying Class B Shares. Class B shares are sold at net asset value
per share without an initial sales charge. However, if Class B
shares are redeemed within 6 years of their purchase, a contingent
deferred sales charge will be deducted from the redemption
proceeds. That sales charge will not apply to shares purchased by
the reinvestment of dividends or capital gains distributions. The
charge will be assessed on the lesser of the net asset value of the
shares at the time of redemption or the original purchase price.
The contingent deferred sales charge is not imposed on the amount
of your account value represented by the increase in net asset
value over the initial purchase price (including increases due to
the reinvestment of dividends and capital gains distributions). The
Class B contingent deferred sales charge is paid to the Distributor
to reimburse its expenses of providing distribution-related
services to the Fund in connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 6 years, and (3)
shares held the longest during the 6-year period.
The amount of the contingent deferred sales charge will depend
on the number of years since you invested and the dollar amount
being redeemed, according to the following schedule:
Years Since Contingent Deferred Sales Charge
Beginning of Month In Which on Redemptions in that Year
Purchase Order was Accepted (As % of Amount Subject to
Charge)
0 - 1 5.0%
1 - 2 4.0%
2 - 3 3.0%
3 - 4 3.0%
4 - 5 2.0%
5 - 6 1.0%
6 and following None
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of
the month in which the purchase was made.
-- Automatic Conversion of Class B Shares. Six years after
you purchase Class B shares, those shares will automatically
convert to Class A shares. This conversion feature relieves Class
B shareholders of the asset-based sales charge that applies to
Class B shares under the Class B Distribution Plan, described
below. The conversion is based on the relative net asset value of
the two classes, and no sales load or other charge is imposed. When
Class B shares convert, any other Class B shares that were acquired
by the reinvestment of dividends and distributions on the converted
shares will also convert to Class A shares. The conversion feature
is subject to the continued availability of a tax ruling described
in "Alternative Sales Arrangements - Class A, Class B and Class C
Shares" in the Statement of Additional Information.
-- Distribution and Service Plan for Class B Shares. The Fund
has adopted a Distribution and Service Plan for Class B shares to
compensate the Distributor for distributing Class B shares and
servicing accounts. Under the Plan, the Fund pays the Distributor
an annual "asset-based sales charge" of 0.75% per year on Class B
shares that are outstanding for 6 years or less. The Distributor
also receives a service fee of 0.25% per year. Both fees are
computed on the average annual net assets of Class B shares,
determined as of the close of each regular business day. The asset-
based sales charge allows investors to buy Class B shares without
a front-end sales charge while allowing the Distributor to
compensate dealers that sell Class B shares.
The Distributor uses the service fee to compensate dealers for
providing personal services for accounts that hold Class B shares.
Those services are similar to those provided under the Class A
Service Plan, described above. The asset-based sales charge and
service fee increase Class B expenses by 1.00% of average net
assets per year.
The Distributor pays the 0.25% service fee to dealers in
advance for the first year after Class B shares have been sold by
the dealer. After the shares have been held for a year, the
Distributor pays the fee on a quarterly basis. The Distributor pays
sales commissions of 3.75% of the purchase price to dealers from
its own resources at the time of sale.
The Fund pays the asset-based sales charge to the Distributor
for its services rendered in connection with the distribution of
Class B shares. Those payments, retained by the Distributor, are
at a fixed rate which is not related to the Distributor's expenses.
The services rendered by the Distributor include paying and
financing the payment of sales commissions, service fees, and other
costs of distributing and selling Class B shares. If the Plan is
terminated by the Fund, the Board of Trustees may allow the Fund to
continue payments of the service fee and/or asset-based sales
charge to the Distributor for distributing Class B shares before
the Plan was terminated.
-- Waivers of Class B Sales Charges. The Class B contingent
deferred sales charge will not apply to shares purchased in certain
types of transactions, nor will it apply to shares redeemed in
certain circumstances, as described below under "Waivers of Class
B and Class C Sales Charges."
Buying Class C Shares. Class C shares are sold at net asset value
per share without an initial sales charge. However, if Class C
shares are redeemed within 12 months of their purchase, a
contingent deferred sales charge of 1.0% will be deducted from the
redemption proceeds. That sales charge will not apply to shares
purchased by the reinvestment of dividends or capital gains
distributions. The charge will be assessed on the lesser of the net
asset value of the shares at the time of redemption or the original
purchase price. The contingent deferred sales charge is not imposed
on the amount of your account value represented by the increase in
net asset value over the initial purchase price (including
increases due to the reinvestment of dividends and capital gains
distributions). The Class C contingent deferred sales charge is
paid to the Distributor to reimburse its expenses of providing
distribution-related services to the Fund in connection with the
sale of Class C shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 12 months, and (3)
shares held the longest during the 12-month period.
-- Distribution and Service Plan for Class C Shares. The Fund
has adopted a Distribution and Service Plan for Class C shares to
compensate the Distributor for distributing Class C shares and
servicing accounts. Under the Plan, the Fund pays the Distributor
an annual "asset-based sales charge" of 0.75% per year on Class C
shares. The Distributor also receives a service fee of 0.25% per
year. Both fees are computed on the average annual net assets of
Class C shares, determined as of the close of each regular business
day. The asset-based sales charge allows investors to buy Class C
shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell Class C shares.
The Distributor uses the service fee to compensate dealers for
providing personal services for accounts that hold Class C shares.
Those services are similar to those provided under the Class A
Service Plan, described above. The asset-based sales charge and
service fees increase Class C expenses by 1.00% of average net
assets per year.
The Distributor pays the 0.25% service fee to dealers in
advance for the first year after Class C shares have been sold by
the dealer. After the shares have been held for a year, the
Distributor pays the fee on a quarterly basis. The Distributor pays
sales commissions of 0.75% of the purchase price to dealers from
its own resources at the time of sale. The total up-front
commission paid by the Distributor to the dealer at the time of
sale of Class C shares is 1.00% of the purchase price. The
Distributor plans to pay the asset-based sales charge as an ongoing
commission to the dealer on Class C shares that have been
outstanding for a year or more.
The Fund pays the asset-based sales charge to the Distributor
for its services rendered in connection with the distribution of
Class C shares. Those payments are at a fixed rate which is not
related to the Distributor's expenses. The services rendered by
the Distributor include paying and financing the payment of sales
commissions, service fees, and other costs of distributing and
selling Class C shares, including compensation of personnel of the
Distributor who support distribution of Class C shares. If the Plan
is terminated by the Fund, the Board of Trustees may allow the Fund
to continue payments of the service fee and/or asset-based sales
charge to the Distributor for distributing Class C shares before
the plan was terminated.
-- Waivers of Class B and Class C Sales Charges. The Class B
and Class C contingent deferred sales charges will not be applied
to shares purchased in certain types of transactions nor will it
apply to shares redeemed in certain circumstances as described
below. The reasons for this policy are in "Reduced Sales Charges"
in the Statement of Additional Information.
Waivers for Redemptions in Certain Cases. The Class B and
Class C contingent deferred sales charges will be waived for
redemptions of shares in the following cases:
- distributions to participants or beneficiaries from
Retirement Plans, if the distributions are made (a) under an
Automatic Withdrawal Plan after the participant reaches age 59-1/2,
as long as the payments are no more than 10% of the account value
annually (measured from the date the Transfer Agent received the
request), or (b) following the death or disability (as defined in
the Internal Revenue Code ("IRC")) of the participant or
beneficiary (the death or disability must have occurred after the
account was established);
- redemptions from accounts other than Retirement Plans
following the death or disability of the last surviving shareholder
(the death or disability must have occurred after the account was
established, and for disability you must provide evidence of a
determination of disability by the Social Security Administration);
- returns of excess contributions to Retirement Plans;
- distributions from IRAs (including SEP-IRAs and SAR/SEP
accounts) before the participant is age 59-1/2, and distributions
from 403(b)(7) custodial plans or pension or profit sharing plans
before the participant is age 59-1/2 but only after the participant
has separated from service, if the distributions are made in
substantially equal periodic payments over the life (or life
expectancy) of the participant or the joint lives (or joint life
and last survivor expectancy) of the participant and the
participant's designated beneficiary (and the distributions must
comply with other requirements for such distributions under the IRC
and may not exceed 10% of the account value annually, measured from
the date the Transfer Agent received the request);
- shares redeemed involuntarily, as described in "Shareholder
Account Rules and Policies," below; or
- distributions from OppenheimerFunds prototype 401(k) plans:
(1) for hardship withdrawals; (2) under a Qualified Domestic
Relations Order, as defined in the IRC; (3) to meet minimum
distribution requirements as defined in the IRC; (4) to make
"substantially equal periodic payments" as described in Section
72(t) of the IRC; (5) for separation from service.
Waivers for Shares Sold or Issued in Certain Transactions.
The contingent deferred sales charge is also waived on Class B and
Class C shares sold or issued in the following cases:
- shares sold to the Manager or its affiliates;
- shares sold to registered management investment companies or
separate accounts of insurance companies having an agreement with
the Manager or the Distributor for that purpose; or
- shares issued in plans or reorganization to which the Fund
is a party.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account
to your account at your bank or other financial institution to
enable you to send money electronically between those accounts to
perform a number of types of account transactions. These include
purchases of shares by telephone (either through a service
representative or by PhoneLink, described below), automatic
investments under Asset Builder Plans, and sending dividends and
distributions or Automatic Withdrawal Plan payments directly to
your bank account. Please refer to the Application for details or
call the Transfer Agent for more information.
AccountLink privileges must be requested on the Application
you use to buy shares, or on your dealer's settlement instructions
if you buy your shares through your dealer. After your account is
established, you can request AccountLink privileges on signature-
guaranteed instructions to the Transfer Agent. AccountLink
privileges will apply to each shareholder listed in the
registration on your account as well as to your dealer
representative of record unless and until the Transfer Agent
receives written instructions terminating or changing those
privileges. After you establish AccountLink for your account, any
change of bank account information must be made by signature-
guaranteed instructions to the Transfer Agent signed by all
shareholders who own the account.
-- Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase
shares in amounts up to $250,000 through a telephone
representative, call the Distributor at 1-800-852-8457. The
purchase payment will be debited from your bank account.
-- PhoneLink. PhoneLink is the OppenheimerFunds automated
telephone system that enables shareholders to perform a number of
account transactions automatically using a touch-tone phone.
PhoneLink may be used on already-established Fund accounts after
you obtain a Personal Identification Number (PIN), by calling the
special PhoneLink number: 1-800-533-3310.
- Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have
established AccountLink privileges to link your bank account with
the Fund, to pay for these purchases.
- Exchanging Shares. With the OppenheimerFunds exchange
privilege, described below, you can exchange shares automatically
by phone from your Fund account to another OppenheimerFunds account
you have already established by calling the special PhoneLink
number. Please refer to "How to Exchange Shares," below, for
details.
- Selling Shares. You can redeem shares by telephone
automatically by calling the PhoneLink number and the Fund will
send the proceeds directly to your AccountLink bank account.
Please refer to "How to Sell Shares," below, for details.
Automatic Withdrawal and Exchange Plans. Each Fund has several
plans that enable you to sell shares automatically or exchange them
to another OppenheimerFunds account on a regular basis:
-- Automatic Withdrawal Plans. If your Fund account is $5,000
or more, you can establish an Automatic Withdrawal Plan to receive
payments of at least $50 on a monthly, quarterly, semi-annual or
annual basis. The checks may be sent to you or sent automatically
to your bank account on AccountLink. You may even set up certain
types of withdrawals of up to $1,500 per month by telephone. You
should consult the Application and Statement of Additional
Information for more details.
-- Automatic Exchange Plans. You can authorize the Transfer
Agent to exchange an amount you establish in advance automatically
for shares of up to five other OppenheimerFunds on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange
Plan. The minimum purchase for each other OppenheimerFunds account
is $25. These exchanges are subject to the terms of the Exchange
Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class A
shares, you have up to 6 months to reinvest all or part of the
redemption proceeds in Class A shares of a Fund or other
OppenheimerFunds without paying a sales charge. This privilege
applies to Class A shares that you purchased subject to an initial
sales charge and to Class A shares on which you paid a contingent
deferred sales charge when you redeemed them. It does not apply to
Class C shares. Please consult the Statement of Additional
Information for more details.
Retirement Plans. Fund shares are available as an investment for
your retirement plans. If you participate in a plan sponsored by
your employer, the plan trustee or administrator must make the
purchase of shares for your retirement plan account. The
Distributor offers a number of different retirement plans that can
be used by individuals and employers:
- Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
- 403(b)(7) Custodial Plans for employees of eligible tax-
exempt organizations, such as schools, hospitals and charitable
organizations
- SEP-IRAs (Simplified Employee Pension Plans) for small
business owners or people with income from self-employment,
including SAR/SEP IRAs
- Pension and Profit-Sharing Plans for self-employed persons
and small business owners
- 401(k) prototype retirement plans for businesses
Please call the Distributor for the OppenheimerFunds plan
documents, which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account on any
regular business day by selling (redeeming) some or all of your
shares. Your shares will be sold at the next net asset value
calculated after your order is received and accepted by the
Transfer Agent. The Fund offers you a number of ways to sell your
shares: in writing or by telephone. You can also set up Automatic
Withdrawal Plans to redeem shares on a regular basis, as described
above. If you have questions about any of these procedures, and
especially if you are redeeming shares in a special situation, such
as due to the death of the owner, or from a retirement plan, please
call the Transfer Agent first, at 1-800-525-7048, for assistance.
-- Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must
submit a withholding form with your request to avoid delay. If your
retirement plan account is held for you by your employer, you must
arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the
Statement of Additional Information.
-- Certain Requests Require A Signature Guarantee. To protect
you and each Fund from fraud, certain redemption requests must be
in writing and must include a signature guarantee in the following
situations (there may be other situations also requiring a
signature guarantee):
- You wish to redeem more than $50,000 worth of shares and
receive a check
- The redemption check is not payable to all shareholders
listed on the account statement
- The redemption check is not sent to the address of record on
your statement
- Shares are being transferred to a Fund account with a
different owner or name
- Shares are redeemed by someone other than the owners (such
as an Executor)
-- Where Can I Have My Signature Guaranteed? The Transfer
Agent will accept a guarantee of your signature by a number of
financial institutions, including: a U.S. bank, trust company,
credit union or savings association, or by a foreign bank that has
a U.S. correspondent bank, or by a U.S. registered dealer or broker
in securities, municipal securities or government securities, or by
a U.S. national securities exchange, a registered securities
association or a clearing agency. If you are signing as a fiduciary
or on behalf of a corporation, partnership or other business, you
must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that
includes:
- Your name
- The Fund's name
- Your Fund account number (from your account statement)
- The dollar amount or number of shares to be redeemed
- Any special payment instructions
- Any share certificates for the shares you are selling,
- The signatures of all registered owners exactly as the
account is registered, and
- Any special requirements or documents requested by the
Transfer Agent to assure proper authorization of the person asking
to sell shares.
Use the following address for Send courier or Express Mail
request by mail: requests to:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Avenue, Building
D
Denver, Colorado 80217 Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of
record may also sell your shares by telephone. To receive the
redemption price on a regular business day, your call must be
received by the Transfer Agent by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M. but may be earlier
on some days. Shares held in an OppenheimerFunds retirement plan
or under a share certificate may not be redeemed by telephone.
- To redeem shares through a service representative, call 1-
800-852-8457
- To redeem shares automatically on PhoneLink, call 1-800-533-
3310
Whichever method you use, you may have a check sent to the
address on the account statement, or, if you have linked your Fund
account to your bank account on AccountLink, you may have the
proceeds wired to that bank account.
-- Telephone Redemptions Paid by Check. Up to $50,000 may be
redeemed by telephone, once in each 7-day period. The check must
be payable to all owners of record of the shares and must be sent
to the address on the account. This service is not available
within 30 days of changing the address on an account.
-- Telephone Redemptions Through AccountLink. There are no
dollar limits on telephone redemption proceeds sent to a bank
account designated when you establish AccountLink. Normally the ACH
wire to your bank is initiated on the business day after the
redemption. You do not receive dividends on the proceeds of the
shares you redeemed while they are waiting to be wired.
Selling Shares Through Your Dealer. The Distributor has made
arrangements to repurchase Fund shares from dealers and brokers on
behalf of their customers. Brokers or dealers may charge for that
service. Please refer to "Special Arrangements for Repurchase of
Shares from Dealers and Brokers" in the Statement of Additional
Information for more details.
How to Exchange Shares
Shares of the Funds may be exchanged for shares of certain
OppenheimerFunds at net asset value per share at the time of
exchange, without sales charge. To exchange shares, you must meet
several conditions:
- Shares of the fund selected for exchange must be available
for sale in your state of residence
- The prospectuses of this Fund and the fund whose shares you
want to buy must offer the exchange privilege
- You must hold the shares you buy when you establish your
account for at least 7 days before you can exchange them; after the
account is open 7 days, you can exchange shares every regular
business day
- You must meet the minimum purchase requirements for the fund
you purchase by exchange
- Before exchanging into a fund, you should obtain and read
its prospectus
Shares of a particular class may be exchanged only for shares
of the same class in the other OppenheimerFunds. For example, you
can exchange Class A shares of this Fund only for Class A shares of
another fund. At present, Oppenheimer Money Market Fund, Inc.
offers only one class of shares, which are considered Class A
shares for this purpose. In some cases, sales charges may be
imposed on exchange transactions. Please refer to "How to Exchange
Shares" in the Statement of Additional Information for more
details.
Exchanges may be requested in writing or by telephone:
-- Written Exchange Requests. Submit an OppenheimerFunds
Exchange Request form, signed by all owners of the account. Send
it to the Transfer Agent at the addresses listed in "How to Sell
Shares."
-- Telephone Exchange Requests. Telephone exchange requests
may be made either by calling a service representative at 1-800-
852-8457 or by using PhoneLink for automated exchanges, by calling
1-800-533-3310. Telephone exchanges may be made only between
accounts that are registered with the same name(s) and address.
Shares held under certificates may not be exchanged by telephone.
You can find a list of OppenheimerFunds currently available
for exchanges in the Statement of Additional Information or by
calling a service representative at 1-800-525-7048. Exchanges of
shares involve a redemption of the shares of the fund you own and
a purchase of shares of the other fund.
There are certain exchange policies you should be aware of:
- Shares are normally redeemed from one fund and purchased
from the other fund in the exchange transaction on the same regular
business day on which the Transfer Agent receives an exchange
request that is in proper form by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M. but may be earlier
on some days. However, either fund may delay the purchase of
shares of the fund you are exchanging into if it determines it
would be disadvantaged by a same-day transfer of the proceeds to
buy shares. For example, the receipt of multiple exchange requests
from a dealer in a "market-timing" strategy might require the
disposition of securities at a time or price disadvantageous to the
Fund.
- Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange
request that will disadvantage it, or to refuse multiple exchange
requests submitted by a shareholder or dealer.
- The Fund may amend, suspend or terminate the exchange
privilege at any time. Although the Fund will attempt to provide
you notice whenever it is reasonably able to do so, it may impose
these changes at any time.
- If the Transfer Agent cannot exchange all the shares you
request because of a restriction cited above, only the shares
eligible for exchange will be exchanged.
Shareholder Account Rules and Policies
-- Net Asset Value Per Share is determined for each class of
shares as of the close of the New York Stock Exchange, which is
normally 4:00 P.M. but may be earlier on some days, on each day the
Exchange is open by dividing the value of each Fund's net assets
attributable to a class by the number of shares of that class that
are outstanding. The Fund's Board of Trustees has established
procedures to value each Fund's securities to determine net asset
value. In general, securities values are based on market value.
There are special procedures for valuing illiquid and restricted
securities and obligations for which market values cannot be
readily obtained. These procedures are described more completely
in the Statement of Additional Information.
-- The offering of shares may be suspended during any period
in which the determination of net asset value is suspended, and the
offering may be suspended by the Board of Trustees at any time the
Board believes it is in the Fund's best interest to do so.
-- Telephone Transaction Privileges for purchases, redemptions
or exchanges may be modified, suspended or terminated by the Funds
at any time. If an account has more than one owner, the Fund and
the Transfer Agent may rely on the instructions of any one owner.
Telephone privileges apply to each owner of the account and the
dealer representative of record for the account unless and until
the Transfer Agent receives cancellation instructions from an owner
of the account.
-- The Transfer Agent will record any telephone calls to
verify data concerning transactions and has adopted other
procedures to confirm that telephone instructions are genuine, by
requiring callers to provide tax identification numbers and other
account data or by using PINs, and by confirming such transactions
in writing. If the Transfer Agent does not use reasonable
procedures it may be liable for losses due to unauthorized
transactions, but otherwise neither it nor a Fund will be liable
for losses or expenses arising out of telephone instructions
reasonably believed to be genuine. If you are unable to reach the
Transfer Agent during periods of unusual market activity, you may
not be able to complete a telephone transaction and should consider
placing your order by mail.
-- Redemption or transfer requests will not be honored until
the Transfer Agent receives all required documents in proper form.
From time to time, the Transfer Agent in its discretion may waive
certain of the requirements for redemptions stated in this
Prospectus.
-- Dealers that can perform account transactions for their
clients by participating in NETWORKING through the National
Securities Clearing Corporation are responsible for obtaining their
clients' permission to perform those transactions and are
responsible to their clients who are shareholders of the Fund if
the dealer performs any transaction erroneously.
-- The redemption price for shares will vary from day to day
because the value of the securities in each Fund's portfolio
fluctuates, and the redemption price, which is the net asset value
per share, will normally be different for Class A, Class B and
Class C shares. Therefore, the redemption value of your shares may
be more or less than their original cost.
-- Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the
shareholder under the redemption procedures described above) within
7 days after the Transfer Agent receives redemption instructions in
proper form, except under unusual circumstances determined by the
Securities and Exchange Commission delaying or suspending such
payments. For accounts registered in the name of a broker-dealer,
payment will be forwarded within 3 business days. The Transfer
Agent may delay forwarding a check or processing a payment via
AccountLink for recently purchased shares, but only until the
purchase payment has cleared. That delay may be as much as 10 days
from the date the shares were purchased. That delay may be avoided
if you purchase shares by certified check or arrange with your bank
to provide telephone or written assurance to the Transfer Agent
that your purchase payment has cleared.
-- Involuntary redemptions of small accounts may be made by
the Fund if the account value has fallen below $500 for reasons
other than the fact that the market value of shares has dropped,
and in some cases involuntary redemptions may be made to repay the
Distributor for losses from the cancellation of share purchase
orders.
-- Under unusual circumstances, shares of a Fund may be
redeemed "in kind", which means that the redemption proceeds will
be paid with securities from the Fund's portfolio. Please refer to
the Statement of Additional Information for more details.
-- "Backup Withholding" of Federal income tax may be applied
at the rate of 31% from dividends, distributions and redemption
proceeds (including exchanges) if you fail to furnish the Fund a
certified Social Security or taxpayer identification number when
you sign your application, or if you violate Internal Revenue
Service regulations on tax reporting of dividends.
-- The Fund does not charge a redemption fee, but if your
dealer or broker handles your redemption, they may charge a fee.
That fee can be avoided by redeeming your Fund shares directly
through the Transfer Agent. Under the circumstances described in
"How To Buy Shares," you may be subject to a contingent deferred
sales charges when redeeming certain Class A, Class B and Class C
shares.
-- To avoid sending duplicate copies of materials to
households, each Fund will mail only one copy of each annual and
semi-annual report to shareholders having the same last name and
address on the Fund's records. However, each shareholder may call
the Transfer Agent at 1-800-525-7048 to ask that copies of those
materials be sent personally to that shareholder.
-- Transfer Agent and Shareholder Servicing Agent. The
transfer agent and shareholder servicing agent is OppenheimerFunds
Services, a division of the Manager, whose address is P.O. Box
5270, Denver Colorado 80217. Unified Management Corporation
(1-800-346-4601) is the shareholder servicing agent for former
shareholders of the AMA Family of Funds and clients of AMA
Investment Advisers, L.P. who acquire shares of the Fund, and for
former shareholders of the Unified Funds and Liquid Green Trusts,
accounts which participated or participate in a retirement plan for
which Unified Investment Advisers, Inc. or an affiliate acts as
custodian or trustee, and other accounts for which Unified
Management Corporation is the dealer of record.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class
A, Class B and Class C shares from net investment income on an
annual basis and normally pays those dividends to shareholders
following the end of its fiscal year, which is October 31.
Dividends paid on Class A shares generally are expected to be
higher than for Class B and Class C shares because expenses
allocable to Class B and Class C shares will generally be higher
than for Class A shares. There is no fixed dividend rate and there
can be no assurance as to the payment of any dividends.
Capital Gains. The Fund may make distributions annually in December
out of any net short-term or long-term capital gains, and the Fund
may make supplemental distributions of dividends and capital gains
following the end of its fiscal year. Short-term capital gains are
treated as dividends for tax purposes. Long-term capital gains will
be separately identified in the tax information the Fund sends you
after the end of the calendar year. There can be no assurances
that the Fund will pay any capital gains distributions in a
particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are
reinvested. For other accounts, you have four options:
-- Reinvest All Distributions in the Fund. You can elect to
reinvest all dividends and long-term capital gains distributions in
additional shares of the Fund.
-- Reinvest Capital Gains Only. You can elect to reinvest
long-term capital gains in the Fund while receiving dividends by
check or sent to your bank account on AccountLink.
-- Receive All Distributions in Cash. You can elect to receive
a check for all dividends and long-term capital gains distributions
or have them sent to your bank on AccountLink.
-- Reinvest Your Distributions in Another OppenheimerFunds
Account. You can reinvest all distributions in another
OppenheimerFunds account you have established.
Taxes. If your account is not a tax-deferred retirement account,
you should be aware of the following tax implications of investing
in a Fund. Long-term capital gains are taxable as long-term capital
gains when distributed to shareholders. It does not matter how
long you held your shares. Dividends paid from short-term capital
gains and net investment income are taxable as ordinary income.
Distributions are subject to federal income tax and may be subject
to state or local taxes. Your distributions are taxable when paid,
whether you reinvest them in additional shares or take them in
cash. Every year each Fund will send you and the IRS a statement
showing the amount of each taxable distribution you received in the
previous year.
-- "Buying a Dividend": When a Fund goes ex-dividend, its
share price is reduced by the amount of the distribution. If you
buy shares on or just before the ex-dividend date, or just before
the Fund declares a capital gains distribution, you will pay the
full price for the shares and then receive a portion of the price
back as a taxable dividend or capital gain.
-- Taxes on Transactions: Share redemptions, including
redemptions for exchanges, are subject to capital gains tax. A
capital gain or loss is the difference between the price you paid
for the shares and the price you received when you sold them.
-- Returns of Capital: In certain cases distributions made by
a Fund may be considered a non-taxable return of capital to
shareholders. If that occurs, it will be identified in notices to
shareholders. A non-taxable return of capital may reduce your tax
basis in your Fund shares.
This information is only a summary of certain federal tax
information about your investment. More information is contained
in the Statement of Additional Information, and in addition you
should consult with your tax adviser about the effect of an
investment in a Fund on your particular tax situation.
<PAGE>
APPENDIX A
Special Sales Charge Arrangements for Shareholders
of the Former Quest for Value Funds
The initial and contingent sales charge rates and waivers for
Class A, Class B and Class C shares described elsewhere in this
Prospectus are modified as described below for those shareholders
of (i) Quest for Value Fund, Inc., Quest for Value Growth and
Income Fund, Quest for Value Opportunity Fund, Quest for Value
Small Capitalization Fund and Quest for Value Global Equity Fund,
Inc. on November 24, 1995, when OppenheimerFunds, Inc. became the
investment adviser to those funds, and (ii) Quest for Value U.S.
Government Income Fund, Quest for Value Investment Quality Income
Fund, Quest for Value Global Income Fund, Quest for Value New York
Tax-Exempt Fund, Quest for Value National Tax-Exempt Fund and Quest
for Value California Tax-Exempt Fund when those funds merged into
various Oppenheimer funds on November 24, 1995. The funds listed
above are referred to in this Prospectus as the "Former Quest for
Value Funds."
Class A Sales Charges
- -- Reduced Class A Initial Sales Charge Rates for Certain Former
Quest Shareholders
- - Purchases by Groups, Associations and Certain Qualified
Retirement Plans. The following table sets forth the initial sales
charge rates for Class A shares purchased by a "Qualified
Retirement Plan" through a single broker, dealer or financial
institution, or by members of "Associations" formed for any purpose
other than the purchase of securities if that Qualified Retirement
Plan or that Association purchased shares of any of the Former
Quest for Value Funds or received a proposal to purchase such
shares from OCC Distributors prior to November 24, 1995. For this
purpose only, a "Qualified Retirement Plan" includes any 401(k)
plan, 403(b) plan, and SEP/IRA or IRA plan for employees of a
single employer.
Front-End Front-End
Sales Sales Commission
Charge Charge as
as a as a Percentage
Number of Percentage Percentage of
Eligible Employees of Offering of Amount Offering
or Members Price Invested Price
9 or fewer 2.50% 2.56% 2.00%
At least 10 but not
more than 49 2.00% 2.04% 1.60%
For purchases by Qualified Retirement plans and Associations
having 50 or more eligible employees or members, there is no
initial sales charge on purchases of Class A shares, but those
shares are subject to the Class A contingent deferred sales charge
described on pages 29 to 30 of this Prospectus.
Purchases made under this arrangement qualify for the lower of
the sales charge rate in the table based on the number of eligible
employees in a Qualified Retirement Plan or members of an
Association or the sales charge rate that applies under the Rights
of Accumulation described above in the Prospectus. In addition,
purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they
qualified to purchase shares of any of the Former Quest For Value
Funds by virtue of projected contributions or investments of $1
millon or more each year. Individuals who qualify under this
arrangement for reduced sales charge rates as members of
Associations, or as eligible employees in Qualified Retirement
Plans also may purchase shares for their individual or custodial
accounts at these reduced sales charge rates, upon request to the
Fund's Distributor.
- -- Special Class A Contingent Deferred Sales Charge Rates
Class A shares of the Fund purchased by exchange of shares of other
Oppenheimer funds that were acquired as a result of the merger of
Former Quest for Value Funds into those Oppenheimer Funds, and
which shares were subject to a Class A contingent deferred sales
charge prior to November 24, 1995 will be subject to a contingent
deferred sales charge at the following rates: if they are redeemed
within 18 months of the end of the calendar month in which they
were purchased, at a rate equal to 1.0% if the redemption occurs
within 12 months of their initial purchase and at a rate of 0.50 of
1.0% if the redemption occurs in the subsequent six months. Class
A shares of any of the Former Quest for Value Funds purchased
without an initial sales charge on or before November 22, 1995 will
continue to be subject to the applicable contingent deferred sales
charge in effect as of that date as set forth in the then-current
prospectus for such fund.
- -- Waiver of Class A Sales Charges for Certain Shareholders
Class A shares of the Fund purchased by the following investors are
not subject to any Class A initial or contingent deferred sales
charges:
- Shareholders of the Fund who were shareholders of the AMA
Family of Funds on February 28, 1991 and who acquired shares of any
of the Former Quest for Value Funds by merger of a portfolio of the
AMA Family of Funds.
- Shareholders of the Fund who acquired shares of any Former
Quest for Value Fund by merger of any of the portfolios of the
Unified Funds.
- -- Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions
The Class A contingent deferred sales charge will not apply to
redemptions of Class A shares of the Fund purchased by the
following investors who were shareholders of any Former Quest for
Value Fund:
- Investors who purchased Class A shares from a dealer that is
or was not permitted to receive a sales load or redemption fee
imposed on a shareholder with whom that dealer has a fiduciary
relationship under the Employee Retirement Income Security Act of
1974 and regulations adopted under that law.
- Participants in Qualified Retirement Plans that purchased
shares of any of the Former Quest For Value Funds pursuant to a
special "strategic alliance" with the distributor of those funds.
The Fund's Distributor will pay a commission to the dealer for
purchases of Fund shares as described above in "Class A Contingent
Deferred Sales Charge."
Class A, Class B and Class C Contingent Deferred Sales Charge
Waivers
- -- Waivers for Redemptions of Shares Purchased Prior to March 6,
1995
In the following cases, the contingent deferred sales charge will
be waived for redemptions of Class A, B or C shares of the Fund if
those shares were purchased prior to March 6, 1995: in connection
with (i) distributions to participants or beneficiaries of plans
qualified under Section 401(a) of the Internal Revenue Code or from
custodial accounts under Section 403(b)(7) of the Code, Individual
Retirement Accounts, deferred compensation plans under Section 457
of the Code, and other employee benefit plans, and returns of
excess contributions made to each type of plan, (ii) withdrawals
under an automatic withdrawal plan holding only either Class B or
C shares if the annual withdrawal does not exceed 10% of the
initial value of the account, and (iii) liquidation of a
shareholder's account if the aggregate net asset value of shares
held in the account is less than the required minimum value of such
accounts.
- -- Waivers for Redemptions of Shares Purchased on or After March
6, 1995 but Prior to November 24, 1995.
In the following cases, the contingent deferred sales charge will
be waived for redemptions of Class A, B or C shares of the Fund if
those shares were purchased on or after March 6, 1995, but prior to
November 24, 1995: (1) distributions to participants or
beneficiaries from Individual Retirement Accounts under
Section 408(a) of the Internal Revenue Code or retirement plans
under Section 401(a), 401(k), 403(b) and 457 of the Code, if those
distributions are made either (a) to an individual participant as
a result of separation from service or (b) following the death or
disability (as defined in the Code) of the participant or
beneficiary; (2) returns of excess contributions to such retirement
plans; (3) redemptions other than from retirement plans following
the death or disability of the shareholder(s) (as evidenced by a
determination of total disability by the U.S. Social Security
Administration); (4) withdrawals under an automatic withdrawal plan
(but only for Class B or C shares) where the annual withdrawals do
not exceed 10% of the initial value of the account; and
(5) liquidation of a shareholder's account if the aggregate net
asset value of shares held in the account is less than the required
minimum account value. A shareholder's account will be credited
with the amount of any contingent deferred sales charge paid on the
redemption of any Class A, B or C shares of the Fund described in
this section if within 90 days after that redemption, the proceeds
are invested in the same Class of shares in this Fund or another
Oppenheimer fund.
Special Dealer Arrangements
Dealers who sold Class B shares of a Former Quest for Value Fund to
Quest for Value prototype 401(k) plans that were maintained on the
TRAC-2000 recordkeeping system and that were transferred to an
OppenheimerFunds prototype 401(k) plan shall be eligible for an
additional one-time payment by the Distributor of 1% of the value
of the plan assets transferred, but that payment may not exceed
$5,000 as to any one plan.
Dealers who sold Class C shares of a Former Quest for Value Fund to
Quest for Value prototype 401(k) plans that were maintained on the
TRAC-2000 recordkeeping system and (i) the shares held by those
plans were exchanged for Class A shares, or (ii) the plan assets
were transferred to an OppenheimerFunds prototype 401(k) plan,
shall be eligible for an additional one-time payment by the
Distributor of 1% of the value of the plan assets transferred, but
that payment may not exceed $5,000.
<PAGE>
Appendix B
DESCRIPTION OF RATINGS
Bond Ratings
- -- Moody's Investors Service, Inc.
Aaa: Bonds which are rated "Aaa" are judged to be the best quality
and to carry the smallest degree of investment risk. Interest
payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective
elements are likely to change, the changes that can be expected are
most unlikely to impair the fundamentally strong position of such
issues.
Aa: Bonds which are rated "Aa" are judged to be of high quality by
all standards. Together with the "Aaa" group, they comprise what
are generally known as "high-grade" bonds. They are rated lower
than the best bonds because margins of protection may not be as
large as with "Aaa" securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than
those of "Aaa" securities.
A: Bonds which are rated "A" possess many favorable investment
attributes and are to be considered as upper-medium grade
obligations. Factors giving security to principal and interest are
considered adequate but elements may be present which suggest a
susceptibility to impairment sometime in the future.
Baa: Bonds which are rated "Baa" are considered medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and have
speculative characteristics as well.
Ba: Bonds which are rated "Ba" are judged to have speculative
elements; their future cannot be considered well-assured. Often
the protection of interest and principal payments may be very
moderate and not well safeguarded during both good and bad times
over the future. Uncertainty of position characterizes bonds in
this class.
B: Bonds which are rated "B" generally lack characteristics of
desirable investment. Assurance of interest and principal payments
or of maintenance of other terms of the contract over any long
period of time may be small.
Caa: Bonds which are rated "Caa" are of poor standing and may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca: Bonds which are rated "Ca" represent obligations which are
speculative in a high degree and are often in default or have other
marked shortcomings.
C: Bonds which are rated "C" can be regarded as having extremely
poor prospects of ever retaining any real investment standing.
- -- Standard & Poor's Corporation
AAA: "AAA" is the highest rating assigned to a debt obligation and
indicates an extremely strong capacity to pay principal and
interest.
AA: Bonds rated "AA" also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the
majority of instances they differ from "AAA" issues only in small
degree.
A: Bonds rated "A" have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to adverse
effects of change in circumstances and economic conditions.
BBB: Bonds rated "BBB" are regarded as having an adequate capacity
to pay principal and interest. Whereas they normally exhibit
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
principal and interest for bonds in this category than for bonds in
the "A" category.
BB, B, CCC, CC: Bonds rated "BB," "B," "CCC" and "CC" are regarded,
on balance, as predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance
with the terms of the obligation. "BB" indicates the lowest degree
of speculation and "CC" the highest degree. While such bonds will
likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to
adverse conditions.
C, D: Bonds on which no interest is being paid are rated "C."
Bonds rated "D" are in default and payment of interest and/or
repayment of principal is in arrears.
- -- Fitch Investors Service, Inc.
AAA Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected
by reasonably foreseeable events.
AA Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated "AAA."
Because bonds rated in the "AAA" and "AA" categories are not
significantly vulnerable to foreseeable future developments, short-
term debt of these issuers is generally rated "F-1+."
A Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal
is considered to be strong, but may be more vulnerable to adverse
changes in economic conditions and circumstances than bonds with
higher ratings.
BBB Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in
economic conditions and circumstances, however, are more likely to
have adverse impact on these bonds, and therefore impair timely
payment. The likelihood that the ratings of these bonds will fall
below investment grade is higher than for bonds with higher
ratings.
BB Bonds are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can
be identified which could assist the obligor in satisfying its debt
service requirements.
B Bonds are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the
probability of continued timely payment of principal and interest
reflects the obligor's limited margin of safety and the need for
reasonable business and economic activity through the life of the
issue.
CCC Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.
CC Bonds are minimally protected. Default in payment of interest
and/or principal seems probable over time.
C Bonds are in imminent default in payment of interest or
principal.
DDD, DD, and D Bonds are in default on interest and/or principal
payments. Such bonds are extremely speculative and should be
valued on the basis of their ultimate recovery value in liquidation
or reorganization of the obligor. "DDD" represents the highest
potential for recovery of these bonds, and "D" represents the
lowest potential for recovery.
Plus (+) Minus (-) Plus and minus signs are used with a rating
symbol to indicate the relative position of a credit within the
rating category. Plus and minus signs, however, are not used in
the "DDD," "DD," or "D" categories.
Short-Term Debt Ratings.
- -- Moody's Investors Service, Inc. The following rating
designations for commercial paper (defined by Moody's as promissory
obligations not having original maturity in excess of nine months),
are judged by Moody's to be investment grade, and indicate the
relative repayment capacity of rated issuers:
Prime-1: Superior capacity for repayment. Capacity will normally
be evidenced by the following characteristics: (a) leveling market
positions in well-established industries; (b) high rates of return
on funds employed; (c) conservative capitalization structures with
moderate reliance on debt and ample asset protection; (d) broad
margins in earning coverage of fixed financial charges and high
internal cash generation; and (e) well established access to a
range of financial markets and assured sources of alternate
liquidity.
Prime-2: Strong capacity for repayment. This will normally be
evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound,
will be more subject to variation. Capitalization characteristics,
while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
Moody's ratings for state and municipal short-term obligations are
designated "Moody's Investment Grade" ("MIG"). Short-term notes
which have demand features may also be designated as "VMIG". These
rating categories are as follows:
MIG1/VMIG1: Best quality. There is present strong protection by
established cash flows, superior liquidity support or demonstrated
broadbased access to the market for refinancing.
MIG2/VMIG2: High quality. Margins of protection are ample
although not so large as in the preceding group.
- -- Standard & Poor's Corporation ("S&P"): The following ratings by
S&P for commercial paper (defined by S&P as debt having an original
maturity of no more than 365 days) assess the likelihood of
payment:
A-1: Strong capacity for timely payment. Those issues determined
to possess extremely strong safety characteristics are denoted with
a plus sign (+) designation.
A-2: Satisfactory capacity for timely payment. However, the
relative degree of safety is not as high as for issues designated
"A-1".
S&P's ratings for Municipal Notes due in three years or less are:
SP-1: Very strong or strong capacity to pay principal and
interest. Those issues determined to possess overwhelming safety
characteristics will be given a plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest.
S&P assigns "dual ratings" to all municipal debt issues that have
a demand or double feature as part of their provisions. The first
rating addresses the likelihood of repayment of principal and
interest as due, and the second rating addresses only the demand
feature. With short-term demand debt, S&P's note rating symbols
are used with the commercial paper symbols (for example, "SP-1+/A-
1+").
- -- Fitch Investors Service, Inc. Fitch assigns the following
short-term ratings to debt obligations that are payable on demand
or have original maturities of generally up to three years,
including commercial paper, certificates of deposit, medium-term
notes, and municipal and investment notes:
F-1+: Exceptionally strong credit quality; the strongest degree of
assurance for timely payment.
F-1: Very strong credit quality; assurance of timely payment is
only slightly less in degree than issues rated "F-1+".
F-2: Good credit quality; satisfactory degree of assurance for
timely payment, but the margin of safety is not as great as for
issues assigned "F-1+" or "F-1" ratings.
- -- Duff & Phelps, Inc. The following ratings are for commercial
paper (defined by Duff & Phelps as obligations with maturities,
when issued, of under one year), asset-backed commercial paper, and
certificates of deposit (the ratings cover all obligations of the
institution with maturities, when issued, of under one year,
including bankers' acceptance and letters of credit):
Duff 1+: Highest certainty of timely payment. Short-term
liquidity, including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is just
below risk-free U.S. Treasury short-term obligations.
Duff 1: Very high certainty of timely payment. Liquidity factors
are excellent and supported by good fundamental protection factors.
Risk factors are minor.
Duff 1-: High certainty of timely payment. Liquidity factors are
strong and supported by good fundamental protection factors. Risk
factors are very small.
Duff 2: Good certainty of timely payment. Liquidity factors and
company fundamentals are sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital markets is
good. Risk factors are small.
- -- IBCA Limited or its affiliate IBCA Inc. Short-term ratings,
including commercial paper (with maturities up to 12 months), are
as follows:
A1+: Obligations supported by the highest capacity for timely
repayment.
A1: Obligations supported by a very strong capacity for timely
repayment.
A2: Obligations supported by a strong capacity for timely
repayment, although such capacity may be susceptible to adverse
changes in business, economic, or financial conditions.
- -- Thomson BankWatch, Inc. The following short-term ratings apply
to commercial paper, certificates of deposit, unsecured notes, and
other securities having a maturity of one year or less.
TBW-1: The highest category; indicates the degree of safety
regarding timely repayment of principal and interest is very
strong.
TBW-2: The second highest rating category; while the degree of
safety regarding timely repayment of principal and interest is
strong, the relative degree of safety is not as high as for issues
rated "TBW-1".
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER QUEST OFFICERS VALUE FUND
Graphic material included in Prospectus of Oppenheimer Quest
Officers Value Fund: "Comparison of Total Return of Oppenheimer
Quest Officers Value Fund with the S&P 400 Mid-Cap Index - Change
in Value of $10,000 Hypothetical Investment in Class A Shares of
Oppenheimer Quest Officers Value Fund and the S&P 400 Mid-Cap
Index"
A linear graph will be included in the Prospectus of
Oppenheimer Quest Value Fund (the "Fund") depicting the initial
account value and subsequent account value of a hypothetical
$10,000 investment in the Fund. That graph will cover the
performance of Class A shares of the Fund since inception (November
8, 1994) 10/31/95; Class B and Class C shares are not included as
such shares are not currently issued. The graph will compare such
values with hypothetical $10,000 investment over the same time
period in the S&P 400 Index. Set forth below are the relevant data
points that will appear on the linear graph. Additional
information with respect to the foregoing, including a description
of the S&P 400 Mid-Cap Index, is set forth in the Prospectus under
"Performance of the Fund - Comparing the Fund's Performance to the
Market."
Fiscal Period Oppenheimer Quest S&P 400
Ended Officers Value Fund Index
11/08/94 $10,000 $10,000
10/31/95 $12,344 $12,332
Oppenheimer Quest Officers Value Fund
Two World Trade Center
New York, NY 10048-0203
1-800-525-7048
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Sub-Adviser
OpCap Advisors
One World Financial Center
New York, New York 10281
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
State Street Bank and Trust Company
P.O. Box 8505
Boston, Massachusetts 02266-8505
Independent Auditors
Price Waterhouse LLP
950 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, broker, salesperson or any other person has been
authorized to give any information or to make any representations
other than those contained in this Prospectus or the Additional
Statement, and if given or made, such information and
representations must not be relied upon as having been authorized
by the Fund, OppenheimerFunds, Inc., OppenheimerFunds Distributor,
Inc. or any affiliate thereof. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any state to any person to whom it is
unlawful to make such an offer in such state.
prosp\229psp.#1
<PAGE>
OPPENHEIMER QUEST OFFICERS VALUE FUND
Two World Trade Center, New York, New York 10048
1-800-525-7048
Statement of Additional Information dated February 15, 1996
This document contains additional information about the Fund and
supplements information in the Prospectus dated February 15, 1996.
It should be read together with the Prospectus, which may be
obtained upon written request to the Fund's Transfer Agent,
OppenheimerFunds Services at P.O. Box 5270, Denver, Colorado 80217,
or by calling the Transfer Agent at the toll-free number shown
above.
Contents
Page
About the Fund
Investment Objective and Policies
Investment Policies and Strategies
Other Investment Techniques and Strategies
Other Investment Restrictions
How the Fund is Managed
Organization and History
Trustees and Officers of the Fund
The Manager and Its Affiliates
Brokerage Policies of the Fund
Performance of the Fund
Distribution and Service Plans
About Your Account
How To Buy Shares
How To Sell Shares
How To Exchange Shares
Dividends, Capital Gains and Taxes
Additional Information About the Fund
Financial Information About the Fund
Independent Auditors' Report
Financial Statements
Appendix A: Corporate Industry Classifications A-1
<PAGE>
ABOUT THE FUND
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and
policies of the Fund are described in the Prospectus. The Fund is
one of four portfolios of Oppenheimer Quest for Value Funds (the
"Trust"). Set forth below is supplemental information about those
policies and the types of securities in which the Fund invests, as
well as the strategies the Fund may use to try to achieve its
objective. Capitalized terms used in this Statement of Additional
Information have the same meaning as those terms have in the
Prospectus.
-- Foreign Securities. "Foreign securities" include equity
and debt securities of companies organized under the laws of
countries other than the United States and debt securities of
foreign governments that are traded on foreign securities exchanges
or in the foreign over-the-counter markets. Securities of foreign
issuers that are represented by American Depository Receipts or
that are listed on a U.S. securities exchange or traded in the U.S.
over-the-counter markets are not considered "foreign securities"
for the purpose of the Fund's investment allocations, because they
are not subject to many of the special considerations and risks,
discussed below, that apply to foreign securities traded and held
abroad. In connection with purchases on foreign securities
exchanges, although the Fund may purchase securities issued by
companies in any country, developed or underdeveloped, the Fund
does not presently intend to purchase securities issued by
companies in underdeveloped countries.
Investing in foreign securities offers potential benefits not
available from investing solely in securities of domestic issuers,
including the opportunity to invest in foreign issuers that appear
to offer growth potential, or in foreign countries with economic
policies or business cycles different from those of the U.S., or to
reduce fluctuations in portfolio value by taking advantage of
foreign stock markets that do not move in a manner parallel to U.S.
markets. If the Fund's portfolio securities are held abroad, the
countries in which they may be held and the sub-custodians holding
them must be approved by the Trust's Board of Trustees where
required under applicable rules of the Securities and Exchange
Commission (the "SEC").
- Risks of Foreign Investing. Investments in foreign
securities present special additional risks and considerations not
typically associated with investments in domestic securities:
reduction of income by foreign taxes; fluctuation in value of
foreign portfolio investments due to changes in currency rates and
control regulations (e.g., currency blockage); transaction charges
for currency exchange; lack of public information about foreign
issuers; lack of uniform accounting, auditing and financial
reporting standards comparable to those applicable to domestic
issuers; less volume on foreign exchanges than on U.S. exchanges;
greater volatility and less liquidity on foreign markets than in
the U.S.; less regulation of foreign issuers, stock exchanges and
brokers than in the U.S.; greater difficulties in commencing
lawsuits and obtaining judgments in foreign courts; higher
brokerage commission rates than in the U.S.; increased risks of
delays in settlement of portfolio transactions or loss of
certificates for portfolio securities; possibilities in some
countries of expropriation, confiscatory taxation, political,
financial or social instability or adverse diplomatic developments;
and unfavorable differences between the U.S. economy and foreign
economies. In the past, U.S. Government policies have discouraged
certain investments abroad by U.S. investors, through taxation or
other restrictions, and it is possible that such restrictions could
be re-imposed.
-- U.S. Government Securities. Obligations of U.S. Government
agencies or instrumentalities (including mortgage-backed
securities) may or may not be guaranteed or supported by the "full
faith and credit" of the United States. Some are backed by the
right of the issuer to borrow from the U.S. Treasury; others, by
discretionary authority of the U.S. Government to purchase the
agencies' obligations; while others are supported only by the
credit of the instrumentality. All U.S. Treasury obligations are
backed by the full faith and credit of the United States. If the
securities are not backed by the full faith and credit of the
United States, the owner of the securities must look principally to
the agency issuing the obligation for repayment and may not be able
to assert a claim against the United States in the event that the
agency or instrumentality does not meet its commitment. The Fund
will invest in U.S. Government Securities of such agencies and
instrumentalities only when the Manager is satisfied that the
credit risk with respect to such instrumentality is minimal.
Money Market Securities. As stated in the Prospectus, the
Fund typically invests a part of its assets in money market
securities, and may invest up to 100% of its total assets in money
market securities for temporary defensive purposes. Money market
securities in which the Fund may invest include the following:
- Time Deposits and Variable Rate Notes. The Fund may invest
in fixed time deposits, whether or not subject to withdrawal
penalties. However, investment in such deposits which are subject
to withdrawal penalties, other than overnight deposits, are subject
to the 15% limit on illiquid investments set forth in the
Prospectus for the Fund.
The commercial paper obligations which the Fund may buy are
unsecured and may include variable rate notes. The nature and
terms of a variable rate note (i.e., a "Master Note") permit the
Fund to invest fluctuating amounts at varying rates of interest
pursuant to a direct arrangement between the Fund as lender, and
the issuer, as borrower. It permits daily changes in the amounts
borrowed. The Fund has the right at any time to increase, up to
the full amount stated in the note agreement, or to decrease the
amount outstanding under the note. The issuer may prepay at any
time and without penalty any part or the full amount of the note.
The note may or may not be backed by one or more bank letters of
credit. Because these notes are direct lending arrangements
between the Fund and the issuer, it is not generally contemplated
that they will be traded; moreover, there is currently no secondary
market for them. Except as specifically provided in the Prospectus
for the Fund, there is no limitation on the type of issuer from
whom these notes will be purchased. However, in connection with
such purchase and on an ongoing basis, OpCap Advisors (the "Sub-
Adviser") will consider the earning power, cash flow and other
liquidity ratios of the issuer, and its ability to pay principal
and interest on demand, including a situation in which all holders
of such notes made demand simultaneously. The Fund will not invest
more than 5% of its total assets in variable rate notes. Variable
rate notes are subject to the Fund's investment restriction on
illiquid securities unless such notes can be put back to the issuer
on demand within seven days.
- Insured Bank Obligations. The Federal Deposit Insurance
Corporation ("FDIC") insures the deposits of federally insured
banks and savings and loan associations (collectively referred to
as "banks") up to $100,000. The Fund may, within the limits set
forth in the Prospectus, purchase bank obligations which are fully
insured as to principal by the FDIC. Currently, to remain fully
insured as to principal, these investments must be limited to
$100,000 per bank. If the principal amount and accrued interest
together exceed $100,000, the excess principal and accrued interest
will not be insured. Insured bank obligations may have limited
marketability. Unless the Board of Trustees determines that a
readily available market exists for such obligations, the Fund will
treat such obligations as subject to the 15% limit for illiquid
investments set forth in the Prospectus for the Fund unless such
obligations are payable at principal amount plus accrued interest
on demand or within seven days after demand.
-- Convertible Securities. The Fund may invest in fixed-
income securities which are convertible into common stock.
Convertible securities rank senior to common stocks in a
corporation's capital structure and, therefore, entail less risk
than the corporation's common stock. The value of a convertible
security is a function of its "investment value" (its value as if
it did not have a conversion privilege), and its "conversion value"
(the security's worth if it were to be exchanged for the underlying
security, at market value, pursuant to its conversion privilege).
To the extent that a convertible security's investment value
is greater than its conversion value, its price will be primarily
a reflection of such investment value and its price will be likely
to increase when interest rates fall and decrease when interest
rates rise, as with a fixed-income security (the credit standing of
the issuer and other factors may also have an effect on the
convertible security's value). If the conversion value exceeds the
investment value, the price of the convertible security will rise
above its investment value and, in addition, will sell at some
premium over its conversion value. (This premium represents the
price investors are willing to pay for the privilege of purchasing
a fixed-income security with a possibility of capital appreciation
due to the conversion privilege.) At such times the price of the
convertible security will tend to fluctuate directly with the price
of the underlying equity security. Convertible securities may be
purchased by the Fund at varying price levels above their
investment values and/or their conversion values in keeping with
the Fund's objectives.
-- Investment Risks of Fixed-Income Securities. All fixed-
income securities are subject to two types of risks: credit risk
and interest rate risk. Credit risk relates to the ability of the
issuer to meet interest or principal payments on a security as they
become due. Generally, higher yielding lower-grade bonds are
subject to credit risk to a greater extent than lower yielding,
investment grade bonds. Interest rate risk refers to the
fluctuations in value of fixed-income securities resulting solely
from the inverse relationship between price and yield of
outstanding fixed-income securities. An increase in prevailing
interest rates will generally reduce the market value of already-
issued fixed-income investments, and a decline in interest rates
will tend to increase their value. In addition, debt securities
with longer maturities, which tend to produce higher yields, are
subject to potentially greater changes in their prices from changes
in interest rates than obligations with shorter maturities.
Fluctuations in the market value of fixed-income securities after
the Fund buys them will not affect the interest payable on those
securities, nor the cash income from such securities. However,
those price fluctuations will be reflected in the valuations of
these securities and therefore the Fund's net asset values.
- Lower-Grade Securities. As stated in the Prospectus, the
Fund may invest up to 25% of its net assets in bonds rated below
Baa3 by Moody's or BBB- by Standard & Poor's (commonly known as
"high yield" or "junk bonds"). The Manager will not rely solely on
the ratings assigned by rating services and may invest, without
limit, in unrated securities which offer, in the opinion of the
Manager, yields and risks comparable to those of rated securities
in which the Fund may invest.
Some of the principal risks of high yield securities include:
(i) limited liquidity and secondary market support, (ii)
substantial market price volatility resulting from changes in
prevailing interest rates, (iii) subordination of the holder's
claims to the prior claims of banks and other senior lenders in
bankruptcy proceedings, (iv) the operation of mandatory sinking
fund or call/redemption provisions during periods of declining
interest rates, whereby the holder might receive redemption
proceeds at times when only lower-yielding portfolio securities are
available for investment, (v) the possibility that earnings of the
issuer may be insufficient to meet its debt service, and (vi) the
issuer's low creditworthiness and potential for insolvency during
periods of rising interest rates and economic downturn. Some high
yield bonds pay interest in kind rather than in cash.
As a result of the limited liquidity of high yield securities,
their prices have at times experienced significant and rapid
decline when a significant number of holders of high yield
securities simultaneously decided to sell them. A decline is also
likely in the high yield bond market during an economic downturn.
An economic downturn or an increase in interest rates could
severely disrupt the market for high yield securities and adversely
affect the value of outstanding securities and the ability of the
issuers to repay principal and interest. In addition, in recent
years there have been several Congressional attempts to limit the
use or limit tax and other advantages of high yield bonds. If
enacted, such proposals could adversely affect the value of these
securities and consequently the Fund's net asset value per share.
For example, federally insured savings and loan associations have
been required to divest their investments in high yield securities.
-- Rights and Warrants. The Fund may not invest more than 5%
of its total assets at the time of purchase in warrants (other than
those that have been acquired in units or attached to other
securities). Of such 5%, not more than 2% of the total assets at
the time of purchase may be invested in warrants that are not
listed on the New York or American Stock Exchanges. Warrants
basically are options to purchase equity securities at specific
prices valid for a specific period of time. Their prices do not
necessarily move parallel to the prices of the underlying
securities. Rights are similar to warrants, but normally have a
short duration and are distributed directly by the issuer to its
shareholders. Rights and warrants have no voting rights, receive
no dividends and have no rights with respect to the assets of the
issuer.
-- Investing in Small, Unseasoned Companies. The securities
of small, unseasoned companies may have a limited trading market,
which may adversely affect the Fund's ability to dispose of them
and can reduce the price the Fund might be able to obtain for them.
If other investment companies and investors that invest in this
type of securities trade the same securities when the Fund attempts
to dispose of its holdings, the Fund may receive lower prices than
might otherwise be obtained, because of the thinner market for such
securities.
-- Borrowing. From time to time, the Fund may increase its
ownership of securities by borrowing from banks on a unsecured
basis and investing the borrowed funds, subject to the restrictions
stated in the Prospectus. Any such borrowing will be made only
from banks, and pursuant to the requirements of the Investment
Company Act, will be made only to the extent that the value of that
Fund's assets, less its liabilities other than borrowings, is equal
to at least 300% of all borrowings including the proposed borrowing
and amounts covering the Fund's obligations under "forward roll"
transactions. If the value of the Fund's assets so computed should
fail to meet the 300% asset coverage requirement, the Fund is
required within three days to reduce its bank debt to the extent
necessary to meet such requirement and may have to sell a portion
of its investments at a time when independent investment judgment
would not dictate such sale. Borrowing for investment increases
both investment opportunity and risk. Since substantially all of
the Fund's assets fluctuate in value, but borrowing obligations are
fixed, when the Fund has outstanding borrowings, its net asset
value per share correspondingly will tend to increase and decrease
more when portfolio assets fluctuate in value than otherwise would
be the case.
Other Investment Techniques and Strategies
-- When-Issued Securities. The Fund may take advantage of
offerings of eligible portfolio securities on a "when-issued" basis
where delivery of and payment for such securities take place
sometime after the transaction date on terms established on such
date. Normally, settlement on U.S. Government securities takes
place within ten days. The Fund only will make when-issued
commitments on eligible securities with the intention of actually
acquiring the securities. If the Fund chooses to dispose of the
right to acquire a when-issued security prior to its acquisition,
it could, as with the disposition of any other portfolio
obligation, incur a gain or loss due to market fluctuation. When-
issued commitments will not be made if, as a result, more than 15%
of the net assets of the Fund would be so committed.
-- Repurchase Agreements and Reverse Repurchase Agreements.
The Fund may acquire securities subject to repurchase agreements
for liquidity purposes to meet anticipated redemptions, or pending
the investment of the proceeds from sales of Fund shares, or
pending the settlement of purchases of portfolio securities. In a
repurchase transaction, the Fund acquires a security from, and
simultaneously resells it to, an approved vendor. An "approved
vendor" is a U.S. commercial bank or the U.S. branch of a foreign
bank or a broker-dealer that has been designated a primary dealer
in government securities, that must meet credit requirements set by
the Trust's Board of Trustees from time to time. The resale price
exceeds the purchase price by an amount that reflects an agreed-
upon interest rate effective for the period during which the
repurchase agreement is in effect. The majority of these
transactions run from day to day, and delivery pursuant to the
resale typically will occur within one to five days of the
purchase. Repurchase agreements are considered "loans" under the
Investment Company Act, collateralized by the underlying security.
The Fund's repurchase agreements require that at all times while
the repurchase agreement is in effect, the value of the collateral
must equal or exceed the repurchase price to fully collateralize
the repayment obligation. Additionally, the Manager will impose
creditworthiness requirements to confirm that the vendor is
financially sound and will continuously monitor the collateral's
value.
The Fund may enter into reverse repurchase agreements. Under
a reverse repurchase agreement, the Fund sells securities and
agrees to repurchase them at a mutually agreed upon date and price.
At the time the Fund enters into a reverse repurchase agreement, it
will establish and maintain a segregated account with an approved
custodian containing liquid high grade securities having a value
not less than the repurchase price (including accrued interest).
Reverse repurchase agreements involve the risk that the market
value of the securities retained in lieu of sale by the Fund may
decline more than or appreciate less than the securities the Fund
has sold but is obligated to repurchase. In the event the buyer of
securities under a reverse repurchase agreement files for
bankruptcy or becomes insolvent, such buyer or its trustee or
receiver may receive an extension of time to determine whether to
enforce the Fund's obligation to repurchase the securities and the
Fund's use of the proceeds of the reverse repurchase agreements may
effectively be restricted pending such decisions. Reverse
repurchase agreements create leverage, a speculative factor, and
will be considered borrowings for purposes of the Fund's limitation
on borrowing.
-- Illiquid and Restricted Securities. To enable the Fund to
sell restricted securities not registered under the Securities Act
of 1933, the Fund may have to cause those securities to be
registered. The expenses of registration of restricted securities
may be negotiated by the Fund with the issuer at the time such
securities are purchased by the Fund, if such registration is
required before such securities may be sold publicly. When
registration must be arranged because the Fund wishes to sell the
security, a considerable period may elapse between the time the
decision is made to sell the securities and the time the Fund would
be permitted to sell them. The Fund would bear the risks of any
downward price fluctuation during that period. The Fund may also
acquire, through private placements, securities having contractual
restrictions on their resale, which might limit the Fund's ability
to dispose of such securities and might lower the amount realizable
upon the sale of such securities.
The Fund has percentage limitations that apply to purchases of
restricted securities, as stated in the Prospectus. Those
percentage restrictions do not limit purchases of restricted
securities that are eligible for sale to qualified institutional
purchasers pursuant to Rule 144A under the Securities Act of 1933,
provided that those securities have been determined to be liquid by
the Board of Trustees of the Trust or by the Sub-Advisor under
Board-approved guidelines. Those guidelines take into account the
trading activity for such securities and the availability of
reliable pricing information, among other factors. If there is a
lack of trading interest in a particular Rule 144A security, the
Fund's holding of that security may be deemed to be illiquid.
-- Loans of Portfolio Securities. The Fund may lend its
portfolio securities subject to the restrictions stated in the
Prospectus. Under applicable regulatory requirements (which are
subject to change), the loan collateral on each business day must
at least equal the value of the loaned securities and must consist
of cash, bank letters of credit or securities of the U.S.
Government (or its agencies or instrumentalities). To be
acceptable as collateral, letters of credit must obligate a bank to
pay amounts demanded by the Fund if the demand meets the terms of
the letter. Such terms and the issuing bank must be satisfactory
to the Fund. When it lends securities, the Fund receives amounts
equal to the dividends or interest on loaned securities and also
receives one or more of (a) negotiated loan fees, (b) interest on
securities used as collateral, and (c) interest on short-term debt
securities purchased with such loan collateral. Either type of
interest may be shared with the borrower. The Fund may also pay
reasonable finder's, custodian and administrative fees. The terms
of the Fund's loans must meet applicable tests under the Internal
Revenue Code and must permit the Fund to reacquire loaned
securities on five days' notice or in time to vote on any important
matter.
-- Hedging With Options and Futures Contracts. The Fund may
employ one or more types of Hedging Instruments for the purposes
described in the Prospectus. When hedging to attempt to protect
against declines in the market value of the Fund's portfolio, or to
permit the Fund to retain unrealized gains in the value of
portfolio securities which have appreciated, or to facilitate
selling securities for investment reasons, the Fund may: (i) sell
Stock Index Futures, (ii) buy puts, or (iii) write covered calls
(as described in the Prospectus). When hedging to establish a
position in the equity securities markets as a temporary substitute
for the purchase of individual equity securities the Fund may: (i)
buy Stock Index Futures, or (ii) buy calls on Stock Index Futures.
Normally, the Fund would then purchase the equity securities and
terminate the hedging portion.
The Fund's strategy of hedging with Futures and options on
Futures will be incidental to the Fund's investment activities in
the underlying cash market. In the future, the Fund may employ
hedging instruments and strategies that are not presently
contemplated but which may be subsequently developed, to the extent
such investment methods are consistent with the Fund's investment
objective, and are legally permissible and disclosed in the
Prospectus. Additional information about the hedging instruments
the Fund may use is provided below.
- Writing Call Options. As described in the Prospectus, the
Fund may write covered calls. When the Fund writes a call on an
investment, it receives a premium and agrees to sell the callable
investment to a purchaser of a corresponding call during the call
period (usually not more than 9 months) at a fixed exercise price
(which may differ from the market price of the underlying
investment) regardless of market price changes during the call
period. To terminate its obligation on a call it has written, the
Fund may purchase a corresponding call in a "closing purchase
transaction." A profit or loss will be realized, depending upon
whether the net of the amount of option transaction costs and the
premium received on the call the Fund has written is more or less
than the price of the call the Fund subsequently purchased. A
profit may also be realized if the call lapses unexercised because
the Fund retains the underlying investment and the premium
received. Those profits are considered short-term capital gains
for Federal income tax purposes, as are premiums on lapsed calls,
and when distributed by the Fund are taxable as ordinary income.
If the Fund could not effect a closing purchase transaction due to
the lack of a market, it would have to hold the callable investment
until the call lapsed or was exercised.
The Fund may also write calls on Futures without owning a
futures contract or deliverable securities, provided that at the
time the call is written, the Fund covers the call by segregating
in escrow an equivalent dollar value of deliverable securities or
liquid assets. The Fund will segregate additional liquid assets if
the value of the escrowed assets drops below 100% of the current
value of the Future. In no circumstances would an exercise notice
as to a Future put the Fund in a short futures position.
- Writing Put Options. A put option on securities gives the
purchaser the right to sell, and the writer the obligation to buy,
the underlying investment at the exercise price during the option
period. Writing a put covered by segregated liquid assets equal to
the exercise price of the put has the same economic effect to the
Fund as writing a covered call. The premium the Fund receives from
writing a put option represents a profit, as long as the price of
the underlying investment remains above the exercise price.
However, the Fund has also assumed the obligation during the option
period to buy the underlying investment from the buyer of the put
at the exercise price, even though the value of the investment may
fall below the exercise price. If the put expires unexercised, the
Fund (as the writer of the put) realizes a gain in the amount of
the premium less transaction costs. If the put is exercised, the
Fund must fulfill its obligation to purchase the underlying
investment at the exercise price, which will usually exceed the
market value of the investment at that time. In that case, the
Fund may incur a loss, equal to the sum of the sale price of the
underlying investment and the premium received minus the sum of the
exercise price and any transaction costs incurred.
When writing put options, to secure its obligation to pay for
the underlying security, the Fund will deposit in escrow liquid
assets with a value equal to or greater than the exercise price of
the underlying securities. The Fund therefore forgoes the
opportunity of investing the segregated assets or writing calls
against those assets. As long as the obligation of the Fund as the
put writer continues, it may be assigned an exercise notice by the
exchange or broker-dealer through whom such option was sold,
requiring the Fund to exchange currency at the specified rate of
exchange or to take delivery of the underlying security against
payment of the exercise price. The Fund may have no control over
when it may be required to purchase the underlying security, since
it may be assigned an exercise notice at any time prior to the
termination of its obligation as the writer of the put. This
obligation terminates upon expiration of the put, or such earlier
time at which the Fund effects a closing purchase transaction by
purchasing a put of the same series as that previously sold. Once
the Fund has been assigned an exercise notice, it is thereafter not
allowed to effect a closing purchase transaction.
The Fund may effect a closing purchase transaction to realize
a profit on an outstanding put option it has written or to prevent
an underlying security from being put. Furthermore, effecting such
a closing purchase transaction will permit the Fund to write
another put option to the extent that the exercise price thereof is
secured by the deposited assets, or to utilize the proceeds from
the sale of such assets for other investments by the Fund. The
Fund will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the
premium received from writing the option. As above for writing
covered calls, any and all such profits described herein from
writing puts are considered short-term capital gains for Federal
tax purposes, and when distributed by the Fund, are taxable as
ordinary income.
- Purchasing Puts and Calls. The Fund may purchase calls to
protect against the possibility that the Fund's portfolio will not
participate in an anticipated rise in the securities market. When
the Fund purchases a call (other than in a closing purchase
transaction), it pays a premium and, except as to calls on stock
indices, has the right to buy the underlying investment from a
seller of a corresponding call on the same investment during the
call period at a fixed exercise price. In purchasing a call, the
Fund benefits only if the call is sold at a profit or if, during
the call period, the market price of the underlying investment is
above the sum of the exercise price, transaction costs, and the
premium paid, and the call is exercised. If the call is not
exercised or sold (whether or not at a profit), it will become
worthless at its expiration date and the Fund will lose its premium
payment and the right to purchase the underlying investment. When
the Fund purchases a call on a stock index, it pays a premium, but
settlement is in cash rather than by delivery of the underlying
investment to the Fund.
When the Fund purchases a put, it pays a premium and, except
as to puts on stock indices, has the right to sell the underlying
investment to a seller of a corresponding put on the same
investment during the put period at a fixed exercise price. Buying
a put on an investment the Fund owns (a "protective put") enables
the Fund to attempt to protect itself during the put period against
a decline in the value of the underlying investment below the
exercise price by selling the underlying investment at the exercise
price to a seller of a corresponding put. If the market price of
the underlying investment is equal to or above the exercise price
and as a result the put is not exercised or resold, the put will
become worthless at its expiration and the Fund will lose the
premium payment and the right to sell the underlying investment.
However, the put may be sold prior to expiration (whether or not at
a profit).
Puts and calls on broadly-based stock indices or Stock Index
Futures are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss
depends on changes in the index in question (and thus on price
movements in the stock market generally) rather than on price
movements of individual securities or futures contracts. When the
Fund buys a call on a stock index or Stock Index Future, it pays a
premium. If the Fund exercises the call during the call period, a
seller of a corresponding call on the same investment will pay the
Fund an amount of cash to settle the call if the closing level of
the stock index or Future upon which the call is based is greater
than the exercise price of the call. That cash payment is equal to
the difference between the closing price of the call and the
exercise price of the call times a specified multiple (the
"multiplier") which determines the total dollar value for each
point of difference. When the Fund buys a put on a stock index or
Stock Index Future, it pays a premium and has the right during the
put period to require a seller of a corresponding put, upon the
Fund's exercise of its put, to deliver cash to the Fund to settle
the put if the closing level of the stock index or Stock Index
Future upon which the put is based is less than the exercise price
of the put. That cash payment is determined by the multiplier, in
the same manner as described above as to calls.
When the Fund purchases a put on a stock index, or on a Stock
Index Future not owned by it, the put protects the Fund to the
extent that the index moves in a similar pattern to the securities
the Fund holds. The Fund can either resell the put or, in the case
of a put on a Stock Index Future, buy the underlying investment and
sell it at the exercise price. The resale price of the put will
vary inversely with the price of the underlying investment. If the
market price of the underlying investment is above the exercise
price, and as a result the put is not exercised, the put will
become worthless on the expiration date. In the event of a decline
in price of the underlying investment, the Fund could exercise or
sell the put at a profit to attempt to offset some or all of its
loss on its portfolio securities.
The Fund's option activities may affect its portfolio turnover
rate and brokerage commissions. The exercise of calls written by
the Fund may cause the Fund to sell related portfolio securities,
thus increasing its turnover rate. The exercise by the Fund of
puts on securities will cause the sale of underlying investments,
increasing portfolio turnover. Although the decision whether to
exercise a put it holds is within the Fund's control, holding a put
might cause the Fund to sell the related investments for reasons
that would not exist in the absence of the put. The Fund will pay
a brokerage commission each time it buys or sells a call, put or an
underlying investment in connection with the exercise of a put or
call. Those commissions may be higher than the commissions for
direct purchases or sales of the underlying investments.
Premiums paid for options are small in relation to the market
value of the underlying investments and, consequently, put and call
options offer large amounts of leverage. The leverage offered by
trading in options could result in the Fund's net asset value being
more sensitive to changes in the value of the underlying
investments.
- Stock Index Futures. As described in the Prospectus, the
Fund may invest in Stock Index Futures only if they relate to
broadly-based stock indices. A stock index is considered to be
broadly-based if it includes stocks that are not limited to issuers
in any particular industry or group of industries. A stock index
assigns relative values to the common stocks included in the index
and fluctuates with the changes in the market value of those
stocks. Stock indices cannot be purchased or sold directly.
Stock index futures are contracts based on the future value of
the basket of securities that comprise the underlying stock index.
The contracts obligate the seller to deliver, and the purchaser to
take, cash to settle the futures transaction or to enter into an
offsetting contract. No physical delivery of the securities
underlying the index is made on settling the futures obligation. No
monetary amount is paid or received by the Fund on the purchase or
sale of a Stock Index Future. Upon entering into a Futures
transaction, the Fund will be required to deposit an initial margin
payment, in cash or U.S. Treasury bills, with the futures
commission merchant (the "futures broker"). Initial margin
payments will be deposited with the Fund's Custodian in an account
registered in the futures broker's name; however, the futures
broker can gain access to that account only under certain specified
conditions. As the Future is marked to market (that is, its value
on the Fund's books is changed) to reflect changes in its market
value, subsequent margin payments, called variation margin, will be
paid to or by the futures broker on a daily basis.
At any time prior to the expiration of the Future, the Fund
may elect to close out its position by taking an opposite position,
at which time a final determination of variation margin is made and
additional cash is required to be paid by or released to the Fund.
Any gain or loss is then realized by the Fund on the Future for tax
purposes. Although Stock Index Futures by their terms call for
settlement by the delivery of cash, in most cases the settlement
obligation is fulfilled without such delivery by entering into an
offsetting transaction. All futures transactions are effected
through a clearing house associated with the exchange on which the
contracts are traded.
- Regulatory Aspects of Hedging Instruments. The Fund is
required to operate within certain guidelines and restrictions with
respect to its use of futures and options thereon as established by
the Commodities Futures Trading Commission ("CFTC"). In
particular, the Fund is excluded from registration as a "commodity
pool operator" if it complies with the requirements of Rule 4.5
adopted by the CFTC. Under this Rule, the Fund is not limited
regarding the percentage of its assets committed to futures margins
and related options premiums subject to a hedge position. However,
aggregate initial futures margins and related options premiums are
limited to 5% or less of the Fund's net asset value for other than
bona fide hedging strategies employed by the Fund within the
meaning and intent of applicable provisions of the Commodity
Exchange Act and CFTC regulations thereunder.
Transactions in options by the Fund are subject to limitations
established by option exchanges governing the maximum number of
options that may be written or held by a single investor or group
of investors acting in concert, regardless of whether the options
were written or purchased on the same or different exchanges or are
held in one or more accounts or through one or more different
exchanges or through one or more brokers. Thus the number of
options which the Fund may write or hold may be affected by options
written or held by other entities, including other investment
companies having the same adviser as the Fund (or an adviser that
is an affiliate of the Fund's adviser). The exchanges also impose
position limits on Futures transactions. An exchange may order the
liquidation of positions found to be in violation of those limits
and may impose certain other sanctions.
Due to requirements under the Investment Company Act, when the
Fund purchases a Stock Index Future, the Fund will maintain, in a
segregated account or accounts with its custodian, cash or readily-
marketable, short-term (maturing in one year or less) debt
instruments in an amount equal to the market value of the
securities underlying such Future, less the margin deposit
applicable to it.
- Additional Information About Hedging Instruments and Their
Use. The Fund's Custodian, or a securities depository acting for
the Custodian, will act as the Fund's escrow agent, through the
facilities of the Options Clearing Corporation ("OCC"), as to the
investments on which the Fund has written options traded on
exchanges or as to other acceptable escrow securities, so that no
margin will be required for such transactions. OCC will release
the securities on the expiration of the option or upon the Fund's
entering into a closing transaction. An option position may be
closed out only on a market which provides secondary trading for
options of the same series, and there is no assurance that a liquid
secondary market will exist for any particular option.
When the Fund writes an over-the-counter("OTC") option, it
will enter into an arrangement with a primary U.S. Government
securities dealer, which would establish a formula price at which
the Fund would have the absolute right to repurchase that OTC
option. That formula price would generally be based on a multiple
of the premium received for the option, plus the amount by which
the option is exercisable below the market price of the underlying
security (that is, the extent to which the option is "in-the-
money"). When the Fund writes an OTC option, it will treat as
illiquid (for purposes of the limit on its assets that may be
invested in the illiquid securities, stated in the Prospectus) the
mark-to-market value of any OTC option held by it. The Securities
and Exchange Commission ("SEC") is evaluating whether OTC options
should be considered liquid securities, and the procedure described
above could be affected by the outcome of that evaluation.
The Fund's option activities may affect its turnover rate and
brokerage commissions. The exercise by the Fund of puts on
securities will cause the sale of related investments, increasing
portfolio turnover. Although such exercise is within the Fund's
control, holding a put might cause the Fund to sell the related
investments for reasons which would not exist in the absence of the
put. The Fund will pay a brokerage commission each time it buys a
put or call, sells a call, or buys or sells an underlying
investment in connection with the exercise of a put or call. Such
commissions may be higher than those which would apply to direct
purchases or sales of such underlying investments. Premiums paid
for options are small in relation to the market value of the
related investments, and consequently, put and call options offer
large amounts of leverage. The leverage offered by trading options
could result in the Fund's net asset value being more sensitive to
changes in the value of the underlying investments.
- Tax Aspects of Covered Calls and Hedging Instruments. The
Fund intends to qualify as a "regulated investment company" under
the Internal Revenue Code. That qualification enables the Fund to
"pass through" its income and realized capital gains to
shareholders without having to pay tax on them. This avoids a
"double tax" on that income and capital gains, since shareholders
normally will be taxed on the dividends and capital gains they
receive from the Fund (unless the Fund's shares are held in a
retirement account or the shareholder is otherwise exempt from
tax). One of the tests for the Fund's qualification as a regulated
investment company is that less than 30% of its gross income must
be derived from gains realized on the sale of securities held for
less than three months. To comply with this 30% cap, the Fund will
limit the extent to which it engages in the following activities,
but will not be precluded from them: (i) selling investments,
including Stock Index Futures, held for less than three months,
whether or not they were purchased on the exercise of a call held
by the Fund; (ii) purchasing options which expire in less than
three months; (iii) effecting closing transactions with respect to
calls or puts written or purchased less than three months
previously; (iv) exercising puts or calls held by the Fund for less
than three months; or (v) writing calls on investments held less
than three months.
Certain foreign currency exchange contracts ("Forward
Contracts") in which the Fund may invest are treated as "section
1256 contracts." Gains or losses relating to section 1256
contracts generally are characterized under the Internal Revenue
Code as 60% long-term and 40% short-term capital gains or losses.
However, foreign currency gains or losses arising from certain
section 1256 contracts (including Forward Contracts) generally are
treated as ordinary income or loss. In addition, section 1256
contracts held by the Fund at the end of each taxable year are
"marked-to-market" with the result that unrealized gains or losses
are treated as though they were realized. These contracts also may
be marked-to-market for purposes of the excise tax applicable to
investment company distributions and for other purposes under rules
prescribed pursuant to the Internal Revenue Code. An election can
be made by the Fund to exempt these transactions from this marked-
to-market treatment.
Certain Forward Contracts entered into by the Fund may result
in "straddles" for Federal income tax purposes. The straddle rules
may affect the character of gains (or losses) realized by the Fund
on straddle positions. Generally, a loss sustained on the
disposition of a position making up a straddle is allowed only to
the extent such loss exceeds any unrecognized gain in the
offsetting positions making up the straddle. Disallowed loss is
generally allowed at the point where there is no unrecognized gain
in the offsetting positions making up the straddle, or the
offsetting position is disposed of.
Under the Internal Revenue Code, gains or losses attributable
to fluctuations in exchange rates that occur between the time the
Fund accrues interest or other receivables or accrues expenses or
other liabilities denominated in a foreign currency and the time
the Fund actually collects such receivables or pays such
liabilities generally are treated as ordinary income or ordinary
loss. Similarly, on disposition of debt securities denominated in
a foreign currency and on disposition foreign currency forward
contracts, gains or losses attributable to fluctuations in the
value of a foreign currency between the date of acquisition of the
security or contract and the date of the disposition also are
treated as an ordinary gain or loss. Currency gains and losses are
offset against market gains and losses on each trade before
determining a net "section 988" gain or loss under the Internal
Revenue Code, which may ultimately increase or decrease the amount
of the Fund's investment company income available for distribution
to its shareholders.
- Additional Risk Factors in Hedging. In addition to the
risks with respect to options discussed in the Prospectus and
above, there is a risk in using short hedging by (i) selling Stock
Index Futures or (ii) purchasing puts on stock indices or Stock
Index Futures to attempt to protect against declines in the value
of the Fund's equity securities. The risk is that the prices of
Stock Index Futures will correlate imperfectly with the behavior of
the cash (i.e., market value) prices of the Fund's equity
securities. The ordinary spreads between prices in the cash and
futures markets are subject to distortions, due to differences in
the natures of those markets. First, all participants in the
futures markets are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit
requirements, investors may close out futures contracts through
offsetting transactions which could distort the normal relationship
between the cash and futures markets. Second, the liquidity of the
futures markets depends on participants entering into offsetting
transactions rather than making or taking delivery. To the extent
participants decide to make or take delivery, liquidity in the
futures markets could be reduced, thus producing distortion.
Third, from the point of view of speculators, the deposit
requirements in the futures markets are less onerous than margin
requirements in the securities markets. Therefore, increased
participation by speculators in the futures markets may cause
temporary price distortions.
The risk of imperfect correlation increases as the composition
of the Fund's portfolio diverges from the securities included in
the applicable index. To compensate for the imperfect correlation
of movements in the price of the equity securities being hedged and
movements in the price of the hedging instruments, the Fund may use
hedging instruments in a greater dollar amount than the dollar
amount of equity securities being hedged if the historical
volatility of the prices of the equity securities being hedged is
more than the historical volatility of the applicable index. It is
also possible that if the Fund has used hedging instruments in a
short hedge, the market may advance and the value of equity
securities held in the Fund's portfolio may decline. If that
occurred, the Fund would lose money on the hedging instruments and
also experience a decline in value in its portfolio securities.
However, while this could occur for a very brief period or to a
very small degree, over time the value of a diversified portfolio
of equity securities will tend to move in the same direction as the
indices upon which the hedging instruments are based.
If the Fund uses hedging instruments to establish a position
in the equities markets as a temporary substitute for the purchase
of individual equity securities (long hedging) by buying Stock
Index Futures and/or calls on such Futures, on securities or on
stock indices, it is possible that the market may decline. If the
Fund then concludes not to invest in equity securities at that time
because of concerns as to a possible further market decline or for
other reasons, the Fund will realize a loss on the hedging
instruments that is not offset by a reduction in the price of the
equity securities purchased.
Other Investment Restrictions
The Fund's most significant investment restrictions are set
forth in the Prospectus. There are additional investment
restrictions that the Fund must follow that are also fundamental
policies. Fundamental policies and the Fund's investment objective
cannot be changed without the vote of a "majority" of the Fund's
outstanding voting securities. Under the Investment Company Act,
such a majority vote is defined as the vote of the holders of the
lesser of: (i) 67% or more of the shares present or represented by
proxy at a shareholder meeting, if the holders of more than 50% of
the outstanding shares are present or represented by proxy, or (ii)
more than 50% of the outstanding shares.
Under these additional restrictions, the Fund cannot:
- Invest in real estate or interests in real estate (including
limited partnership interests), but may purchase readily marketable
securities of companies holding real estate or interests therein;
- Purchase securities on margin;
- Underwrite securities of other companies, except insofar as
it might be deemed to be an underwriter for purposes of the
Securities Act of 1933 in the resale of any securities held in its
own portfolio (except that the Fund may in the future invest all of
its investable assets in an open-end management investment company
with substantially the same investment objective and restrictions
as the Fund);
- Mortgage, hypothecate or pledge any of its assets;
- Invest or hold securities of any issuer if the Officers and
Trustees of the Fund or its Manager or Sub-Adviser owning
individually more then 1/2 of 1% of the securities of such issuer
together own more than 5% of the securities of such issuer; or
- Invest in companies for the primary purpose of acquiring
control or management thereof (except that the Fund may in the
future invest all of its investable assets in an open-end
management investment company with substantially the same
investment objective and restrictions as the Fund);
- Invest in physical commodities or physical commodity
contracts, or speculate in financial commodity contracts, but may
purchase and sell stock futures contracts and options on such
futures contracts exclusively for hedging purposes;
- Write, purchase or sell puts, calls, or combinations thereof
on individual stocks, but may purchase or sell exchange traded put
and call options on stock indices to protect the Fund's assets.
In connection with the registration of its shares in certain
states, the Fund has made the following undertakings. These
undertakings shall terminate if the Fund ceases to qualify its
shares for sale in that state or if the state's rules or
regulations are amended.
The Fund has agreed not to make loans to any person or
individual (except that portfolio securities may be loaned within
the limitations set forth in the Prospectus), not to make short
sales of securities except "against-the-box" and not to invest in
interests in oil, gas or other mineral exploration or development
programs or leases.
How the Fund is Managed
Organization and History. Oppenheimer Quest Officers Value Fund
(referred to as the "Fund") is one of four portfolios of
Oppenheimer Quest for Value Funds (the "Trust"), a Massachusetts
business trust. This Statement of Additional Information may be
used with the Fund's Prospectus only to offer shares of the Fund.
The Trustees are authorized to create new series and classes
of series. The Trustees may reclassify unissued shares of the
Trust or its series or classes into additional series or classes of
shares. The Trustees may also divide or combine the shares of a
class into a greater or lesser number of shares without thereby
changing the proportionate beneficial interest of a shareholder in
the Fund. Shares do not have cumulative voting rights or
preemptive or subscription rights. Shares may be voted in person
or by proxy.
As a Massachusetts business trust, the Fund is not required to
hold, and does not plan to hold, regular annual meetings of
shareholders. The Fund will hold meetings when required to do so by
the Investment Company Act or other applicable law, or when a
shareholder meeting is called by the Trustees or upon proper
request of the shareholders. Shareholders have the right, upon the
declaration in writing or vote of two-thirds of the outstanding
shares of the Fund, to remove a Trustee. The Trustees will call a
meeting of shareholders to vote on the removal of a Trustee upon
the written request of the record holders of 10% of its outstanding
shares. In addition, if the Trustees receive a request from at
least 10 shareholders (who have been shareholders for at least six
months) holding shares of the Fund valued at $25,000 or more or
holding at least 1% of the Fund's outstanding shares, whichever is
less, stating that they wish to communicate with other shareholders
to request a meeting to remove a Trustee, the Trustees will then
either make the Fund's shareholder list available to the applicants
or mail their communication to all other shareholders at the
applicants' expense, or the Trustees may take such other action as
set forth under Section 16(c) of the Investment Company Act.
The Fund's Declaration of Trust contains an express disclaimer
of shareholder or Trustee liability for the Fund's obligations, and
provides for indemnification and reimbursement of expenses out of
its property for any shareholder held personally liable for its
obligations. The Declaration of Trust also provides that the Fund
shall, upon request, assume the defense of any claim made against
any shareholder for any act or obligation of the Fund and satisfy
any judgment thereon. Thus, while Massachusetts law permits a
shareholder of a business trust (such as the Fund) to be held
personally liable as a "partner" under certain circumstances, the
risk of a Fund shareholder incurring financial loss on account of
shareholder liability is limited to the relatively remote
circumstances in which the Fund would be unable to meet its
obligations described above. Any person doing business with the
Trust, and any shareholder of the Trust, agrees under the Trust's
Declaration of Trust to look solely to the assets of the Trust for
satisfaction of any claim or demand which may arise out of any
dealings with the Trust, and the Trustees shall have no personal
liability to any such person, to the extent permitted by law.
Trustees and Officers of the Trust. The Trust's Trustees and
officers, and the Fund's portfolio manager (who is not an officer),
are listed below, together with principal occupations and business
affiliations during the past five years. The address of each is
Two World Trade Center, New York, New York 10048, except as noted.
All of the Trustees are also trustees of Oppenheimer Quest Global
Value Fund, Inc. and Oppenheimer Quest Value Fund, Inc. and The
Rochester Funds (Rochester Fund Municipals, Rochester Portfolio
Series and Rochester Fund Series). As of January 25, 1996, the
Trustees and officers of the Trust as a group owned less than 1% of
the Fund's issued and outstanding shares. The foregoing does not
include shares held of record by an employee benefit plan for
employees of the Manager (for which plan one of the officers listed
below, Mr. Donohue, is a trustee), other than the shares
beneficially owned under that plan by officers of the Trust listed
below.
Bridget A. Macaskill, Chairman of the Board of Trustees and
President*; Age: 47
Chief Executive Officer, President and Chief Operating Officer of
the Manager; prior thereto, Chief Operating Officer of the Manager
and Executive Vice President of the Manager. Vice President and a
Director of Oppenheimer Acquisition Corp., Director of Oppenheimer
Partnership Holdings, Inc., Chairman and a Director of Shareholder
Services, Inc.("SSI"), Director of Main Street Advisers, Inc., and
Director of HarbourView Asset Management Corporation
("HarbourView"), all of which are subsidiaries of the Manager; a
Trustee of the New York-based and Denver-based Oppenheimer funds.
[FN]
- -------------
*A Trustee who is an "interested person" as defined in the
Investment Company Act.
Paul Y. Clinton, Trustee; Age: 64
946 Morris Avenue, Bryn Mawr, Pennsylvania 19010
Director, External Affairs, Kravco Corporation (national real
estate owner and property management); formerly President of Essex
Management Corporation (management consulting company); Trustee of
Capital Cash Management Trust, Prime Cash Fund and Short Term Asset
Reserves, each of which is a money-market fund; Director of Quest
Cash Reserves, Inc. and Trustee of Quest For Value Accumulation
Trust, all of which are open-end investment companies. Formerly:
a general partner of Capital Growth Fund (venture capital
partnership); a general partner of Essex Limited Partnership
(investment partnership); President of Geneve Corp. (venture
capital fund); Chairman of Woodland Capital Corp. (small business
investment company); and Vice President of W.R. Grace & Co.
Thomas W, Courtney, Trustee; Age: 66
P.O. Box 580, Sewickley, Pennsylvania 15143
Principal of Courtney Associates, Inc. (venture capital firm);
former General Partner of Trivest Venture Fund (private venture
capital fund); former President of Investment Counseling Federated
Investors, Inc.; Trustee of Cash Assets Trust, a money market fund;
Director of Quest Cash Reserves, Inc., and 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.
Lacy B. Herrmann, Trustee; Age: 66
380 Madison Avenue, Suite 2300, New York, New York 10017
President and Chairman of the Board of Aquila Management
Corporation, the sponsoring organization and Administrator and/or
Sub-Adviser to the following open-end investment companies, and
Chairman of the Board of Trustees and President of each: Churchill
Cash Reserves Trust, Short Term Asset Reserves, Pacific Capital
Cash Assets Trust, Pacific Capital U.S. Treasuries Cash Assets
Trust, Pacific Capital Tax-Free Cash Assets Trust, Prime Cash Fund,
Narragansett Insured Tax-Free Income Fund, Tax-Free Fund For Utah,
Churchill Tax-Free Fund of Kentucky, Tax-Free Fund of Colorado,
Tax-Free Trust of Oregon, Tax-Free Trust of Arizona, Hawaiian Tax-
Free Trust, and Aquila Rocky Mountain Equity Fund; Vice President,
Director, Secretary, and formerly Treasurer of Aquila Distributors,
Inc., distributor of the above funds; President and Chairman of the
Board of Trustees of Capital Cash Management Trust ("CCMT"), and an
Officer and Trustee/Director of its predecessors; President and
Director of STCM Management Company, Inc., sponsor and adviser to
CCMT; Chairman, President and a Director of InCap Management
Corporation, formerly sub-adviser and administrator of Prime Cash
Fund and Short Term Asset Reserves; Director of Quest Cash
Reserves, Inc., and Trustee of Quest for Value Accumulation Trust
and The Saratoga Advantage Trust, each of which is an open-end
investment company; Trustee of Brown University.
George Loft, Trustee; Age: 80
51 Herrick Road, Sharon, Connecticut 06069
Private Investor; Director of Quest Cash Reserves, Inc., and
Trustee of Quest for Value Accumulation Trust and The Saratoga
Advantage Trust, all of which are open-end investment companies,
and Director of the Quest for Value Dual Purpose Fund, Inc., a
closed-end investment company.
Jeffrey C. Whittingon, Portfolio Manager; Age 38
Two World Financial Center, 225 Liberty Street, New York, New York
10080
Senior Vice President of Oppenheimer Capital; formerly a portfolio
manager at Neuberger & Berman and prior thereto, a portfolio
manager at Oppenheimer & Co., Inc.
Robert C. Doll, Jr., Vice President; Age: 41
Executive Vice President and Director of Equity Investments of the
Manager; an officer and Portfolio Manager of other Oppenheimer
funds.
Andrew J. Donohue, Secretary; Age: 45
Executive Vice President and General Counsel of the Manager and
OppenheimerFunds Distributor, Inc. (the "Distributor"); an officer
of other Oppenheimer funds; formerly Senior Vice President and
Associate General Counsel of the Manager and the Distributor,
partner in Kraft & McManimon (a law firm), an officer of First
Investors Corporation (a broker-dealer) and First Investors
Management Company, Inc. (broker-dealer and investment adviser),
and a director and an officer of First Investors Family of Funds
and First Investors Life Insurance Company.
George C. Bowen, Treasurer; Age: 59
3410 South Galena Street Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President
and Treasurer of the Distributor and HarbourView; Senior Vice
President, Treasurer, Assistant Secretary and a director of
Centennial Asset Management Corporation, an investment advisory
subsidiary of the Manager; Vice President, Treasurer and Secretary
of OppenheimerFunds Services and Shareholder Financial Services,
Inc. ("SFSI)", a transfer agent subsidiary of the Manager; an
officer of other Oppenheimer funds.
Robert G. Zack, Assistant Secretary; Age: 47
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; an officer of other
Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer; Age: 36
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other Oppenheimer funds; formerly a Fund Controller for
the Manager, prior to which he was an Accountant for Yale &
Seffinger, P.C., an accounting firm, and previously an Accountant
and Commissions Supervisor for Stuart James Company Inc., a broker-
dealer.
Scott Farrar, Assistant Treasurer; Age: 29
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting, an
officer of other Oppenheimer funds; previously a Fund Controller
for the Manager, prior to which he was an International Mutual Fund
Supervisor for Brown Brothers Harriman & Co. (a bank) and
previously a Senior Fund Accountant for State Street Bank & Trust
Company.
-- Remuneration of Trustees. All officers of the Trust and
Ms. Macaskill, a Trustee, are officers or directors of the Manager
and receive no salary or fee from the Fund. The Trustees of the
Fund (excluding Ms. Macaskill) received the total amounts shown
below from (i) the Fund during its fiscal period November 8, 1994
(commencement of operations) to October 31, 1995 and (ii) other
investment companies (or series thereof) managed by OpCap Advisors
(previously named Quest for Value Advisors), or an affiliate
thereof, during the fiscal year ended October 31, 1995 (the "Fund
Complex"). OpCap Advisors, or an affiliate thereof, served as the
investment adviser to the Fund Complex prior to November 22, 1995;
effective as of such date, the Manager acquired the investment
advisory and other contracts and business relationships and certain
assets and liabilities of OpCap Advisors, Quest for Value
Distributors and Oppenheimer Capital relating to twelve Quest for
Value mutual funds (or series thereof) included in the Fund
Complex.
<TABLE>
<CAPTION>
Pension or
Retirement
Aggregate Benefits Estimated Total
Compensation Accrued as Annual Compensation
from the Part of Fund Benefits Upon From Fund
Name of Person Fund(1) Expenses Retirement Complex
<S> <C> <C> <C> <C>
Paul Y. Clinton $0 None None $61,650
Thomas W. Courtney $0 None None $60,900
Lacy B. Herrmann $0 None None $61,650
George Loft $0 None None $61,650
</TABLE>
(1)Reflects compensation from the commencement of operations of the
Fund (November 8, 1994) to October 31, 1995.
Messrs. Clinton, Courtney and Herrmann earned directors fees with
respect to 18 investment companies in the Fund Complex and the fees
earned by Mr. Loft were with respect to 19 investment companies in
the Fund Complex. During such period 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 Fund
Complex but for which OpCap 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 Fund 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 Fund 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.
-- Major Shareholders. Although the Fund is authorized to
issue three classes of shares, currently only Class A shares have
been issued and are outstanding. As of January 25, 1996, no person
owned of record or was known by the Fund to own beneficially 5% or
more of the Fund's Class A shares except the following: (i)
Oppenheimer & Co., Inc. P.O. Box 3484 Church Street Station, New
York, New York 10008-8484, which owned of record for the benefit of
employee accounts 21,934.229 and 21,868.622 Class A shares
representing 6.13% and 6.11%, respectively, of the outstanding
Class A shares as of such date; and (ii) Jeffrey C. Whittington, 10
Bleecker Street, New York, New York 10012-2438 who owned of record
and beneficially 21,868.22 Class A shares, representing 6.11% of
the outstanding Class A shares as of such date.
The Manager and its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled
by Massachusetts Mutual Life Insurance Company. OAC is also owned
in part by certain of the Manager s directors and officers, some of
whom also serve as officers of the Fund and one of whom (Ms.
Macaskill) also serves as an officer and a Trustee of the Fund.
The Manager and the Trust have a Code of Ethics. In addition
to having its own Code of Ethics, the Sub-Adviser is subject to a
reporting obligation to the Manager under this Code of Ethics. The
Code of Ethics is designed to detect and prevent improper personal
trading by certain employees, including the Fund's portfolio
manager, who is an employee of the Sub-Adviser, that would compete
with or take advantage of the Funds portfolio transactions.
Compliance with the Code of Ethics is carefully monitored and
strictly enforced by the Manager.
-- The Investment Advisory Agreement. The Manager acts as
investment adviser to the Fund pursuant to the terms of an
Investment Advisory Agreement dated November 22, 1995. The Sub-
Adviser previously served as the Fund's investment adviser since
the Fund's inception (November 8, 1994) through to and including
November 22, 1995.
Under the Investment Advisory Agreement, the Manager acts as
the investment adviser for the Fund and supervises the investment
program of the Fund. The Investment Advisory Agreement provides
that the Manager will provide administrative services for the Fund,
including completion and maintenance of records, preparation and
filing of reports required by the Securities and Exchange
Commission, reports to shareholders, and composition of proxy
statements and registration statements required by Federal and
state securities laws. The Manager 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 the Manager under the Investment
Advisory Agreement will be at its own expense, except that each
class of shares of the Fund will pay the Manager an annual fee for
calculating the Fund s daily net asset value as follows: Class A -
$25,000; Class B - $18,000; and Class C - $12,000.
Expenses not assumed by the Manager under the Investment
Advisory Agreement or paid by the Distributor under the General
Distributor's Agreement will be paid by the Fund. Expenses with
respect to the Trust's four portfolios, including the Fund, are
allocated in proportion to the net assets of the respective
portfolio, except where allocations of direct expenses could be
made. Certain expenses are further allocated to certain classes of
shares of a series as explained in the Prospectus and under "How to
Buy Shares," below. The Investment Advisory Agreement lists
examples of expenses paid by the Fund, including interest, taxes,
brokerage commissions, insurance premiums, fees of non-interested
Trustees, legal and audit expenses, transfer agent and custodian
expenses, share issuance costs, certain printing and registration
costs, and non-recurring expenses, including litigation.
The Investment Advisory Agreement contains no expense
limitation. However, independently of the Investment Advisory
Agreement, the Manager has voluntarily undertaken that the Fund's
total expenses 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) shall not exceed the most
stringent state regulatory limitation application 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.
Pursuant to the undertaking, the Manager's fee at the end of
any month will be reduced or eliminated such that there will not be
any accrued but unpaid liability under this expense limitation.
The Manager reserves the right to terminate or amend the
undertaking at any time. Any assumption of the Fund s expenses
under this undertaking would lower the Fund s overall expense ratio
and increase its total return during any period in which expenses
are limited.
The Investment Advisory Agreement provides that in the absence
of willful misfeasance, bad faith, or gross negligence in the
performance of its duty, or reckless disregard for its obligations
and duties under the advisory agreement, the Manager is not liable
for any loss resulting from good faith errors or omissions on its
part with respect to any of its duties thereunder. The Investment
Advisory Agreement permits the Manager to act as investment adviser
for any other person, firm or corporation and to use the name
"Oppenheimer" in connection with its other investment companies for
which it may act as an investment adviser or general distributor.
If the Manager shall no longer act as investment adviser to a Fund,
the right of the Fund to use "Oppenheimer" as part of its name may
be withdrawn.
The Investment Advisory Agreement provides that the Manager
may enter into sub-advisory agreements with other affiliated or
unaffiliated registered investment advisers in order to obtain
specialized services for the Funds provided that the Fund is not
required to pay any additional fees for such services. The Manager
has retained the Sub-Adviser (previously named Quest for Value
Advisors) pursuant to a separate Subadvisory Agreement, dated as of
November 22, 1995, with respect to the Fund as described below.
- -- Fees Paid Under the Prior Investment Advisory Agreement. The
Sub-Adviser served as investment adviser to the Fund from the
inception of the Fund (November 8, 1994) until November 22, 1995.
During the period November 8, 1994 (commencement of operations) to
October 31, 1995, the Sub-Adviser voluntarily waived its advisory
fee of $28,182 and reimbursed the Fund for all other operating
expenses of $27,467. Such voluntary waivers and reimbursements
were terminated effective February 1, 1996.
- -- The Subadvisory Agreement. The Subadvisory Agreement provides
that the Sub-Adviser shall regularly provide investment advice with
respect to the Fund and invest and reinvest cash, securities and
the property comprising the assets of the Fund. Under the
Subadvisory Agreement, the Sub-Adviser agrees not to change the
Portfolio Manager of the Fund without the written approval of the
Manager and to provide assistance in the distribution and marketing
of the Fund. The Subadvisory Agreement was approved by the Board
of Trustees, including a majority of the Trustees who are not
"interested persons" of the Trust (as defined in the Investment
Company Act) and who have no direct or indirect financial interest
in such agreements, on June 22, 1995 and by the shareholders of the
Fund at a meeting held for that purpose on November 3, 1995.
Under the Subadvisory Agreement, the Manager will pay the Sub-
Adviser an annual fee payable monthly, based on the average daily
net assets of the Fund, equal to 40% of the investment advisory fee
collected by the Manager from the Fund based on the total net
assets of the Fund as of the effective date of the Subadvisory
Agreement (the "base amount") plus 30% of the investment advisory
fee collected by the Manager based on the total net assets of the
Fund that exceed the base amount.
The Subadvisory Agreement provides that in the absence of
willful misfeasance, bad faith, negligence or reckless disregard of
its duties or obligations, the Sub-Adviser shall not be liable to
the Manager for any act or omission in the course of or connected
with rendering services under the Subadvisory Agreement or for any
losses that may be sustained in the purchase, holding or sale of
any security.
-- The Distributor. Under a General Distributor s Agreement
with the Trust dated as of November 22, 1995, the Distributor acts
as the Fund s principal underwriter in the continuous public
offering of Class A, Class B and Class C shares of the Fund but is
not obligated to sell a specific number of shares. To date, Class
B and Class C shares have not been issued. Expenses normally
attributable to sales, including advertising and the cost of
printing and mailing prospectuses, other than those furnished to
existing shareholders, are borne by the Distributor. For the
period November 8, 1994 (commencement of operations) to October 31,
1995, no sales charges were assessed on sales of the Fund's Class
A shares. For additional information about distribution of the
Fund's shares and the expenses connected with such activities,
please refer to "Distribution and Service Plans" below.
-- The Transfer Agent. OppenheimerFunds Services acts as the
Fund's Transfer Agent pursuant to a Transfer Agency and Service
Agency Agreement dated November 22, 1995. Pursuant to the
Agreement, the Transfer Agent is responsible for maintaining the
Fund's shareholder registry and shareholder accounting records and
for shareholder servicing and administrative functions. As
compensation therefor, the Fund is obligated to pay the Transfer
Agent an annual maintenance fee for each Fund shareholder account
and reimburse the Transfer Agent for its out of pocket expenses.
- Shareholder Servicing Agent for Certain Shareholders.
Unified Management Corporation (1-800-346-4601) is the shareholder
servicing agent of the Fund for former shareholders of the AMA
Family of Funds and clients of AMA Investment Advisers, Inc. (which
had been the investment adviser of AMA Family of Funds) who acquire
shares of any Oppenheimer Quest Fund, and for (i) former
shareholders of the Unified Funds and Liquid Green Trusts, (ii)
accounts which participated or participate in a retirement plan for
which Unified Investment Advisers, Inc. or an affiliate acts as
custodian or trustee, (iii) accounts which have a Money Manager
brokerage account, and (iv) other accounts for which Unified
Management Corporation is the dealer of record.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory and Subadvisory
Agreement. The Investment Advisory Agreement contains provisions
relating to the selection of broker-dealers ("brokers") for the
Fund's portfolio transactions. The Manager and the Sub-Adviser may
use such brokers as may, in their best judgment based on all
relevant factors, implement the policy of the Fund to achieve best
execution of portfolio transactions. While the Manager need not
seek advance competitive bidding or base its selection on posted
rates, it is expected to be aware of the current rates of most
eligible brokers and to minimize the commissions paid to the extent
consistent with the interests and policies of the Fund as
established by its Board and the provisions of the Investment
Advisory Agreement.
The Investment Advisory Agreement also provides that,
consistent with obtaining the best execution of the Fund's
portfolio transactions, the Manager and the Sub-Adviser, in the
interest of the Fund, may select brokers other than affiliated
brokers, because they provide brokerage and/or research services to
the Fund and/or other accounts of the Manager or the Sub-Adviser.
The commissions paid to such brokers may be higher than another
qualified broker would have charged if a good faith determination
is made by the Manager or the Sub-Adviser that the commissions are
reasonable in relation to the services provided, viewed either in
terms of that transaction or the Manager s or the Sub-Adviser s
overall responsibilities to all its accounts. No specific dollar
value need be put on the services, some of which may or may not be
used by the Manager or the Sub-Adviser for the benefit of the Fund
or other of its advisory clients. To show that the determinations
were made in good faith, the Manager or any Sub-Adviser must be
prepared to show that the amount of such commissions paid over a
representative period selected by the Board was reasonable in
relation to the benefits to the Fund. The Investment Advisory
Agreement recognizes that an affiliated broker-dealer may act as
one of the regular brokers for the Fund provided that any
commissions paid to such broker are calculated in accordance with
procedures adopted by the Trust s Board under applicable rules of
the SEC.
In addition, the Subadvisory Agreement permits the Sub-Adviser
to enter into soft dollar arrangements through the agency of third
parties to obtain services for the Fund. Pursuant to these
arrangements, the Sub-Adviser will undertake to place brokerage
business with broker-dealers who pay third parties that provide
services. Any such soft dollar arrangements will be made in
accordance with policies adopted by the Board of the Trust and in
compliance with applicable law.
Description of Brokerage Practices. Portfolio decisions are based
upon recommendations of the portfolio manager and the judgment of
the portfolio managers. The Fund will pay brokerage commissions on
transactions in listed options and equity securities. Prices of
portfolio securities purchased from underwriters of new issues
include a commission or concession paid by the issuer to the
underwriter, and prices of debt securities purchased from dealers
include a spread between the bid and asked prices.
Transactions may be directed to dealers during the course of
an underwriting in return for their brokerage and research
services, which are intangible and on which no dollar value can be
placed. There is no formula for such allocation. The research
information may or may not be useful to one or more of the Fund
and/or other accounts of the Manager or the Sub-Adviser;
information received in connection with directed orders of other
accounts managed by the Manager or the Sub-Adviser or its
affiliates may or may not be useful to one or more of the Funds.
Such information may be in written or oral form and includes
information on particular companies and industries as well as
market, economic or institutional activity areas. It serves to
broaden the scope and supplement the research activities of the
Manager or the Sub-Adviser, to make available additional views for
consideration and comparison, and to enable the Manager or the Sub-
Adviser to obtain market information for the valuation of
securities held in the Fund's assets.
Sales of shares of the Fund, subject to applicable rules
covering the Distributor's activities in this area, will also be
considered as a factor in the direction of portfolio transactions
to dealers, but only in conformity with the price, execution and
other considerations and practices discussed above. The Fund will
not purchase any securities from or sell any securities to an
affiliated broker-dealer including Oppenheimer & Co., Inc.
("Opco"), an affiliate of the Sub-Adviser, acting as principal for
its own account.
The Sub-Adviser currently serves as investment manager to a
number of clients, including other investment companies, and may in
the future act as investment manager or advisor to others. It is
the practice of the Sub-Adviser to cause purchase or sale
transactions to be allocated among the Fund and others whose assets
it manages in such manner as it deems equitable. In making such
allocations among the Fund and other client accounts, the main
factors considered are the respective investment objectives, the
relative size of portfolio holdings of the same or comparable
securities, the availability of cash for investment, the size of
investment commitments generally held and the opinions of the
persons responsible for managing the portfolios of each Fund and
other client accounts. When orders to purchase or sell the same
security on identical terms are placed by more than one of the
funds and/or other advisory accounts managed by the Sub-Adviser or
its affiliates, the transactions are generally executed as
received, although a fund or advisory account that does not direct
trades to a specific broker ("free trades") usually will have its
order executed first. Purchases are combined where possible for
the purpose of negotiating brokerage commissions, which in some
cases might have a detrimental effect on the price or volume of the
security in a particular transaction as far as the Fund is
concerned. Orders placed by accounts that direct trades to a
specific broker will generally be executed after the free trades.
All orders placed on behalf of the Fund are considered free trades.
However, having an order placed first in the market does not
necessarily guarantee the most favorable price.
The following table presents information as to the allocation
of brokerage commissions paid by the Fund for the fiscal period
from November 8, 1994 (commencement of operations) to October 31,
1995:
<TABLE>
<CAPTION>
Total Brokerage Commissions Total Amount of Transactions
Brokerage Paid to Opco Where Brokerage Commissions
Commissions Dollar Paid to Opco
Paid Amount % Dollar Amount %
<S> <C> <C> <S> <C>
$11,593 $4,461 38.5% $2,153,416 39.8%
</TABLE>
During the period November 8, 1994 (commencement of
operations) to October 31, 1995, $194 was paid by the Fund to
brokers as commissions in return for research services; the
aggregate dollar amount of those transactions was $57,195.
Performance of the Fund
Total Return Information. As described in the Prospectus, from
time to time the "average annual total return," "cumulative total
return" and "total return at net asset value" of an investment in
a class of shares of the Fund may be advertised. An explanation of
how these total returns are calculated for each class and the
components of those calculations is set forth below.
The Fund's advertisements of its performance data must, under
applicable rules of the SEC, include the average annual total
returns for each class of shares of the Fund for the 1, 5, and 10-
year periods (or the life of the class, if less) ending as of the
most recently-ended calendar quarter prior to the publication of
the advertisement. This enables an investor to compare the Fund's
performance to the performance of other funds for the same periods.
However, a number of factors should be considered before using such
information as a basis for comparison with other investments. An
investment in the Fund is not insured; its returns and share prices
are not guaranteed and normally will fluctuate on a daily basis.
When redeemed, an investor's shares may be worth more or less than
their original cost. Returns for any given past period are not a
prediction or representation by the Fund of future returns. The
returns of Class A, Class B and Class C shares of the Fund are
affected by portfolio quality, the type of investments the Fund
holds and its operating expenses allocated to the particular class.
To date, Class B and Class C shares have not been issued;
accordingly, performance information for such classes of shares is
not set forth below.
Total returns for the Fund for the period November 8, 1994
(commencement of operations) to October 31, 1995 reflect the waiver
of management fees and the assumption of all expenses by the Sub-
Adviser. Without such waivers and expense assumptions, the total
returns for the Fund for such period would have been lower. These
waivers and expense assumptions terminated on February 1, 1996.
-- Average Annual Total Returns. The "average annual total
return" of each class is an average annual compounded rate of
return for each year in a specified number of years. It is the
rate of return based on the change in value of a hypothetical
initial investment of $1,000 ("P" in the formula below) held for a
number of years ("n") to achieve an Ending Redeemable Value ("ERV")
of that investment, according to the following formula:
1/n
(ERV)
(---) -1 = Average Annual Total Return
( P )
-- Cumulative Total Returns. The cumulative "total return"
calculation measures the change in value of a hypothetical
investment of $1,000 over an entire period of years. Its
calculation uses some of the same factors as average annual total
return, but it does not average the rate of return on an annual
basis. Cumulative total return is determined as follows:
ERV - P
------- = Total Return
P
In calculating total returns for Class A shares, the current
maximum sales charge of 5.75% (as a percentage of the offering
price) is deducted from the initial investment ("P") (unless the
return is shown at net asset value, as described below). Prior to
November 24, 1995, the maximum initial sales charge on Class A
shares was 5.50%. For Class B shares, the payment of the
applicable contingent deferred sales charge (5% for the first year,
4% for the second year, 3% for the third and fourth years, 2% for
the fifth year, 1% for the sixth year, and none thereafter) is
applied to the investment result for the period shown (unless the
total return is shown at net asset value, as described below). For
Class C shares, the 1.0% contingent deferred sales charge is
applied to the investment result for the one-year period (or less).
Total returns also assume that all dividends and capital gains
distributions during the period are reinvested to buy additional
shares at net asset value per share, and that the investment is
redeemed at the end of the period.
The "cumulative total return" on Class A shares for the period
from November 8, 1994 (commencement of operations) to October 31,
1995 was 23.44%.
-- Total Returns at Net Asset Value. From time to time the
Fund may also quote an "average annual total return at net asset
value" or a "cumulative total return at net asset value" for Class
A, Class B or Class C shares. Each is based on the difference in
net asset value per share at the beginning and the end of the
period for a hypothetical investment in that class of shares
(without considering front-end or contingent deferred sales
charges) and takes into consideration the reinvestment of dividends
and capital gains distributions.
The cumulative total return at net asset value on the Fund's
Class A shares for the period from November 8, 1994 (commencement
of operations) to October 31, 1995 was 23.44%.
Other Performance Comparisons. From time to time the Fund may
refer in advertisements to rankings and performance statistics
published by (1) recognized mutual fund performance rating services
including but not limited to Lipper Analytical Services, Inc. and
Morningstar, Inc.; (2) recognized indexes including but not limited
to the Standard & Poor's Composite Stock Price Index, Standard &
Poor's 400 Mid-Cap Index, Consumer Price Index and Dow Jones
Industrial Average; and (3) Money Magazine and other financial
publications including magazines, newspapers and newsletters.
Performance statistics may include total returns, measures of
volatility, standard deviation or other methods of performance
based on the method used by the publishers of the information.
Advertising materials for the Fund may also compare the Fund's
total return to money market fund yields and rates on certificates
of deposit, U.S. Government Securities and corporate bonds, may
compare growth stocks to value stocks and may refer to current or
historic financial or economic trends or conditions.
The performance of the Fund may be compared to the performance
of other mutual funds in general, or to the performance of
particular types of mutual funds. These comparisons may be
expressed as mutual fund rankings prepared by Lipper Analytical
Services, Inc. (Lipper), an independent service located in Summit,
New Jersey that monitors the performance of mutual funds. Lipper
generally ranks funds on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and rankings are prepared
without regard to tax consequences. In addition to the mutual fund
rankings, performance may be compared to mutual fund performance
indices prepared by Lipper.
From time to time, the Fund's performance also may be compared
to other mutual funds tracked by financial or business publications
and periodicals. For example, the Fund may quote Morningstar, Inc.
in its advertising materials. Morningstar, Inc. is a mutual fund
rating service that rates mutual funds on the basis of risk-
adjusted performance.
The total return on an investment in the Fund's shares may be
compared with performance for the same period of the S&P Mid-Cap
400 Index as described in the Prospectus. The performance of the
index includes a factor for the reinvestment of income dividends,
but does not reflect reinvestment of capital gains, expenses or
taxes.
The performance of the Fund's Class A, Class B, or Class C
shares may also be compared in publications to (i) the performance
of various market indices or to other investments for which
reliable performance data is available, and (ii) to averages,
performance rankings or other benchmarks prepared by recognized
mutual fund statistical services.
Investors may also wish to compare the Fund's Class A, Class
B or Class C return to the returns on fixed income investments
available from banks and thrift institutions, such as certificates
of deposit, ordinary interest-paying checking and savings accounts,
and other forms of fixed or variable time deposits, and various
other instruments such as Treasury bills. However, the Fund's
returns and share price are not guaranteed by the FDIC or any other
agency and will fluctuate daily, while bank depository obligations
may be insured by the FDIC and may provide fixed rates of return,
and Treasury bills are guaranteed as to principal and interest by
the U.S. government.
From time to time, the Fund's Manager may publish rankings or
ratings of the Manager (or Transfer Agent) or the investor services
provided by them to shareholders of the Oppenheimer funds, other
than performance rankings of the Oppenheimer funds themselves.
Those ratings or rankings of shareholder/investor services by third
parties may compare the Oppenheimer funds' services to those of
other mutual fund families selected by the rating or ranking
services and may be based upon the opinions of the rating or
ranking service itself, based on its research or judgment, or based
upon surveys of investors, brokers, shareholders or others.
Distribution and Service Plans
The Trust has adopted separate Amended and Restated
Distribution and Service Plans and Agreements for Class A, Class B
and Class C shares of the Fund under Rule 12b-1 of the Investment
Company Act pursuant to which the Fund will compensate the
Distributor for distribution and/or servicing of the shares of that
class, as described in the Prospectus. Each Plan has been approved
by a vote of the Board of Trustees of the Trust, including a
majority of the Trustees who are not "interested persons" (as
defined in the Investment Company Act) of the Fund and who have no
direct or indirect financial interest in the operation of the
Fund's 12b-1 plans or in any related agreement ("Independent
Trustees"), cast in person at a meeting on June 22, 1995 called for
the purpose, among others, of voting on that Plan. The Class A
Plan has been approved by the holders of a "majority" (as defined
in the Investment Company Act) of the shares of such class at a
meeting on November 3, 1995. The Class B and Class C Plans are
subject to approval by the shareholders of such classes; as of this
date, Class B and Class C shares have not been issued.
In addition, under the Plans the Manager and the Distributor,
in their sole discretion, from time to time may use their own
resources (which, in the case of the Manager, may include profits
from the advisory fee it receives from the Fund) to make payments
to brokers, dealers or other financial institutions (each is
referred to as a "Recipient" under the Plans) for distribution and
administrative services they perform. The Distributor and the
Manager may, in their sole discretion, increase or decrease the
amount of payments they make from their own resources to
Recipients.
Unless terminated as described below, each plan continues in
effect from year to year but only as long as such continuance is
specifically approved at least annually by the Trust's Board of
Trustees and its "Independent Trustees" by a vote cast in person at
a meeting called for the purpose of voting on such continuance.
Any Plan may be terminated at any time by the vote of a majority of
the Independent Trustees or by the vote of the holders of a
"majority" (as defined in the Investment Company Act) of the
outstanding shares of that class. No Plan may be amended to
increase materially the amount of payments to be made unless such
amendment is approved by shareholders of the class affected by the
amendment. In addition, because Class B shares of the Fund
automatically convert into Class A shares after six years, the Fund
is required to obtain the approval of Class B as well as Class A
shareholders for a proposed material amendment to the Class A Plan
that would materially increase payments under the Plan. Such
approval must be by a "majority" of the Class A and Class B shares
(as defined in the Investment Company Act), voting separately by
class. All material amendments must be approved by the Board of
Trustees and the Independent Trustees.
While the Plans are in effect, the Treasurer of the Trust
shall provide separate written reports to the Trust's Board of
Trustees at least quarterly on the amount of all payments made
pursuant to each Plan, the purpose for which the payments were made
and the identity of each Recipient that received any such payment.
The reports shall also include the distribution costs for that
quarter, and such costs for previous fiscal periods that are
carried forward, as explained in the Prospectus and below. Those
reports, including the allocations on which they are based, will be
subject to the review and approval of the Independent Trustees in
the exercise of their fiduciary duty. Each Plan further provides
that while it is in effect, the selection and nomination of those
Trustees of the Trust who are not "interested persons" of the Trust
is committed to the discretion of the Independent Trustees. This
does not prevent the involvement of others in such selection and
nomination if the final decision on any such selection or
nomination is approved by a majority of the Independent Trustees.
Under the Plans, no payment will be made to any Recipient in
any quarter if the aggregate net asset value of all Fund shares
held by the Recipient for itself and its customers did not exceed
a minimum amount, if any, that may be determined from time to time
by a majority of the Trust's Independent Trustees. Initially, the
Board of Trustees has set the fee at the maximum rate and set no
requirement for a minimum amount.
The Plans allow the service fee payments to be paid by the
Distributor to Recipients in advance for the first year Class A,
Class B and Class C shares are outstanding, and thereafter on a
quarterly basis, as described in the Prospectus. The advance
payment is based on the net assets of the Class A, Class B and
Class C shares sold. An exchange of shares does not entitle the
Recipient to an advance service fee payment. In the event Class A,
Class B or Class C shares are redeemed during the first year such
shares are outstanding, the Recipient will be obligated to repay a
pro rata portion of such advance payment to the Distributor.
Although the Plans permit the Distributor to retain both the
asset-based sales charge and the service fee, or to pay Recipients
the service fee on a quarterly basis, without payment in advance,
the Distributor presently intends to pay the service fee to
Recipients in the manner described above. A minimum holding period
may be established from time to time under the Plans by the Board.
Initially, the Board has set no minimum holding period. All
payments under the Plans are subject to the limitations imposed by
the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. on payments of asset-based sales charges
and service fees.
The Plans provide for the Distributor to be compensated at a
flat rate, whether the Distributor's expenses are more or less than
the amounts paid by the Fund during that period. The asset-based
sales charges paid to the Distributor by the Fund under the Plans
are intended to allow the Distributor to recoup the cost of sales
commissions paid to authorized brokers and dealers at the time of
sale, plus financing costs, as described in the Prospectus. Such
payments may also be used to pay for the following expenses in
connection with the distribution of shares: (i) financing the
advance of the service fee payment to Recipients under the Plan,
(ii) compensation and expenses of personnel employed by the
Distributor to support distribution of shares, and (iii) costs of
sales literature, advertising and prospectuses (other than those
furnished to current shareholders).
- The Prior Plans. From the inception date of the Fund on
November 8, 1994 through to and including November 22, 1995, OpCap
Distributors (formerly known as Quest for Value Distributors)
served as Distributor to the Fund and provided distribution
services for the Fund's Class A shares pursuant to a plan adopted
under the Investment Company Act (the "Prior Plan"). For the
period from November 8, 1994 (commencement of operations) to
October 31, 1995, no fees were payable under the Prior Plan and
OpCap Distributors paid no distribution and service fees to
Oppenheimer & Co., Inc., an affiliated broker-dealer, with respect
to the Fund.
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A, Class B and Class C
Shares. The availability of three classes of shares permits the
individual investor to choose the method of purchasing shares that
is more beneficial to the investor depending on the amount of the
purchase, the length of time the investor expects to hold shares
and other relevant circumstances. Investors should understand that
the purpose and function of the deferred sales charge and asset-
based sales charge with respect to Class B and Class C shares are
the same as those of the initial sales charge with respect to Class
A shares. Any salesperson or other person entitled to receive
compensation for selling Fund shares may receive different
compensation with respect to one class of shares than another. The
Distributor will not accept any order for $500,000 or $1 million or
more of Class B or Class C shares, respectively, on behalf of a
single investor (not including dealer "street name" or omnibus
accounts) because generally it will be more advantageous for that
investor to purchase Class A shares of the Fund instead.
The three classes of shares each represent an interest in the
same portfolio investments of the Fund. However, each class has
different shareholder privileges and features. The net income
attributable to Class B and Class C shares and the dividends
payable on Class B and Class C shares will be reduced by
incremental expenses borne solely by that class, respectively,
including the asset-based sales charges to which Class B and Class
C shares are subject.
The conversion of Class B shares to Class A shares is subject
to the continuing availability of a private letter ruling from the
Internal Revenue Service, or an opinion of counsel or tax adviser,
to the effect that the conversion of Class B shares does not
constitute a taxable event for the holder under Federal income tax
law. If such a revenue ruling or opinion is no longer available,
the automatic conversion feature may be suspended, in which event
no further conversions of Class B shares would occur while such
suspension remained in effect. Although Class B shares could then
be exchanged for Class A shares on the basis of relative net asset
value of the two classes, without the imposition of a sales charge
or fee, such exchange could constitute a taxable event for the
holder, and absent such exchange, Class B shares might continue to
be subject to the asset-based sales charge for longer than six
years.
The methodology for calculating the net asset value, dividends
and distributions of the Fund's Class A, Class B and Class C shares
recognizes two types of expenses. General expenses that do not
pertain specifically to either class are allocated pro rata to the
shares of each class, based on the percentage of the net assets of
such class to the Fund's total assets, and then equally to each
outstanding share within a given class. Such general expenses
include (i) management fees, (ii) legal, bookkeeping and audit
fees, (iii) printing and mailing costs of shareholder reports,
Prospectuses, Statements of Additional Information and other
materials for current shareholders, (iv) fees to Independent
Trustees, (v) custodian expenses, (vi) share issuance costs, (vii)
organization and start-up costs, (viii) interest, taxes and
brokerage commissions, and (ix) non-recurring expenses, such as
litigation costs. Other expenses that are directly attributable to
a class are allocated equally to each outstanding share within that
class. Such expenses include (i) Distribution Plan fees, (ii)
incremental transfer and shareholder servicing agent fees and
expenses, (iii) registration fees and (iv) shareholder meeting
expenses, to the extent that such expenses pertain to a specific
class rather than to the Fund as a whole.
Determination of Net Asset Values Per Share. The Trust's Board of
Trustees has established procedures for the valuation of the Fund's
securities generally as follows: (i) equity securities traded on a
securities exchange or on the NASDAQ for which last sale
information is regularly reported are valued at the last sales
prices on their primary exchange or the NASDAQ that day (or, in the
absence of sales that day, at values based on the last sale prices
of the preceding trading day or closing bid and asked prices); (ii)
securities actively traded on a foreign securities exchange are
valued at the last sales price available to the pricing service
approved by the Trust's Board of Trustees or to the Manager as
reported by the principal exchange on which the security is traded;
(iii) unlisted foreign securities or listed foreign securities not
actively traded are valued as in (i) above, if available, or at the
mean between "bid" and "asked" prices obtained from active market
makers in the security on the basis of reasonable inquiry; (iv)
long-term debt securities having a remaining maturity in excess of
60 days are valued at the mean between the "bid" and "asked" prices
determined by a portfolio pricing service approved by the Trust's
Board of Trustees or obtained from active market makers in the
security on the basis of reasonable inquiry; (v) debt instruments
having a maturity of more than one year when issued, and non-money
market type instruments having a maturity of one year or less when
issued, which have a remaining maturity of 60 days or less are
valued at the mean between the "bid" and "asked" prices determined
by a pricing service approved by the Trust's Board of Trustees or
obtained from active market makers in the security on the basis of
reasonable inquiry; (vi) money market-type debt securities having
a maturity of less than one year when issued that having a
remaining maturity of 60 days or less are valued at cost, adjusted
for amortization of premiums and accretion of discounts; (vii)
securities (including restricted securities) not having readily-
available market quotations are valued at fair value under the
Board's procedures; and (viii) securities traded on foreign
exchanges are valued at the closing or last sales prices reported
on a principal exchange, or, if none, at the mean between closing
bid and asked prices and reflect prevailing rates of exchange taken
from the closing price on the London foreign exchange market that
day.
Trading in securities on European and Asian exchanges and
over-the-counter markets is normally completed before the close of
the Exchange. Events affecting the values of foreign securities
that occur between the time their prices are determined and the
close of the Exchange will not be reflected in the Fund's
calculation of net asset value unless the Board of Trustees or the
Manager, under procedures established by the Board of Trustees,
determines that the particular event would materially affect net
asset value, in which case an adjustment would be made. Foreign
currency, including forward contracts, will be valued at the
closing price in the London foreign exchange market that day as
provided by a reliable bank, dealer or pricing service. The value
of securities denominated in foreign currency will be converted to
U.S. dollars at the closing price in the London foreign exchange
market that day as provided by a reliable bank, dealer or pricing
service.
In the case of Municipal Securities, U.S. Government
securities and corporate bonds, where last sale information is not
generally available, such pricing procedures may include "matrix"
comparisons to the prices for comparable instruments on the basis
of quality, yield, maturity and other special factors involved
(such as the tax-exempt status of the interest paid by Municipal
Securities). With the approval of the Trust's Board of Trustees,
the Manager may employ a pricing service, bank or broker-dealer
experienced in such matters to price any of the types of securities
described above. The Trustees will monitor the accuracy of pricing
services by comparing prices used for portfolio evaluation to
actual sales prices of selected securities.
The Fund values puts, calls and Futures at the last sales
price on the principal exchange or on the NASDAQ on which they are
traded. If there were no sales on the principal exchange, the last
sale or any exchange is used. In the absence of any sales that
day, value shall be the last reported sales price on the prior
trading day or closing bid or asked prices on the principal
exchange closets to the last reported sales price.
AccountLink. When shares are purchased through AccountLink, each
purchase must be at least $25.00. Shares will be purchased on the
regular business day the Distributor is instructed to initiate the
Automated Clearing House ("ACH") transfer to buy the shares.
Dividends will begin to accrue on shares purchased by the proceeds
of ACH transfers on the business day the Fund receives Federal
Funds for the purchase through the ACH system before the close of
The New York Stock Exchange. The Exchange normally closes at 4:00
P.M., but may close earlier on certain days. If Federal Funds are
received on a business day after the close of the Exchange, the
shares will be purchased and dividends will begin to accrue on the
next regular business day. The proceeds of ACH transfers are
normally received by the Fund 3 days after the transfers are
initiated. The Distributor and the Fund are not responsible for
any delays in purchasing shares resulting from delays in ACH
transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced
sales charge rate may be obtained for Class A shares under Rights
of Accumulation and Letters of Intent because of the economies of
sales efforts and reduction in expenses realized by the
Distributor, dealers and brokers making such sales. No sales
charge is imposed in certain other circumstances described in the
Prospectus because the Distributor incurs little or no selling
expenses. The term "immediate family" refers to one's spouse,
children, grandchildren, parents, grandparents, parents-in-law,
sons- and daughters-in-law, siblings, a sibling's spouse and a
spouse's siblings.
-- The Oppenheimer Funds. The Oppenheimer funds are those
mutual funds for which the Distributor acts as the distributor or
the sub-distributor and include the following:
Oppenheimer Tax-Free Bond Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Fund
Oppenheimer Insured Tax-Exempt Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion Income Fund
Oppenheimer Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer International Bond Fund
Oppenheimer Enterprise Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
The Bond Fund For Growth
Limited Term New York Municipal Fund
Rochester Fund Municipals
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
There is an initial sales charge on the purchase of Class A
shares of each of the Oppenheimer funds except Money Market Funds
(under certain circumstances described herein, redemption proceeds
of Money Market Fund shares may be subject to a contingent
deferred sales charge).
-- Letters of Intent. A Letter of Intent ("Letter") is the
investor's statement of intention to purchase Class A and Class B
shares (or shares of either class) of the Fund (and other eligible
Oppenheimer funds) during the 13-month period from the investor's
first purchase pursuant to the Letter (the "Letter of Intent
period"), which may, at the investor's request, include purchases
made up to 90 days prior to the date of the Letter. The Letter
states the investor's intention to make the aggregate amount of
purchases (excluding any purchases made by reinvestment of
dividends or distributions or purchases made at net asset value
without sales charge), which together with the investor's holdings
of such funds (calculated at their respective public offering
prices calculated on the date of the Letter) will equal or exceed
the amount specified in the Letter. This enables the investor to
count the shares to be purchased under the Letter of Intent to
obtain the reduced sales charge rate (as set forth in the
Prospectus) that applies under the Right of Accumulation to current
purchases of Class A shares. Each purchase of Class A shares under
the Letter will be made at the public offering price (including the
sales charge) that applies to a single lump-sum purchase of shares
in the amount intended to be purchased under the Letter.
In submitting a Letter, the investor makes no commitment to
purchase shares, but if the investor's purchases of shares within
the Letter of Intent period, when added to the value (at offering
price) of the investor's holdings of shares on the last day of that
period, do not equal or exceed the intended purchase amount, the
investor agrees to pay the additional amount of sales charge
applicable to such purchases, as set forth in "Terms of Escrow,"
below (as those terms may be amended from time to time). The
investor agrees that shares equal in value to 5% of the intended
purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be
bound by the terms of the Prospectus, this Statement of Additional
Information and the Application used for such Letter of Intent, and
if such terms are amended, as they may be from time to time by the
Fund, that those amendments will apply automatically to existing
Letters of Intent.
For purchases of shares of the Fund and other Oppenheimer
funds by Oppenheimer funds prototype 401(k) plans under a Letter of
Intent, the Transfer Agent will not hold shares in escrow. If the
intended purchase amount under the Letter entered into by an
Oppenheimer funds prototype 401(k) plan is not purchased by the
plan by the end of the Letter of Intent period, there will be no
adjustment of commissions paid to the broker-dealer or financial
institution of record for accounts held in the name of that plan.
If the total eligible purchases made during the Letter of
Intent period do not equal or exceed the intended purchase amount,
the commissions previously paid to the dealer of record for the
account and the amount of sales charge retained by the Distributor
will be adjusted to the rates applicable to actual purchases. If
total eligible purchases during the Letter of Intent period exceed
the intended purchase amount and exceed the amount needed to
qualify for the next sales charge rate reduction set forth in the
applicable prospectus, the sales charges paid will be adjusted to
the lower rate, but only if and when the dealer returns to the
Distributor the excess of the amount of commissions allowed or paid
to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the
Distributor will be used to purchase additional shares for the
investor's account at the net asset value per share in effect on
the date of such purchase, promptly after the Distributor's receipt
thereof.
In determining the total amount of purchases made under a
Letter, shares redeemed by the investor prior to the termination of
the Letter of Intent period will be deducted. It is the
responsibility of the dealer of record and/or the investor to
advise the Distributor about the Letter in placing any purchase
orders for the investor during the Letter of Intent period. All
of such purchases must be made through the Distributor.
- Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in
value to 5% of the intended purchase amount specified in the Letter
shall be held in escrow by the Transfer Agent. For example, if the
intended purchase amount is $50,000, the escrow shall be shares
valued in the amount of $2,500 (computed at the public offering
price adjusted for a $50,000 purchase). Any dividends and capital
gains distributions on the escrowed shares will be credited to the
investor's account.
2. If the intended purchase amount specified under the
Letter is completed within the thirteen-month Letter of Intent
period, the escrowed shares will be promptly released to the
investor.
3. If, at the end of the thirteen-month Letter of Intent
period the total purchases pursuant to the Letter are less than the
intended purchase amount specified in the Letter, the investor must
remit to the Distributor an amount equal to the difference between
the dollar amount of sales charges actually paid and the amount of
sales charges which would have been paid if the total amount
purchased had been made at a single time. Such sales charge
adjustment will apply to any shares redeemed prior to the
completion of the Letter. If such difference in sales charges is
not paid within twenty days after a request from the Distributor or
the dealer, the Distributor will, within sixty days of the
expiration of the Letter, redeem the number of escrowed shares
necessary to realize such difference in sales charges. Full and
fractional shares remaining after such redemption will be released
from escrow. If a request is received to redeem escrowed shares
prior to the payment of such additional sales charge, the sales
charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably
constitutes and appoints the Transfer Agent as attorney-in-fact to
surrender for redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the
holding of which may be counted toward completion of a Letter)
include (a) Class A shares sold with a front-end sales charge or
subject to a Class A contingent deferred sales charge, (b) Class B
shares acquired subject to a contingent deferred sales charge, and
(c) Class A shares or Class B shares acquired in exchange for
either (i) Class A shares of one of the other Oppenheimer funds
that were acquired subject to a Class A initial or contingent
deferred sales charge or (ii) Class B shares of one of the other
Oppenheimer funds that were acquired subject to a contingent
deferred sales charge.
6. Shares held in escrow hereunder will automatically be
exchanged for shares of another fund to which an exchange is
requested, as described in the section of the Prospectus entitled
"Exchange Privilege," and the escrow will be transferred to that
other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a
bank account, a check (minimum $25) for the initial purchase must
accompany the application. Shares purchased by Asset Builder Plan
payments from bank accounts are subject to the redemption
restrictions for recent purchases described in "How To Sell
Shares," in the Prospectus. Asset Builder Plans also enable
shareholders of Oppenheimer Cash Reserves to use those accounts for
monthly automatic purchases of shares of up to four other
Oppenheimer funds.
There is a front-end sales charge on the purchase of certain
Oppenheimer funds, or a contingent deferred sales charge may apply
to shares purchased by Asset Builder payments. An application
should be obtained from the Distributor, completed and returned,
and a prospectus of the selected fund(s) should be obtained from
the Distributor or your financial advisor before initiating Asset
Builder payments. The amount of the Asset Builder investment may
be changed or the automatic investments may be terminated at any
time by writing to the Transfer Agent. A reasonable period
(approximately 15 days) is required after the Transfer Agent's
receipt of such instructions to implement them. The Fund reserves
the right to amend, suspend, or discontinue offering such plans at
any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders
for the Fund's shares (for example, when a purchase check is
returned to the Fund unpaid) causes a loss to be incurred when the
net asset value of the Fund's shares on the cancellation date is
less than on the purchase date. That loss is equal to the amount
of the decline in the net asset value per share multiplied by the
number of shares in the purchase order. The investor is
responsible for that loss. If the investor fails to compensate the
Fund for the loss, the Distributor will do so. The Fund may
reimburse the Distributor for that amount by redeeming shares from
any account registered in that investor's name, or the Fund or the
Distributor may seek other redress.
<PAGE>
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and
conditions for redemptions set forth in the Prospectus.
-- Involuntary Redemptions. The Board of Trustees has the
right to cause the involuntary redemption of the shares held in any
Fund account if the aggregate net asset value of those shares is
less than $200 or such lesser amount as the Board may fix. The
Board of Trustees will not cause the involuntary redemption of
shares in an account if the aggregate net asset value of the shares
has fallen below the stated minimum solely as a result of market
fluctuations. Should the Board elect to exercise this right, it
may also fix, in accordance with the Investment Company Act, the
requirements for any notice to be given to the shareholders in
question (not less than 30 days), or the Board may set requirements
for granting permission to the Shareholder to increase the
investment, and set other terms and conditions so that the shares
would not be involuntarily redeemed.
Reinvestment Privilege. Within six months of a redemption, a
shareholder may reinvest all or part of the redemption proceeds of
(i) Class A shares, or (ii) Class B shares that were subject to the
Class B contingent deferred sales charge when redeemed. This
privilege does not apply to Class C shares. The reinvestment may
be made without sales charge only in Class A shares of the Fund or
any of the other Oppenheimer funds into which shares of the Fund
are exchangeable as described below, at the net asset value next
computed after the Transfer Agent receives the reinvestment order.
The shareholder must ask the Distributor for that privilege at the
time of reinvestment. Any capital gain that was realized when the
shares were redeemed is taxable, and reinvestment will not alter
any capital gains tax payable on that gain. If there has been a
capital loss on the redemption, some or all of the loss may not be
tax deductible, depending on the timing and amount of the
reinvestment. Under the Internal Revenue Code, if the redemption
proceeds of Fund shares on which a sales charge was paid are
reinvested in shares of the Fund or another of the Oppenheimer
funds within 90 days of payment of the sales charge, the
shareholder's basis in the shares of the Fund that were redeemed
may not include the amount of the sales charge paid. That would
reduce the loss or increase the gain recognized from the
redemption. However, in that case the sales charge would be added
to the basis of the shares acquired by the reinvestment of the
redemption proceeds. The Fund may amend, suspend or cease offering
this reinvestment privilege at any time as to shares redeemed after
the date of such amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of any class at the time of
transfer to the name of another person or entity (whether the
transfer occurs by absolute assignment, gift or bequest, not
involving, directly or indirectly, a public sale). The transferred
shares will remain subject to the contingent deferred sales charge,
calculated as if the transferee shareholder had acquired the
transferred shares in the same manner and at the same time as the
transferring shareholder. If less than all shares held in an
account are transferred, and some but not all shares in the account
would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus
under "How to Buy Shares" for the imposition of the Class B and
Class C contingent deferred sales charge will be followed in
determining the order in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions
from OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans,
401(k) plans, or pension or profit-sharing plans should be
addressed to "Trustee, OppenheimerFunds Retirement Plans," c/o the
Transfer Agent at its address listed in "How To Sell Shares" in the
Prospectus or on the back cover of this Statement of Additional
Information. The request must: (i) state the reason for the
distribution; (ii) state the owner's awareness of tax penalties if
the distribution is premature; and (iii) conform to the
requirements of the plan and the Fund's other redemption
requirements. Participants, other than self-employed persons
maintaining a plan account in their own name, in OppenheimerFunds-
sponsored prototype pension or profit-sharing or 401(k) plans may
not directly redeem or exchange shares held for their account under
those plans. The employer or plan administrator must sign the
request. Distributions from pension, profit sharing plans are
subject to special requirements under the Internal Revenue Code and
certain documents (available from the Transfer Agent) must be
completed before the distribution may be made. Distributions from
retirement plans are subject to withholding requirements under the
Internal Revenue Code, and IRS Form W-4P (available from the
Transfer Agent) must be submitted to the Transfer Agent with the
distribution request, or the distribution may be delayed. Unless
the shareholder has provided the Transfer Agent with a certified
tax identification number, the Internal Revenue Code requires that
tax be withheld from any distribution even if the shareholder
elects not to have tax withheld. The Fund, the Manager, the
Distributor, the Trustee and the Transfer Agent assume no
responsibility to determine whether a distribution satisfies the
conditions of applicable tax laws and will not be responsible for
any tax penalties assessed in connection with a distribution.
Special Arrangements for Repurchase of Shares from Dealers and
Brokers. The Distributor is the Fund's agent to repurchase its
shares from authorized dealers or brokers. The repurchase price
per share will be the net asset value next computed after the
Distributor receives the order placed by the dealer or broker,
except that if the Distributor receives a repurchase order from the
dealer or broker after the close of The New York Stock Exchange on
a regular business day, it will be processed at that day's net
asset value, if the order was received by the dealer or broker from
its customer prior to the time the Exchange closes (normally, that
is 4:00 P.M., but may be earlier on some days) and the order was
transmitted to and received by the Distributor prior to its close
of business that day (normally 5:00 P.M.). Ordinarily, for
accounts redeemed by a broker-dealer under this procedure, payment
will be made within three business days after the shares have been
redeemed upon the Distributor's receipt of the required redemption
documents in proper form, with the signature(s) of the registered
owners guaranteed on the redemption document as described in the
Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares
of the Fund valued at $5,000 or more can authorize the Transfer
Agent to redeem shares (minimum $50) automatically on a monthly,
quarterly, semi-annual or annual basis under an Automatic
Withdrawal Plan. Shares will be redeemed three business days prior
to the date requested by the shareholder for receipt of the
payment. Automatic withdrawals of up to $1,500 per month may be
requested by telephone if payments are to be made by check payable
to all shareholders of record and sent to the address of record for
the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from Oppenheimer
funds-sponsored retirement plans may not be arranged on this basis.
Payments are normally made by check, but shareholders having
AccountLink privileges (see "How To Buy Shares") may arrange to
have Automatic Withdrawal Plan payments transferred to the bank
account designated on the Oppenheimer funds New Account Application
or signature-guaranteed instructions. The Fund cannot guarantee
receipt of a payment on the date requested and reserves the right
to amend, suspend or discontinue offering such plans at any time
without prior notice. Because of the sales charge assessed on
Class A share purchases, shareholders should not make regular
additional Class A share purchases while participating in an
Automatic Withdrawal Plan. Class B and Class C shareholders should
not establish withdrawal plans because of the imposition of the
contingent deferred sales charges on such withdrawals (except where
the Class B and Class C contingent deferred sales charges are
waived as described in the Prospectus under "Waivers of Class B and
Class C Contingent Deferred Sales Charges").
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such
plans, as stated below and in the provisions of the Oppenheimer
funds Application relating to such Plans, as well as the
Prospectus. These provisions may be amended from time to time by
the Fund and/or the Distributor. When adopted, such amendments
will automatically apply to existing Plans.
-- Automatic Exchange Plans. Shareholders can authorize the
Transfer Agent (on the Oppenheimer funds Application or signature-
guaranteed instructions) to exchange a pre-determined amount of
shares of the Fund for shares (of the same class) of other
Oppenheimer funds automatically on a monthly, quarterly, semi-
annual or annual basis under an Automatic Exchange Plan. The
minimum amount that may be exchanged to each other fund account is
$25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "How to
Exchange Shares" in the Prospectus and below in this Statement of
Additional Information.
-- Automatic Withdrawal Plans. Fund shares will be redeemed
as necessary to meet withdrawal payments. Shares acquired without
a sales charge will be redeemed first and shares acquired with
reinvested dividends and capital gains distributions will be
redeemed next, followed by shares acquired with a sales charge, to
the extent necessary to make withdrawal payments. Depending upon
the amount withdrawn, the investor's principal may be depleted.
Payments made under withdrawal plans should not be considered as a
yield or income on your investment. It may not be desirable to
purchase additional Class A shares while making automatic
withdrawals because of the sales charges that apply to purchases
when made. Accordingly, a shareholder normally may not maintain an
Automatic Withdrawal Plan while simultaneously making regular
purchases of Class A shares.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the
"Planholder") who executed the Plan authorization and application
submitted to the Transfer Agent. The Transfer Agent shall incur no
liability to the Planholder for any action taken or omitted by the
Transfer Agent in good faith to administer the Plan. Certificates
will not be issued for shares of the Fund purchased for and held
under the Plan, but the Transfer Agent will credit all such shares
to the account of the Planholder on the records of the Fund. Any
share certificates held by a Planholder may be surrendered
unendorsed to the Transfer Agent with the Plan application so that
the shares represented by the certificate may be held under the
Plan.
For accounts subject to Automatic Withdrawal Plans,
distributions of capital gains must be reinvested in shares of the
Fund, which will be done at net asset value without a sales charge.
Dividends on shares held in the account may be paid in cash or
reinvested.
Redemptions of shares needed to make withdrawal payments will
be made at the net asset value per share determined on the
redemption date. Checks or ACH transfer payments of the proceeds
of Plan withdrawals will normally be transmitted three business
days prior to the date selected for receipt of the payment (receipt
of payment on the date selected cannot be guaranteed), according to
the choice specified in writing by the Planholder.
The amount and the interval of disbursement payments and the
address to which checks are to be mailed or AccountLink payments
are to be sent may be changed at any time by the Planholder by
writing to the Transfer Agent. The Planholder should allow at
least two weeks' time in mailing such notification for the
requested change to be put in effect. The Planholder may, at any
time, instruct the Transfer Agent by written notice (in proper form
in accordance with the requirements of the then-current Prospectus
of the Fund) to redeem all, or any part of, the shares held under
the Plan. In that case, the Transfer Agent will redeem the number
of shares requested at the net asset value per share in effect in
accordance with the Fund's usual redemption procedures and will
mail a check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by
writing to the Transfer Agent. A Plan may also be terminated at
any time by the Transfer Agent upon receiving directions to that
effect from the Fund. The Transfer Agent will also terminate a
Plan upon receipt of evidence satisfactory to it of the death or
legal incapacity of the Planholder. Upon termination of a Plan by
the Transfer Agent or the Fund, shares that have not been redeemed
from the account will be held in uncertificated form in the name of
the Planholder, and the account will continue as a dividend-
reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder or his or her
executor or guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt,
the Planholder may request issuance of a portion of the shares in
certificated form. Upon written request from the Planholder, the
Transfer Agent will determine the number of shares for which a
certificate may be issued without causing the withdrawal checks to
stop because of exhaustion of uncertificated shares needed to
continue payments. However, should such uncertificated shares
become exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the
Fund, the Planholder will be deemed to have appointed any successor
transfer agent to act as agent in administering the Plan.
How To Exchange Shares
As stated in the Prospectus, shares of a particular class of
Oppenheimer funds having more than one class of shares may be
exchanged only for shares of the same class of other Oppenheimer
funds. At present Rochester Fund Municipals, The Bond Fund For
Growth and Limited Term New York Municipal Fund have limited
exchange rights; please see their prospectuses for additional
information. Shares of the Oppenheimer funds that have a single
class without a class designation are deemed "Class A" shares for
this purpose. All of the Oppenheimer funds offer Class A, B and C
shares except Oppenheimer Money Market Fund, Inc., Centennial Money
Market Trust, Centennial Tax Exempt Trust, Centennial Government
Trust, Centennial New York Tax Exempt Trust, Centennial California
Tax Exempt Trust, Centennial America Fund, L.P., and Daily Cash
Accumulation Fund, Inc., which only offer Class A shares and
Oppenheimer Main Street California Tax-Exempt Fund which only
offers Class A and Class B shares (Class B and Class C shares of
Oppenheimer Cash Reserves are generally available only by exchange
from the same class of shares of other Oppenheimer funds or through
OppenheimerFunds sponsored 401(k) plans). A list showing which
funds offer which classes can be obtained by calling the
distributor at 1-800-525-7048.
Class A shares of Oppenheimer funds may be exchanged at net
asset value for shares of any Money Market Fund. Shares of any
Money Market Fund purchased without a sales charge may be exchanged
for shares of Oppenheimer funds offered with a sales charge upon
payment of the sales charge (or, if applicable, may be used to
purchase shares of Oppenheimer funds subject to a contingent
deferred sales charge). However, shares of Oppenheimer Money
Market Fund, Inc. purchased with the redemption proceeds of shares
of other mutual funds (other than funds managed by the Manager or
its subsidiaries) redeemed within the 12 months prior to that
purchase may subsequently be exchanged for shares of other
Oppenheimer funds without being subject to an initial or contingent
deferred sales charge, whichever is applicable. To qualify for
that privilege, the investor or the investor's dealer must notify
the Distributor of eligibility for this privilege at the time the
shares of Oppenheimer Money Market Fund, Inc. are purchased, and,
if requested, must supply proof of entitlement to this privilege.
Shares of this Fund acquired by reinvestment of dividends or
distributions from any other of the Oppenheimer funds or from any
unit investment trust for which reinvestment arrangements have been
made with the Distributor may be exchanged at net asset value for
shares of any of the Oppenheimer funds. No contingent deferred
sales charge is imposed on exchanges of shares of either class
purchased subject to a contingent deferred sales charge. However,
when Class A shares acquired by exchange of Class A shares of other
Oppenheimer funds purchased subject to a Class A contingent
deferred sales charge are redeemed within 18 months of the end of
the calendar month of the initial purchase of the exchanged Class
A shares, the Class A contingent deferred sales charge is imposed
on the redeemed shares (see "Class A Contingent Deferred Sales
Charge" in the Prospectus). The Class B contingent deferred sales
charge is imposed on Class B shares acquired by exchange if they
are redeemed within six years of the initial purchase of the
exchanged Class B shares. The Class C contingent deferred sales
charge is imposed on Class C shares acquired by exchange if they
are redeemed within 12 months of the initial purchase of the
exchanged Class C shares.
When Class B or Class C shares are redeemed to effect an
exchange, the priorities described in "How To Buy Shares" in the
Prospectus for the imposition of the Class B and Class C contingent
deferred sales charges will be followed in determining the order in
which the shares are exchanged. Shareholders should take into
account the effect of any exchange on the applicability and rate of
any contingent deferred sales charge that might be imposed in the
subsequent redemption of remaining shares. Shareholders owning
shares of more than one class must specify whether they intend to
exchange Class A, Class B or Class C shares.
The Fund reserves the right to reject telephone or written
exchange requests submitted in bulk by anyone on behalf of 10 or
more accounts. The Fund may accept requests for exchanges of up to
50 accounts per day from representatives of authorized dealers that
qualify for this privilege. In connection with any exchange
request, the number of shares exchanged may be less than the number
requested if the exchange or the number requested would include
shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information or would include shares covered
by a share certificate that is not tendered with the request. In
those cases, only the shares available for exchange without
restriction will be exchanged.
When exchanging shares by telephone, a shareholder must either
have an existing account in, or obtain and acknowledge receipt of
a prospectus of, the fund to which the exchange is to be made. For
full or partial exchanges of an account made by telephone, any
special account features such as Asset Builder Plans, Automatic
Withdrawal Plans and retirement plan contributions will be switched
to the new account unless the Transfer Agent is instructed
otherwise. If all telephone lines are busy (which might occur, for
example, during periods of substantial market fluctuations),
shareholders might not be able to request exchanges by telephone
and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business
day the Transfer Agent receives an exchange request in proper form
(the "Redemption Date"). Normally, shares of the fund to be
acquired are purchased on the Redemption Date, but such purchases
may be delayed by either fund up to five business days if it
determines that it would be disadvantaged by an immediate transfer
of the redemption proceeds. The Fund reserves the right, in its
discretion, to refuse any exchange request that may disadvantage it
(for example, if the receipt of multiple exchange requests from a
dealer might require the disposition of portfolio securities at a
time or at a price that might be disadvantageous to the Fund).
The different Oppenheimer funds available for exchange have
different investment objectives, policies and risks, and a
shareholder should assure that the Fund selected is appropriate for
his or her investment and should be aware of the tax consequences
of an exchange. For federal income tax purposes, an exchange
transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. "Reinvestment Privilege," above,
discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and
the Transfer Agent are unable to provide investment, tax or legal
advice to a shareholder in connection with an exchange request or
any other investment transaction.
Dividends, Capital Gains and Taxes
Tax Status of the Fund's Dividends and Distributions. The Federal
tax treatment of the Fund's dividends and capital gains
distributions is explained in the Prospectus under the caption
"Dividends, Capital Gains and Taxes." Special provisions of the
Internal Revenue Code govern the eligibility of the Fund's
dividends for the dividends-received deduction for corporate
shareholders. Long-term capital gains distributions are not
eligible for the deduction. In addition, the amount of dividends
paid by the Fund which may qualify for the deduction is limited to
the aggregate amount of qualifying dividends that the Fund derives
from its portfolio investments that the Fund has held for a minimum
period, usually 46 days. A corporate shareholder will not be
eligible for the deduction on dividends paid on Fund shares held
for 45 days or less. To the extent the Fund's dividends are
derived from gross income from option premiums, interest income or
short-term gains from the sale of securities or dividends from
foreign corporations, those dividends will not qualify for the
deduction.
Under the Internal Revenue Code, by December 31 each year, the
Fund must distribute 98% of its taxable investment income earned
from January 1 through December 31 of that year and 98% of its
capital gains realized in the period from November 1 of the prior
year through October 31 of the current year, or else the Fund must
pay an excise tax on the amounts not distributed. While it is
presently anticipated that the Fund will meet those requirements,
the Board of Trustees and the Manager might determine in a
particular year that it would be in the best interest of
shareholders for the Fund not to make such distributions at the
required levels and to pay the excise tax on the undistributed
amounts. That would reduce the amount of income or capital gains
available for distribution to shareholders.
If the Fund qualifies as a "regulated investment company"
under the Internal Revenue Code, it will not be liable for Federal
income taxes on amounts paid by it as dividends and distribution.
The Fund qualified during its last fiscal year, and intends to
qualify in current and future years, but reserves the right not to
do so. The Internal Revenue Code contains a number of complex
tests to determine whether the Fund will qualify, and the Fund
might not meet those tests in a particular year. For example, if
the Fund derives 30% or more of its gross income from the sale of
securities held less than three months, it may fail to qualify (see
"Tax Aspects of Covered Calls and Hedging Instruments," above). If
it did not so qualify, the Fund would be treated for tax purposes
as an ordinary corporation and receive no tax deduction for
payments made to shareholders.
The amount of a class's distributions may vary from time to
time depending on market conditions, the composition of the Fund's
portfolio, and expenses borne by the Fund or borne separately by a
class, as described in "Alternative Sales Arrangements -- Class A,
Class B and Class C Shares," above. Dividends are calculated in
the same manner, at the same time and on the same day for shares of
each class. However, dividends on Class B and Class C shares are
expected to be lower as a result of the asset-based sales charge on
Class B and Class C shares, and Class B and Class C dividends will
also differ in amount as a consequence of any difference in net
asset value between the classes.
Dividends, distributions and the proceeds of the redemption of
Fund shares represented by checks returned to the Transfer Agent by
the Postal Service as undeliverable will be invested in shares of
Oppenheimer Money Market Fund, Inc., as promptly as possible after
the return of such checks to the Transfer Agent, to enable the
investor to earn a return on otherwise idle funds.
Dividend Reinvestment in Another Fund. Shareholders of the Fund
may elect to reinvest all dividends and/or capital gains
distributions in shares of the same class of any of the other
Oppenheimer funds listed in "Reduced Sales Charges," above, at net
asset value without sales charge. To elect this option, a
shareholder must notify the Transfer Agent in writing and either
have an existing account in the fund selected for reinvestment or
must obtain a prospectus for that fund and an application from the
Distributor to establish an account. The investment will be made
at the net asset value per share in effect at the close of business
on the payable date of the dividend or distribution. Dividends
and/or distributions from certain of the Oppenheimer funds may be
invested in shares of this Fund on the same basis.
Additional Information About the Fund
The Custodian. State Street Bank and Trust Company acts as
custodian of the assets of the Trust. The Fund's cash balances in
excess of $100,000 are not protected by Federal deposit insurance.
Such uninsured balances may be substantial.
Independent Accountants. Price Waterhouse LLP has been
selected to serve as the Fund's independent auditors with respect
to the fiscal year ending October 31, 1996. Their services include
examining the annual financial statements of the Fund as well as
other related services. KPMG Peat Marwick LLP previously served as
the independent auditors of the Fund.
Retirement Plans. The Distributor may print advertisements and
brochures concerning retirement plans, lump sum distributions and
401-k plans. These materials may include descriptions of tax rules,
strategies for reducing risk and descriptions of the 401-k program
offered by the Distributor. From time to time hypothetical
investment programs illustrating various tax-deferred investment
strategies will be used in brochures, sales literature, and
omitting prospectuses. The following examples illustrate the
general approaches that will be followed. These hypotheticals will
be modified with different investment amounts, reflecting the
amounts that can be invested in different types of retirement
programs, different assumed tax rates, and assumed rates of return.
They should not be viewed as indicative of past or future perfor-
mance of any OppenheimerFunds products.
EXAMPLES
<TABLE>
<CAPTION>
Benefits of Long Term Tax-Free Benefits of Long Term Tax-Free
Compounding - Single Sum Compounding - Periodic Investment
Amount of Contribution: $100,000 Amount Invested Annually: $2,000
Rates of Return Rates of Return
Years 8.00% 10.00% 12.00% Years 8.00% 10.00% 12.00%
Value at End Value at End
<S> <C> <C> <C> <C> <C> <C> <C>
5 $ 146,933 $ 161,051 $ 176,234 5 $ 12,672 $ 13,431 $ 14,230
10 $ 215,892 $ 259,374 $ 310,585 10 $ 31,291 $ 35,062 $ 39,309
15 $ 317,217 $ 417,725 $ 547,357 15 $ 58,649 $ 69,899 $ 83,507
20 $ 466,096 $ 672,750 $ 964,629 20 $ 98,846 $126,005 $161,397
25 $ 684,848 $1,083,471 $1,700,006 25 $157,909 $216,364 $298,668
30 $1,006,266 $1,744,940 $2,995,992 30 $244,692 $361,887 $540,585
</TABLE>
<TABLE>
<CAPTION>
Comparison of Taxable and Tax-Free Investing - Periodic Investments (Assumed Tax Rate: 28%)
Amount of Annual Contribution (Pre-Tax): $2,000 Annual Contribution (After Tax): $1,440
Tax Deferred Rates of Return Fully Taxed Rates of Return
Years 8.00% 10.00% 12.00% Years 5.76% 7.20% 8.64%
Value at End Value at End
<S> <C> <C> <C> <C> <C> <C> <C>
5 $ 12,672 $ 13,431 $ 14,230 5 $ 8,544 $ 8,913 $ 9,296
10 $ 31,291 $ 35,062 $ 39,309 10 $ 19,849 $ 21,531 $ 23,364
15 $ 58,649 $ 69,899 $ 83,507 15 $ 34,807 $ 39,394 $ 44,654
20 $ 98,846 $126,005 $161,397 20 $ 54,598 $ 64,683 $76,874
25 $157,909 $216,364 $298,668 25 $ 80,785 $100,485 $125,635
30 $244,692 $361,887 $540,585 30 $115,435 $151,171 $199,492
</TABLE>
<TABLE>
<CAPTION>
Comparison of Tax Deferred Investing -- Deducting Taxes at End
(Amount of Tax Rate as End: 28%)
Amount of Annual Contribution: $2,000
Tax Deferred Rates of Return
Years 8.00% 10.00% 12.00%
Value at End
<S> <C> <C> <C>
5 $ 11,924 $ 12,470 $ 13,046
10 $ 28,130 $ 30,485 $ 33,903
15 $ 50,627 $ 58,728 $ 68,525
20 $ 82,369 $101,924 $127,406
25 $127,694 $169,782 $229,041
30 $192,978 $277,359 $406,021
</TABLE>
<PAGE>
- ------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- ------------------------------------------------------------------------------
To the Shareholders and Trustees of Quest for Value Family of Funds:
We have audited the accompanying statement of assets and liabilities of the
Officers Fund of Quest for Value Family of Funds, including the schedule of
investments, as of October 31, 1995 and the related statements of operations,
changes in net assets and financial highlights for the period November 8, 1994
(commencement of operations) to October 31, 1995. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 1995 by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Officers Fund of Quest for Value Family of Funds, as of October 31, 1995, the
results of its operations, the changes in its net assets and financial
highlights for the period November 8, 1994 (commencement of operations) to
October 31, 1995, in conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
New York, New York
December 20, 1995
<PAGE>
- ------------------------------------------------------------------------------
QUEST FOR VALUE FAMILY OF FUNDS
OFFICERS FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1995
- ------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------- ------------
U.S. GOVERNMENT AGENCY-16.3%
Tennessee Valley Authority
$600,000 5.59%, 1/18/96
(cost--$592,733)......................... $592,733
------------
SHORT-TERM CORPORATE NOTES-27.7%
MISCELLANEOUS FINANCIAL SERVICES
Federal Home Loan Mortgage Corp.
$490,000 5.57%, 12/18/95........................... $486,437
225,000 5.58%, 1/22/96............................ 222,140
303,000 5.60%, 11/02/95........................... 302,953
------------
(cost--$1,011,530)...................... $1,011,530
------------
SHARES COMMON STOCKS-58.5%
- ----------
AUTOMOTIVE-5.1%
5,100 Varity Corp. *.............................. $184,875
------------
CASINOS/GAMING-5.0%
10,800 Trump Hotels & Casinos Resorts, Inc. *...... 183,600
------------
ELECTRICAL EQUIPMENT-3.9%
5,000 UCAR International Inc.*.................... 142,500
------------
HEALTHCARE SERVICES-4.3%
3,200 Columbia/HCA Healthcare Corp................ 157,200
------------
INSURANCE-22.4%
6,000 EXEL Ltd.................................... 321,000
5,700 Mid Ocean Ltd............................... 201,638
7,100 Progressive Corp., Ohio..................... 294,650
------------
817,288
------------
OIL/GAS-5.3%
4,100 Triton Energy Corp. *....................... 191,162
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS-8.8%
2,200 Philip Morris Companies, Inc................ 185,900
4,500 UST, Inc.................................... 135,000
------------
320,900
------------
TOYS/GAMES/HOBBY-3.7%
4,400 Hasbro, Inc................................. 134,200
------------
Total Common Stocks
(cost--$1,837,098)........................ $2,131,725
------------
TOTAL INVESTMENTS
(cost--$3,441,361)................. 102.5% $3,735,988
Other Liabilities in Excess of
Other Assets ...................... (2.5) (89,420)
------------- ------------
TOTAL NET ASSETS .................... 100.0% $3,646,568
------------- ------------
------------- ------------
- -------------------------------------
*Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
- --------------------------------------------------------------------------------
QUEST FOR VALUE FAMILY OF FUNDS
OFFICERS FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
ASSETS
Investments, at value (cost--$3,441,361).............. $3,735,988
Cash.................................................. 15,975
Receivable for investments sold....................... 378,649
Receivable from adviser............................... 27,467
Deferred organization expenses........................ 6,086
Prepaid expenses and other assets..................... 6,586
-----------
Total Assets........................................ $4,170,751
LIABILITIES
Payable for investments purchased..................... 506,176
Deferred organization expenses payable................ 1,500
Other payables and accrued expenses................... 16,507
-----------
Total Liabilities................................... 524,183
-----------
NET ASSETS
Shares of beneficial interest at par.................. 2,964
Paid-in-surplus....................................... 3,029,959
Accumulated undistributed net investment income....... 61,380
Accumulated undistributed net realized
gain on investments................................. 257,638
Net unrealized appreciation on investments............ 294,627
-----------
Total Net Assets.................................... $3,646,568
-----------
-----------
Shares of beneficial interest outstanding
(unlimited authorized, $.01 par value per share)... 296,399
-----------
Net asset value per share.......................... $12.30
-----------
-----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
QUEST FOR VALUE FAMILY OF FUNDS
OFFICERS FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD NOVEMBER 8, 1994 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1995
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest................................................ $44,042
Dividends............................................... 24,804
----------
Total investment income............................ $68,846
EXPENSES:
Investment advisory fee (note 2a)....................... $28,182
Auditing, consulting and tax return preparation fees.... 8,500
Custodian fees.......................................... 6,000
Reports and notices to shareholders..................... 3,845
Transfer and dividend disbursing agent fees............. 2,916
Legal fees.............................................. 1,500
Registration fees....................................... 1,478
Amortization of deferred organization expenses
(note 1c)............................................. 1,486
Miscellaneous........................................... 1,742
----------
Total operating expenses........................... 55,649
Less: Investment advisory fees waived and
expense reimbursements (note 2a)............ (55,649)
----------
Net operating expenses......................... 0
---------
Net investment income.......................... 68,846
---------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS - NET:
Net realized gain on investments........................ $257,638
Net unrealized appreciation on investments.............. 294,627
---------
Net realized gain and net unrealized appreciation
on investments.................................... 552,265
---------
Net increase in net assets resulting from operations...... $621,111
---------
---------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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<PAGE>
- --------------------------------------------------------------------------------
QUEST FOR VALUE FAMILY OF FUNDS
OFFICERS FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD NOVEMBER 8, 1994 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1995
- --------------------------------------------------------------------------------
OPERATIONS
Net investment income............................................ $68,846
Net realized gain on investments................................. 257,638
Net unrealized appreciation on investments....................... 294,627
------------
Net increase in net assets resulting from operations........... 621,111
------------
DIVIDENDS TO SHAREHOLDERS OF BENEFICIAL INTEREST
Net investment income ($.037 per share)........................... (7,466)
------------
SHARE TRANSACTIONS OF BENEFICIAL INTEREST
Net proceeds from sales........................................... 3,529,359
Reinvestment of dividends......................................... 7,226
Cost of shares redeemed........................................... (503,662)
------------
Net increase in net assets from share transactions
of beneficial interest....................................... 3,032,923
------------
Total increase in net assets................................... 3,646,568
NET ASSETS:
Beginning of period.............................................. 0
------------
End of period (including undistributed net investment income
of $61,380).................................................... $3,646,568
------------
------------
SHARES OF BENEFICIAL INTEREST ISSUED AND REDEEMED
Issued............................................................ 339,572
Issued from reinvestment of dividends............................. 713
Redeemed.......................................................... (43,886)
------------
Net increase.................................................... 296,399
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
QUEST FOR VALUE FAMILY OF FUNDS
OFFICERS FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Quest for Value Officers Fund (the "Fund") is one of nine portfolios in
the Quest for Value Family of Funds, a Massachusetts business trust. The Fund
is an open-end management investment company registered under the Investment
Company Act of 1940, as amended, and commenced operations on November 8, 1994.
Quest for Value Advisors (the "Adviser") serves as the Fund's investment adviser
and provides accounting and administrative services to the Fund. Quest for
Value Distributors (the "Distributor") serves as the Fund's distributor. Both
the Advisor and Distributor are majority-owned (99%) subsidiaries of Oppenheimer
Capital.
The Fund is authorized to issue three separate classes of shares; Class A,
Class B and Class C shares. Initially, only shares of Class A will be offered to
officers, directors (trustees) and employees of Oppenheimer Capital and its
affiliates, their relatives or any trust, pension, profit sharing or other
benefit plan for any of them. Shares of each Class represent an identical
interest in the investment portfolio of the Fund, and generally have the same
rights, but are offered under different sales charge and distribution fee
arrangements. Furthermore, Class B shares will automatically convert to Class A
shares of the same fund eight years after their respective purchase.
The following is a summary of significant accounting policies consistently
followed by the Fund in the
preparation of its financial statements:
(a) VALUATION OF INVESTMENTS
Investment securities listed on a national securities exchange and
securities traded in the over-the-counter National Market System are valued at
the last reported sale price on the valuation date; if there are no such
reported sales, the securities are valued at their last quoted bid price. Other
securities traded over-the-counter and not part of the National Market System
are valued at the last quoted bid price. Short-term debt securities having a
remaining maturity of sixty days or less are valued at amortized cost or
amortized value, which approximates market value. Any securities or other
assets for which market quotations are not readily available are valued at their
fair value as determined in good faith under procedures established by the Board
of Trustees.
(b) FEDERAL INCOME TAXES
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its taxable income to its shareholders; accordingly, no
Federal income tax provision is required.
(c) DEFERRED ORGANIZATION EXPENSES
Costs incurred by the Fund in connection with its organization approximated
$7,600. These costs have been deferred and are being amortized to expense on a
straight line basis over sixty months from commencement of operations.
(d) SECURITIES TRANSACTIONS AND OTHER INCOME
Security transactions are accounted for on the trade date. In determining
the gain or loss from the sale of securities, the cost of securities sold has
been determined on the basis of identified cost. Dividend income is recorded on
the ex-dividend date and interest income is accrued as earned. Discounts or
premiums on debt securities purchased are accreted or amortized to interest
income over the lives of the respective securities.
(e) DIVIDENDS AND DISTRIBUTIONS
It is the Fund's policy to declare and pay dividends from net investment
income and to make distributions from net realized capital gains annually. The
Fund records dividends and distributions to its shareholders on the ex-dividend
date.
(2) INVESTMENT ADVISORY FEE, DISTRIBUTION FEE AND OTHER TRANSACTIONS WITH
AFFILIATES
(a) The investment advisory fee is payable monthly to the Adviser and is
computed as percentage of the Fund's net assets as of the close of business each
day at an annual rate of 1.00%.
For the period November 8, 1994 (commencements of operations) to October
31, 1995, the Adviser has voluntarily waived its investment advisory fee of
$28,182 and reimbursed the Fund for all other operating expenses of $27,467.
<PAGE>
- --------------------------------------------------------------------------------
QUEST FOR VALUE FAMILY OF FUNDS
OFFICERS FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
(b) The Fund has adopted a Plan and Agreement of Distribution (the "Plan")
pursuant to which the Fund is permitted to compensate the Distributor in
connection with the distribution of shares of beneficial Under the Plan, the
Distributor may enter into agreements with securities dealers and other
financial institutions and organizations to obtain various sales-related
services in rendering distribution assistance. To compensate the Distributor
for the services it and other dealers under the Plan provide and for the
expenses they bear under the Plan, the Fund pays the Distributor compensation
accrued daily and payable monthly at an annual rate of .25% of average daily net
assets for Class A. Compensation for Class B and Class C shares of the Fund is
at an annual rate of .75% of average daily net assets. All three classes also
pay a service fee at an annual rate of .25%. Distribution and service fees may
be paid by the Distributor to broker dealers or others for providing personal
service, maintenance of accounts and ongoing sales or shareholder support
functions in connection with the distribution of shares of beneficial interest.
While payments under the Plan may not exceed the stated percentage of average
daily net assets on an annual basis, the payments are not limited to the amounts
actually incurred by the Distributor.
For the period November 8, 1994 (commencement of operations) to October 31,
1995, there were no distribution related activities; therefore no compensation
accrued or paid by the Fund.
(c) Total brokerage commissions paid by the Fund amounted to $11,593 of
which $4,461 was paid to Oppenheimer & Co., Inc., an affiliate of the Adviser.
(3) PURCHASES AND SALES OF SECURITIES
For the period November 8, 1994 (commencement of operations) to October 31,
1995, purchases and sales of investment securities, other than short-term
securities, aggregated $3,805,864 and $2,226,410, respectively.
(4) UNREALIZED APPRECIATION (DEPRECIATION) AND COST OF INVESTMENTS FOR FEDERAL
INCOME TAX PURPOSES
At October 31, 1995, the cost of investments for Federal income tax
purposes was the same as the cost of investments for financial statement
purposes. Aggregate gross unrealized appreciation (all investments in which
there is an excess of value over tax cost) amounted to $296,000 and aggegrate
gross unrealized depreciation (all investments in which there is an excess of
tax cost over value) amounted to $1,373, resulting in net unrealized
appreciation of $294,627.
(5) SUBSEQUENT EVENTS
On November 22, 1995, OCC Distributors (previously Quest for Value
Distributors), OpCap Advisors (previously Quest for Value Advisors), their
parent Oppenheimer Capital and Oppenheimer Management Corporation ("OMC")
consummated a transaction which resulted in the sale to OMC of certain mutual
fund assets of OCC Distributors and OpCap Advisors including the transfer of the
management agreements and other contracts relating to certain Quest for Value
Funds and the use of the name "Quest for Value". As part of the transaction,
certain former Quest for Value Funds, including the Quest for Value Fund, the
Opportunity Fund, the Small Capitalization Fund, the Officers Fund and the
Growth and Income Fund, portfolios of Quest for Value Family of Funds, have
entered into an investment advisory agreement with OMC and OMC has entered into
a sub-advisory agreement with OpCap Advisors with respect to each of such Funds.
Pursuant to the transaction, the U.S. Government Income Fund, the Investment
Quality Income Fund, the National Tax-Exempt Fund, the California Tax-Exempt
Fund and the New York Tax-Exempt Fund were reorganized into the Oppenheimer U.S.
Government Trust, the Oppenheimer Bond Fund, the Oppenheimer Tax-Free Bond Fund,
the Oppenheimer California Tax-Exempt Fund and the Oppenheimer New York
Tax-Exempt Fund, respectively.
<PAGE>
- --------------------------------------------------------------------------------
QUEST FOR VALUE FAMILY OF FUNDS
OFFICERS FUND
FINANCIAL HIGHLIGHTS
NOVEMBER 8, 1994 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1995
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
<TABLE>
<CAPTION>
<S> <C>
Net Asset Value, beginning of period....................................................... $10.00 (1)
-------------
Net investment income...................................................................... 0.24
Net realized and unrealized gain on investments............................................ 2.10
-------------
Total from investment operations......................................................... 2.34
Dividends to shareholders from net investment income....................................... (0.04)
-------------
Net Asset Value, end of period............................................................. $12.30
-------------
-------------
Total investment return*................................................................... 23.44%
-------------
Net assets, end of period.................................................................. $3,646,568
-------------
Ratio of net operating expenses to average net assets...................................... 0.00%(2,3,4)
-------------
Ratio of net investment income to average net assets....................................... 2.44%(2,3,4)
-------------
Portfolio turnover rate.................................................................... 108%
-------------
</TABLE>
- --------------------------------------------------------------------------------
(1) Offering price.
(2) During the period presented above, the Adviser has voluntarily waived all
of its fees and reimbursed the Fund for all of its operating expenses. If
such waivers and reimbursements had not been in effect, the annualized
ratio of net operating expenses to average daily net assets and the
annualized ratio of net investment income to average daily net assets would
have been 1.97% and 0.47%, respectively.
(3) Average net assets for the period November 8, 1994 (commencement of
operations) to October 31, 1995 were $2,873,318.
(4) Annualized.
* Assumes reinvestment of all dividends. Aggregate (not annualized) total
return is shown.
<PAGE>
Appendix A
Corporate Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
Food
Gas Utilities
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking
<PAGE>
Oppenheimer Quest Officers Value Fund
Two World Trade Center
New York, NY 10048-0203
1-800-525-7048
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Sub-Adviser
OpCap Advisors
One World Financial Center
New York, New York 10281
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
State Street Bank and Trust Company
P.O. Box 8505
Boston, Massachusetts 02266-8505
Independent Auditors
Price Waterhouse LLP
950 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
prosp\229SAI.#1
