Registration No. 33-15489
File No. 811-5225
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. ___ / /
POST-EFFECTIVE AMENDMENT NO. 36 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 /X/
Amendment No. 39 /X/
OPPENHEIMER QUEST FOR VALUE FUNDS
- -------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Two World Trade Center, New York, New York 10048-0203
- -------------------------------------------------------------------
(Address of Principal Executive Offices)
(212) 374-1600
- -------------------------------------------------------------------
(Registrant's Telephone Number)
Andrew J. Donohue
Oppenheimer Management Corporation
Two World Trade Center, New York, New York 10048-0203
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
/ / Immediately upon filing pursuant to paragraph (b)
/X/ On February 15, 1996 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ / On _________, pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a) (2)
/ / On _________, pursuant to paragraph (a)(2)
of Rule 485.
- -------------------------------------------------------------------
Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 promulgated under the
Investment Company Act of 1940. A Rule 24f-2 Notice for the
Registrant's fiscal year ended October 31, 1995, was filed on
December 28, 1995.
<PAGE>
FORM N-1A
OPPENHEIMER QUEST FOR VALUE FUNDS
Cross Reference Sheet
Part A of
Form N-1A
Item No. Prospectus Heading
1 Front Cover Page
2 Expenses; Overview of the Fund
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; Investment Objective and Policies;
Investment Restrictions; How the Fund is Managed--
Organization and History
5 How the Fund is Managed; Expenses; Back Cover
5A Performance of the Fund
6 How the Fund is Managed--Organization and History; The
Transfer Agent; Dividends, Capital Gains and Taxes
7 How to Buy Shares; How to Exchange Shares; Special
Investor Services; Service Plan for Class A Shares;
Distribution and Service Plan for Class B Shares;
Distribution and Service Plan for Class C Shares; How
to Sell Shares; Shareholder Account Rules and Policies
8 How to Sell Shares; Special Investor Services
9 *
Part B of
Form N-1A
Item No. Heading in Statement of Additional Information
10 Cover Page
11 Cover Page
12 *
13 Investment Objective and Policies; Other Investment
Techniques and Strategies; Additional Investment
Restrictions
14 How the Fund is Managed - Directors and Officers of
the Fund
15 How the Fund is Managed - Major Shareholders
16 How the Fund is Managed; Distribution and Service
Plans
17 Brokerage Policies of the Fund
18 Additional Information - About the Fund
19 Your Investment Account-How to Buy Shares; How to Sell
Shares; How to Exchange Shares
20 Dividends, Capital Gains and Taxes
21 How the Fund is Managed; Brokerage Policies of the
Fund
22 Performance of the Fund
23 Financial Statements
- -----------------
* Not applicable or negative answer.
<PAGE>
OPPENHEIMER
QUEST GROWTH & INCOME VALUE FUND
Prospectus dated February 15, 1996
Oppenheimer Quest Growth & Income Value Fund (the "Fund"), a series
of Oppenheimer Quest for Value Funds, is a mutual fund that seeks
to achieve a combination of growth of capital and investment income
with growth of capital as the primary objective, by investing in
securities that are believed by OpCap Advisors ("the Sub-Adviser")
to be undervalued in the marketplace and to offer the possibility
of increased value. Ordinarily, the Fund invests in assets in
common stocks (with emphasis on dividend paying stocks), preferred
stocks, securities convertible into common stock, and debt
securities. The Fund may invest in lower-quality, high-yielding
convertible debt securities and other debt securities and currently
intends to limit its investments in these securities to up to 25%
of its assets. In an uncertain investment environment, the Fund
may stress defensive investment methods. Please refer to
"Investment Restrictions and Techniques" for more information about
the types of securities in which the Fund invests, its investment
methods 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).
(OppenheimerFunds logo)
Shares of the Fund are not deposits or obligations of any bank, are
not guaranteed by any bank, and 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
THE 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 Fund Who Were Shareholders of the
Former Quest for Value Funds
Appendix B: Description of Ratings
<PAGE>
<PAGE>
A B O U T T H E F U N D
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. The numbers below are based on the Fund's expenses
during its last fiscal year ended October 31, 1995.
-- 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.
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales 5.75% None None
Charge on Purchases
(as a % of offering price)
- ------------------------------------------------------------------------
Sales Charge on None None None
Reinvested Dividends
- ------------------------------------------------------------------------
Deferred Sales Charge None(1) 5% in the first 1.0% if
(as a % of the lower of the year, declining shares are
original purchase price or to 1% in the redeemed
redemption proceeds) sixth year and within 12
eliminated months of
thereafter(2) purchase(2)
- ------------------------------------------------------------------------
Exchange Fee None None None
</TABLE>
(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 18 calendar months from the end of the calendar month during
which you purchased those shares, depending upon when you purchased
such shares. See "How to Buy Shares - Buying Class A Shares,"
below. Class A shares of the Fund 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.
(2)See "How to Buy Shares - Buying Class B Shares" and "How to Buy
Shares - Buying Class C Shares," below, for more information on the
contingent deferred sales charges.
-- Annual Fund Operating Expenses are paid out of the Fund's
assets and represent the Fund's expenses in operating its business.
For example, the Fund pays management fees to its investment
adviser, OppenheimerFunds, Inc. (which is 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 chart 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 each class of the Fund's shares for that
year. The "Management Fees" and "Total Fund Operating Expenses"
have been restated to reflect the elimination, concurrently with
the acquisition by the Manager described below under "How the Fund
is Managed - The Sub-Adviser", of a voluntary management fee
waiver. Had the voluntary fee waiver remained in effect, the
"Management Fees" would have been _____%, _____% and _____% for
Class A, Class B and Class C shares, respectively, and "Total Fund
Operating Expenses" would have been _____%, _____% and _____% for
Class A, Class B and Class C shares, respectively.
The "12b-1 Distribution Plan Fees" for Class A shares are the
service plan fees (the maximum fee is 0.25% of average annual net
assets of that class), and a distribution fee of 0.15% of the
average annual net assets of that class. For Class B and Class C
shares, the "12b-1 Distribution Plan Fees" are the service plan
fees of 0.25% of average annual net assets of the class, and the
asset-based sales charge of 0.75% of the average annual net assets
of the class. These plans 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 chart, depending on a
number of factors, including the actual value of the Fund's assets
represented by each class of shares.
Class A Class B Class C
Shares Shares Shares
- ---------------------------------------------------------------
Management Fees % % %
- ---------------------------------------------------------------
12b-1 Distribution
Plans Fees % % %
- ---------------------------------------------------------------
Other Expenses % % %
- ---------------------------------------------------------------
Total Fund
Operating Expenses % % %
-- Examples. To try to show the effect of these expenses on
an investment over time, we have created the hypothetical examples
shown below. Assume that you make a $1,000 investment in each class
of shares of the Fund, that the Fund's annual return is 5%, that
its operating expenses for each class are the ones shown in the
Annual Fund Operating Expenses chart above and that Class B shares
automatically convert into Class A shares six years after purchase.
If you were to redeem your shares at the end of each period shown
below, your investment would incur the following expenses by the
end of each 1, 3, 5 and 10 years:
1 year 3 years 5 years 10 years(1)
- --------------------------------------------------------------
Class A Shares $ $ $ $
Class B Shares $ $ $ $
Class C Shares $ $ $ $
If you did not redeem your investment, it would incur the
following expenses:
1 year 3 years 5 years 10 years(1)
- --------------------------------------------------------------
Class A Shares $ $ $ $
Class B Shares $ $ $ $
Class C Shares $ $ $ $
(1)The Class B expenses in years 7 through 10 are based on the Class
A expenses shown above, because the Fund automatically converts
Class B shares into Class A shares after 6 years. Because of the
effect of the asset-based sales charge and the contingent deferred
sales charge on Class B and Class C shares, long-term Class B and
Class C shareholders could pay the economic equivalent of more than
the maximum front-end sales charge allowed under applicable
regulations. For Class B shareholders, the automatic conversion of
Class B shares to Class A shares is designed to minimize the
likelihood that this will occur. Please refer to "How to Buy
Shares - Buying Class B Shares" for more information.
These examples show the effect of expenses on an investment,
but are not meant to state or predict actual or expected costs or
investment returns of the Fund, all of which 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 accounts, such as how to
sell or exchange shares.
-- What is the Fund's Investment Objective? The Fund's
investment objective is to achieve a combination of growth of
capital and investment income with growth of capital as the primary
objective, by investing in securities that are believed by the Sub-
Adviser to be undervalued in the marketplace and to offer the
possibility of increased value.
-- What does the Fund Invest in? The Fund may invest in
common stocks (with an emphasis on dividend paying stocks),
preferred stocks, securities convertible into common stock, and
debt securities. By focusing its purchases of equity securities on
those issued by mature companies that the Fund believes are
undervalued, the Fund seeks to achieve both its objectives of
capital appreciation as well as income from dividends. The Fund's
purchases of convertible securities also gives it the potential of
capital growth and investment income prior to conversion. The
Fund's purchases of debt securities further the objective of
investment income and offer potential for capital appreciation in
an economic environment of declining interest rates or as a result
of improved issuer credit quality. The Fund may invest up to 25%
of its total assets in lower-grade, high yield debt securities
(commonly known as "junk bonds"). It is anticipated that the Fund
will be generally less volatile than the market as a result of its
investment approach. The Fund may assume a temporary defensive
position when appropriate to do so by investing in money market
instruments as defined herein. These investments and investment
methods 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. The Manager (including a
subsidiary) manages investment company portfolios having over $40
billion in assets. The Manager handles the day-to-day business of
the Fund. The Fund also has a sub-adviser, OpCap Advisors (the
"Sub-Adviser") who is responsible for choosing the Fund's
investments. The Manager is paid an advisory fee by the Fund. The
Manager, not the Fund, pays the Sub-Adviser. The Fund has a
portfolio manager, Mr. Colin Glinsman, who 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 investment 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. The Fund's investments in stocks and bonds, including
convertible bonds, are subject to changes in their value from a
number of factors such as changes in general bond and stock market
movements, or the change in value of particular stocks or bonds
because of an event affecting the issuer. Changes in interest
rates can affect stock and bond prices. These changes affect the
value of the Fund's investments and its price per share. The Fund
may invest up to 25% of its total assets in high yield, lower-grade
securities (commonly known as "junk bonds"). Those securities may
be subject to greater market fluctuations and risk of loss of
income and principal than higher-grade securities and may be
considered to have certain speculative characteristics. 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 Fund's portfolio, and in some cases by using
hedging techniques, there is no guarantee of success in achieving
the Fund's investment objective and your shares may be worth more
or less than their original cost when you redeem them. The Fund's
investment allocation mix among equity securities, convertible
securities and debt securities, which will change from time to
time, is anticipated to result in the Fund being generally less
volatile than the market. 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 OppenheimerFunds Distributor, Inc. (the
"Distributor") by completing an Application or by using an
Automatic Investment Plan under AccountLink. Please refer to "How
to Buy Shares" on page __ for more details.
-- Will I Pay a Sales Charge to Buy Shares? The Fund offers
the individual investor three classes of shares. Each class has
the same investment portfolio but different expenses. Class A
shares are offered with a front-end sales charge, starting at
5.75%, and reduced for larger purchases. Class B and Class C
shares are offered without a front-end sales charge, but may be
subject to a contingent deferred sales charge if redeemed within
certain periods of time following their purchase. There is also an
annual asset-based sales charge on Class B and Class C shares.
Please review "How to Buy Shares" starting on page __ for more
details, including a discussion about 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 returns and
cumulative total returns, 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 broad-based market indices,
which we have done on pages __ and __. Please remember that past
performance does not guarantee future results.
Financial Highlights
The table on the following pages presents selected financial
information about the Fund, including per share data, expense
ratios and other data based on the Fund's average net assets. This
information has been audited by Price Waterhouse LLP, the Fund's
independent accountants, whose report on the Fund's financial
statements for the fiscal year ended October 31, 1995, is included
in the Statement of Additional Information.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
CLASS A CLASS B
---------------------------------------------- -----------------------------------
PERIOD PERIOD
ENDED ENDED
YEAR ENDED OCTOBER 31, OCT. 31, YEAR ENDED OCTOBER 31, OCT. 31,
1995 1994 1993 1992(2) 1995 1994 1993(1)
===========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value,
beginning of period $10.09 $11.24 $10.80 $10.00(3) $10.07 $11.23 $11.21(3)
- ---------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income(4) .27 .32 .30 .28 .19 .25 .04
Net realized and
unrealized gain on
investments 1.27 .55 .73 .80 1.28 .56 .05
------ ------ ------ ------ ------ ------ ------
Total income from
investment operations 1.54 .87 1.03 1.08 1.47 .81 .09
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and
distributions to
shareholders:
Dividends from net
investment income (.29) (.32) (.26) (.28) (.24) (.27) (.07)
Distributions from
net realized gain
on investments (.42) (1.70) (.33) -- (.42) (1.70) --
------ ------ ------ ------ ------ ------ ------
Total dividends and
distributions to
shareholders (.71) (2.02) (.59) (.28) (.66) (1.97) (.07)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $10.92 $10.09 $11.24 $10.80 $10.88 $10.07 $11.23
====== ====== ====== ====== ====== ====== ======
===========================================================================================================================
TOTAL RETURN, AT
NET ASSET VALUE(5) 16.35% 8.64% 9.93% 10.84% 15.65% 7.96% 0.81%
===========================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (in thousands) $37,082 $30,576 $28,466 $8,057 $7,623 $2,928 $319
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income(6,7) 2.60% 3.16% 2.66% 2.73%(8) 1.71% 2.53% 1.83%(8)
Expenses(6,7) 1.99% 1.86% 1.90% 2.23%(8) 2.59% 2.47% 2.49%(8)
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(9) 130.0% 113.0% 192.0% 77.0% 130.0% 113.0% 192.0%
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS CLASS C
---------------------------------
PERIOD
ENDED
YEAR ENDED OCTOBER 31, OCT. 31,
1995 1994 1993(1)
====================================================================
<S> <C> <C>
PER SHARE OPERATING DATA:
Net asset value,
beginning of period $10.07 $11.23 $11.21(3)
- --------------------------------------------------------------------
Income from investment
operations:
Net investment income(4) .15 .24 .04
Net realized and
unrealized gain on
investments 1.30 .56 .05
------ ------ ------
Total income from
investment operations 1.45 .80 .09
- --------------------------------------------------------------------
Dividends and
distributions to
shareholders:
Dividends from net
investment income (.21) (.26) (.07)
Distributions from
net realized gain
on investments (.42) (1.70) --
------ ------ ------
Total dividends and
distributions to
shareholders (.63) (1.96) (.07)
- --------------------------------------------------------------------
Net asset value,
end of period $10.89 $10.07 $11.23
====== ====== ======
====================================================================
TOTAL RETURN, AT
NET ASSET VALUE(5) 15.38% 7.91% 0.81%
====================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (in thousands) $1,828 $455 $102
- --------------------------------------------------------------------
Ratios to average net assets:
Net investment income(6,7) 1.39% 2.39% 2.18%(8)
Expenses(6,7) 2.88% 2.62% 2.49%(8)
- --------------------------------------------------------------------
Portfolio turnover rate(9) 130.0% 113.0% 192.0%
</TABLE>
1. Initial offering of Class B and Class C shares. For the period from
September 2, 1993 (inception of offering) to October 31, 1993.
2. For the period from November 4, 1991 (commencement of operations) to October
31, 1992.
3. Offering price.
4. Based on average shares outstanding for the period.
5. Assumes reinvestment of all dividends and distributions, but does not
reflect deductions for sales charges. Aggregate (not annualized) total
return is shown for any period shorter than one year.
6. Average net assets for the year ended October 31, 1995 for Classes A, B and
C were $33,396,923, $4,845,598 and $967,910, respectively.
7. During the periods presented above, the Adviser voluntarily waived a portion
of its fees. If such waivers had not been in effect, the ratios of net
investment income to average net assets and the ratios of expenses to average
net assets for Class A would have been 2.57% and 2.02%, respectively, for the
year ended October 31, 1995, 2.70% and 2.32%, respectively, for the year ended
October 31, 1994, 2.38% and 2.18%, respectively, for the year ended October 31,
1993, and 1.98% and 2.98%, annualized, respectively, for the period November 4,
1991 (commencement of operations) to October 31, 1992. The ratios of net
investment income to average net assets and the ratios of expenses to average
net assets would have been 1.73% and 2.57%, respectively, for Class B and 1.43%
and 2.84%, respectively, for Class C, for the year ended October 31, 1995,
2.07% and 2.93%, respectively, for Class B and 1.91% and 3.10%, respectively,
for Class C, for the year ended October 31, 1994 and 1.44% and 2.88%,
annualized, respectively, for Class B and 1.80% and 2.87%, annualized,
respectively, for Class C, for the period September 2, 1993 (initial offering)
to October 31, 1993.
8. Annualized.
9. 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 $54,163,330 and $41,657,071,
respectively.
<PAGE>
Investment Objective and Policies
Objective. The Fund seeks to achieve a combination of growth of
capital and investment income with growth of capital as the primary
objective, by investing in securities that are believed by the Sub-
Adviser to be undervalued in the marketplace and to offer the
possibility of increased value.
Investment Policies and Strategies. The Fund invests in marketable
securities traded on national securities exchanges and in the over-
the-counter market. The Fund generally invests its assets in
common stocks (with emphasis on dividend-paying stocks), preferred
stocks, securities convertible into common stock, and debt
securities. By focusing its purchases of equity securities on
those issued by mature companies that the Fund believes are
undervalued, the Fund seeks to achieve both its objectives of
capital appreciation as well as income from dividends. The Fund's
purchases of convertible securities also gives it the potential of
capital growth and investment income prior to conversion. The
Fund's purchases of debt securities further the objective of
investment income and offer potential for capital appreciation in
an economic environment of declining interest rates or as a result
of improved issuer credit quality. As a non-fundamental policy,
the Fund may invest up to 25% of its total assets in lower-grade,
high yield debt securities (commonly known as "junk bonds"). It
is anticipated that the Fund will be generally less volatile than
the market as a result of its investment approach.
To provide liquidity for the purchase of new instruments and
to effect redemptions of shares, the Fund typically invests a part
of its assets in various types of U.S. government securities, and
high quality, short-term debt securities with remaining maturities
of one year or less such as government obligations, certificates of
deposit, bankers' acceptances, commercial paper, short-term
corporate securities and repurchase agreements ("money market
instruments").
For temporary defensive purposes, the Fund may invest up to
100% of its assets in money market instruments. At any time that
the Fund invests in money market instruments for temporary
defensive purposes, 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 policies. Except
as indicated, the investment objective and policies described above
are fundamental policies.
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 may invest a
substantial portion of its assets in stocks, the value of the
Fund's portfolio will be affected by changes in the stock markets.
At times, the stock markets can be volatile, and stock prices can
change substantially. This market risk will affect the Fund's net
asset values per share, which will fluctuate as the values of the
Fund's portfolio securities change. Not all stock prices change
uniformly or at the same time, not all stock markets move in the
same direction at the same time, and other factors can affect a
particular stock's prices (for example, poor earnings reports by an
issuer, loss of major customers, major litigation against an
issuer, and 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. In addition,
the Fund's asset allocation mix, which will change from time to
time, among equity securities, convertible securities and debt
securities is anticipated to result in the Fund being generally
less volatile then the market. 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.
-- Risks of Fixed-Income Securities. 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.
-- Special Risks of Lower-Grade Securities. The Fund may
invest up to 25% of its total assets in "lower grade" debt
securities. "Lower-grade" debt securities are those rated below
"investment grade," which means they have a rating lower than "Baa"
by Moody's Investors Service, Inc. or lower than "BBB" by Standard
& Poor's Corporation, or similar ratings by other rating
organizations, or if unrated, are determined by the Sub-Adviser to
be of comparable quality to debt securities rated below investment
grade. Lower-grade high yield debt securities are commonly known
as "junk bonds." The Fund may invest in securities rated as low as
"Caa" by Moody's or "CCC" by Standard & Poor's. Appendix B to this
Prospectus describes these rating categories.
High yield, lower-grade securities, whether rated or unrated,
often have speculative characteristics. Lower-grade securities
have 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.
These risks mean that the Fund may not achieve the expected
income from lower-grade securities, and that the Fund's net asset
value per share may be affected by declines in value of these
securities. However, the Fund's limitations on investments in
these types of securities may reduce some of the risk, as will the
Fund's policy of diversifying its investments. Also, convertible
securities may be less subject to some of these risks than other
debt securities, to the extent they can be converted into stock,
which may be more liquid and less affected by these other risk
factors.
-- U.S. Government Obligations, including Mortgage-Backed
Securities. U.S. Government obligations are obligations supported
by any of the following: (a) the full faith and credit of the
U.S. Government, such as obligations of Government National
Mortgage Association ("Ginnie Mae"), (b) the right of the issuer
to borrow an amount limited to a specific line of credit from the
U.S. Government, such as obligations of Federal National Mortgage
Association ("Fannie Mae"), and (c) the credit of this U.S.
Government instrumentality, such as obligations of Federal Home
Loan Mortgage Corporation ("Freddie Mac").
The Fund may invest in mortgage-backed securities issued by
the U.S. Government, its agencies or instrumentalities, including
Ginnie Mae, Fannie Mae or Freddie Mac. Also known as pass-through
securities, the homeowner's principal and interest payments pass
from the originating bank or savings and loan through the
appropriate governmental agency to investors, net of service
charges.
The effective maturity of a mortgage-backed security may be
shortened by unscheduled or early payment of principal and interest
on the underlying mortgages, which may affect the effective yield
of such securities. The principal that is returned may be invested
in instruments having a higher or lower yield than the prepaid
instruments depending on then-current market conditions.
The Fund may invest in collateralized mortgage obligations
("CMOs") that are issued or guaranteed by the U.S. Government or
its agencies or instrumentalities, or that are collateralized by a
portfolio of mortgages or mortgage-related securities guaranteed by
such an agency or instrumentality. Payment of the interest and
principal generated by the pool of mortgages is passed through to
the holders as the payments are received by the issuer of the CMO.
CMOs may be issued in a variety of classes or series ("tranches")
that have different maturities. The principal value of certain CMO
tranches may be more volatile than other types of mortgage-related
securities, because of the possibility that the principal value of
the CMO may be prepaid earlier than the maturity of the CMO as a
result of prepayments of the underlying mortgage loans by the
borrowers.
-- 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. There is no limit to
the amount of such foreign securities the Fund may acquire. The
Fund may buy securities in any country, including emerging market
countries. The Fund presently does not intend to purchase
securities issued by emerging market countries, or by companies
located in those countries. Foreign currency will be held by the
Fund only in connection with the purchase or sale of foreign
securities.
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. Foreign investment in certain emerging market
countries is restricted or controlled in varying degrees. In the
past, securities in emerging countries have experienced greater
price movement, both positive and negative, than securities of
companies located in developed countries. More information about
the risks and potential rewards of investing in foreign securities
is contained in the Statement of Additional Information.
-- Warrants and Rights. As a non-fundamental policy, the Fund
may invest up to 5% of its total assets in rights or warrants which
entitle the holder to buy equity securities at a specific price for
a specific period of time.
-- Portfolio Turnover. A change in the securities held by the
Fund is known as "portfolio turnover." The Fund may engage in
short-term trading to try to achieve its objective. The Fund's
annual portfolio turnover rate may be up to 250%. The "Financial
Highlights," above, show the Fund's portfolio turnover rate during
past fiscal years. High turnover and short-term trading may cause
the Fund to have relatively larger commission expenses and
transaction costs than funds that do not engage in short-term
trading. Additionally, high portfolio turnover may affect the
ability of the Fund to qualify as a "regulated investment company"
under the Internal Revenue Code for tax deductions for dividends
and capital gain distributions the Fund pays to shareholders. The
Fund qualified in its last fiscal year and intends to do so in the
coming year, although there is no guarantee that it will qualify.
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 reduce some of the
risks.
-- Temporary Defensive Investments. In times of unstable
market or economic conditions, when the Sub-Adviser determines it
appropriate to do so to attempt to reduce fluctuations in the value
of the Fund's net assets, the Fund may assume a temporary defensive
position and invest an unlimited amount of assets in money market
instruments of the type identified on page __ under "Investment
Policies and Strategies."
-- When-Issued and Delayed Delivery Transactions. The Fund
may purchase securities on a "when-issued" basis, and may purchase
or sell such securities on a "delayed delivery" basis. These terms
refer to securities whose terms and indenture are available and for
which a market exists, but which are not available for immediate
delivery. The Fund does not intend to make such purchases for
speculative purposes. During the period between the purchase and
settlement, the underlying securities are subject to market
fluctuations and no interest prior to delivery of the securities.
-- Repurchase Agreements. The Fund may enter into repurchase
agreements. They are primarily used for liquidity purposes. In a
repurchase transaction, the Fund buys a security and simultaneously
sells it to the vendor for delivery at a future date. Repurchase
agreements must be fully collateralized. However, if the vendor
fails to pay the resale price on the delivery date, the Fund may
incur costs in disposing of the collateral and may experience
losses if there is any delay in its ability to do so. 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. Repurchase agreements
with a maturity beyond seven days are subject to the Fund's
limitations on investments in illiquid and restricted securities,
discussed below.
-- Illiquid Securities. Under the policies established by the
Board of Trustees, the Manager determines the liquidity 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. As a
fundamental policy, the Fund will not invest more than 10% of its
total assets in illiquid securities. Restricted securities are
considered illiquid securities for purposes of this restriction.
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. Certain restricted securities,
eligible for resale to qualified institutional purchasers, are not
subject to that limit.
-- 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
Fund's total assets. 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.
-- Hedging. As described below, the Fund may purchase and
sell certain kinds of futures contracts, put and call options,
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. Writing covered
call options may also provide income to the Fund for liquidity
purposes or to raise cash to distribute to shareholders.
- 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). The Fund will not
enter into any financial futures or options contract unless such
transactions are for bona fide hedging purposes, or for other
purposes only if the aggregate initial margins and related option
premiums would not exceed 5% of the Fund's total assets.
- Put and Call Options. The Fund may buy and sell certain
kinds of put options (puts) and call options (calls). Calls the
Fund buys or sells must be listed on a securities or commodities
exchange, or quoted on the automated quotation system of NASDAQ, or
traded in the over-the-counter market. In the case of puts and
calls on a foreign currency, they must be traded on a securities or
commodities exchange or in the over-the-counter market, or must be
quoted by recognized dealers in those options.
The Fund may buy calls only on securities, broadly-based stock
indices, foreign currencies or Stock Index Futures. The Fund may
buy calls to terminate its obligation on a call the Fund previously
wrote.
The Fund may write (that is, sell) covered call options. 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.
When the Fund writes 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).
The Fund may purchase and sell put options. Buying a put on
an investment gives the Fund the right to sell the investment at a
set price to a seller of a put on that investment. The Fund can
buy only those puts that relate to securities that the Fund owns,
broadly-based stock indices, foreign currencies or Stock Index
Futures. The Fund can buy a put on a Stock Index Future whether or
not the Fund owns the particular Stock Index Future in its
portfolio.
The Fund may write puts on securities, broadly-based stock
indices, foreign currencies or Stock Index Futures, but only if
those puts are covered by segregated liquid assets.
- 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.
Other Investment Restrictions.
The Fund has certain investment restrictions that 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;
- With respect to 75% of its total assets, purchase more than
10% of the voting securities of any one issuer (other than the U.S.
Government or any of its agencies or instrumentalities);
- 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);
- 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
temporary measure for extraordinary or emergency purposes and will
make no additional investments while such borrowings exceed 5% of
the Fund's total assets; or
- 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.
As a non-fundamental policy, the Fund may not 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
continuous operation.
Notwithstanding the above restriction on illiquid securities,
the Fund may purchase securities which are not registered under the
Securities Act of 1933 (the "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,
provided that the Sub-Advisor, under guidelines established by the
Fund's Board of Trustees, determines that an adequate trading
market exists for that security.
The Fund has undertaken, in connection with the qualification
of its shares for sale in certain states, to limit investments in
restricted securities to 5% of its total assets excluding
restricted securities that may be resold to "qualified
institutional buyers". This undertaking will terminate if the Fund
ceases to qualify its shares for sale in those states, or if the
applicable state rule or regulations are amended.
All of the percentage restrictions described above and
elsewhere in this Prospectus and in the Statement of Additional
Information 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 is one of four portfolios of
Oppenheimer Quest For Value Funds, an open-end management
investment company organized as a Massachusetts business trust in
April, 1987. The Fund is an open-end, diversified management
investment company, with an unlimited number of authorized shares
of beneficial interest.
The Fund is governed by a Board of Trustees, which is
responsible under Massachusetts law for protecting the interests of
shareholders. The Trustees meet periodically throughout the year
to oversee the Fund's activities, review its performance, and
review the actions of the Manager. "Trustees and Officers of the
Fund" in the Statement of Additional Information names the Trustees
and provides more information about them and the officers of the
Fund. Although the Fund is not required by law to hold annual
meetings, it may hold shareholder meetings from time to time on
important matters, and shareholders have the right under certain
circumstances to call a meeting to remove a Trustee or to take
other action described in the Fund's Declaration of 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 on matters
submitted to the vote of shareholders. 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. OpCap Advisors is a majority-owned subsidiary of Oppenheimer
Capital, a registered investment advisor, whose employees perform
all investment advisory services provided to the Fund by OpCap
Advisors. 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 November 24, 1995, 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, effective
November 24, 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 portfolio manager of the Fund is
Mr. Colin Glinsman, who is also a Senior Vice President of
Oppenheimer Capital. He has been the Fund's portfolio manager
since December, 1992. Mr. Glinsman has been a securities analyst
with Oppenheimer Capital since 1989.
-- Fees and Expenses. Under the Investment Advisory
Agreement, the Fund pays the Manager an annual fee based on the
Fund's daily net assets at the rate of 0.85% of net assets. The
Fund also reimburses the Manager for bookkeeping and accounting
services performed on behalf of the Fund.
The Manager will pay OpCap Advisors 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, OpCap
Advisors may consider their record of sales of shares of the Fund.
Further information about the Fund's brokerage policies and
practices is set forth in "Brokerage Policies of the Fund" in the
Statement of Additional Information.
-- 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
Distributor. The Distributor also distributes the shares of other
mutual funds managed by the Manager (the "Oppenheimer funds") and
is sub-distributor for funds managed by a subsidiary of the
Manager.
-- Transfer Agent and Shareholder Servicing Agent. The
transfer agent and shareholder servicing agent is OppenheimerFunds
Services. 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.
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
investment in the Fund over various periods, and do not show the
performance of each shareholder's investment (which will vary if
dividends are received in cash or shares are sold or additional
shares are purchased). The Fund's performance information may help
you see how well your 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 considering the effect
of the sales charge, and those returns would be reduced if sales
charges were deducted.
How Has the Fund Performed? Below is a discussion of the Fund's
performance during its last fiscal year ended October 31, 1995,
followed by a graphical comparison of the Fund's performance to
appropriate broad-based market indices. Prior to November 22,
1995, the Fund was known as Quest for Value Small Capitalization
Fund, and the Sub-Adviser was the Fund's investment manager.
-- Management's Discussion of Performance. The Fund's
portfolio is structured around three broad segments: common stocks,
which provide growth potential and some income; higher-yielding
bonds, which generate relatively more income but are also selected
for their potential for capital appreciation; and fixed income
securities which are convertible into common stocks. The Fund's
performance in the fiscal year ended October 31, 1995 was dominated
by its emphasis on protecting principal in a risky stock market
environment. While typically the Fund might invest at least two-
thirds of its assets in common stocks, stocks represented
approximately 50% of the portfolio for certain periods of the
fiscal year. Because of this conservative posture, the Fund did
not participate fully in a rising market, and its total return for
the year was below that of most other growth and income funds. On
the other hand, because it had larger-than-normal holdings of fixed
income securities, the Fund generated a greater rate of income for
shareholders than did many funds with more aggressive investment
positions. The Fund increased its holdings of common stocks in the
second half of the year, and its current posture is neither
conservative nor aggressive. The Sub-Adviser believes the Fund is
positioned to participate in a strong market environment in fiscal
1996, should such an environment develop. As of October 31, 1995,
72.6% of the Fund's assets was invested in common stocks, 6.5% in
securities convertible into common stocks, 18.2% in notes and
bonds, and 2.7% in cash and cash equivalents.
-- Comparing the Fund's Performance to the Market. The graphs
below show the performance of a hypothetical $10,000 investment in
each class of shares of the Fund held until October 31, 1995. In
the case of Class A shares, performance is measured from the
commencement of operations on November 4, 1991, and in the case of
Class B and Class C shares, from inception of those classes on
September 1, 1993.
The Fund's performance is compared to the performance of the
Standard & Poor's ("S&P") 500 Index. The S&P 500 Index is a broad
based index of equity securities widely regarded as the general
measure of the performance of the U.S. equity securities market.
Index performance reflects the reinvestment of dividends but
does not consider the effect of capital gains or transaction costs,
and none of the data in the graphs below shows the effect of taxes.
Moreover, index performance data does not reflect any assessment of
the risk of the investments included in the index. The Fund's
performance reflects the effect of Fund business and operating
expenses. While index comparisons may be useful to provide a
benchmark for the Fund's performance, it must be noted that the
Fund's investments are not limited to the securities in the indices
shown.
Oppenheimer Quest Growth & Income Value Fund
Comparison of Change in Value of
$10,000 Hypothetical Investments in
Oppenheimer Quest Growth & Income Value Fund and
the S&P 500 Index
[Graph]
Past Performance is not predictive of future performance.
Oppenheimer Quest Growth & Income Value Fund
Average Annual Total Returns of the Fund at 10/31/95
- ----------------------------------------------------
Class A Shares(1)
- -----------------
1-Year Life
------ ----
9.66% 9.78%
Class B Shares(2)
- -----------------
1-Year Life
------ ----
10.65% 10.02%
Class C Shares(3)
- -----------------
1-Year Life
------ ----
14.38% 11.07%
- ---------------------
Total returns and the ending account values in the graphs reflect
reinvestment of all dividends and capital gains distributions.
Total returns are based upon inception of the Fund (for Class A
shares) or date of first public offering (for Class B and Class C
shares).
(1) The commencement of operations of the Fund (Class A shares) was
11/4/91. Class A returns are shown net of the current applicable
5.75% maximum initial sales charge.
(2) Class B shares of the Fund were first publicly offered on
9/01/93. Returns are shown net of the applicable 5% and 3%
contingent deferred sales charge, respectively, for the 1-year
period and life of the class. The ending account value in the
graph is net of the applicable 3% contingent deferred sales charge.
(3) Class C shares of the Fund were first publicly offered on
9/01/93. The 1-year return is shown net of the applicable 1%
contingent deferred sales charge.
About Your Account
How to Buy Shares
Classes of Shares. The Fund offers investors three different
classes of shares. The different classes of shares represent
investments in the same portfolio of securities but 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 Funds,
you will not pay an initial sales charge, but if you sell any of
those shares within 18 months of buying them, you may pay a
contingent deferred sales charge 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. Class A shares of the
Fund purchased subject to a contingent deferred sales charge on or
prior to November 24, 1995 will be subject to a contingent deferred
sales charge at the applicable rate set forth in Appendix A to this
Prospectus. 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 and how long you plan to
hold your investment. If your goals and objectives change over
time and you plan to purchase additional shares, you should re-
evaluate those factors to see if you should consider another class
of shares.
In the following discussion, to help provide you and your
financial advisor with a framework in which to choose a class, we
have made some assumptions using a hypothetical investment in the
Fund. We used the sales charge rates that apply to each class, and
considered the effect of the 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
of shares you invest in.
The factors discussed below are not intended to be investment
advice or recommendations, because each investor's financial
considerations are different. The discussion below of the factors
to consider in purchasing a particular class of shares assumes that
you will purchase only one class of shares and not a combination of
shares of different classes.
-- How Long Do You Expect to Hold Your Investment? While
future financial needs cannot be predicted with certainty, knowing
how long you expect to hold your investment will assist you in
selecting the appropriate class of shares. 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 Oppenheimer
funds (a list of them appears in the Statement of Additional
Information, or you can ask your dealer or call the Transfer
Agent), or by reinvesting distributions from unit investment trusts
that have made arrangements with the Distributor.
-- How Are Shares Purchased? You can buy shares several ways:
through any dealer, broker or financial institution that has a
sales agreement with the Distributor, directly through the
Distributor, or automatically from your bank account through an
Asset Builder Plan under the OppenheimerFunds AccountLink service.
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 AccountLink on the
regular business day the Distributor is instructed by you to
initiate the ACH transfer to buy shares. You can provide those
instructions automatically, under an Asset Builder Plan, described
below, or by telephone instructions using OppenheimerFunds
PhoneLink, also described below. You should request AccountLink
privileges on the application or dealer settlement instructions
used to establish your account. Please refer to "AccountLink" below
for more details.
-- Asset Builder Plans. You may purchase shares of the Fund
(and up to four other 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.
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 Oppenheimer funds 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 class of the Oppenheimer funds 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 Oppenheimer funds you purchased subject to the Class
A contingent deferred sales charge. Class A shares of the Fund
purchased subject to a contingent deferred sales charge on or prior
to November 24, 1995 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 18 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 Oppenheimer funds (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 Oppenheimer funds to
reduce the sales charge rate that applies to current purchases of
Class A shares. You can also count Class A and Class B shares of
Oppenheimer funds you previously purchased subject to an initial or
contingent deferred sales charge to reduce the sales charge rate
for current purchases of Class A shares, provided that you still
hold that investment in one of the Oppenheimer funds. The value of
those shares will be based on the greater of the amount you paid
for the shares or their current value (at offering price). The
Oppenheimer funds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from
the Transfer Agent. The reduced sales charge will apply only to
current purchases and must be requested when you buy your shares.
-- Letter of Intent. Under a Letter of Intent, if you
purchase Class A shares or Class A and Class B shares of the Fund
and other Oppenheimer funds during a 13-month period, you can
reduce the sales charge rate that applies to your purchases of
Class A shares. The total amount of your intended purchases of
both Class A and Class B shares will determine the reduced sales
charge rate for the Class A shares purchased during that period.
This can include purchases made up to 90 days before the date of
the Letter. More information is contained in the Application and
in "Reduced Sales Charges" in the Statement of Additional
Information.
-- Waivers of Class A Sales Charges. The Class A sales
charges are not imposed in the circumstances described below.
There is an explanation of this policy in "Reduced Sales Charges"
in the Statement of Additional Information.
Waivers of Initial and Contingent Deferred Sales Charges for
Certain Purchasers. Class A shares purchased by the following
investors are not subject to any Class A sales charges:
- the Manager or its affiliates;
- present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced
Sales Charges" in the Statement of Additional Information) of the
Fund, the Manager and its affiliates, and retirement plans
established by them for their employees;
- registered management investment companies, or separate
accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose;
- dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
- employees and registered representatives (and their spouses)
of dealers or brokers described above or financial institutions
that have entered into sales arrangements with such dealers or
brokers (and are identified to the Distributor) or with the
Distributor; the purchaser must certify to the Distributor at the
time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor
children);
- dealers, brokers or registered investment advisers that have
entered into an agreement with the Distributor (1) providing
specifically for the use of shares of the Fund in particular
investment products made available to their clients (those clients
may be charged a transaction fee by their dealer, broker or advisor
for the purchase or sale of Fund shares) and (2) 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 Oppenheimer funds
(other than Oppenheimer Cash Reserves) or unit investment trusts
for which reinvestment arrangements have been made with the
Distributor;
- shares purchased and paid for with the proceeds of shares
redeemed in the 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
- 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 0.15% 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 0.10%
annually) 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. This Plan is described below under "Buying
Class C Shares - Distribution and Service Plans for Class B and
Class C Shares."
-- Waivers of Class B Sales Charges. The Class B contingent
deferred sales charge will not apply to shares purchased in certain
types of transactions, nor will it apply to shares redeemed in
certain circumstances, as described below under "Buying Class C
Share - 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 Plans for Class B and Class C
Shares. The Fund has adopted Distribution and Service Plans for
Class B and Class C shares to compensate the Distributor for
distributing Class B and Class C shares and servicing accounts.
Under the Plans, the Fund pays the Distributor an annual "asset-
based sales charge" of 0.75% per year on Class B shares that are
outstanding for 6 years or less and on Class C shares. The
Distributor also receives a service fee of 0.25% per year.
Under each Plan, both fees are computed on the average of the
net asset value of shares in the respective class, determined as of
the close of each regular business day during the period. The
asset-based sales charge allows investors to buy Class B or Class
C shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell those shares.
The Distributor uses the service fees to compensate dealers
for providing personal services for accounts that hold Class B or
Class C shares. Those services are similar to those provided under
the Class A Service Plan, described above. The Distributor pays
the 0.25% service fees to dealers in advance for the first year
after Class B or Class C shares have been sold by the dealer and
retains the service fee paid by the Fund in that year. After the
shares have been held for a year, the Distributor pays the service
fees to dealers on a quarterly basis.
The Distributor currently pays sales commissions of 3.75% of
the purchase price to dealers from its own resources at the time of
sale of Class B shares. The total amount paid by the Distributor
to the dealer at the time of sales of Class B shares is therefore
4.00% of the purchase price. 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
and Class C shares.
The Distributor currently pays sales commissions of 0.75% of
the purchase price to dealers from its own resources at the time of
sale of Class C shares. 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 retains the asset-
based sales charge during the first year Class C shares are
outstanding to recoup sales commissions it has paid, the advances
of service fee payments it has made, and its financing costs and
other expenses. The Distributor plans to pay the asset-based sales
charge as an ongoing commission to the dealer on Class C shares
that have been outstanding for a year or more. 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 and Class C Sales Charges. The Class B
and Class C contingent deferred sales charges will not be applied
to shares purchased in certain types of transactions nor will it
apply to Class B and Class C shares redeemed in certain
circumstances as described below. The reasons for this policy are
in "Reduced Sales Charges" in the Statement of Additional
Information.
Waivers for Redemptions in Certain Cases. The Class B and
Class C contingent deferred sales charges will be waived for
redemptions of shares in the following cases if the Transfer Agent
is notified that these conditions apply to the redemption:
- distributions to participants or beneficiaries from
Retirement Plans, if the distributions are made (a) under an
Automatic Withdrawal Plan after the participant reaches age 59-1/2,
as long as the payments are no more than 10% of the account value
annually (measured from the date the Transfer Agent 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 Investors Services
AccountLink. OppenheimerFunds AccountLink links your Fund account
to your account at your bank or other financial institution to
enable you to send money electronically between those accounts to
perform a number of types of account transactions. These include
purchases of shares by telephone (either through a service
representative or by PhoneLink, described below), automatic
investments under Asset Builder Plans, and sending dividends and
distributions or Automatic Withdrawal Plan payments directly to
your bank account. Please refer to the Application for details or
call the Transfer Agent for more information.
AccountLink privileges should be requested on the Application
you use to buy shares, or on your dealer's settlement instructions
if you buy your shares through your dealer. After your account is
established, you can request AccountLink privileges 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 Oppenheimer funds 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 Oppenheimer funds on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange
Plan. The minimum purchase for each other Oppenheimer funds
account is $25. These exchanges are subject to the terms of the
Exchange Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class A
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
Oppenheimer funds without paying a sales charge. This privilege
applies to Class A shares that you purchased subject to an initial
sales charge and to Class A 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 by selling
(redeeming) some or all of your shares on any regular business day.
Your shares will be sold at the next net asset value calculated
after your order is received and accepted by the Transfer Agent.
The Fund offers you a number of ways to sell your shares: in
writing or by telephone. You can also set up Automatic Withdrawal
Plans to redeem shares on a regular basis, as described above. If
you have questions about any of these procedures, and especially if
you are redeeming shares in a special situation, such as due to the
death of the owner, or from a retirement plan, please call the
Transfer Agent first, at 1-800-525-7048, for assistance.
-- Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must
submit a withholding form with your request to avoid delay. If your
retirement plan account is held for you by your employer, you must
arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the
Statement of Additional Information.
-- Certain Requests Require A Signature Guarantee. To protect
you and each Fund from fraud, certain redemption requests must be
in writing and must include a signature guarantee in the following
situations (there may be other situations also requiring a
signature guarantee):
- You wish to redeem more than $50,000 worth of shares and
receive a check
- The redemption check is not payable to all shareholders
listed on the account statement
- The redemption check is not sent to the address of record on
your account statement
- Shares are being transferred to a Fund account with a
different owner or name
- Shares are redeemed by someone other than the owners (such
as an Executor)
-- Where Can I Have My Signature Guaranteed? The Transfer
Agent will accept a guarantee of your signature by a number of
financial institutions, including: a U.S. bank, trust company,
credit union or savings association, or by a foreign bank that has
a U.S. correspondent bank, or by a U.S. registered dealer or broker
in securities, municipal securities or government securities, or by
a U.S. national securities exchange, a registered securities
association or a clearing agency. If you are signing as a fiduciary
or on behalf of a corporation, partnership or other business, you
must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that
includes:
- Your name
- The Fund's name
- Your Fund account number (from your account statement)
- The dollar amount or number of shares to be redeemed
- Any special payment instructions
- Any share certificates for the shares you are selling,
- The signatures of all registered owners exactly as the
account is registered, and
- Any special requirements or documents requested by the
Transfer Agent to assure proper authorization of the person asking
to sell shares.
Use the following address for Send courier or Express Mail
request by mail: requests to:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Ave., 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
Oppenheimer funds at net asset value per share at the time of
exchange, without sales charge. To exchange shares, you must meet
several conditions:
- Shares of the fund selected for exchange must be available
for sale in your state of residence
- The prospectuses of this Fund and the fund whose shares you
want to buy must offer the exchange privilege
- You must hold the shares you buy when you establish your
account for at least 7 days before you can exchange them; after the
account is open 7 days, you can exchange shares every regular
business day
- You must meet the minimum purchase requirements for the fund
you purchase by exchange
- Before exchanging into a fund, you should obtain and read
its prospectus
Shares of a particular class may be exchanged only for shares
of the same class in the other Oppenheimer funds. For example, you
can exchange Class A shares of this Fund only for Class A shares of
another fund. At present, Oppenheimer Money Market Fund, Inc.
offers only one class of shares, which are considered Class A
shares for this purpose. In some cases, sales charges may be
imposed on exchange transactions. Please refer to "How to Exchange
Shares" in the Statement of Additional Information for more
details.
Exchanges may be requested in writing or by telephone:
-- Written Exchange Requests. Submit an OppenheimerFunds
Exchange Request form, signed by all owners of the account. Send
it to the Transfer Agent at the addresses listed in "How to Sell
Shares."
-- Telephone Exchange Requests. Telephone exchange requests
may be made either by calling a service representative at 1-800-
852-8457 or by using PhoneLink for automated exchanges, by calling
1-800-533-3310. Telephone exchanges may be made only between
accounts that are registered with the same name(s) and address.
Shares held under certificates may not be exchanged by telephone.
You can find a list of Oppenheimer funds currently available
for exchanges in the Statement of Additional Information or 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.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares and pays dividends separately
for Class A, Class B and Class C shares from net investment income
on a quarterly basis. 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, which is October 31. Short-
term capital gains are treated as dividends for tax purposes. Long-
term capital gains will be separately identified in the tax
information the Fund sends you after the end of the calendar year.
There can be no assurances that the Fund will pay any capital gains
distributions in a particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are
reinvested. For other accounts, you have four options:
-- Reinvest All Distributions in the Fund. You can elect to
reinvest all dividends and long-term capital gains distributions in
additional shares of the Fund.
-- Reinvest Capital Gains Only. You can elect to reinvest
long-term capital gains in the Fund while receiving dividends by
check or sent to your bank account on AccountLink.
-- Receive All Distributions in Cash. You can elect to receive
a check for all dividends and long-term capital gains distributions
or have them sent to your bank on AccountLink.
-- Reinvest Your Distributions in Another Oppenheimer Fund
Account. You can reinvest all distributions in another Oppenheimer
fund account you have established.
Taxes. If your account is not a tax-deferred retirement account,
you should be aware of the following tax implications of investing
in 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 Fund
Who Were 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 of the Fund 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." The waivers of initial and
contingent deferred sales charges described in this Appendix apply
to shares of the Fund (i) acquired by such shareholder pursuant to
an exchange of shares of one of the Oppenheimer funds that was one
of the Former Quest for Value Funds or (ii) received by such
shareholder pursuant to the merger of any of the Former Quest for
Value Funds into an Oppenheimer fund on November 24, 1995.
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
Number of as a as a Percentage
Eligible Percentage Percentage of
Employees of Offering of Amount Offering
or Members Price Invested Price
- --------------------------------------------------------------
9 or fewer 2.50% 2.56% 2.00%
- --------------------------------------------------------------
At least 10 but not
more than 49 2.00% 2.04% 1.60%
For purchases by Qualified Retirement plans and Associations
having 50 or more eligible employees or members, there is no
initial sales charge on purchases of Class A shares, but those
shares are subject to the Class A contingent deferred sales charge
described on pages __ and __ of this Prospectus.
Purchases made under this arrangement qualify for the lower of
the sales charge rate in the table based on the number of eligible
employees in a Qualified Retirement Plan or members of an
Association or the sales charge rate that applies under the Rights
of Accumulation described above in the Prospectus. In addition,
purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they
qualified to purchase shares of any of the Former Quest For Value
Funds by virtue of projected contributions or investments of $1
million or more each year. Individuals who qualify under this
arrangement for reduced sales charge rates as members of
Associations, or as eligible employees in Qualified Retirement
Plans also may purchase shares for their individual or custodial
accounts at these reduced sales charge rates, upon request to the
Fund's Distributor.
- -- Special Class A Contingent Deferred Sales Charge Rates
Class A shares of the Fund purchased by exchange of shares of other
Oppenheimer funds that were acquired as a result of the merger of
Former Quest for Value Funds into those Oppenheimer funds, and
which shares were subject to a Class A contingent deferred sales
charge prior to November 24, 1995 will be subject to a contingent
deferred sales charge at the following rates: if they are redeemed
within 18 months of the end of the calendar month in which they
were purchased, at a rate equal to 1.0% if the redemption occurs
within 12 months of their initial purchase and at a rate of 0.50 of
1.0% if the redemption occurs in the subsequent six months. Class
A shares of any of the Former Quest for Value Funds purchased
without an initial sales charge on or before November 22, 1995 will
continue to be subject to the applicable contingent deferred sales
charge in effect as of that date as set forth in the then-current
prospectus for such fund.
- -- Waiver of Class A Sales Charges for Certain Shareholders
Class A shares of the Fund purchased by the following investors are
not subject to any Class A initial or contingent deferred sales
charges:
- Shareholders of the Fund who were shareholders of the AMA
Family of Funds on February 28, 1991 and who acquired shares of any
of the Former Quest for Value Funds by merger of a portfolio of the
AMA Family of Funds.
- Shareholders of the Fund who acquired shares of any Former
Quest for Value Fund by merger of any of the portfolios of the
Unified Funds.
- -- Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions
The Class A contingent deferred sales charge will not apply to
redemptions of Class A shares of the Fund purchased by the
following investors who were shareholders of any Former Quest for
Value Fund:
- Investors who purchased Class A shares from a dealer that is
or was not permitted to receive a sales load or redemption fee
imposed on a shareholder with whom that dealer has a fiduciary
relationship under the Employee Retirement Income Security Act of
1974 and regulations adopted under that law.
- Participants in Qualified Retirement Plans that purchased
shares of any of the Former Quest For Value Funds pursuant to a
special "strategic alliance" with the distributor of those funds.
The Fund's Distributor will pay a commission to the dealer for
purchases of Fund shares as described above in "Class A Contingent
Deferred Sales Charge."
Class A, Class B and Class C Contingent Deferred Sales Charge
Waivers
- -- Waivers for Redemptions of Shares Purchased Prior to March 6,
1995
In the following cases, the contingent deferred sales charge will
be waived for redemptions of Class A, B or C shares of the Fund
acquired by merger of a Former Quest for Value Fund into the Fund
or by exchange from an Oppenheimer fund that was a Former Quest for
Value Fund or into which such fund merged, if those shares were
purchased prior to March 6, 1995: in connection with
(i) distributions to participants or beneficiaries of plans
qualified under Section 401(a) of the Internal Revenue Code or from
custodial accounts under Section 403(b)(7) of the Code, Individual
Retirement Accounts, deferred compensation plans under Section 457
of the Code, and other employee benefit plans, and returns of
excess contributions made to each type of plan, (ii) withdrawals
under an automatic withdrawal plan holding only either Class B or
C shares if the annual withdrawal does not exceed 10% of the
initial value of the account, and (iii) liquidation of a
shareholder's account if the aggregate net asset value of shares
held in the account is less than the required minimum value of such
accounts.
- -- Waivers for Redemptions of Shares Purchased on or After March 6,
1995 but Prior to November 24, 1995.
In the following cases, the contingent deferred sales charge will
be waived for redemptions of Class A, B or C shares of the Fund
acquired by merger of a Former Quest for Value Fund into the Fund
or by exchange from an Oppenheimer fund that was a Former Quest For
Value Fund or into which such fund merged, if those shares were
purchased on or after March 6, 1995, but prior to November 24,
1995: (1) distributions to participants or beneficiaries from
Individual Retirement Accounts under Section 408(a) of the Internal
Revenue Code or retirement plans under Section 401(a), 401(k),
403(b) and 457 of the Code, if those distributions are made either
(a) to an individual participant as a result of separation from
service or (b) following the death or disability (as defined in the
Code) of the participant or beneficiary; (2) returns of excess
contributions to such retirement plans; (3) redemptions other than
from retirement plans following the death or disability of the
shareholder(s) (as evidenced by a determination of total disability
by the U.S. Social Security Administration); (4) withdrawals under
an automatic withdrawal plan (but only for Class B or C shares)
where the annual withdrawals do not exceed 10% of the initial value
of the account; and (5) liquidation of a shareholder's account if
the aggregate net asset value of shares held in the account is less
than the required minimum account value. A shareholder's account
will be credited with the amount of any contingent deferred sales
charge paid on the redemption of any Class A, B or C shares of the
Fund described in this section if within 90 days after that
redemption, the proceeds are invested in the same Class of shares
in this Fund or another Oppenheimer fund.
Special Dealer Arrangements
Dealers who sold Class B shares of a Former Quest for Value Fund to
Quest for Value prototype 401(k) plans that were maintained on the
TRAC-2000 recordkeeping system and that were transferred to an
OppenheimerFunds prototype 401(k) plan shall be eligible for an
additional one-time payment by the Distributor of 1% of the value
of the plan assets transferred, but that payment may not exceed
$5,000 as to any one plan.
Dealers who sold Class C shares of a Former Quest for Value Fund to
Quest for Value prototype 401(k) plans that were maintained on the
TRAC-2000 recordkeeping system and (i) the shares held by those
plans were exchanged for Class A shares, or (ii) the plan assets
were transferred to an OppenheimerFunds prototype 401(k) plan,
shall be eligible for an additional one-time payment by the
Distributor of 1% of the value of the plan assets transferred, but
that payment may not exceed $5,000.
<PAGE>
Appendix B
Description of Ratings
Bond Ratings
- -- Moody's Investors Service, Inc.
Aaa: Bonds which are rated "Aaa" are judged to be the best quality
and to carry the smallest degree of investment risk. Interest
payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective
elements are likely to change, the changes that can be expected are
most unlikely to impair the fundamentally strong position of such
issues.
Aa: Bonds which are rated "Aa" are judged to be of high quality by
all standards. Together with the "Aaa" group, they comprise what
are generally known as "high-grade" bonds. They are rated lower
than the best bonds because margins of protection may not be as
large as with "Aaa" securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than
those of "Aaa" securities.
A: Bonds which are rated "A" possess many favorable investment
attributes and are to be considered as upper-medium grade
obligations. Factors giving security to principal and interest are
considered adequate but elements may be present which suggest a
susceptibility to impairment sometime in the future.
Baa: Bonds which are rated "Baa" are considered medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and have
speculative characteristics as well.
Ba: Bonds which are rated "Ba" are judged to have speculative
elements; their future cannot be considered well-assured. Often
the protection of interest and principal payments may be very
moderate and not well safeguarded during both good and bad times
over the future. Uncertainty of position characterizes bonds in
this class.
B: Bonds which are rated "B" generally lack characteristics of
desirable investment. Assurance of interest and principal payments
or of maintenance of other terms of the contract over any long
period of time may be small.
Caa: Bonds which are rated "Caa" are of poor standing and may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca: Bonds which are rated "Ca" represent obligations which are
speculative in a high degree and are often in default or have other
marked shortcomings.
C: Bonds which are rated "C" can be regarded as having extremely
poor prospects of ever retaining any real investment standing.
- -- Standard & Poor's Corporation
AAA: "AAA" is the highest rating assigned to a debt obligation and
indicates an extremely strong capacity to pay principal and
interest.
AA: Bonds rated "AA" also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the
majority of instances they differ from "AAA" issues only in small
degree.
A: Bonds rated "A" have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to adverse
effects of change in circumstances and economic conditions.
BBB: Bonds rated "BBB" are regarded as having an adequate capacity
to pay principal and interest. Whereas they normally exhibit
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
principal and interest for bonds in this category than for bonds in
the "A" category.
BB, B, CCC, CC: Bonds rated "BB," "B," "CCC" and "CC" are regarded,
on balance, as predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance
with the terms of the obligation. "BB" indicates the lowest degree
of speculation and "CC" the highest degree. While such bonds will
likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to
adverse conditions.
C, D: Bonds on which no interest is being paid are rated "C."
Bonds rated "D" are in default and payment of interest and/or
repayment of principal is in arrears.
- -- Fitch Investors Service, Inc.
AAA Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected
by reasonably foreseeable events.
AA Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated "AAA."
Because bonds rated in the "AAA" and "AA" categories are not
significantly vulnerable to foreseeable future developments, short-
term debt of these issuers is generally rated "F-1+."
A Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal
is considered to be strong, but may be more vulnerable to adverse
changes in economic conditions and circumstances than bonds with
higher ratings.
BBB Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in
economic conditions and circumstances, however, are more likely to
have adverse impact on these bonds, and therefore impair timely
payment. The likelihood that the ratings of these bonds will fall
below investment grade is higher than for bonds with higher
ratings.
BB Bonds are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can
be identified which could assist the obligor in satisfying its debt
service requirements.
B Bonds are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the
probability of continued timely payment of principal and interest
reflects the obligor's limited margin of safety and the need for
reasonable business and economic activity through the life of the
issue.
CCC Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.
CC Bonds are minimally protected. Default in payment of interest
and/or principal seems probable over time.
C Bonds are in imminent default in payment of interest or
principal.
DDD, DD, and D Bonds are in default on interest and/or principal
payments. Such bonds are extremely speculative and should be
valued on the basis of their ultimate recovery value in liquidation
or reorganization of the obligor. "DDD" represents the highest
potential for recovery of these bonds, and "D" represents the
lowest potential for recovery.
Plus (+) Minus (-) Plus and minus signs are used with a rating
symbol to indicate the relative position of a credit within the
rating category. Plus and minus signs, however, are not used in
the "DDD," "DD," or "D" categories.
Short-Term Debt Ratings.
- -- Moody's Investors Service, Inc. The following rating
designations for commercial paper (defined by Moody's as promissory
obligations not having original maturity in excess of nine months),
are judged by Moody's to be investment grade, and indicate the
relative repayment capacity of rated issuers:
Prime-1: Superior capacity for repayment. Capacity will normally
be evidenced by the following characteristics: (a) leveling market
positions in well-established industries; (b) high rates of return
on funds employed; (c) conservative capitalization structures with
moderate reliance on debt and ample asset protection; (d) broad
margins in earning coverage of fixed financial charges and high
internal cash generation; and (e) well established access to a
range of financial markets and assured sources of alternate
liquidity.
Prime-2: Strong capacity for repayment. This will normally be
evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound,
will be more subject to variation. Capitalization characteristics,
while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
Moody's ratings for state and municipal short-term obligations are
designated "Moody's Investment Grade" ("MIG"). Short-term notes
which have demand features may also be designated as "VMIG". These
rating categories are as follows:
MIG1/VMIG1: Best quality. There is present strong protection by
established cash flows, superior liquidity support or demonstrated
broadbased access to the market for refinancing.
MIG2/VMIG2: High quality. Margins of protection are ample
although not so large as in the preceding group.
- -- Standard & Poor's Corporation ("S&P"): The following ratings by
S&P for commercial paper (defined by S&P as debt having an original
maturity of no more than 365 days) assess the likelihood of
payment:
A-1: Strong capacity for timely payment. Those issues determined
to possess extremely strong safety characteristics are denoted with
a plus sign (+) designation.
A-2: Satisfactory capacity for timely payment. However, the
relative degree of safety is not as high as for issues designated
"A-1".
S&P's ratings for Municipal Notes due in three years or less are:
SP-1: Very strong or strong capacity to pay principal and
interest. Those issues determined to possess overwhelming safety
characteristics will be given a plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest.
S&P assigns "dual ratings" to all municipal debt issues that have
a demand or double feature as part of their provisions. The first
rating addresses the likelihood of repayment of principal and
interest as due, and the second rating addresses only the demand
feature. With short-term demand debt, S&P's note rating symbols
are used with the commercial paper symbols (for example, "SP-1+/A-
1+").
- -- Fitch Investors Service, Inc. Fitch assigns the following
short-term ratings to debt obligations that are payable on demand
or have original maturities of generally up to three years,
including commercial paper, certificates of deposit, medium-term
notes, and municipal and investment notes:
F-1+: Exceptionally strong credit quality; the strongest degree of
assurance for timely payment.
F-1: Very strong credit quality; assurance of timely payment is
only slightly less in degree than issues rated "F-1+".
F-2: Good credit quality; satisfactory degree of assurance for
timely payment, but the margin of safety is not as great as for
issues assigned "F-1+" or "F-1" ratings.
- -- Duff & Phelps, Inc. The following ratings are for commercial
paper (defined by Duff & Phelps as obligations with maturities,
when issued, of under one year), asset-backed commercial paper, and
certificates of deposit (the ratings cover all obligations of the
institution with maturities, when issued, of under one year,
including bankers' acceptance and letters of credit):
Duff 1+: Highest certainty of timely payment. Short-term
liquidity, including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is just
below risk-free U.S. Treasury short-term obligations.
Duff 1: Very high certainty of timely payment. Liquidity factors
are excellent and supported by good fundamental protection factors.
Risk factors are minor.
Duff 1-: High certainty of timely payment. Liquidity factors are
strong and supported by good fundamental protection factors. Risk
factors are very small.
Duff 2: Good certainty of timely payment. Liquidity factors and
company fundamentals are sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital markets is
good. Risk factors are small.
- -- IBCA Limited or its affiliate IBCA Inc. Short-term ratings,
including commercial paper (with maturities up to 12 months), are
as follows:
A1+: Obligations supported by the highest capacity for timely
repayment.
A1: Obligations supported by a very strong capacity for timely
repayment.
A2: Obligations supported by a strong capacity for timely
repayment, although such capacity may be susceptible to adverse
changes in business, economic, or financial conditions.
- -- Thomson BankWatch, Inc. The following short-term ratings apply
to commercial paper, certificates of deposit, unsecured notes, and
other securities having a maturity of one year or less.
TBW-1: The highest category; indicates the degree of safety
regarding timely repayment of principal and interest is very
strong.
TBW-2: The second highest rating category; while the degree of
safety regarding timely repayment of principal and interest is
strong, the relative degree of safety is not as high as for issues
rated "TBW-1".
<PAGE>
SCHEDULE TO PROSPECTUS OF
OPPENHEIMER QUEST GROWTH & INCOME VALUE FUND
Graphic material included in Prospectus of Oppenheimer Quest
Growth & Income Value Fund: "Comparison of Total Return of
Oppenheimer Quest Growth & Income Value Fund with the S&P 500 Index
- - Change in Value of $10,000 Hypothetical Investments in Class A,
Class B and Class C Shares of Oppenheimer Quest Growth & Income
Value Fund and the S&P 500 Index."
Linear graphs will be included in the Prospectus of
Oppenheimer Quest Growth & Income Value Fund (the "Fund") depicting
the initial account value and subsequent account value of a
hypothetical $10,000 investment in the Fund. In the case of the
Fund's Class A shares, that graph will cover the period from
inception (11/1/91) through 10/31/95, and in the case of the Fund's
Class B and Class C shares, will cover the period from the
inception of the class (9/1/93) through 10/31/95. The graph will
compare such values with hypothetical $10,000 investments over the
same time periods in the S&P 500 Index. Set forth below are the
relevant data points that will appear on the linear graph.
Additional information with respect to the foregoing, including a
description of the S&P 500 Index, is set forth in the Prospectus
under "Performance of the Fund - Comparing the Fund's Performance
to the Market."
Oppenheimer Quest
Fiscal Growth & Income S&P 500
Period Ended Fund A Index
- ------------ ----------------- -------
11/01/91 $ 9,425 $10,000
10/31/92 $10,447 $11,028
10/31/93 $11,484 $12,675
10/31/94 $12,476 $13,164
10/31/95 $14,516 $16,645
Oppenheimer Quest
Fiscal Growth & Income S&P 500
Period Ended Fund B Index
- ------------ ----------------- -------
9/01/93(2) $10,000 $10,000
10/31/93 $10,081 $10,136
10/31/94 $10,884 $10,526
10/31/95 $12,296 $13,312
Oppenheimer Quest
Fiscal Growth & Income S&P 500
Period Ended Fund C Index
- ------------ ----------------- -------
9/01/93(2) $10,000 $10,000
10/31/93 $10,081 $10,136
10/31/94 $10,879 $10,528
10/31/95 $12,551 $13,312
- ---------------------
(2) Class B shares of the Fund were first publicly offered on
9/01/93.
(3) Class C shares of the Fund were first publicly offered on
9/01/93.
<PAGE>
Oppenheimer Quest Growth & Income Value Fund
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Sub-Adviser
OpCap Advisors
One World Financial Center
New York, New York 10281
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
State Street Bank and Trust Company
P.O. Box 8505
Boston, Massachusetts 02266-8505
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, broker, salesperson or any other person has been
authorized to give any information or to make any representations
other than those contained in this Prospectus or the Statement of
Additional Information, and if given or made, such information and
representations must not be relied upon as having been authorized
by the Fund, Oppenheimer Management Corporation, Oppenheimer Funds
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\q257psp
<PAGE>
OPPENHEIMER QUEST GROWTH & INCOME 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
<TABLE>
<CAPTION>
Page
<S> <C>
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.
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 or
depositories holding them must be approved by the Corporation's
Board of Directors to the extent that approval is required under
applicable rules of the Securities and Exchange Commission.
- 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.
- Emerging Market Countries: Certain developing countries may
have relatively unstable governments, economies based on only a few
industries that are dependent upon international trade, and reduced
secondary market liquidity. Foreign investment in certain emerging
market countries is restricted or controlled in varying degrees.
In the past, securities in these countries have experienced greater
price movement, both positive and negative, than securities of
companies located in developed countries. Lower-rated high-
yielding emerging market securities may be considered to have
speculative elements.
-- U.S. Government Securities. Obligations of U.S. Government
agencies or instrumentalities (including mortgage-backed
securities) may or may not be guaranteed or supported by the "full
faith and credit" of the United States. Some are backed by the
right of the issuer to borrow from the U.S. Treasury; others, by
discretionary authority of the U.S. Government to purchase the
agencies' obligations; while others are supported only by the
credit of the instrumentality. All U.S. Treasury obligations are
backed by the full faith and credit of the United States. If the
securities are not backed by the full faith and credit of the
United States, the owner of the securities must look principally to
the agency issuing the obligation for repayment and may not be able
to assert a claim against the United States in the event that the
agency or instrumentality does not meet its commitment. The Fund
will invest in U.S. Government Securities of such agencies and
instrumentalities only when the Manager is satisfied that the
credit risk with respect to such instrumentality is minimal.
- Mortgage-Backed Securities. Also known as pass-through
securities, the homeowner's principal and interest payments pass
from the originating bank or savings and loan through the
appropriate governmental agency to investors, net of service
charges. These pass-through securities include participation
certificates of Ginnie Mae, Freddie Mac and Fannie Mae.
The investment characteristics of mortgage-backed securities
differ from those of traditional debt securities. The effective
maturity of a mortgage-backed security may be shortened by
unscheduled or early payment of principal and interest on the
underlying mortgages, which may affect the effective yield of such
securities. The principal that is returned may be invested in
instruments having a higher or lower yield than the prepaid
instruments depending on then-current market conditions. Such
securities therefore may be less effective as a means of "locking
in" attractive long-term interest rates and may have less potential
for appreciation during periods of declining interest rates than
conventional bonds with comparable stated maturities. These
differences can result in significantly greater price and yield
volatility than is the case with traditional debt securities. If
the Fund purchases mortgage-backed securities at a premium, a
prepayment rate that is faster than expected will reduce both the
market value and the yield to maturity from that which was
anticipated, while a prepayment rate that is slower than expected
will have the opposite effect of increasing yield to maturity and
market value. Conversely, if the Fund purchases mortgage-backed
securities at a discount, faster than expected prepayments will
increase, while slower than expected prepayments will reduce, yield
to maturity and market value.
The Fund may invest in collateralized mortgage obligations
("CMOs") that are issued or guaranteed by the U.S. Government or
its agencies or instrumentalities, or that are collateralized by a
portfolio of mortgages or mortgage-related securities guaranteed by
such an agency or instrumentality. Payment of the interest and
principal generated by the pool of mortgages is passed through to
the holders as the payments are received by the issuer of the CMO.
CMOs may be issued in a variety of classes or series ("tranches")
that have different maturities. The principal value of certain CMO
tranches may be more volatile than other types of mortgage-related
securities, because of the possibility that the principal value of
the CMO may be prepaid earlier than the maturity of the CMO as a
result of prepayments of the underlying mortgage loans by the
borrowers.
As with other bond investments, the value of U.S. Government
Securities and mortgage-backed securities will tend to rise when
interest rates fall and to fall when interest rates rise. The
value of mortgage-backed securities may also be affected by changes
in the market's perception of the creditworthiness of the entity
issuing or guaranteeing them or by changes in government
regulations and tax policies. Because of these factors, the Fund's
share value and yield are not guaranteed and will fluctuate, and
there can be no assurance that the Fund's objective will be
achieved. The magnitude of these fluctuations generally will be
greater when the average maturity of the Fund's portfolio
securities is longer. Because the yields on U.S. Government
Securities are generally lower than on corporate debt securities,
the Fund may attempt to increase the income it can earn from U.S.
Government Securities by writing covered call options against them,
when market conditions are appropriate. Writing covered call
options is explained below, under "Other Investment Techniques and
Strategies."
-- 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 10% 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 each 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 10% 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 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.
The Fund may invest in securities rated as low as "C" by
Moody's or "D" by Standard and Poor's, although it does not intend
to do so. 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 lower-grade, 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. 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.
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. 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 agrees to resell 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.
-- 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 on
securities held by it or on Stock Index Futures (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 or
securities. Normally, the Fund would then purchase the equity
securities and terminate the hedging portion.
The Fund's strategy of hedging with Futures and options on
Futures will be incidental to the Fund's investment activities in
the underlying cash market. In the future, the Fund may employ
hedging instruments and strategies that are not presently
contemplated but which may be subsequently developed, to the extent
such investment methods are consistent with the Fund's investment
objective, and are legally permissible and disclosed in the
Prospectus. Additional information about the hedging instruments
the Fund may use is provided below.
- Writing Call Options. As described in the Prospectus, the
Fund may write covered calls. When the Fund writes a call on an
investment, it receives a premium and agrees to sell the callable
investment to a purchaser of a corresponding call during the call
period (usually not more than 9 months) at a fixed exercise price
(which may differ from the market price of the underlying
investment) regardless of market price changes during the call
period. To terminate its obligation on a call it has written, the
Fund may purchase a corresponding call in a "closing purchase
transaction." A profit or loss will be realized, depending upon
whether the net of the amount of option transaction costs and the
premium received on the call the Fund has written is more or less
than the price of the call the Fund subsequently purchased. A
profit may also be realized if the call lapses unexercised because
the Fund retains the underlying investment and the premium
received. Those profits are considered short-term capital gains
for Federal income tax purposes, as are premiums on lapsed calls,
and when distributed by the Fund are taxable as ordinary income.
If the Fund could not effect a closing purchase transaction due to
the lack of a market, it would have to hold the callable investment
until the call lapsed or was exercised.
The Fund may also write calls on Futures without owning a
futures contract or deliverable securities, provided that at the
time the call is written, the Fund covers the call by segregating
in escrow an equivalent dollar value of deliverable securities or
liquid assets. The Fund will segregate additional liquid assets if
the value of the escrowed assets drops below 100% of the current
value of the Future. In no circumstances would an exercise notice
as to a Future put the Fund in a short futures position.
- Writing Put Options. A put option on securities gives the
purchaser the right to sell, and the writer the obligation to buy,
the underlying investment at the exercise price during the option
period. Writing a put covered by segregated liquid assets equal to
the exercise price of the put has the same economic effect to the
Fund as writing a covered call. The premium the Fund receives from
writing a put option represents a profit, as long as the price of
the underlying investment remains above the exercise price.
However, the Fund has also assumed the obligation during the option
period to buy the underlying investment from the buyer of the put
at the exercise price, even though the value of the investment may
fall below the exercise price. If the put expires unexercised, the
Fund (as the writer of the put) realizes a gain in the amount of
the premium less transaction costs. If the put is exercised, the
Fund must fulfill its obligation to purchase the underlying
investment at the exercise price, which will usually exceed the
market value of the investment at that time. In that case, the
Fund may incur a loss, equal to the sum of the sale price of the
underlying investment and the premium received minus the sum of the
exercise price and any transaction costs incurred.
When writing put options on securities or on foreign
currencies, to secure its obligation to pay for the underlying
security, the Fund will deposit in escrow liquid assets with a
value equal to or greater than the exercise price of the underlying
securities. The Fund therefore forgoes the opportunity of
investing the segregated assets or writing calls against those
assets. As long as the obligation of the Fund as the put writer
continues, it may be assigned an exercise notice by the exchange or
broker-dealer through whom such option was sold, requiring the Fund
to exchange currency at the specified rate of exchange or to take
delivery of the underlying security against payment of the exercise
price. The Fund may have no control over when it may be required
to purchase the underlying security, since it may be assigned an
exercise notice at any time prior to the termination of its
obligation as the writer of the put. This obligation terminates
upon expiration of the put, or such earlier time at which the Fund
effects a closing purchase transaction by purchasing a put of the
same series as that previously sold. Once the Fund has been
assigned an exercise notice, it is thereafter not allowed to effect
a closing purchase transaction.
The Fund may effect a closing purchase transaction to realize
a profit on an outstanding put 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.
The Trustees have adopted a non-fundamental policy that the
Fund may write covered call options or write covered put options
with respect to not more than 5% of the value of its net assets.
Similarly, the Fund may only purchase call options and put options
with a value of up to 5% of its net assets.
- 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 (although it reserves the right not to
qualify). That qualification enables the Fund to "pass through"
its income and realized capital gains to shareholders without
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 physical commodities or physical commodity
contracts or speculate in financial commodity contracts, but the
Fund is authorized to purchase and sell financial futures contracts
and options on such futures contracts exclusively for hedging and
other non-speculative purposes to the extent specified in the
Prospectus;
- invest in real estate or real estate limited partnerships
(direct participation programs); however, the Fund may purchase
securities of issuers which engage in real estate operations and
securities which are secured by real estate or interests therein;
- purchase securities on margin (except for such short-term
loans as are necessary for the clearance of purchases of portfolio
securities) or make short sales of securities except "against the
box" (collateral arrangements in connection with transactions in
futures and options are not deemed to be margin transactions);
- underwrite securities of other companies except in so far as
the Fund may be deemed to be an underwriter under the Securities
Act of 1933 in disposing of a security ;
- invest in securities of other investment companies except in
connection with a merger, consolidation, reorganization or
acquisition of assets;
- invest in interests in oil, gas or other mineral exploration
or development programs or leases;
- purchase warrants if as a result the Fund would then have
either more than 5% of its total assets (determined at the time of
investment) invested in warrants or more than 2% of its total
assets invested in warrants not listed on the New York or American
Stock Exchange;
- invest in securities of any issuer if, to the knowledge of
the Trust, any officer or trustee of the Trust or any officer or
director of the Manager or Sub-Adviser owns more than 1/2 of 1% of
the outstanding securities of such issuer, and such officers,
trustees and directors who own more than 1/2 of l% own in the
aggregate more than 5% of the outstanding securities of such
issuer;
- pledge its assets or assign or otherwise encumber its assets
in excess of 10% of its net assets (taken at market value at the
time of pledging) and then only to secure borrowings effected
within the limitations set forth in the Prospectus;
- invest for the purpose of exercising control or management
of another company;
- issue senior securities as defined in the 1940 Act except
insofar as the Fund may be deemed to have issued a senior security
by reason of: (a) entering into any repurchase agreement; (b)
borrowing money in accordance with restrictions described above; or
(c) lending portfolio securities; or
- make loans to any person or individual except that portfolio
securities may be loaned by the Fund within the limitations set
forth in the Prospectus.
For purposes of the Fund's policy not to concentrate its
assets described in the Prospectus, the Fund has adopted, as a
matter of non-fundamental policy, the corporate industry
classifications set forth in Appendix A to this Statement of
Additional Information.
How the Fund is Managed
Organization and History. Oppenheimer Quest Growth & Income 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. Each Trustee is also a
Trustee of Oppenheimer Quest Small Cap Value Fund, Oppenheimer
Quest Opportunity Value Fund, Oppenheimer Quest Officers Fund,
Oppenheimer Quest Value Fund, Inc., Oppenheimer Quest Global Value
Fund, Inc. (collectively, the "Oppenheimer Quest Funds"), Rochester
Portfolio Series - Limited-Term New York Municipal Fund, Rochester
Fund Series - The Bond Fund For Growth and Rochester Fund
Municipals (collectively, the "Rochester Funds"). The address of
each is Two World Trade Center, New York, New York 10048, except as
noted. As of January ___, 1996, the trustees and officers of the
Trust as a group owned less than 1% of the outstanding shares of
each class of the Fund.
Bridget A. Macaskill, Chairman of the Board of Trustees and
President*; Age: 47.
President, Chief Executive Officer of OppenheimerFunds, Inc. (the
"Manager"); prior thereto, Executive Vice President and Chief
Operating Officer 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., Director of Main Street Advisers, Inc., and Director of
HarbourView Asset Management Corporation, all of which are
subsidiaries of the Manager.
Paul Y. Clinton, Trustee; Age: 64
946 Morris Avenue, Bryn Mawr, Pennsylvania 19010
Director, External Affairs, Kravco Corporation, a national real
estate owner and property management corporation; formerly
President of Essex Management Corporation, a 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 Oppenheimer Quest Value Fund, Inc., Oppenheimer
Quest Global Value Fund, Inc., and 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, a venture capital partnership; formerly a
general partner of Essex Limited Partnership, an investment
partnership; formerly President of Geneve Corp., a venture capital
fund; formerly Chairman of Woodland Capital Corp., a small business
investment company; formerly Vice President of W.R. Grace & Co.
Thomas W. Courtney, Trustee; Age: 62
P.O. Box 580, Sewickley, Pennsylvania 15143
Principal of Courtney Associates, Inc., a venture capital firm;
former General Partner of Trivest Venture Fund, a 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., Oppenheimer Quest Value
Fund, Inc. and Oppenheimer Quest Global Value Fund, 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 or Trustee of Quest
Cash Reserves, Inc., Oppenheimer Quest Global Value Fund, Inc. and
Oppenheimer Quest Value Fund, 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.,
Oppenheimer Quest Value Fund, Inc. and Oppenheimer Quest Global
Value Fund, 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.
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 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 Asset Management
Corporation; 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 the Transfer Agent and Shareholder
Financial Services, Inc., a transfer agent subsidiary of the
Manager; an officer of other Oppenheimer funds.
Colin Glinsman, Portfolio Manager; Age ___
Two World Financial Center, 225 Liberty Street, New York, New York
10080
Senior Vice President of Oppenheimer Capital.
Robert Bishop, Assistant Treasurer; Age: 37
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: 30
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 International Mutual Fund
Supervisor for Brown Brothers, Harriman Co., a bank, and previously
a Senior Fund Accountant for State Street Bank & Trust Company.
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.
<FN>
- -----------
*A Trustee who is an "interested person" as defined in the
Investment Company Act.
-- 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, who was not a Trustee prior to
November 22, 1995) received the total amounts shown below from (i)
the Fund during its fiscal period ended 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>
<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 Expenses Retirement Complex
<S> <C> <C> <C> <C>
Paul Y. Clinton $ None None $
Thomas W. Courtney $ None None $
Lacy B. Herrmann $ None None $
George Loft $ None None $
</TABLE>
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.
- AMA Family of Funds Indemnification. In connection with the
combination of each of the U.S. Government Income Fund and the
Growth and Income Fund with a portfolio of AMA Family of Funds,
Inc., each Fund has agreed to assume the obligation of such
portfolio of the AMA Family of Funds to indemnify the directors of
the AMA Family of Funds, Inc. to the fullest extent permitted by
law and the By-Laws of the AMA Family of Funds, Inc.
- Unified Funds Indemnification. In connection with the
combination of Growth and Income Fund with Unified Income Fund and
Unified Mutual Shares, Growth and Income Fund has agreed to assume
the obligation of Unified Income Fund and Unified Mutual Shares to
indemnify the directors of such Unified Funds to the fullest extent
permitted by law and the By-Laws of such Unified Funds.
-- Major Shareholders. As of January ___, 1996, the only
persons who owned of record or were known by the Fund to own
beneficially 5% or more of the Fund's outstanding Class A, Class B
or Class C shares were the following:
Number and Class
of Shares Owned Percentage
Beneficially of Record Name & Address of Class
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 has 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 its 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 Funds pursuant to the terms of an
Investment Advisory Agreement dated as of November 22, 1995. OpCap
Advisors, the Fund's Sub-Adviser, served as the Fund's investment
adviser from its inception to 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
or 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.
-- Fees Paid Under the Prior Investment Advisory Agreement.
OpCap Advisors served as investment adviser to the Fund from its
inception until November 22, 1995. Under the prior Investment
Advisory Agreement, the total advisory fees accrued or paid by the
Fund were as follows: For the fiscal year ended October 31, 1993,
the total advisory fee accrued or paid by the Fund was $202,511, of
which $66,413 was waived by OpCap Advisors. For the fiscal year
ended October 31, 1994, the total advisory fee accrued or paid by
the Fund was $263,469, of which $142,772 was waived by OpCap
Advisors. For the fiscal year ended October 31, 1995, the total
advisory fee accrued or paid by the Fund was $________, of which
$__________ was waived by OpCap Advisors.
For the fiscal years ended October 31, 1993, 1994 and 1995,
the Fund paid or accrued accounting services fees to OpCap
Advisors in the amounts of $14,723, $68,117 and $_______,
respectively. Commencing in 1993, the Trust retained the services
of State Street Bank and Trust Company ("State Street") to
calculate the net asset value of each class of shares and to
prepare the books and records. For such services, the Fund accrued
or paid fees for the fiscal years ended October 31, 1993, 1994 and
1995 in the amounts of $27,918, $55,000 and $__________,
respectively.
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 OpCap Advisors (previously named Quest for Value
Advisors) pursuant to a separate Subadvisory Agreement dated as of
November 22, 1995 with respect to the Fund.
-- The Subadvisory Agreement. The Subadvisory Agreement
provides that OpCap Advisors shall regularly provide investment
advice with respect to the Fund and invest and reinvest cash,
securities and the property comprising the assets of the Fund.
Under the Subadvisory Agreement, OpCap Advisors 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 OpCap
Advisors an annual fee payable monthly, based on the average daily
net assets of the Fund, equal to 40% of the investment advisory fee
collected by 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, OpCap Advisors 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 its Class A, Class B and Class C shares but is not
obligated to sell a specific number of shares. Expenses normally
attributable to sales, including advertising and the cost of
printing and mailing prospectuses, other than those furnished to
existing shareholders, are borne by the Distributor. During the
Fund's fiscal year ended October 31, 1995, the aggregate amount of
sales charges on sales of the Fund's Class A shares was $________,
of which Quest for Value Distributors, the Fund's distributor prior
to November 22, 1995, retained $_________ and an affiliated broker-
dealer retained $_________, respectively. During the fiscal years
ended October 31, 1995, Quest for Value Distributors received
contingent deferred sales charges of $___________ upon redemption
of Class B shares, and received contingent deferred sales charges
of $___________ upon redemption of Class C shares. 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, the Fund's
Transfer Agent, is responsible for maintaining the Fund's
shareholder registry and shareholder accounting records, and for
shareholder servicing and administrative functions.
- 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 or
the Securities and Exchange Commission ("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 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 Sub-Adviser to cause purchase or sale transactions
to be allocated among the Fund and others whose assets it manages
in such manner as it deems equitable. In making such allocations
among the Fund and other client accounts, the main factors
considered are the respective investment objectives, the relative
size of portfolio holdings of the same or comparable securities,
the availability of cash for investment, the size of investment
commitments generally held and the opinions of the persons
responsible for managing the portfolios of each Fund and other
client accounts.
When orders to purchase or sell the same security on identical
terms are placed by more than one of the funds and/or other
advisory accounts managed by the Sub-Adviser or its affiliates, the
transactions are generally executed as received, although a fund or
advisory account that does not direct trades to a specific broker
("free trades") usually will have its order executed first.
Purchases are combined where possible for the purpose of
negotiating brokerage commissions, which in some cases might have
a detrimental effect on the price or volume of the security in a
particular transaction as far as the Fund is concerned. Orders
placed by accounts that direct trades to a specific broker will
generally be executed after the free trades. All orders placed on
behalf of the Fund are considered free trades. However, having an
order placed first in the market does not necessarily guarantee the
most favorable price.
The following table presents information as to the allocation
of brokerage commissions paid by the Fund for the fiscal years
ended October 31, 1993, 1994 and 1995:
<TABLE>
<CAPTION>
Total Amount of Transactions
For the Total Brokerage Commissions Where Brokerage Commissions
Fiscal Year Brokerage Paid to Opco Paid to Opco
Ended Commissions Dollar Dollar
October 31, Paid Amounts % Amounts %
<S> <C> <C> <C> <C> <C>
1993 $108,617 $91,522 84.3% $54,968,280 86.0%
1994 $ 74,334 $55,911 75.2% $38,409,929 77.5%
1995 $ $ % $ %
</TABLE>
During the Fund's fiscal year ended October 31, 1995,
$___________ was paid by the Fund to brokers as commissions in
return for research services; the aggregate dollar amount of those
transactions was $___________.
Performance of the Fund
Total Return Information. As described in the Prospectus, from
time to time the "average annual total return," "cumulative total
return" and "total return at net asset value" of an investment in
a class of shares of the Fund may be advertised. An explanation of
how these total returns are calculated for each class and the
components of those calculations is set forth below.
The Fund's advertisements of its performance data must, under
applicable SEC rules, 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.
-- 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 )
The "average annual total returns" on an investment in Class
A shares of the Fund (using the method described above) for the one
year period ended October 31, 1995 and for the period from November
4, 1991 (commencement of operations) to October 31, 1995 were 9.66%
and 9.78%, respectively.
The average annual total return on Class B shares for the one-
year period ended October 31, 1995 and for the period September 1,
1993 (commencement of the public offering of the class) through
October 31, 1995 were 10.65% and 10.02%, respectively.
The average annual total return on Class C shares for the one-
year period ended October 31, 1995 and for the period September 1,
1993 (commencement of the public offering of the class) through
October 31, 1995 were 14.38% and 11.07%, respectively.
-- 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 4, 1991 (commencement of operations) to October 31,
1995 was _____%. The cumulative total return on Class B shares for
the period from September 1, 1993 (commencement of the public
offering of the class) through October 31, 1995 was _____%. The
cumulative total return on Class C shares for the period from
September 1, 1993 (commencement of the public offering of the
class) through October 31, 1995 was _____%.
-- Total Returns at Net Asset Value. From time to time the
Fund may also quote an "average annual total return at net asset
value" or a "cumulative total return at net asset value" for Class
A, Class B or Class C shares. Each is based on the difference in
net asset value per share at the beginning and the end of the
period for a hypothetical investment in that class of shares
(without considering front-end or contingent deferred sales
charges) and takes into consideration the reinvestment of dividends
and capital gains distributions.
The average annual total returns at net asset value on the
Fund's Class A shares for the one year period ended October 31,
1995 and for the period from November 4, 1991 (commencement of
operations) to October 31, 1995 were _____% and _____%,
respectively. The cumulative total return at net asset value on
the Fund's Class A shares for the period November 4, 1991 through
October 31, 1995 was _____%.
The average annual total returns at net asset value on the
Fund's Class B shares for the one year period ended October 31,
1995 and for the period from September 1, 1993 (commencement of the
public offering of the class) through October 31, 1995 were ____%
and ____%, respectively. The cumulative total return at net asset
value on the Fund's Class B shares for the period September 1, 1993
through October 31, 1995 was ____%.
The average annual total returns at net asset value on the
Fund's Class C shares for the one-year period ended October 31,
1995 and for the period September 1, 1993 (commencement of the
public offering of the class) through October 31, 1995 were ____%
and ____%, respectively. The cumulative total return at net asset
value on the Fund's Class C shares for the period September 1, 1993
through October 31, 1995 was ____%.
Other Performance Comparisons. From time to time the Fund may
publish the ranking of its Class A, Class B or Class C shares by
Lipper Analytical Services, Inc. ("Lipper"), a widely-recognized
independent mutual fund monitoring service. Lipper monitors the
performance of regulated investment companies, including the Fund,
and ranks their performance for various periods based on categories
relating to investment objectives. The performance of the Fund is
ranked against (i) all other funds, (ii) all other __________ funds
and (iii) all other __________________ funds in a specific size
category. The Lipper performance rankings are based on total
returns that include the reinvestment of capital gain distributions
and income dividends but do not take sales charges or taxes into
consideration.
From time to time the Fund may publish the ranking of the
performance of its Class A, Class B or Class C shares by
Morningstar, Inc., an independent mutual fund monitoring service
that ranks mutual funds, including the Fund, monthly in broad
investment categories (equity, taxable bond, municipal bond and
hybrid) based on risk-adjusted investment return. Investment
return measures a fund's three, five and ten-year average annual
total returns (when available) in excess of 90-day U.S. Treasury
bill returns after considering sales charges and expenses. Risk
measures fund performance below 90-day U.S. Treasury bill monthly
returns. Risk and investment return are combined to produce star
rankings reflecting performance relative to the average fund in a
fund's category. Five stars is the "highest" ranking (top 10%),
four stars is "above average" (next 22.5%), three stars is
"average" (next 35%), two stars is "below average" (next 22.5%) and
one star is "lowest" (bottom 10%). Morningstar ranks the Fund in
relation to other rated growth and income funds. Rankings are
subject to change.
The total return on an investment in the Fund's Class A, Class
B or Class C shares may be compared with performance for the same
period of either the Lipper __________ Index, or the S&P 500 Index
as described in the Prospectus. The performance of each 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 a separate Distribution and Service Plan
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
reimburse the Distributor for all or a portion of its costs
incurred in connection with the distribution and/or servicing of
the shares of that class, as described in the Prospectus. Each
Plan has been approved by a vote of (i) the Board of 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,
and (ii) the holders of a "majority" (as defined in the Investment
Company Act) of the shares of each class at a meeting on November
3, 1995.
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 shares are
outstanding, and thereafter on a quarterly basis, as described in
the Prospectus. The advance payment is based on the net assets of
shares of that class sold. An exchange of shares does not entitle
the Recipient to an advance service fee payment. In the event
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 Plans,
(ii) compensation and expenses of personnel employed by the
Distributor to support distribution of shares, and (iii) costs of
sales literature, advertising and prospectuses (other than those
furnished to current shareholders).
- The Prior Plans. From the inception date of the Fund
through November 22, 1995, OCC Distributors (formerly known as
Quest for Value Distributors) served as Distributor to the Fund.
OCC Distributors provided distribution services for the Fund's
Class A, Class B and Class C shares pursuant to separate plans
adopted for each class under the Investment Company Act (the "Prior
Plans"). The total distribution fees accrued or paid by Class A,
Class B and Class C shares of the Fund under the Prior Plans for
the fiscal year ended October 31, 1995 were $________, $________
and $_______, respectively.
OCC Distributors has estimated it spent approximately the
following amounts with respect to Class A, B and C shares of the
Fund for the fiscal year ended October 31, 1995:
<TABLE>
<CAPTION>
Printing and
mailing of
prospectuses
Sales to other
Compensation
Material and than
current Compensation to Sales
Class Advertising shareholders to
Dealers Personnel Other (1)
<S> <C> <C> <C> <C> <C>
Class A $ $ $ $ $
Class B $ $ $ $ $
Class C $ $ $ $ $
</TABLE>
- ----------------
(1) Includes cost of telephone and overhead.
During the fiscal year ended October 31, 1995, OCC
Distributors received the following compensation with respect to
the Fund:
Portion of
Sales Charge Compensation on
on Class A Shares Redemptions (CDSC's)
$8,014 $1,000
For the fiscal year ended October 31, 1994, OCC Distributors
paid $10,684 in 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 net asset values
per share of Class A, Class B and Class C shares of the Fund are
determined as of the close of business of The New York Stock
Exchange (the "Exchange") on each day that the Exchange is open, by
dividing the value of the Fund's net assets attributable to that
class by the total number of Fund shares of that class outstanding.
The Exchange normally closes at 4:00 P.M. New York time, but may
close earlier on some days (for example, in case of weather
emergencies or days falling before a holiday). The Exchange's most
recent annual holiday schedule (which is subject to change) states
that it will close on New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. It may also close on other days. The Fund may
invest a substantial portion of its assets in foreign securities
primarily listed on foreign exchanges which may trade on Saturdays
or customary U.S. business holidays on which the Exchange is
closed. Because the Fund's net asset values will not be calculated
on those days, the Fund's net asset value per share may be
significantly affected on such days when shareholders may not
purchase or redeem shares.
The Trust's Board of Trustees has established procedures for
the valuation of the Trust's securities generally as follows: (i)
equity securities traded on a U.S. securities exchange or on NASDAQ
for which last sale information is regularly reported are valued at
the last reported sale price on their primary exchange or NASDAQ
that day (or, in the absence of sales that day, at values based on
the last sale prices of the preceding trading day or closing bid
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; and (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 as
provided by a reliable bank, dealer or pricing service.
Trading in securities on European and Asian exchanges and
over-the-counter markets is normally completed before the close of
the Exchange. Events affecting the values of foreign securities
traded in such markets that occur between the time their prices are
determined and the close of the Exchange will not be reflected in
the Fund's calculation of its net asset value unless the Board of
Trustees or the Manager, under procedures established by the Board,
determines that the particular event would materially affect the
Fund's net asset values, 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 values
of securities denominated in foreign currency will be converted to
U.S. dollars at the closing price in the London foreign exchange
market that day as provided by a reliable bank, dealer or pricing
service. In the case of U.S. government securities and corporate
bonds, where last sale information is not generally available, such
pricing procedures may include "matrix" comparisons to the prices
for comparable instruments on the basis of quality, yield, maturity
and other special factors involved. The Trustees will monitor the
accuracy of pricing services by comparing prices used for portfolio
evaluation to actual sales prices of selected securities.
Puts, calls and Futures are valued at the last sales price on
the principal exchanges on which they are traded or on NASDAQ, as
applicable as determined by a pricing service approved by the Board
of Trustees or by the Manager, or, if there are no sales that day,
in accordance with (i) above. When the Fund writes an option, an
amount equal to the premium received by the Fund is included in the
Fund's Statement of Assets and Liabilities as an asset, and an
equivalent deferred credit is included in the liability section.
The deferred credit is adjusted ("marked-to-market") to reflect the
current market value of the option. If a call written by the Fund
is exercised, the proceeds are increased by the premium received.
AccountLink. When shares are purchased through AccountLink, each
purchase must be at least $25.00. Shares will be purchased on the
regular business day the Distributor is instructed to initiate the
Automated Clearing House ("ACH") transfer to buy the shares.
Dividends will begin to accrue on shares purchased by the proceeds
of ACH transfers on the business day the Fund receives Federal
Funds for the purchase through the ACH system before the close of
The New York Stock Exchange. The Exchange normally closes at 4:00
P.M., but may close earlier on certain days. If Federal Funds are
received on a business day after the close of the Exchange, the
shares will be purchased and dividends will begin to accrue on the
next regular business day. The proceeds of ACH transfers are
normally received by the Fund 3 days after the transfers are
initiated. The Distributor and the Fund are not responsible for
any delays in purchasing shares resulting from delays in ACH
transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced
sales charge rate may be obtained for Class A shares under Rights
of Accumulation and Letters of Intent because of the economies of
sales efforts and reduction in expenses realized by the
Distributor, dealers and brokers making such sales. No sales
charge is imposed in certain other circumstances described in the
Prospectus because the Distributor or dealer or broker incurs
little or no selling expenses. The term "immediate family" refers
to one's spouse, children, grandchildren, parents, grandparents,
parents-in-law, sons- and daughters-in-law, 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 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.
Rochester Portfolio Series - Limited-Term New York Municipal
Fund
Rochester Fund Series - The Bond Fund For Growth
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 up to 5% of the intended purchase amount specified in the
Letter shall be held in escrow by the Transfer Agent. For example,
if the intended purchase amount is $50,000, the escrow shall be
shares valued in the amount of $2,500 (computed at the public
offering price adjusted for a $50,000 purchase). Any dividends and
capital gains distributions on the escrowed shares will be credited
to the investor's account.
2. If the 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.
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 Directors has the
right to cause the involuntary redemption of the shares held in any
Fund account if the aggregate net asset value of those shares is
less than $200 or such lesser amount as the Board may fix. The
Board of Directors will not cause the involuntary redemption of
shares in an account if the aggregate net asset value of the shares
has fallen below the stated minimum solely as a result of market
fluctuations. Should the Board elect to exercise this right, it
may also fix, in accordance with the 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 and the Fund
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
The Rochester Funds are not Eligible Funds for purposes of the
Exchange Privilege set forth in the Prospectus. As stated in the
Prospectus, shares of a particular class of Oppenheimer funds
having more than one class of shares may be exchanged only for
shares of the same class of other Oppenheimer funds. Shares of the
Oppenheimer funds that have a single class without a class
designation are deemed "Class A" shares for this purpose. All of
the Oppenheimer funds offer Class A, 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 Directors and the Manager might determine in a
particular year that it would be in the best interest of
shareholders for the Fund not to make such distributions at the
required levels and to pay the excise tax on the undistributed
amounts. That would reduce the amount of income or capital gains
available for distribution to shareholders.
If the Fund qualifies as a "regulated investment company"
under the Internal Revenue Code, it will not be liable for Federal
income taxes on amounts paid by it as dividends and 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 are the
independent auditors of the Fund. Their services include examining
the annual financial statements of the Fund as well as other
related services.
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.
<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>
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
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
<PAGE>
41
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of
Quest for Value Family of Funds:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Opportunity Fund, the Small
Capitalization Fund, the Growth and Income Fund, the U.S. Government Income
Fund, and the Investment Quality Income Fund (constituting part of Quest for
Value Family of Funds, hereafter referred to as the "Fund") at October 31, 1995,
the results of each of their operations for the year then ended, the changes in
each of their net assets for each of the two years in the period then ended and
the financial highlights for each of the periods indicated, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1995 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
December 20, 1995
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
QUEST FOR VALUE FUND, INC.
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 19.9%
AUTOMOTIVE -- 6.0%
Ford Motor Credit Co.
$ 2,400,000 5.72%, 11/20/95 $ 2,392,755
6,600,000 5.73%, 11/27/95 6,572,687
General Motors Acceptance Corp.
335,000 5.74%, 11/20/95 333,985
10,700,000 5.77%, 11/20/95 10,667,415
------------
19,966,842
------------
BANKING -- 1.4%
4,700,000 Norwest Financial, Inc.
5.73%, 11/13/95 4,691,023
------------
COMPUTERS -- 0.1%
430,000 IBM Credit Corp.
5.70%, 11/06/95 429,660
------------
MACHINERY & ENGINEERING -- 2.1%
Deere (John) Capital Corp.
3,300,000 5.71%, 11/13/95 3,293,719
3,600,000 5.75%, 11/13/95 3,593,100
------------
6,886,819
------------
MISCELLANEOUS FINANCIAL SERVICES -- 10.1%
Beneficial Corp.
1,300,000 5.72%, 11/27/95 1,294,629
225,000 5.74%, 11/27/95 224,067
800,000 CIT Group Holdings, Inc.
5.73%, 11/13/95 798,472
Household Finance Corp.
14,200,000 5.72%, 12/04/95 14,125,545
1,000,000 5.73%, 11/27/95 995,862
Merrill Lynch & Co., Inc.
500,000 5.72%, 11/06/95 499,603
15,345,000 5.75%, 11/06/95 15,332,745
------------
33,270,923
------------
OIL/GAS -- 0.2%
500,000 Chevron Oil Finance Co.
5.71%, 11/08/95 499,445
------------
Total Short-Term Corporate Notes
(cost -- $65,744,712) $ 65,744,712
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
CONVERTIBLE CORPORATE BONDS -- 0.7%
REAL ESTATE
$ 2,330,921 Security Capital Realty, Inc. (A)
12.00%, 6/30/14
(cost -- $2,198,259) $ 2,330,921
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
COMMON STOCKS -- 79.3%
AEROSPACE -- 6.0%
127,000 AlliedSignal, Inc. $ 5,397,500
177,000 McDonnell Douglas Corp. 14,469,750
------------
19,867,250
------------
APPAREL -- 1.4%
202,600 Warnaco Group, Inc. (Class A)* 4,710,450
------------
BANKING -- 3.4%
110,000 Citicorp 7,136,250
81,215 Mellon Bank Corp. 4,070,902
------------
11,207,152
------------
CHEMICALS -- 4.5%
60,000 du Pont (E.I.) de Nemours & Co. 3,742,500
81,000 Hercules, Inc. 4,323,375
64,000 Monsanto Co. 6,704,000
------------
14,769,875
------------
CONGLOMERATES -- 1.7%
90,200 General Electric Co. 5,705,150
------------
CONSUMER PRODUCTS -- 1.5%
149,000 Reebok International Ltd. 5,066,000
------------
CONTAINERS -- 2.2%
160,000 Temple - Inland, Inc. 7,280,000
------------
COSMETICS/TOILETRIES -- 1.5%
67,800 Avon Products, Inc. 4,822,275
------------
DRUGS & MEDICAL PRODUCTS -- 4.8%
179,000 Becton, Dickinson & Co. 11,635,000
48,000 Warner-Lambert Co. 4,086,000
------------
15,721,000
------------
</TABLE>
* Non-income producing security.
15
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------
ELECTRONICS -- 5.3%
177,000 Arrow Electronics, Inc.* $ 8,982,750
122,000 Intel Corp. 8,524,750
------------
17,507,500
------------
HEALTHCARE SERVICES -- 2.4%
440,000 Tenet Healthcare Corp. 7,865,000
------------
INSURANCE -- 17.2%
216,200 Ace Ltd. 7,350,800
35,300 AFLAC, Inc. 1,438,475
99,000 American International Group, Inc. 8,353,125
464,200 EXEL Ltd. 24,834,700
197,000 Progressive Corp., Ohio 8,175,500
101,000 Transamerica Corp. 6,842,750
------------
56,995,350
------------
METALS/MINING -- 2.7%
66,333 Freeport McMoRan, Inc. 2,479,208
8,518 Freeport McMoRan, Copper & Gold
(Class A) 194,849
279,290 Freeport McMoRan, Copper & Gold
(Class B) 6,353,848
------------
9,027,905
------------
MISCELLANEOUS FINANCIAL SERVICES -- 8.8%
200,000 American Express Co. 8,125,000
290,000 Countrywide Credit Industries, Inc. 6,416,250
214,000 Federal Home Loan Mortgage Corp. 14,819,500
------------
29,360,750
------------
PAPER PRODUCTS -- 1.9%
120,000 Champion International Corp. $ 6,420,000
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
REAL ESTATE -- 0.8%
3,050 Security Capital Realty, Inc. (A) 2,689,844
------------
RETAIL -- 6.3%
373,000 May Department Stores Co. 14,640,250
140,000 Mercantile Stores Co., Inc. 6,282,500
------------
20,922,750
------------
TELECOMMUNICATIONS -- 2.6%
344 Bell Atlantic Corp. 21,887
225,200 Sprint Corp. 8,670,200
------------
8,692,087
------------
TEXTILES -- 1.3%
340,000 Shaw Industries, Inc. 4,335,000
------------
TOYS/GAMES/HOBBY -- 0.9%
92,000 Hasbro, Inc. 2,806,000
------------
TRANSPORTATION -- 2.1%
84,000 CSX Corp. 7,035,000
------------
Total Common Stocks
(cost -- $190,764,443) $262,806,338
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $258,707,414)) 99.9% $330,881,971
Other Assets in Excess of
Other Liabilities 0.1 429,932
------ ------------
TOTAL NET ASSETS 100.0 % $331,311,903
------ ------------
------ ------------
</TABLE>
* Non-income producing security.
(A) Restricted Securities (the Fund will not bear any costs, including those
involved in registration under the Securities Act of 1933, in connection
with the disposition of these securities):
<TABLE>
<CAPTION>
UNIT
VALUATION
AS
DATE OF UNIT OF OCTOBER
DESCRIPTION ACQUISITION PAR AMOUNT SHARES COST 31, 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Security Capital
Realty, Inc.
12.00%, 6/30/14 9/15/94 $2,330,921 -- $ 94 $ 100
Security Capital
Realty, Inc.
Common Stock 9/15/94 -- 3,050 926 882
</TABLE>
16
<PAGE>
- --------------------------------------------------------------------------------
OPPORTUNITY FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 15.6%
AUTOMOTIVE -- 2.4%
$15,000,000 General Motors Acceptance Corp.
5.77%, 11/20/95 $ 14,954,321
------------
BANKING -- 2.8%
Norwest Financial, Inc.
1,800,000 5.73%, 11/13/95 1,796,562
16,000,000 5.73%, 11/27/95 15,933,787
------------
17,730,349
------------
COMPUTERS -- 0.2%
1,490,000 IBM Credit Corp.
5.70%, 11/06/95 1,488,820
------------
MACHINERY & ENGINEERING -- 3.0%
Deere (John) Capital Corp.
13,600,000 5.71%, 11/13/95 13,574,115
5,235,000 5.74%, 11/13/95 5,224,984
------------
18,799,099
------------
MISCELLANEOUS FINANCIAL SERVICES -- 7.1%
Beneficial Corp.
1,200,000 5.72%, 11/20/95 1,196,377
10,455,000 5.73%, 11/20/95 10,423,382
1,800,000 CIT Group Holdings, Inc.
5.73%, 11/13/95 1,796,562
15,980,000 Household Finance Corp.
5.73%, 11/08/95 15,962,196
Merrill Lynch & Co., Inc.
4,500,000 5.75%, 11/02/95 4,499,281
11,475,000 5.75%, 11/06/95 11,465,836
------------
45,343,634
------------
OIL/GAS -- 0.1%
491,000 Chevron Oil Finance Co.
5.71%, 11/08/95 490,455
------------
Total Short-Term Corporate Notes
(cost -- $98,806,678) $ 98,806,678
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
U.S. TREASURY NOTES -- 0.5%
$ 1,000,000 7.50%, 11/15/01 $ 1,081,410
1,000,000 7.50%, 5/15/02 1,086,410
550,000 7.875%, 4/15/98 577,241
550,000 7.875%, 8/15/01 603,537
------------
Total U.S. Treasury Notes
(cost -- $3,143,397) $ 3,348,598
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
COMMON STOCKS -- 85.0%
AEROSPACE -- 9.0%
100,000 Loral Corp. $ 2,962,500
525,000 McDonnell Douglas Corp. 42,918,750
200,000 Northrop Grumman Corp. 11,450,000
------------
57,331,250
------------
AIRLINES -- 1.0%
100,000 AMR Corp.* 6,600,000
------------
BANKING -- 13.6%
525,000 Citicorp 34,059,375
34,100 First Empire State Corp. 6,709,175
450,000 Mellon Bank Corp. 22,556,250
110,000 Wells Fargo & Co. 23,113,750
------------
86,438,550
------------
CASINOS/GAMING -- 2.9%
750,000 Harrahs Entertainment, Inc. 18,562,500
------------
CHEMICALS -- 4.4%
260,000 du Pont (E.I.) de Nemours & Co. 16,217,500
220,000 Hercules, Inc. 11,742,500
------------
27,960,000
------------
CONSUMER PRODUCTS -- 3.2%
600,000 Reebok International Ltd. 20,400,000
------------
COSMETICS/TOILETRIES -- 0.7%
60,600 Avon Products, Inc. 4,310,175
------------
DRUGS & MEDICAL PRODUCTS -- 2.8%
275,000 Becton, Dickinson & Co. 17,875,000
------------
</TABLE>
* Non-income producing security.
17
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------
ELECTRONICS -- 8.1%
460,000 Intel Corp. $ 32,142,500
200,000 National Semiconductor Corp.* 4,875,000
50,000 Raychem Corp. 2,318,750
440,000 Unitrode Corp.* 11,825,000
------------
51,161,250
------------
INSURANCE -- 3.2%
300,000 EXEL Ltd. 16,050,000
60,000 Transamerica Corp. 4,065,000
------------
20,115,000
------------
METALS/MINING -- 5.2%
83,333 Freeport McMoRan, Inc. 3,114,583
1,302,100 Freeport McMoRan Copper & Gold
(Class B) 29,622,775
------------
32,737,358
------------
MISCELLANEOUS FINANCIAL SERVICES -- 10.5%
250,000 American Express Co. 10,156,250
500,000 Countrywide Credit Industries, Inc. 11,062,500
500,000 Federal Home Loan Mortgage Corp. 34,625,000
100,000 Federal National Mortgage Assoc. 10,487,500
------------
66,331,250
------------
OIL/GAS -- 6.0%
80,000 Mapco, Inc. 4,120,000
610,000 Tenneco, Inc. 26,763,750
149,300 Triton Energy Corp.* 6,961,113
------------
37,844,863
------------
PAPER PRODUCTS -- 7.2%
535,000 Champion International Corp. 28,622,500
325,000 Scott Paper Co. 17,306,250
------------
45,928,750
------------
TELECOMMUNICATIONS -- 1.8%
300,000 Sprint Corp. 11,550,000
------------
TEXTILES -- 2.4%
155,000 Collins & Aikman Corp.* $ 1,240,000
1,100,000 Shaw Industries, Inc. 14,025,000
------------
15,265,000
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
TOYS/GAMES/HOBBY -- 2.7%
600,000 Mattel, Inc. 17,250,000
------------
OTHER -- 0.3%
40,000 Alliant Techsystems, Inc.* 1,860,000
------------
Total Common Stocks
(cost -- $440,332,557) $539,520,946
------------
<CAPTION>
- ------------------------------------------------------
WARRANTS VALUE
- ------------------------------------------------------
<C> <S> <C>
WARRANTS -- 0.0%
HEALTHCARE SERVICES
34 Laboratory Corp. of America
Holdings
(cost -- $81) $ 21
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $542,282,713) 101.1% $641,676,243
Other Liabilities in Excess of
Other Assets (1.1) (7,165,129)
------ ------------
TOTAL NET ASSETS 100.0% $634,511,114
------ ------------
------ ------------
</TABLE>
SMALL CAPITALIZATION FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 15.1%
AUTOMOTIVE -- 1.8%
$ 2,758,000 General Motors Acceptance Corp.
5.81%, 11/06/95 $ 2,755,774
------------
BANKING -- 4.0%
6,000,000 Norwest Financial, Inc.
5.73%, 11/14/95 5,987,585
------------
INSURANCE -- 4.7%
7,000,000 Prudential Funding Corp.
5.73%, 11/27/95 6,971,031
------------
</TABLE>
* Non-income producing security.
18
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
MACHINERY & ENGINEERING -- 1.8%
Deere (John) Capital Corp.
$ 1,560,000 5.71%, 11/13/95 $ 1,557,031
1,074,000 5.75%, 11/13/95 1,071,942
------------
2,628,973
------------
MISCELLANEOUS FINANCIAL SERVICES -- 2.8%
3,635,000 Beneficial Corp.
5.73%, 11/22/95 3,622,850
575,000 Household Finance Corp.
5.72%, 11/13/95 573,904
------------
4,196,754
------------
Total Short-Term Corporate Notes
(cost -- $22,540,117) $ 22,540,117
------------
CORPORATE NOTES & BONDS -- 0.4%
AUTOMOTIVE -- 0.0%
$ 62,950 Collins Industries, Inc.
8.75%, 1/11/00 $ 57,577
------------
OIL/GAS -- 0.4%
500,000 Global Marine, Inc.
12.75%, 12/15/99 552,500
------------
Total Corporate Notes & Bonds
(cost -- $585,111) $ 610,077
------------
CONVERTIBLE CORPORATE BONDS -- 0.9%
REAL ESTATE
$ 1,404,189 Security Capital Realty, Inc. (A)
12.00%, 6/30/14
(cost -- $1,325,889) $ 1,404,189
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS -- 0.2%
RETAIL
36,000 Family Bargain Corp.
$0.95 Conv. Pfd.
(cost -- $360,000) $ 220,500
------------
COMMON STOCKS -- 84.4%
ADVERTISING -- 6.2%
77,600 Katz Media Group, Inc.* $ 1,396,800
30,000 Omnicom Group, Inc. 1,916,250
292,400 True North Communications 5,921,100
------------
9,234,150
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
AEROSPACE -- 0.5%
97,500 BE Aerospace, Inc.* $ 767,813
------------
AUTOMOTIVE -- 1.7%
126,000 Collins Industries, Inc.* 259,875
120,100 Masland Corp. 1,681,400
70,000 Sudbury, Inc.* 586,250
------------
2,527,525
------------
BUILDING & CONSTRUCTION -- 5.8%
57,300 Carlisle Cos., Inc. 2,356,462
190,547 D.R. Horton, Inc. 2,119,835
26,500 Insituform Technologies (Class A)* 331,250
204,000 Martin Marietta Materials, Inc. 3,876,000
------------
8,683,547
------------
CHEMICALS -- 1.7%
86,400 OM Group, Inc. 2,505,600
------------
COMPUTER SERVICES -- 3.6%
149,900 BancTec, Inc.* 2,810,625
52,000 DST Systems, Inc. 1,092,000
114,000 Exabyte Corp.* 1,474,875
------------
5,377,500
------------
CONTAINERS -- 1.9%
169,000 Shorewood Packaging Corp.* 2,830,750
------------
DRUGS & MEDICAL PRODUCTS -- 1.9%
49,900 Amerisource Health Corp. (Class A) 1,359,775
33,900 Sybron International Corp. -
Wisconsin* 1,440,750
------------
2,800,525
------------
ELECTRONICS -- 8.9%
35,700 Arrow Electronics, Inc* 1,811,775
174,900 EG&G, Inc. 3,257,512
146,500 Marshall Industries* 5,164,125
111,000 Oak Industries, Inc.* 2,317,125
26,200 Unitrode Corp.* 704,125
------------
13,254,662
------------
</TABLE>
* Non-income producing security.
19
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------
ENTERTAINMENT -- 0.2%
25,000 Hollywood Park, Inc.* $ 243,750
------------
FOOD SERVICES -- 1.0%
70,000 IHOP Corp.* 1,505,000
------------
HEALTHCARE SERVICES -- 2.8%
16,000 Charter Medical Corp.* 288,000
20,000 Community Health Systems, Inc.* 635,000
51,900 Dentsply International, Inc. 1,790,550
54,000 SpaceLabs Medical, Inc.* 1,390,500
------------
4,104,050
------------
HOUSEHOLD PRODUCTS -- 2.4%
120,000 Singer Co. 2,820,000
35,000 The Rival Co. 682,500
------------
3,502,500
------------
INSURANCE -- 5.3%
47,000 Ace Ltd. 1,598,000
62,800 Capsure Holdings Corp.* 855,650
119,400 E.W. Blanch Holdings, Inc. 2,298,450
112,500 Guaranty National Corp. 1,603,125
7,000 Horace Mann Educators Corp. 186,375
64,200 Prudential Reinsurance Holdings,
Inc. 1,308,075
------------
7,849,675
------------
LEASING -- 1.1%
101,700 Interpool, Inc.* 1,627,200
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
MACHINERY & ENGINEERING -- 6.0%
50,000 Baldwin Technologies Co., Inc
(Class A)* $ 268,750
40,000 Briggs & Stratton Corp. 1,615,000
52,100 BW/IP Holdings, Inc. (Class A) 872,675
145,000 Crane Co. 5,129,375
67,400 Harmon Industries, Inc. 994,150
------------
8,879,950
------------
MANUFACTURING -- 1.9%
94,000 North American Watch Corp. 1,703,750
50,000 Pall Corp. 1,218,750
------------
2,922,500
------------
METALS/MINING -- 0.4%
70,000 Olympic Steel, Inc.* 568,750
------------
OFFICE EQUIPMENT -- 0.8%
60,600 Nu-Kote Holdings, Inc. (Class A)* 1,257,450
------------
OIL/GAS -- 6.4%
92,800 Aquila Gas Pipeline Corp. 1,020,800
84,000 Belden & Blake Corp.* 1,219,313
200,000 Global Natural Resources, Inc.* 2,000,000
137,500 Noble Drilling Corp.* 962,500
165,000 Petroleum Heat & Power Co., Inc.
(Class A) 1,278,750
105,400 St. Mary Land & Exploration Co. 1,409,725
34,000 Triton Energy Corp.* 1,585,250
------------
9,476,338
------------
PAPER PRODUCTS -- 1.8%
422,000 Repap Enterprises, Inc.* 2,663,875
------------
PRINTING/PUBLISHING -- 1.4%
69,000 International Imaging Materials,
Inc. 1,742,250
20,000 Merrill Corp. 320,000
------------
2,062,250
------------
</TABLE>
* Non-income producing security.
20
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------
REAL ESTATE -- 8.7%
151,800 Cousins Properties, Inc. $ 2,637,525
44,000 Post Properties, Inc. 1,320,000
231,600 Security Capital Industrial Trust,
Inc. 3,792,450
199,363 Security Capital Pacific Trust,
Inc. 3,563,614
1,800 Security Capital Realty, Inc. (A) 1,587,600
------------
12,901,189
------------
RETAIL -- 0.7%
10,900 Blair Corp. 321,550
60,000 The Maxim Group, Inc.* 780,000
------------
1,101,550
------------
TELECOMMUNICATIONS -- 1.2%
94,500 ECI Telecommunications Ltd. 1,795,500
------------
TEXTILES -- 4.8%
89,000 Collins & Aikman Corp.* 712,000
64,000 Culp, Inc. 624,000
42,700 Fab Industries, Inc. 1,248,975
149,600 Mohawk Industries, Inc.* 2,244,000
110,500 WestPoint Stevens, Inc.* 2,334,313
------------
7,163,288
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS -- 2.6%
55,900 Morningstar Group, Inc.* 433,225
111,800 Ralcorp Holdings, Inc. 2,571,400
84,700 Sylvan, Inc.* 899,937
------------
3,904,562
------------
TRANSPORTATION -- 0.1%
8,000 MTL, Inc.* 117,000
------------
UTILITIES -- 1.5%
34,600 Sithe Energies, Inc.* 246,525
96,000 UGI Corp. 2,016,000
------------
2,262,525
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
OTHER -- 1.1%
93,300 McGrath RentCorp. $ 1,632,750
------------
Total Common Stocks
(cost -- $116,900,149) $125,523,724
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $141,711,266) 101.0% $150,298,607
Other Liabilities in Excess of
Other Assets (1.0) (1,483,609)
------ ------------
TOTAL NET ASSETS 100.0% $148,814,998
------ ------------
------ ------------
</TABLE>
GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 1.9%
AUTOMOTIVE -- 0.4%
$ 200,000 Ford Motor Credit Co.
5.73%, 11/06/95 $ 199,841
------------
MISCELLANEOUS FINANCIAL SERVICES -- 1.5%
Beneficial Corp.
447,000 5.72%, 11/02/95 446,929
230,000 5.74%, 11/15/95 229,486
------------
676,415
------------
Total Short-Term Corporate Notes
(cost -- $876,256) $ 876,256
------------
CORPORATE NOTES & BONDS -- 18.2%
CASINOS/GAMING -- 1.9%
$ 1,000,000 Harrah's Jazz Co.
14.25%, 11/15/01 $ 875,000
------------
COSMETICS/TOILETRIES -- 3.8%
2,000,000 Playtex Family Products Corp.
9.00%, 12/15/03 1,790,000
------------
</TABLE>
* Non-income producing security.
(A) Restricted Securities (the Fund will not bear any costs, including those
involved in registration under the Securities Act of 1933, in connection
with the disposition of these securities):
<TABLE>
<CAPTION>
UNIT
VALUATION
AS
DATE OF UNIT OF OCTOBER
DESCRIPTION ACQUISITION PAR AMOUNT SHARES COST 31, 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Security Capital
Realty, Inc.
12.00%, 6/30/14 6/16/94 $1,404,189 -- $ 94 $ 100
Security Capital
Realty, Inc.
Common Stock 8/02/93 -- 1,800 684 882
</TABLE>
21
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL VALUE
AMOUNT
- ------------------------------------------------------
<C> <S> <C>
ENTERTAINMENT -- 3.7%
$ 5,000,000 Time Warner, Inc.
Zero Coupon, 12/17/12 $ 1,725,000
------------
FOOD SERVICES -- 0.9%
1,000,000 Shoney's, Inc.
Zero Coupon, 4/11/04 402,500
------------
OIL/GAS -- 3.7%
2,000,000 Triton Energy Corp.
Zero Coupon, 11/01/97 1,700,000
------------
TELECOMMUNICATIONS -- 4.2%
1,000,000 Comcast Corp.
10.625%, 7/15/12 1,097,500
1,500,000 Nextel Communications, Inc.
0.00/11.50%, 9/01/03** 870,000
------------
1,967,500
------------
Total Corporate Notes & Bonds
(cost -- $8,705,038) $ 8,460,000
------------
CONVERTIBLE CORPORATE BONDS -- 6.5%
MANUFACTURING
$ 4,000,000 Mascotech, Inc.
4.50%, 12/15/03
(cost -- $3,042,591) $ 3,040,000
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
COMMON STOCKS -- 72.6%
AEROSPACE -- 4.4%
25,000 McDonnell Douglas Corp. $ 2,043,750
------------
AUTOMOTIVE -- 3.8%
40,000 General Motors Corp. 1,750,000
------------
BANKING -- 7.6%
32,000 Citicorp 2,076,000
50,000 U.S. Bancorp 1,481,250
------------
3,557,250
------------
CHEMICALS -- 2.7%
20,000 du Pont (E.I.) de Nemours & Co. 1,247,500
------------
COMPUTER SOFTWARE -- 1.1%
5,000 Microsoft Corp.* $ 500,000
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
CONGLOMERATES -- 3.4%
100,000 Canadian Pacific Ltd. 1,600,000
------------
CONTAINERS -- 3.9%
40,000 Temple-Inland, Inc. 1,820,000
------------
ELECTRONICS -- 0.2%
1,000 Intel Corp. 69,875
------------
HEALTHCARE SERVICES -- 1.0%
10,000 Columbia/HCA Healthcare Corp. 491,250
------------
HOUSEHOLD PRODUCTS -- 4.0%
40,000 Premark International, Inc. 1,850,000
------------
INSURANCE -- 6.8%
15,000 Ace, Ltd. 510,000
10,000 AFLAC, Inc. 407,500
30,000 Progressive Corp., Ohio 1,245,000
20,000 Travelers, Inc. 1,010,000
------------
3,172,500
------------
MACHINERY & ENGINEERING -- 3.9%
45,000 Briggs & Stratton Corp. 1,816,875
------------
MEDIA/BROADCASTING -- 4.0%
20,000 Tele-Communications Liberty Media
Group (Series A)* 492,500
80,000 Tele-Communications TCI Group
(Series A)* 1,360,000
------------
1,852,500
------------
METALS/MINING -- 6.6%
133,687 Freeport McMoRan, Copper & Gold
(Class A) 3,058,090
------------
MISCELLANEOUS FINANCIAL SERVICES -- 0.5%
1,000 Countrywide Credit Industries, Inc. 22,125
3,000 Federal Home Loan Mortgage Corp. 207,750
------------
229,875
------------
OIL/GAS -- 1.6%
10,000 Triton Energy Corp.* $ 466,250
15,000 Union Texas Petroleum Holdings,
Inc. 270,000
------------
736,250
------------
</TABLE>
* Non-income producing security.
** Represents a step-up floater which will receive 0.00% interest until 9/01/98,
then will "step-up" to 11.50% until maturity.
22
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------
PAPER PRODUCTS -- 4.0%
35,000 Champion International Corp. 1,872,500
------------
TELECOMMUNICATIONS -- 4.5%
55,000 Sprint Corp. 2,117,500
------------
TEXTILES -- 8.6%
20,000 Shaw Industries, Inc. 255,000
50,000 Unifi, Inc. 1,125,000
55,000 VF Corp. 2,633,125
------------
4,013,125
------------
Total Common Stocks
(cost -- $30,820,524) $ 33,798,840
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $43,444,409) 99.2% $ 46,175,096
Other Assets in Excess of
Other Liabilities 0.8 358,263
------ ------------
TOTAL NET ASSETS 100.0 % $ 46,533,359
------ ------------
------ ------------
</TABLE>
U.S. GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
REPURCHASE AGREEMENT -- 24.6%
$28,300,000 J.P. Morgan, 5.85%, 11/01/95
(proceeds at maturity:
$28,304,599, collateralized by
$27,265,000 par, $28,866,819
value, U.S. Treasury Notes,
7.50%, 10/31/99)
(cost -- $28,300,000) $ 28,300,000
------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION -- 0.6%
$ 652,460 9.50%, 12/01/02 - 11/01/03
(cost -- $657,455) $ 679,981
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION I -- 43.6%
$19,729,923 7.00%, 2/15/22 - 11/15/23 $ 19,594,181
10,813,268 7.50%, 2/15/22 - 5/15/24 10,955,138
7,998,232 8.00%, 4/15/02 - 5/15/25 8,250,767
10,522,241 8.50%, 6/15/01 - 9/15/24 10,956,944
449,937 10.50%, 1/15/98 - 12/15/00 472,573
------------
Total Government National Mortgage
Association I (cost -- $50,865,933) $ 50,229,603
------------
U.S. TREASURY NOTES -- 30.4%
$15,000,000 5.875%, 8/15/98 $ 15,070,350
5,000,000 6.125%, 5/31/97 5,035,950
14,000,000 7.75%, 11/30/99 14,975,660
------------
Total U.S. Treasury Notes
(cost -- $34,397,838) $ 35,081,960
------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments
(cost -- $114,221,226) 99.2% $114,291,544
------ ------------
- ------------------------------------------------
PRINCIPAL
AMOUNT
SUBJECT
TO PUT VALUE
- ------------------------------------------------------
WRITTEN PUT OPTIONS OUTSTANDING -- (0.1%)
$25,000,000 U.S. Treasury Notes, 6.125%,
9/30/00, expiring Nov. '95, strike
@ $101.3125
(premium received: $132,812) $ (117,188)
------------
Other Assets in Excess of
Other Liabilities 0.9 1,067,411
------ ------------
TOTAL NET ASSETS 100.0 % $115,241,767
------ ------------
------ ------------
</TABLE>
* Non-income producing security.
23
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
INVESTMENT QUALITY INCOME FUND
<TABLE>
<CAPTION>
<C> <S> <C>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 4.5%
MISCELLANEOUS FINANCIAL SERVICES
$ 1,800,000 Beneficial Corp.
5.75%, 11/06/95 $ 1,798,563
570,000 Household Finance Corp.
5.73%, 11/06/95 569,546
425,000 Merrill Lynch & Co., Inc.
5.75%, 11/02/95 424,932
------------
Total Short-Term Corporate Notes
(cost -- $2,793,041) $ 2,793,041
------------
CORPORATE NOTES & BONDS -- 93.6%
AEROSPACE -- 3.4%
$ 2,000,000 Boeing Co.
7.50%, 8/15/42 $ 2,092,300
------------
AIRLINES -- 2.9%
1,000,000 American Airlines
9.73%, 9/29/14 1,133,870
550,000 Delta Air Lines, Inc.
10.375%, 2/01/11 650,551
------------
1,784,421
------------
AUTOMOTIVE -- 3.6%
2,000,000 Ford Motor Credit Co. (A)
8.875%, 11/15/22 2,234,600
------------
BANKING -- 6.5%
70,000 NatWest Bancorp, Inc.
9.375%, 11/15/03 81,979
1,300,000 NCNB Corp.
10.20%, 7/15/15 1,680,731
500,000 RBSG Capital Corp.
10.125%, 3/01/04 606,020
1,500,000 Westpac Banking Corp.
9.125%, 8/15/01 1,680,810
------------
4,049,540
------------
CHEMICALS -- 1.0%
500,000 Rohm & Haas Co.
9.50%, 4/01/21 607,720
------------
CONGLOMERATES -- 4.0%
2,000,000 Canadian Pacific Ltd.
9.45%, 8/01/21 2,517,380
------------
ENTERTAINMENT -- 5.2%
3,000,000 Time Warner, Inc.
9.15%, 2/01/23 3,253,800
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
INSURANCE -- 11.6%
$ 1,000,000 Aetna Life & Casualty Co.
8.00%, 1/15/17 $ 1,015,020
1,200,000 Capital Holding Corp.
8.75%, 1/15/17 1,263,636
2,000,000 CNA Financial Corp.
7.25%, 11/15/23 1,900,200
3,000,000 Torchmark, Inc.
7.875%, 5/15/23 3,064,440
------------
7,243,296
------------
LEASING -- 2.7%
1,600,000 Ryder Systems, Inc.
8.75%, 3/15/17 1,712,464
------------
MACHINERY & ENGINEERING -- 3.3%
1,750,000 Caterpillar, Inc.
9.75%, 6/01/19 2,056,373
------------
MISCELLANEOUS FINANCIAL SERVICES -- 11.4%
20,000 Beneficial Corp.
12.875%, 8/01/13 24,110
1,500,000 BHP Finance USA Ltd.
8.50%, 12/01/12 1,700,430
Lehman Brothers, Inc.
865,000 9.875%, 10/15/00 955,280
115,000 10.00%, 5/15/99 127,045
205,000 Midland American Capital Corp.
12.75%, 11/15/03 240,533
3,000,000 Prudential Funding Corp.
6.75%, 9/15/23 (B) 2,672,760
1,250,000 Source One Mortgage Services Corp.
9.00%, 6/01/12 1,363,087
------------
7,083,245
------------
OIL/GAS -- 5.9%
3,000,000 Occidental Petroleum Corp.
11.125%, 6/01/19 3,677,430
------------
PAPER PRODUCTS -- 0.2%
100,000 Union Camp Corp.
10.00%, 5/01/19 113,709
------------
PIPELINES -- 3.1%
1,500,000 TransCanada Pipelines Ltd.
9.875%, 1/01/21 1,930,965
------------
RETAIL -- 1.3%
May Department Stores Co.
250,000 9.875%, 6/01/17 276,337
405,000 10.625%, 11/01/10 541,542
------------
817,879
------------
</TABLE>
24
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
TELECOMMUNICATIONS -- 11.8%
$ 2,500,000 New York Telephone Co.
9.375%, 7/15/31 $ 2,965,900
2,000,000 Pacific Bell
8.50%, 8/15/31 2,191,900
2,000,000 Southern New England Telephone Co.
8.70%, 8/15/31 2,168,720
------------
7,326,520
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS -- 3.5%
2,000,000 American Brands, Inc.
7.875%, 1/15/23 2,153,300
------------
UTILITIES -- 7.0%
2,000,000 Hydro-Quebec
8.50%, 12/01/29 2,203,280
2,000,000 Southern California Edison Co.
8.875%, 6/01/24 2,140,540
------------
4,343,820
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
OTHER -- 5.2%
$ 1,447,305 DLJ Mortgage Acceptance Corp.
8.75%, 11/25/24 $ 1,471,276
1,500,000 Nova Scotia (Province of)
8.875%, 7/01/19 1,733,370
------------
3,204,646
------------
Total Corporate Notes & Bonds
(cost -- $54,144,780) $ 58,203,408
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $56,937,821) 98.1 % $ 60,996,449
Other Assets in Excess of
Other Liabilities 1.9 1,192,720
------ ------------
TOTAL NET ASSETS 100.0 % $ 62,189,169
------ ------------
------ ------------
</TABLE>
(A) Security segregated (partial) as collateral for open futures contracts. The
aggregate market value of such security is $558,650.
(B) Resale of the security is restricted to qualified institutional investors.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
QUEST FOR SMALL GROWTH U.S. INVESTMENT
VALUE FUND, OPPORTUNITY CAPITALIZATION AND GOVERNMENT QUALITY
INC. FUND FUND INCOME FUND INCOME FUND INCOME FUND
------------ ------------ ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at value (cost --
$258,707,414, $542,282,713,
$141,711,266, $43,444,409,
$85,921,226 and $56,937,821,
respectively)...................... $330,881,971 $641,676,243 $150,298,607 $46,175,096 $ 85,991,544 $60,996,449
Repurchase agreement
(cost -- $28,300,000).............. -- -- -- -- 28,300,000 --
Cash................................ 45,640 547,052 554,656 43,048 147,175 59,556
Receivable for fund shares sold..... 530,951 3,886,531 429,526 135,588 112,467 66,286
Dividends receivable 243,046 997,122 50,222 40,770 -- --
Interest receivable................. 70,681 80,486 85,156 232,993 1,100,769 1,428,564
Receivable for investments sold..... -- 3,775,999 1,519,249 -- -- --
Receivable for mortgage
prepayments........................ -- -- -- -- 9,512 --
Deferred organization expenses...... -- -- -- 19,361 -- 1,598
Other assets........................ 39,549 22,478 12,365 17,891 30,144 12,304
------------ ------------ ------------ ----------- ------------ -----------
Total Assets...................... 331,811,838 650,985,911 152,949,781 46,664,747 115,691,611 62,564,757
------------ ------------ ------------ ----------- ------------ -----------
LIABILITIES
Written put options outstanding, at
value (premiums received:
$132,812).......................... -- -- -- -- 117,188 --
Payable for fund shares redeemed.... 246,415 541,931 381,171 39,485 94,741 182,432
Distribution fee payable............ 57,478 218,953 31,207 9,227 13,696 14,560
Investment advisory fee payable..... 54,437 103,767 24,467 6,603 11,374 6,111
Payable for investments purchased... -- 15,310,750 3,596,750 -- -- --
Dividends payable................... -- -- -- -- 100,543 79,161
Payable for futures variation
margin............................. -- -- -- -- -- 33,750
Other payables and accrued
expenses........................... 141,605 299,396 101,188 76,073 112,302 59,574
------------ ------------ ------------ ----------- ------------ -----------
Total Liabilities................. 499,935 16,474,797 4,134,783 131,388 449,844 375,588
------------ ------------ ------------ ----------- ------------ -----------
NET ASSETS
Par value........................... 22,865,787 259,205 86,170 42,633 102,228 57,180
Paid-in-surplus..................... 211,941,042 523,701,982 131,509,611 41,486,396 124,603,694 59,929,025
Accumulated undistributed net
investment income (loss)........... 2,115,981 3,043,582 817,130 62,229 (100,543) (1,302)
Accumulated undistributed net
realized gain (loss) on
investments........................ 22,214,536 8,112,815 7,814,746 2,211,414 (9,449,554) (1,441,862)
Net unrealized appreciation on
investments........................ 72,174,557 99,393,530 8,587,341 2,730,687 85,942 3,646,128
------------ ------------ ------------ ----------- ------------ -----------
Total Net Assets.................. $331,311,903 $634,511,114 $148,814,998 $46,533,359 $115,241,767 $62,189,169
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
CLASS A:
Fund shares outstanding............. 19,476,461 14,934,153 6,717,417 3,395,059 9,111,820 4,144,692
------------ ------------ ------------ ----------- ------------ -----------
Net asset value per share........... $ 14.51 $ 24.59 $ 17.31 $ 10.92 $ 11.27 $ 10.88
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
Maximum offering price per share*... $ 15.35 $ 26.02 $ 18.32 $ 11.46 $ 11.83 $ 11.42
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
CLASS B:
Fund shares outstanding............. 2,682,851 8,945,500 1,369,612 700,417 855,263 1,207,703
------------ ------------ ------------ ----------- ------------ -----------
Net asset value and offering price
per share.......................... $ 14.37 $ 24.33 $ 17.11 $ 10.88 $ 11.27 $ 10.88
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
CLASS C:
Fund shares outstanding............. 706,475 2,040,801 529,946 167,833 255,735 365,603
------------ ------------ ------------ ----------- ------------ -----------
Net asset value and offering price
per share.......................... $ 14.35 $ 24.31 $ 17.11 $ 10.89 $ 11.27 $ 10.88
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
</TABLE>
*Sales charges decrease on purchases of $50,000 or higher.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
GROWTH
QUEST FOR SMALL AND U.S. INVESTMENT
VALUE OPPORTUNITY CAPITALIZATION INCOME GOVERNMENT QUALITY
FUND, INC. FUND FUND FUND INCOME FUND INCOME FUND
----------- ----------- ------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends*................... $4,933,153 $5,805,392 $ 1,902,266 $ 693,240 $ -- $
- --
Interest..................... 2,545,437 4,798,092 1,684,966 1,089,203 8,894,940 4,872,959
----------- ----------- ------------- ---------- ----------- -----------
Total investment income.... 7,478,590 10,603,484 3,587,232 1,782,443 8,894,940 4,872,959
----------- ----------- ------------- ---------- ----------- -----------
OPERATING EXPENSES
Investment advisory fees
(note 2a)................... 2,893,435 3,923,159 1,456,594 333,289 755,883 351,860
Distribution fees (note
2c)......................... 1,607,236 2,665,031 859,394 191,723 455,179 311,219
Transfer and dividend
disbursing agent fees (note
1i)......................... 330,355 410,006 206,267 73,852 130,367 71,201
Accounting service fees (note
2b)......................... -- 103,747 108,951 112,800 121,310 105,362
Registration fees............ 54,800 141,636 34,952 34,042 32,098 33,871
Custodian fees............... 40,216 47,751 22,819 18,724 70,657 21,556
Reports and notices to
shareholders................ 40,057 44,869 27,492 8,814 17,517 10,688
Auditing, consulting and tax
return preparation fees..... 24,597 18,515 18,514 14,435 40,367 17,355
Directors'(Trustees') fees
and expenses................ 17,270 17,270 17,270 8,870 17,270 17,270
Legal fees................... 11,749 10,120 7,222 4,721 6,836 5,236
Amortization of deferred
organization expenses (note
1c)......................... -- -- -- 19,148 -- 12,374
Miscellaneous................ 19,575 13,337 9,189 4,500 14,726 5,566
----------- ----------- ------------- ---------- ----------- -----------
Total operating expenses... 5,039,290 7,395,441 2,768,664 824,918 1,662,210 963,558
Less: Investment advisory
fees waived (note 2a)..... -- -- -- (8,286) -- (42,245)
----------- ----------- ------------- ---------- ----------- -----------
Net operating expenses... 5,039,290 7,395,441 2,768,664 816,632 1,662,210 921,313
----------- ----------- ------------- ---------- ----------- -----------
Net investment income.... 2,439,300 3,208,043 818,568 965,811 7,232,730 3,951,646
----------- ----------- ------------- ---------- ----------- -----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS -- NET
Net realized gain (loss) on
security transactions....... 22,321,532 8,125,065 8,630,413 2,227,731 (3,475,568) (24,232)
Net realized loss on option
transactions (note 1f).... -- -- -- -- (267,734) --
Net realized loss on futures
transactions (note 1g)...... -- -- (86,670) -- -- (464,750)
----------- ----------- ------------- ---------- ----------- -----------
Net realized gain (loss) on
investments............... 22,321,532 8,125,065 8,543,743 2,227,731 (3,743,302) (488,982)
Net change in unrealized
appreciation (depreciation)
on investments.............. 39,322,642 85,013,107 3,040,965 2,324,387 9,332,957 7,336,722
----------- ----------- ------------- ---------- ----------- -----------
Net realized gain (loss)
and change in unrealized
appreciation
(depreciation) on
investments............... 61,644,174 93,138,172 11,584,708 4,552,118 5,589,655 6,847,740
----------- ----------- ------------- ---------- ----------- -----------
Net increase in net assets
resulting from operations... $64,083,474 $96,346,215 $ 12,403,276 $5,517,929 $12,822,385 $10,799,386
----------- ----------- ------------- ---------- ----------- -----------
----------- ----------- ------------- ---------- ----------- -----------
<FN>
* Net of withholding taxes of $6,473, $732 and $1,752 for Quest for Value, Small
Capitalization and Growth and Income, respectively.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>
27
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
QUEST FOR VALUE FUND,
INC. OPPORTUNITY FUND
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
------------------------ ------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income (loss).............................. $ 2,439,300 $ 1,726,225 $ 3,208,043 $ 1,397,364
Net realized gain (loss) on investments................... 22,321,532 16,664,331 8,125,065 7,139,720
Net change in unrealized appreciation (depreciation) on
investments.............................................. 39,322,642 (6,250,090) 85,013,107 4,721,481
----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting from
operations............................................. 64,083,474 12,140,466 96,346,215 13,258,565
----------- ----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS*
Net investment income -- Class A.......................... (1,649,576) (819,873) (1,066,642) (2,269,483)
Net investment income -- Class B.......................... (108,497) (11,801) (335,822) (98,258)
Net investment income -- Class C.......................... (29,366) (2,040) (56,920) (21,098)
Net realized gains -- Class A............................. (15,501,438) (9,227,704) (5,314,298) (1,498,248)
Net realized gains -- Class B............................. (1,014,005) (115,604) (1,562,718) (30,484)
Net realized gains -- Class C............................. (255,884) (11,081) (267,734) (11,476)
Tax return of capital -- Class A.......................... -- -- -- --
Tax return of capital -- Class B.......................... -- -- -- --
Tax return of capital -- Class C.......................... -- -- -- --
----------- ----------- ----------- -----------
Total dividends and distributions to shareholders....... (18,558,766) (10,188,103) (8,604,134) (3,929,047)
----------- ----------- ----------- -----------
FUND SHARE TRANSACTIONS
CLASS A
Net proceeds from sales................................... 53,027,793 61,908,256 201,988,591 90,332,759
Reinvestment of dividends and distributions............... 16,047,556 9,385,655 6,034,648 3,405,284
Cost of shares redeemed................................... (64,462,161) (80,014,950) (60,771,127) (65,200,453)
----------- ----------- ----------- -----------
Net increase (decrease) -- Class A...................... 4,613,188 (8,721,039) 147,252,112 28,537,590
----------- ----------- ----------- -----------
CLASS B
Net proceeds from sales................................... 22,392,431 12,409,864 160,670,137 40,604,196
Reinvestment of dividends and distributions............... 1,045,812 123,599 1,804,130 124,021
Cost of shares redeemed................................... (3,681,109) (544,061) (14,031,965) (1,026,439)
----------- ----------- ----------- -----------
Net increase -- Class B................................. 19,757,134 11,989,402 148,442,302 39,701,778
----------- ----------- ----------- -----------
CLASS C
Net proceeds from sales................................... 6,835,837 3,521,667 40,882,367 6,945,412
Reinvestment of dividends and distributions............... 280,898 13,020 314,274 32,567
Cost of shares redeemed................................... (1,738,997) (271,901) (4,067,767) (254,081)
----------- ----------- ----------- -----------
Net increase -- Class C................................. 5,377,738 3,262,786 37,128,874 6,723,898
----------- ----------- ----------- -----------
Total net increase (decrease) in net assets from fund
share transactions....................................... 29,748,060 6,531,149 332,823,288 74,963,266
----------- ----------- ----------- -----------
Total increase (decrease) in net assets................. 75,272,768 8,483,512 420,565,369 84,292,784
NET ASSETS
Beginning of year......................................... 256,039,135 247,555,623 213,945,745 129,652,961
----------- ----------- ----------- -----------
End of year (including undistributed net investment income
(loss) of $2,115,981, $1,464,120; $3,043,582, $1,291,867;
$817,130, ($238,336); $62,229, $127,460; ($100,543), $0
and ($1,302), $0, respectively).......................... $331,311,903 $256,039,135 $634,511,114 $213,945,745
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
<FN>
*Certain figures have been restated to conform to current year presentation for
Opportunity, Growth and Income and U.S. Government.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>
28
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAPITALIZATION U.S. GOVERNMENT INCOME
FUND GROWTH AND INCOME FUND FUND INVESTMENT QUALITY
INCOME FUND
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
- -------------------------- ------------------------ -------------------------- ------------------------
1995 1994 1995 1994 1995 1994 1995 1994
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 818,568 $ (238,336) $ 965,811 $ 966,108 $ 7,232,730 $ 8,291,969 $ 3,951,646 $ 3,846,353
8,543,743 3,366,835 2,227,731 1,768,686 (3,743,302) (4,366,839) (488,982) (952,880)
3,040,965 (3,118,979) 2,324,387 (189,442) 9,332,957 (11,007,688) 7,336,722 (9,068,979)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
12,403,276 9,520 5,517,929 2,545,352 12,822,385 (7,082,558) 10,799,386 (6,175,506)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
-- -- (917,781) (936,128) (6,680,576) (8,071,564) (3,164,967) (3,482,793)
-- -- (105,700) (41,545) (464,033) (196,735) (586,935) (244,424)
-- -- (17,697) (7,305) (89,583) (39,362) (199,744) (119,136)
(3,010,761) (8,036,736) (1,275,011) (4,278,474) -- (3,218,859) -- (367,910)
(434,007) (160,831) (129,812) (152,311) -- (42,833) -- (10,112)
(91,772) (19,543) (20,124) (19,378) -- (7,144) -- (637)
-- -- -- -- (140,061) -- -- --
-- -- -- -- (8,675) -- -- --
-- -- -- -- (1,431) -- -- --
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
(3,536,540) (8,217,110) (2,466,125) (5,435,141) (7,384,359) (11,576,497) (3,951,646) (4,225,012)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
38,194,245 127,081,752 8,471,883 5,937,491 18,642,107 17,007,814 8,023,597 12,621,718
2,840,961 7,215,556 2,097,137 5,008,623 5,896,557 9,588,703 2,288,961 2,758,350
(52,052,199) (111,134,238) (6,705,888) (6,040,040) (50,011,121) (74,313,512) (17,520,761) (20,364,228)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
(11,016,993) 23,163,070 3,863,132 4,906,074 (25,472,457) (47,716,995) (7,208,203) (4,984,160)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
10,160,304 15,275,222 4,674,731 2,763,975 5,110,647 6,748,251 7,327,816 6,440,954
408,265 148,570 217,205 188,513 319,245 187,137 462,628 185,172
(4,495,109) (811,203) (533,417) (260,750) (3,026,400) (964,994) (2,363,759) (800,932)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
6,073,460 14,612,589 4,358,519 2,691,738 2,403,492 5,970,394 5,426,685 5,825,194
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
6,393,572 3,345,761 1,497,250 341,819 2,026,463 1,424,484 1,204,849 3,141,700
88,907 18,810 36,149 26,593 85,658 46,127 93,152 93,436
(1,180,484) (229,505) (232,677) (4,696) (533,211) (289,465) (285,205) (422,838)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
5,301,995 3,135,066 1,300,722 363,716 1,578,910 1,181,146 1,012,796 2,812,298
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
358,462 40,910,725 9,522,373 7,961,528 (21,490,055) (40,565,455) (768,722) 3,653,332
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
9,225,198 32,703,135 12,574,177 5,071,739 (16,052,029) (59,224,510) 6,079,018 (6,747,186)
139,589,800 106,886,665 33,959,182 28,887,443 131,293,796 190,518,306 56,110,151 62,857,337
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
$148,814,998 $139,589,800 $46,533,359 $33,959,182 $115,241,767 $131,293,796 $62,189,169 $56,110,151
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
</TABLE>
29
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Quest for Value Funds are registered under the Investment Company Act of
1940, as diversified, open-end management investment companies. Quest for Value
Fund, Inc. ("Quest for Value") is a Maryland corporation. Opportunity Fund
("Opportunity"), Small Capitalization Fund ("Small Capitalization"), Growth and
Income Fund ("Growth and Income"), U.S. Government Income Fund ("U.S.
Government") and Investment Quality Income Fund ("Investment Quality") are five
of nine funds offered in the Quest for Value Family of Funds, a Massachusetts
business trust. Quest for Value Advisors (the "Adviser") serves as investment
adviser and provides accounting and administrative services to each fund. Quest
for Value Distributors (the "Distributor") serves as each fund's distributor.
Both the Adviser and Distributor are majority-owned (99%) subsidiaries of
Oppenheimer Capital.
Prior to September 1, 1993, the funds issued only one class of shares which
were redesignated Class A shares. Subsequent to that date all funds were
authorized to issue Class A, Class B and Class C shares. Shares of each Class
represent an identical interest in the investment portfolio of their respective
fund and generally have the same rights, but are offered under different sales
charges 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 each 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 securites are valued at the last quoted bid price. Other
securities traded over-the-counter and not part of the National Market System
are valued at the last quoted bid price. Investment debt securities (other than
short-term obligations) are valued each day by an independent pricing service
approved by the Board of Directors (Trustees) using methods which include
current market quotations from major market makers in the securities and
trader-reviewed "matrix" prices. Futures contracts are valued based upon their
daily settlement value as of the close of the exchange upon which they trade.
OTC options are valued based upon formulas which utilize the market value of the
underlying securities, strike prices and expiration dates of the options.
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 values as determined in good faith under
procedures established by each fund's Board of Directors (Trustees). The ability
of issuers of debt securities held by the funds to meet their obligations may be
affected by economic or political development in a specific state, industry or
region.
(B) FEDERAL INCOME TAXES
It is each 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
The following approximate costs were incurred in connection with their
organization: Growth and Income -- $96,000 and Investment Quality -- $62,000.
These costs have been deferred and are being amortized to expense on a
straight-line basis over sixty months from commencement of each fund's
operations.
(D) SECURITY 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 is
determined on the basis of identified cost. Dividend income is recorded on the
ex-dividend
30
<PAGE>
- --------------------------------------------------------------------------------
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. Net investment income, other than class specific
expenses and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets, as defined, of each
class.
(E) DIVIDENDS AND DISTRIBUTIONS
The following table summarizes each fund's dividend and capital gain
declaration policy:
<TABLE>
<CAPTION>
SHORT-TERM LONG-TERM
INCOME CAPITAL CAPITAL
DIVIDENDS GAINS GAINS
---------- ---------- ----------
<S> <C> <C> <C>
Quest for Value annually annually annually
Opportunity annually annually annually
Small Capitalization annually annually annually
Growth and Income quarterly annually annually
U.S. Government daily * quarterly annually
Investment Quality daily * annually annually
* paid monthly.
</TABLE>
Each fund records dividends and distributions to its shareholders on the
ex-dividend date. The amount of dividends and distributions from net investment
income and net realized capital gains are determined in accordance with federal
income tax regulations, which may differ from generally accepted accounting
principles. These "book-tax" differences are either considered temporary or
permanent in nature. To the extent these differences are permanent in nature,
such amounts are reclassified within the capital accounts based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Dividends and distributions which exceed net investment income and net realized
capital gains for financial reporting purposes but not for tax purposes are
reported as dividends in excess of net investment income or distributions in
excess of net realized capital gains, respectively. To the extent distributions
exceed current and accumulated earnings and profits for federal income tax
purposes, they are reported as distributions of paid-in-surplus or tax return of
capital. Accordingly, permanent book-tax differences relating to shareholder
distributions have been reclassified to paid-in-surplus. Net investment
income(loss), net realized gain(loss) and net assets were not affected.
As required by Statement of Position 93 - 2, Determination, Disclosure and
Financial Statement Presentation of Income, Capital Gain and Return of Capital
Distributions by Investment Companies, the following table discloses the
reclassifications from accumulated undistributed net investment income(loss) and
accumulated undistributed capital gain(loss) on investments to paid-in-surplus
during the fiscal year ended October 31, 1995:
<TABLE>
<CAPTION>
ACCUMULATED
UNDISTRIBUTED
NET ACCUMULATED
INVESTMENT UNDISTRIBUTED PAID
INCOME NET REALIZED IN
(LOSS) GAIN (LOSS) SURPLUS
---------- --------------- --------
<S> <C> <C> <C>
Quest for Value -- -- --
Opportunity 3,056 (5,991) 2,935
Small Capitalization 236,898 (559,292) 322,394
Growth and Income 10,136 (152,783) 142,647
U.S. Government (99,081) (407,920) 507,001
Investment Quality (1,302) -- 1,302
</TABLE>
31
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(F) WRITTEN OPTIONS ACCOUNTING POLICIES
When a fund writes a call option or a put option, an amount equal to the
premium received by the fund is included in the fund's Statement of Assets and
Liabilities as an asset and an equivalent liability. The amount of the liability
is subsequently marked-to-market to reflect the current market value of the
option written. If the option expires on its stipulated expiration date or if a
fund enters into a closing purchase transaction, the fund will realize a gain
(or loss if the cost of a closing purchase tranaction exceeds the premium
received when the option was written) without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option will
be extinguished. If a call option which a fund has written is exercised, the
fund realizes a gain or loss from the sale of the underlying security and the
proceeds from such sale are increased by the premium originally received. If a
put option which a fund has written is exercised, the amount of the premium
originally received will reduce the cost of the security which the fund
purchases upon exercise of the option.
(G) FUTURES ACCOUNTING POLICIES
Futures contracts are agreements between two parties to buy and sell a
financial instrument at a set price on a future date. Upon entering into such a
contract, a fund is required to pledge to the broker an amount of cash, cash
equivalents or U.S. Government securities equal to the minimum "initial margin"
requirements of the exchange. Pursuant to the contract, a fund agrees to receive
from or pay to the broker an amount of cash equal to the daily fluctuation in
the value of the contract. Such receipts or payments are known as "variation
margin" and are recorded by the fund as unrealized appreciation or depreciation.
When a contract is closed, the fund records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed and reverses any unrealized appreciation or
depreciation previously recorded. At October 31, 1995, Investment Quality had
the following futures contracts open:
<TABLE>
<CAPTION>
NET
NUMBER OF UNREALIZED
TYPE CONTRACTS SHORT VALUE EXPIRATION LOSS
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------
CBT U.S. Treasury Bond 120 $13,635,000 Dec. '95 $412,500
</TABLE>
(H) REPURCHASE AGREEMENTS
U.S. Government enters into repurchase agreements as part of its investment
program. The fund's custodian takes possession of collateral pledged by the
counterparty. The collateral is marked-to-market daily to ensure that the value,
plus accrued interest, is at least equal to the repurchase price. In the event
of default by the obligor to repurchase, the fund has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. Under
certain circumstances, in the event of default or bankruptcy by the other party
to the agreement, realization and/or retention of the collateral or proceeds may
be subject to legal proceedings.
(I) ALLOCATION OF EXPENSES
Expenses specifically identifiable to a particular fund or class are borne
by that fund or class. Other expenses are allocated to each fund or class based
on its net assets in relation to the total net assets of all applicable funds or
classes or on another reasonable basis. For the year ended October 31, 1995,
transfer and dividend disbursing agent fees accrued to classes A, B and C were
$279,089, $36,906 and $14,360, respectively, for Quest for Value; $236,086,
$141,736 and $32,184, respectively, for Opportunity; $146,564, $44,501 and
$15,202, respectively, for Small Capitalization; $61,191, $8,864 and $3,797,
respectively, for Growth and Income; $117,106, $8,732 and $4,529, respectively,
for U.S. Government and $58,422, $8,814 and $3,965, respectively, for Investment
Quality Income. These expenses are consolidated, by fund, in the accompanying
Statements of Operations.
32
<PAGE>
- --------------------------------------------------------------------------------
2. INVESTMENT ADVISORY FEE, ACCOUNTING SERVICES FEE, DISTRIBUTION FEE AND OTHER
TRANSACTIONS WITH AFFILIATES
(A) The investment advisory fee is payable monthly to the Adviser, and is
computed as a percentage of each fund's net assets as of the close of business
each day at the following annual rates: 1.00% for Quest for Value, Opportunity
and Small Capitalization, respectively; .85% for Growth and Income and .60% for
U.S. Government and Investment Quality, respectively. For the year ended October
31, 1995, the Adviser voluntarily waived $8,286 and $42,245 in investment
advisory fees for Growth and Income and Investment Quality, respectively.
(B) A portion of the accounting services fee for Opportunity, Small
Capitalization, Growth and Income, U.S. Government and Investment Quality is
payable monthly to the Adviser. These funds reimburse the Adviser for a portion
of the salaries of officers and employees of Oppenheimer Capital based upon the
amount of time such persons spend in providing services to each fund in
accordance with the provisions of the Investment Advisory Agreement. For the
year ended October 31, 1995, the Adviser received $48,747, $53,951, $57,800,
$56,310 and $50,362, respectively.
(C) The funds have adopted a Plan and Agreement of Distribution (the
"Plan") pursuant to which each fund is permitted to compensate the Distributor
in connection with the distribution of fund shares. Under the Plan, the
Distributor has entered 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 funds pay the Distributor compensation, accrued
daily and payable monthly on each fund's average daily net assets for Class A
shares at the following annual rates: .25% for Quest for Value, Opportunity and
Small Capitalization, .05% for U.S. Government and .15% for Investment Quality
and Growth and Income. Each fund's Class A shares also pay a service fee at the
annual rate of .25%. Compensation for Class B and Class C shares of each fund is
at an annual rate of .75% of average daily net assets. Each fund's Class B and
Class C shares also pay a service fee at the 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 fund
shares. 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 year ended October 31, 1995, distribution and service fees charged
to classes A, B and C were $1,286,200, $253,926 and $67,110, respectively, for
Quest for Value; $1,258,129, $1,165,226 and $241,676, respectively, for
Opportunity; $597,200, $201,055 and $61,139, respectively, for Small
Capitalization; $133,588, $48,455 and $9,680, respectively, for Growth and
Income; $344,839, $92,104 and $18,236, respectively, for U.S. Government and
$183,475, $95,449 and $32,295, respectively, for Investment Quality Income.
These expenses are consolidated, by fund, in the accompanying Statements of
Operations.
(D) Total brokerage commissions paid by Quest for Value, Opportunity, Small
Capitalization and Growth and Income were $309,310, $647,240, $400,477 and
$112,411, respectively, of which Oppenheimer & Co., Inc., an affiliate of the
Adviser, received $156,970, $266,868, $161,399 and $54,131, respectively, for
the year ended October 31, 1995.
(E) Oppenheimer & Co., Inc. has informed the funds that it received
approximately $390,000, $959,000, $241,000, $35,000, $162,000 and $88,000 in
connection with the sale of Class A shares for Quest for Value, Opportunity,
Small Capitalization, Growth and Income, U.S. Government and Investment Quality,
respectively, for the year ended October 31, 1995.
33
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Distributor has also informed the funds that it received contingent
deferred sales charges on the redemption of Class A and Class C shares of
approximately $10,000, $20,000, $10,000, $100, $6,000 and $2,000 for Quest for
Value, Opportunity, Small Capitalization, Growth and Income, U.S. Government and
Investment Quality, respectively, for the year ended October 31, 1995.
For the year ended October 31, 1995, the Distributor had assigned the right
to receive the compensation and contingent deferred sales charge on Class B
shares to a bank in return for the bank's reimbursement to the Distributor of
commissions paid by the Distributor to brokers/dealers on the sale of Class B
shares.
3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1995, purchases and sales of investment
securities, other than short-term securities, were as follows:
<TABLE>
<CAPTION>
QUEST FOR SMALL GROWTH AND U.S. INVESTMENT
VALUE OPPORTUNITY CAPITALIZATION INCOME GOVERNMENT QUALITY
------------ ------------- ---------------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Purchases $ 89,609,378 $ 350,805,248 $ 92,530,292 $54,163,330 $259,064,073 $5,329,244
Sales 116,160,440 67,743,053 99,613,323 41,657,071 304,565,951 4,275,980
</TABLE>
The following table summarizes activity in written option transactions for U.S.
Government for the year ended October 31, 1995:
<TABLE>
<CAPTION>
CONTRACTS PREMIUMS
----------- -----------
<S> <C> <C>
Option contracts written: Outstanding
beginning of year 2 $ 142,188
Options written 47 3,306,327
Options terminated in closing purchase
transactions (25) (1,788,359)
Options exercised (15) (920,313)
Options expired (8) (607,031)
--- -----------
Option contracts written: Outstanding end of
year 1 $ 132,812
--- -----------
--- -----------
</TABLE>
34
<PAGE>
- --------------------------------------------------------------------------------
4. FUND SHARE TRANSACTIONS
The following tables summarize the fund share activity for the two years
ended October 31, 1995:
<TABLE>
<CAPTION>
QUEST FOR VALUE OPPORTUNITY SMALL CAPITALIZATION
------------------------- ------------------------- -------------------------
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
------------------------- ------------------------- -------------------------
1995 1994 1995 1994 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Issued................................ 4,045,256 5,077,999 9,028,138 4,781,210 2,307,655 7,804,081
Dividends and distributions
reinvested........................... 1,440,961 797,941 328,864 186,714 181,647 450,409
Redeemed.............................. (4,924,606) (6,566,112) (2,718,312) (3,470,990) (3,125,095) (6,835,042)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease)............. 561,611 (690,172) 6,638,690 1,496,934 (635,793) 1,419,448
----------- ----------- ----------- ----------- ----------- -----------
CLASS B
Issued................................ 1,718,575 1,020,362 7,259,921 2,145,988 620,242 936,328
Dividends and distributions
reinvested........................... 94,418 10,514 98,923 6,821 26,272 9,286
Redeemed.............................. (277,524) (44,566) (624,721) (54,500) (271,244) (50,575)
----------- ----------- ----------- ----------- ----------- -----------
Net increase........................ 1,535,469 986,310 6,734,123 2,098,309 375,270 895,039
----------- ----------- ----------- ----------- ----------- -----------
CLASS C
Issued................................ 523,083 289,679 1,828,198 367,367 389,503 205,454
Dividends and distributions
reinvested........................... 25,381 1,106 17,240 1,789 5,721 1,176
Redeemed.............................. (127,913) (22,509) (176,839) (13,680) (71,284) (13,923)
----------- ----------- ----------- ----------- ----------- -----------
Net increase........................ 420,551 268,276 1,668,599 355,476 323,940 192,707
----------- ----------- ----------- ----------- ----------- -----------
Total net increase................ 2,517,631 564,414 15,041,412 3,950,719 63,417 2,507,194
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME U.S. GOVERNMENT INVESTMENT QUALITY
------------------------- ------------------------- -------------------------
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
------------------------- ------------------------- -------------------------
1995 1994 1995 1994 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Issued................................ 790,817 591,037 1,685,034 1,484,549 777,291 1,194,443
Dividends and distributions
reinvested........................... 216,701 506,743 534,322 839,276 222,241 263,168
Redeemed.............................. (641,530) (600,435) (4,526,190) (6,552,668) (1,706,041) (1,940,417)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease)............. 365,988 497,345 (2,306,834) (4,228,843) (706,509) (482,806)
----------- ----------- ----------- ----------- ----------- -----------
CLASS B
Issued................................ 438,682 269,571 467,177 594,901 708,238 614,495
Dividends and distributions
reinvested........................... 22,368 19,104 28,912 16,698 44,636 18,150
Redeemed.............................. (51,318) (26,407) (272,297) (86,599) (228,114) (77,488)
----------- ----------- ----------- ----------- ----------- -----------
Net increase........................ 409,732 262,268 223,792 525,000 524,760 555,157
----------- ----------- ----------- ----------- ----------- -----------
CLASS C
Issued................................ 140,694 33,894 182,514 123,553 116,706 290,357
Dividends and distributions
reinvested........................... 3,711 2,697 7,733 4,123 8,984 9,047
Redeemed.............................. (21,778) (469) (47,976) (25,877) (27,176) (41,081)
----------- ----------- ----------- ----------- ----------- -----------
Net increase........................ 122,627 36,122 142,271 101,799 98,514 258,323
----------- ----------- ----------- ----------- ----------- -----------
Total net increase (decrease)..... 898,347 795,735 (1,940,771) (3,602,044) (83,235) 330,674
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
35
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. UNREALIZED APPRECIATION (DEPRECIATION) AND COST OF INVESTMENTS FOR FEDERAL
INCOME TAX PURPOSES
At October 31, 1995, the composition of unrealized appreciation
(depreciation) of investment securities and the cost of investments for Federal
income tax purposes were as follows:
<TABLE>
<CAPTION>
APPRECIATION (DEPRECIATION) NET TAX COST
------------ -------------- ----------- ------------
<S> <C> <C> <C> <C>
Quest for Value $72,832,935 $ (782,009) $72,050,926 $258,831,045
Opportunity 107,623,664 (8,230,134) 99,393,530 542,282,713
Small Capitalization 13,114,205 (4,646,081) 8,468,124 141,830,483
Growth and Income 3,674,355 (1,106,543) 2,567,812 43,607,284
U.S. Government 852,086 (2,085,345) (1,233,259) 115,524,803
Investment Quality 4,461,416 (402,788) 4,058,628 56,937,821
</TABLE>
6. AUTHORIZED FUND SHARES AND PAR VALUE PER SHARE
<TABLE>
<CAPTION>
QUEST SMALL GROWTH U.S. INVESTMENT
FOR VALUE OPPORTUNITY CAPITALIZATION AND INCOME GOVERNMENT QUALITY
---------- ----------- -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Authorized fund shares 35,000,000 unlimited unlimited unlimited unlimited unlimited
Par value per share $1.00 $.01 $.01 $.01 $.01 $.01
</TABLE>
7. DIVIDENDS AND DISTRIBUTIONS
The following tables summarize the per share dividends and distributions
made for the two years ended October 31, 1995:
<TABLE>
<CAPTION>
QUEST FOR SMALL
VALUE OPPORTUNITY CAPITALIZATION
-------------- -------------- --------------
YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
-------------- -------------- --------------
1995 1994 1995 1994 1995 1994
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME:
Class A.......................... $ 0.083 $ 0.040 $ 0.117 $ 0.326 -- --
Class B.......................... 0.074 0.031 0.117 0.313 -- --
Class C.......................... 0.081 0.033 0.117 0.312 -- --
NET REALIZED GAINS:
Class A.......................... $ 0.828 $ 0.469 $ 0.614 $ 0.219 $ 0.415 $ 1.331
Class B.......................... 0.828 0.469 0.614 0.219 0.415 1.331
Class C.......................... 0.828 0.469 0.614 0.219 0.415 1.331
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND U.S. INVESTMENT
INCOME GOVERNMENT QUALITY
-------------- -------------- --------------
YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
-------------- -------------- --------------
1995 1994 1995 1994 1995 1994
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME:
Class A.......................... $ 0.289 $ 0.319 $ 0.639 $ 0.593 $ 0.707 $ 0.680
Class B.......................... 0.242 0.265 0.562 0.510 0.646 0.609
Class C.......................... 0.209 0.261 0.549 0.509 0.643 0.608
NET REALIZED GAINS:
Class A.......................... $ 0.422 $ 1.669 -- $ 0.213 -- $ 0.069
Class B.......................... 0.422 1.669 -- 0.213 -- 0.069
Class C.......................... 0.422 1.669 -- 0.213 -- 0.069
TAX RETURN OF CAPITAL:
Class A.......................... -- -- $ 0.013 -- -- --
Class B.......................... -- -- 0.013 -- -- --
Class C.......................... -- -- 0.013 -- -- --
</TABLE>
36
<PAGE>
- --------------------------------------------------------------------------------
8. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
During the year ended October 31, 1995, U.S. Government wrote covered
options and Small Capitalization and Investment Quality entered into futures
contracts in order to hedge their existing portfolio securities against
fluctuations in value. Written options and futures contracts involve elements of
market risk in excess of the amounts reflected in the fund's Statements of
Assets and Liabilities. A fund, as a writer of an option, has no control over
whether the option is exercised. The underlying security may be sold and, as a
result, a fund bears the market risk of an unfavorable change in the price of
the security underlying the written option. For futures contracts, the contract
amount reflects the extent of a fund's exposure to off balance sheet risk.
Written options and futures contracts also have elements of credit risk; i.e.
the risk that the counterparty may not perform. If the option or futures
contracts are traded through a regulated exchange, the counterparty risk is
generally eliminated since the exchange interposes itself into the transaction.
If, however, the option or futures contracts are traded in the over-the-counter
market, counterparty risk can exist.
9. NET CAPITAL LOSS CARRYOVERS
For the fiscal year ended October 31, 1995, Growth and Income will utilize
$188,067 of net capital loss carryovers. Growth and Income has net capital loss
carryovers of $233,749 of which $177,811 and $55,938 will be available, to the
extent provided by regulations, to offset future net capital gains realized
through the fiscal years ending 1996 and 2000, respectively. However, due to the
acquisition of the Unified Income Fund and the Unified Mutual Shares Fund in
1992, the loss carryovers are further limited by IRC Section 382 to $188,067
annually. As a result, Growth and Income had $370,083 of net capital loss
carryover expire on October 31, 1995 which is no longer available for future
periods. In addition, U.S. Government, at October 31, 1995, had a net capital
loss carryover of $8,145,977 available, to the extent provided by regulations,
to offset future net capital gains realized before the end of fiscal year 2003.
Also at October 31, 1995, Investment Quality had a net capital loss carryover of
$1,854,362 of which $952,880 and $901,482 will be available to offset future net
capital gains realized through the fiscal years ending 2002 and 2003,
respectively. To the extent that the capital loss carryovers are used to offset
future net capital gains, it is probable that the gains so offset will not be
distributed to shareholders.
10. SUBSEQUENT EVENTS
(a) On November 22, 1995, OCC Distributors (previously Quest for Value
Distributors), OpCap Advisors (previously Quest for Value Advisors) and their
parent Oppenheimer Capital consummated a transaction with Oppenheimer Management
Corporation ("OMC") 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 and the
Opportunity Fund, the Small Capitalization Fund, the Growth and Income Fund and
the Officers Fund, portfolios of the 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 merged, as part of a tax-free
reorganization, 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.
(b) On November 22, 1995, U.S. Government and Investment Quality paid the
following per share net investment income dividends to shareholders of record on
the close of business November 22, 1995:
<TABLE>
<CAPTION>
CLASS CLASS CLASS
A B C
------ ------ ------
<S> <C> <C> <C>
U.S. Government $0.0352 $0.0302 $0.0298
Investment Quality 0.0384 0.0345 0.0343
</TABLE>
37
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
---------------------------------- ----------------------------------
Net
Realized Distributions
and Dividends to
Unrealized to Shareholders
Net Asset Net Gain Total Shareholders from Net Total
Value, Investment (Loss) from from Net Realized Dividends
Beginning Income on Investment Investment Gain on and
of Period (Loss)* Investments Operations Income Investments Distributions
<S> <C> <C> <C> <C> <C> <C> <C>
Quest for Value Fund, Inc.
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 12.59 $ 0.12 $ 2.71 $ 2.83 ($ 0.08) ($ 0.83) ($ 0.91)
1994 12.51 0.09 0.50 0.59 (0.04) (0.47) (0.51)
1993 11.71 0.05 1.34 1.39 (0.05) (0.54) (0.59)
1992 10.61 0.04 1.77 1.81 (0.07) (0.64) (0.71)
1991 7.84 0.09 2.84 2.93 (0.16) -- (0.16)
Class B,
YEAR ENDED OCTOBER 31,
1995 12.53 0.05 2.69 2.74 (0.07) (0.83) (0.90)
1994 12.51 0.02 0.50 0.52 (0.03) (0.47) (0.50)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.66(3) (0.01) (0.14) (0.15) -- -- --
Class C,
YEAR ENDED OCTOBER 31,
1995 12.52 0.04 2.70 2.74 (0.08) (0.83) (0.91)
1994 12.50 0.01 0.51 0.52 (0.03) (0.47) (0.50)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.66(3) (0.01) (0.15) (0.16) -- -- --
<CAPTION>
RATIOS
-----------------------------------
Ratio of
Net Ratio of
Operating Net
Net Net Expenses Investment
Asset Assets to Income
Value, End of Average (Loss) Portfolio
End of Total Period Net to Average Turnover
Period Return** (000's) Assets Net Assets Rate
<S> <C> <C> <C> <C> <C> <C>
Quest for Value Fund, Inc.
Class A,
YEAR ENDED OCTOBER 31,
1995 $14.51 24.74% $282,615 1.68%(1) 0.90%(1) 36%
1994 12.59 5.01% 238,085 1.71% 0.72% 49%
1993 12.51 12.27% 245,320 1.75% 0.40% 27%
1992 11.71 18.45% 142,939 1.75% 0.53% 41%
1991 10.61 37.94% 79,914 1.83% 1.06% 48%
Class B,
YEAR ENDED OCTOBER 31,
1995 14.37 24.08% 38,557 2.21%(1) 0.36%(1) 36%
1994 12.53 4.43% 14,373 2.24% 0.14% 49%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.51 (1.19%) 2,015 2.27%(5) (1.19%)(5) 27%
Class C,
YEAR ENDED OCTOBER 31,
1995 14.35 24.10% 10,140 2.26%(1) 0.31%(1) 36%
1994 12.52 4.45% 3,581 2.28% 0.09% 49%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.50 (1.26%) 221 2.27%(5) (0.90%)(5) 27%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995, FOR CLASSES A, B,
AND C WERE $257,239,913, $25,392,617 AND $6,711,023, RESPECTIVELY.
Opportunity Fund
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 19.69 $ 0.23 $ 5.40 $ 5.63 ($ 0.12) ($ 0.61) ($ 0.73)
1994 18.71 0.18 1.35 1.53 (0.33) (0.22) (0.55)
1993 16.73 0.35 2.02 2.37 (0.07) (0.32) (0.39)
1992 14.29 0.09 2.93 3.02 (0.03) (0.55) (0.58)
1991 9.74 0.03 4.78 4.81 (0.23) (0.03) (0.26)
Class B,
YEAR ENDED OCTOBER 31,
1995 19.59 0.11 5.36 5.47 (0.12) (0.61) (0.73)
1994 18.70 0.08 1.34 1.42 (0.31) (0.22) (0.53)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 18.73(3) 0.02 (0.05) (0.03) -- -- --
Class C,
YEAR ENDED OCTOBER 31,
1995 19.58 0.08 5.38 5.46 (0.12) (0.61) (0.73)
1994 18.70 0.08 1.33 1.41 (0.31) (0.22) (0.53)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 18.73(3) 0.02 (0.05) (0.03) -- -- --
<CAPTION>
Class A,
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31,
1995 $24.59 29.88% $367,240 1.69%(1) 1.02%(1) 21%
1994 19.69 8.41% 163,340 1.78% 0.96% 42%
1993 18.71 14.34% 127,225 1.83% 2.69% 24%
1992 16.73 21.93% 40,563 2.27% 0.72% 32%
1991 14.29 50.44% 8,446 2.35%(2) 0.30%(2) 88%
Class B,
YEAR ENDED OCTOBER 31,
1995 24.33 29.19% 217,663 2.21%(1) 0.48%(1) 21%
1994 19.59 7.84% 43,317 2.34% 0.43% 42%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 18.70 (0.16%) 2,115 2.52%(5) 1.32%(5) 24%
Class C,
YEAR ENDED OCTOBER 31,
1995 24.31 29.16% 49,608 2.31%(1) 0.37%(1) 21%
1994 19.58 8.06% 7,289 2.35% 0.43% 42%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 18.70 (0.16%) 313 2.52%(5) 1.13%(5) 24%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995, FOR CLASSES A, B,
AND C WERE $251,625,672, $116,522,609 AND $24,167,608, RESPECTIVELY.
(2) DURING THE PERIOD NOTED ABOVE, THE ADVISER VOLUNTARILY WAIVED ITS FEE AND
ASSUMED A PORTION OF THE OPERATING EXPENSES. IF SUCH WAIVER AND ASSUMPTION
HAD NOT BEEN IN EFFECT, THE RATIO OF NET OPERATING EXPENSES TO AVERAGE NET
ASSETS AND THE RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS
WOULD HAVE BEEN 3.33% AND (0.68%), RESPECTIVELY, FOR THE YEAR ENDED OCTOBER
31, 1991.
- ----------------------------------
(3) OFFERING PRICE.
(4) INITIAL OFFERING OF CLASS B AND CLASS C SHARES.
(5) ANNUALIZED.
* BASED ON AVERAGE SHARES OUTSTANDING FOR THE PERIOD.
** ASSUMES REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS, BUT DOES NOT
REFLECT DEDUCTIONS FOR SALES CHARGES. AGGREGATE (NOT ANNUALIZED) TOTAL
RETURN IS SHOWN FOR ANY PERIOD SHORTER THAN ONE YEAR.
38
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
---------------------------------- ----------------------------------
Net
Realized Distributions
and Dividends to
Unrealized to Shareholders
Net Asset Net Gain Total Shareholders from Net Total
Value, Investment (Loss) from from Net Realized Dividends
Beginning Income on Investment Investment Gain on and
of Period (Loss)* Investments Operations Income Investments Distributions
<S> <C> <C> <C> <C> <C> <C> <C>
Small Capitalization Fund
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 16.33 $ 0.11 $ 1.29 $ 1.40 $ -- ($ 0.42) ($ 0.42)
1994 17.68 (0.03) 0.01 (0.02) -- (1.33) (1.33)
1993 14.60 (0.04) 4.26 4.22 -- (1.14) (1.14)
1992 13.52 -- 1.50 1.50 -- (0.42) (0.42)
1991 8.80 (0.05) 4.85 4.80 (0.08) -- (0.08)
Class B,
YEAR ENDED OCTOBER 31,
1995 16.24 0.02 1.27 1.29 -- (0.42) (0.42)
1994 17.66 (0.11) 0.02 (0.09) -- (1.33) (1.33)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 17.19(3) (0.02) 0.49 0.47 -- -- --
Class C,
YEAR ENDED OCTOBER 31,
1995 16.23 0.01 1.29 1.30 -- (0.42) (0.42)
1994 17.67 (0.13) 0.02 (0.11) -- (1.33) (1.33)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 17.19(3) (0.02) 0.50 0.48 -- -- --
<CAPTION>
RATIOS
-----------------------------------
Ratio of
Net Ratio of
Operating Net
Net Net Expenses Investment
Asset Assets to Income
Value, End of Average (Loss) Portfolio
End of Total Period Net to Average Turnover
Period Return** (000's) Assets Net Assets Rate
<S> <C> <C> <C> <C> <C> <C>
Small Capitalization Fund
Class A,
YEAR ENDED OCTOBER 31,
1995 $17.31 8.82% $116,307 1.80%(1) 0.67%(1) 76%
1994 16.33 0.04% 120,102 1.88% (0.14%) 67%
1993 17.68 30.21% 104,898 1.89% (0.36%) 74%
1992 14.60 11.60% 39,693 2.11% (0.04%) 95%
1991 13.52 55.01% 20,686 2.25%(2) (0.41%)(2) 103%
Class B,
YEAR ENDED OCTOBER 31,
1995 17.11 8.17% 23,440 2.37%(1) 0.09%(1) 76%
1994 16.24 (0.39%) 16,144 2.48% (0.70%) 67%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 17.66 2.73% 1,754 2.57%(5) (1.15%)(5) 74%
Class C,
YEAR ENDED OCTOBER 31,
1995 17.11 8.24% 9,068 2.38%(1) 0.08%(1) 76%
1994 16.23 (0.51%) 3,344 2.59% (0.81%) 67%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 17.67 2.79% 235 2.57%(5) (1.20%)(5) 74%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995, FOR CLASSES A, B,
AND C WERE $119,440,010, $20,105,476 AND $6,113,900, RESPECTIVELY.
(2) DURING THE PERIOD NOTED ABOVE, THE ADVISER VOLUNTARILY WAIVED ITS FEE AND
ASSUMED A PORTION OF THE OPERATING EXPENSES. IF SUCH WAIVER AND ASSUMPTION
HAD NOT BEEN IN EFFECT, THE RATIO OF NET OPERATING EXPENSES TO AVERAGE NET
ASSETS AND THE RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS
WOULD HAVE BEEN 3.27% AND (1.43%), RESPECTIVELY, FOR THE YEAR ENDED OCTOBER
31, 1991.
Growth and Income Fund
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 10.09 $ 0.27 $ 1.27 $ 1.54 ($ 0.29) ($ 0.42) ($ 0.71)
1994 11.24 0.32 0.55 0.87 (0.32) (1.70) (2.02)
1993 10.80 0.30 0.73 1.03 (0.26) (0.33) (0.59)
NOVEMBER 4, 1991 (6)
TO OCTOBER 31, 1992 10.00(3) 0.28 0.80 1.08 (0.28) -- (0.28)
Class B,
YEAR ENDED OCTOBER 31,
1995 10.07 0.19 1.28 1.47 (0.24) (0.42) (0.66)
1994 11.23 0.25 0.56 0.81 (0.27) (1.70) (1.97)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.21(3) 0.04 0.05 0.09 (0.07) -- (0.07)
Class C,
YEAR ENDED OCTOBER 31,
1995 10.07 0.15 1.30 1.45 (0.21) (0.42) (0.63)
1994 11.23 0.24 0.56 0.80 (0.26) (1.70) (1.96)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.21(3) 0.04 0.05 0.09 (0.07) -- (0.07)
<CAPTION>
Class A,
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31,
1995 $10.92 16.35% $37,082 1.99%(1,2) 2.60%(1,2) 130%
1994 10.09 8.64% 30,576 1.86%(2) 3.16%(2) 113%
1993 11.24 9.93% 28,466 1.90%(2) 2.66%(2) 192%
NOVEMBER 4, 1991 (6)
TO OCTOBER 31, 1992 10.80 10.84% 8,057 2.23%(2,5) 2.73%(2,5) 77%
Class B,
YEAR ENDED OCTOBER 31,
1995 10.88 15.65% 7,623 2.59%(1,2) 1.71%(1,2) 130%
1994 10.07 7.96% 2,928 2.47%(2) 2.53%(2) 113%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.23 0.81% 319 2.49%(2,5) 1.83%(2,5) 192%
Class C,
YEAR ENDED OCTOBER 31,
1995 10.89 15.38% 1,828 2.88%(1,2) 1.39%(1,2) 130%
1994 10.07 7.91% 455 2.62%(2) 2.39%(2) 113%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.23 0.81% 102 2.49%(2,5) 2.18%(2,5) 192%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995 FOR CLASSES A, B, AND
C WERE $33,396,923, $4,845,598 AND $967,910, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED A PORTION
OF ITS FEES. IF SUCH WAIVERS HAD NOT BEEN IN EFFECT, THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS FOR CLASS A WOULD HAVE BEEN 2.02% AND 2.57%,
RESPECTIVELY, FOR THE YEAR ENDED OCOTBER 31, 1995, 2.32% AND 2.70%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1994, 2.18% AND 2.38%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1993 AND 2.98% AND 1.98%,
ANNUALIZED, RESPECTIVELY, FOR THE PERIOD NOVEMBER 4, 1991 (COMMENCEMENT OF
OPERATIONS) TO OCTOBER 31, 1992. THE RATIOS OF NET OPERATING EXPENSES TO
AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT INCOME TO AVERAGE NET
ASSETS WOULD HAVE BEEN 2.57% AND 1.73%, RESPECTIVELY, FOR CLASS B AND 2.84%
AND 1.43%, RESPECTIVELY, FOR CLASS C, FOR THE YEAR ENDED OCTOBER 31, 1995,
2.93% AND 2.07%, RESPECTIVELY, FOR CLASS B AND 3.10% AND 1.91%,
RESPECTIVELY, FOR CLASS C, FOR THE YEAR ENDED OCTOBER 31, 1994 AND 2.88% AND
1.44%, ANNUALIZED, RESPECTIVELY, FOR CLASS B AND 2.87% AND 1.80%,
ANNUALIZED, RESPECTIVELY, FOR CLASS C, FOR THE PERIOD SEPTEMBER 2, 1993
(INITIAL OFFERING) TO OCTOBER 31, 1993.
- ----------------------------------
(3) OFFERING PRICE.
(4) INITIAL OFFERING OF CLASS B AND CLASS C SHARES.
(5) ANNUALIZED.
(6) COMMENCEMENT OF OPERATIONS.
* BASED ON AVERAGE SHARES OUTSTANDING FOR THE PERIOD.
** ASSUMES REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS, BUT DOES NOT
REFLECT DEDUCTIONS FOR SALES CHARGES. AGGREGATE (NOT ANNUALIZED) TOTAL
RETURN IS SHOWN FOR ANY PERIOD SHORTER THAN ONE YEAR.
39
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
(CONTINUED)
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
---------------------------------- ----------------------------------
Net
Realized Distributions
and Dividends to
Unrealized to Shareholders
Net Asset Net Gain Total Shareholders from Net Tax
Value, Investment (Loss) from from Net Realized return
Beginning Income on Investment Investment Gain on of
of Period (Loss) Investments Operations Income Investments Capital
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. Government Income Fund
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 10.79 $ 0.64 $ 0.49 $ 1.13 ($ 0.64) $ -- ($ 0.01)
1994 12.08 0.59 (1.08) (0.49) (0.59) (0.21) --
1993 11.92 0.65 0.35 1.00 (0.68) (0.16) --
1992 11.80 0.74 0.18 0.92 (0.74) (0.06) --
1991 11.35 0.85 0.61 1.46 (0.86) (0.15) --
Class B,
YEAR ENDED OCTOBER 31,
1995 10.79 0.56 0.49 1.05 (0.56) -- (0.01)
1994 12.08 0.51 (1.08) (0.57) (0.51) (0.21) --
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.13(3) 0.08 (0.04) 0.04 (0.08) (0.01) --
Class C,
YEAR ENDED OCTOBER 31,
1995 10.79 0.55 0.49 1.04 (0.55) -- (0.01)
1994 12.08 0.51 (1.08) (0.57) (0.51) (0.21) --
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.13(3) 0.08 (0.04) 0.04 (0.08) (0.01) --
<CAPTION>
RATIOS
-----------------------------------
Ratio of
Net Ratio of
Operating Net
Net Net Expenses Investment
Asset Assets to Income
Total Value, End of Average (Loss) Portfolio
Dividends and End of Total Period Net to Average Turnover
Distributions Period Return* (000's) Assets Net Assets Rate
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. Government Income Fund
Class A,
YEAR ENDED OCTOBER 31,
1995 ($0.65) $11.27 10.78% $102,718 1.26%(1) 5.81%(1) 245%
1994 (0.80) 10.79 (4.15%) 123,257 1.20%(2) 5.19%(2) 126%
1993 (0.84) 12.08 8.55% 189,091 1.15%(2) 5.33%(2) 315%
1992 (0.80) 11.92 7.98% 151,197 1.15%(2) 6.26%(2) 207%
1991 (1.01) 11.80 13.40% 82,400 1.15%(2) 7.24%(2) 309%
Class B,
YEAR ENDED OCTOBER 31,
1995 (0.57) 11.27 10.01% 9,641 1.94%(1) 5.04%(1) 245%
1994 (0.72) 10.79 (4.84%) 6,813 1.92%(2) 4.53%(2) 126%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 (0.09) 12.08 0.29% 1,286 1.85%(2,5) 3.07%(2,5) 315%
Class C,
YEAR ENDED OCTOBER 31,
1995 (0.56) 11.27 9.89% 2,883 2.06%(1) 4.91%(1) 245%
1994 (0.72) 10.79 (4.84%) 1,224 1.94%(2) 4.57%(2) 126%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 (0.09) 12.08 0.34% 141 1.85%(2,5) 3.89%(2,5) 315%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995, FOR CLASSES A, B,
AND C WERE $114,946,501, $9,210,406 AND $1,823,599, RESPECTIVELY.
(2) DURING THE PERIODS NOTED ABOVE, THE ADVISER VOLUNTARILY WAIVED A PORTION OF
ITS FEES. IF SUCH WAIVERS HAD NOT BEEN IN EFFECT, THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS FOR CLASS A WOULD HAVE BEEN 1.23% AND 5.16%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1994, 1.20% AND 5.28%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1993, 1.17% AND 6.24%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1992, AND 1.46% AND 6.93%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1991. THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS WOULD HAVE BEEN 1.93% AND 4.52%, RESPECTIVELY,
FOR CLASS B AND 1.95% AND 4.56%, RESPECTIVELY, FOR CLASS C, FOR THE YEAR
ENDED OCTOBER 31, 1994 AND 1.96% AND 2.96%, ANNUALIZED, RESEPCTIVELY, FOR
CLASS B AND 1.96% AND 3.78%, ANNUALIZED, RESPECTIVELY, FOR CLASS C, FOR THE
PERIOD SEPTEMBER 2, 1993 (INITIAL OFFERING) TO OCTOBER 31, 1993.
Investment Quality Income Fund
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 9.67 $ 0.71 $ 1.21 $ 1.92 ($ 0.71) $ -- $ --
1994 11.49 0.68 (1.75) (1.07) (0.68) (0.07) --
1993 10.36 0.68 1.19 1.87 (0.68) (0.06) --
1992 10.06 0.80 0.30 1.10 (0.80) -- --
DECEMBER 18, 1990 (6)
TO OCTOBER 31, 1991 10.00(3) 0.71 0.06 0.77 (0.71) -- --
Class B,
YEAR ENDED OCTOBER 31,
1995 9.67 0.65 1.21 1.86 (0.65) -- --
1994 11.49 0.61 (1.75) (1.14) (0.61) (0.07) --
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.52(3) 0.08 (0.03) 0.05 (0.08) -- --
Class C,
YEAR ENDED OCTOBER 31,
1995 9.67 0.64 1.21 1.85 (0.64) -- --
1994 11.49 0.61 (1.75) (1.14) (0.61) (0.07) --
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.52(3) 0.09 (0.03) 0.06 (0.09) -- --
<CAPTION>
Class A,
<S> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31,
1995 ($0.71) $10.88 20.49% $ 45,078 1.44%(1,2) 6.90%(1,2) 8%
1994 (0.75) 9.67 (9.61%) 46,922 1.29%(2) 6.47%(2) 33%
1993 (0.74) 11.49 18.64% 61,288 1.20%(2) 6.07%(2) 12%
1992 (0.80) 10.36 11.21% 29,701 0.95%(2) 7.62%(2) 18%
DECEMBER 18, 1990 (6)
TO OCTOBER 31, 1991 (0.71) 10.06 8.11% 17,235 0.82%(2,5) 8.25%(2,5) 19%
Class B,
YEAR ENDED OCTOBER 31,
1995 (0.65) 10.88 19.78% 13,134 2.03%(1,2) 6.15%(1,2) 8%
1994 (0.68) 9.67 (10.22%) 6,605 1.92%(2) 5.85%(2) 33%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 (0.08) 11.49 0.45% 1,468 1.84%(2,5) 3.68%(2,5) 12%
Class C,
YEAR ENDED OCTOBER 31,
1995 (0.64) 10.88 19.72% 3,977 2.08%(1,2) 6.18%(1,2) 8%
1994 (0.68) 9.67 (10.23%) 2,583 1.90%(2) 6.01%(2) 33%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 (0.09) 11.49 0.55% 101 1.84%(2,5) 4.83%(2,5) 12%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995, FOR CLASSES A, B,
AND C WERE $45,868,837, $9,544,915 AND $3,229,501, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED ALL OR A
PORTION OF ITS FEES AND ASSUMED A PORTION OF ITS OPERATING EXPENSES. IF SUCH
WAIVERS AND ASSUMPTIONS HAD NOT BEEN IN EFFECT, THE RATIOS OF NET OPERATING
EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS FOR CLASS A WOULD HAVE BEEN 1.52% AND 6.82%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1995, 1.59% AND 6.71%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1994, 1.50% AND 5.77%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1993, 1.72% AND 6.85%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1992, AND 2.11% AND 6.96%,
ANNUALIZED, RESPECTIVELY, FOR THE PERIOD DECEMBER 18, 1990 (COMMENCEMENT OF
OPERATIONS) TO OCTOBER 31, 1991. THE RATIOS OF NET OPERATING EXPENSES TO
AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT INCOME TO AVERAGE NET
AASETS WOULD HAVE BEEN 2.09% AND 6.09%, RESPECTIVELY, FOR CLASS B AND 2.15%
AND 6.11%, RESPECTIVELY FOR CLASS C, FOR THE YEAR ENDED OCTOBER 31, 1995,
2.23% AND 5.54%, RESPECTIVELY, FOR CLASS B AND 2.21% AND 5.70%,
RESPECTIVELY, FOR CLASS C, FOR THE YEAR ENDED OCTOBER 31, 1994 AND 2.07% AND
3.45%, ANNUALIZED, RESPECTIVELY, FOR CLASS B AND 2.06% AND 4.61%,
ANNUALIZED, RESPECTIVELY, FOR CLASS C FOR THE PERIOD SEPTEMBER 2, 1993
(INITIAL OFFERING) TO OCTOBER 31, 1993.
- ----------------------------------
(3) OFFERING PRICE.
(4) INITIAL OFFERING OF CLASS B AND CLASS C SHARES.
(5) ANNUALIZED.
(6) COMMENCEMENT OF OPERATIONS.
* ASSUMES REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS, BUT DOES NOT
REFLECT DEDUCTIONS FOR SALES CHARGES. AGGREGATE (NOT ANNUALIZED) TOTAL
RETURN IS SHOWN FOR ANY PERIOD SHORTER THAN ONE YEAR.
<PAGE>
<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 Growth & Income Value Fund
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Sub-Adviser
OpCap Advisors
One World Financial Center
New York, New York 10281
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
State Street Bank and Trust Company
P.O. Box 8505
Boston, Massachusetts 02266-8505
Independent Auditors
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
prosp\p257sai
<PAGE>
OPPENHEIMER
QUEST SMALL CAP VALUE FUND
Prospectus dated February 15, 1996
Oppenheimer Quest Small Cap Value Fund (the "Fund"), a series of Oppenheimer
Quest for Value Funds, is a mutual fund that seeks capital appreciation
through investments in a diversified portfolio which under normal conditions
will have at least 65% of its assets invested in equity securities of
companies with market capitalizations under $1 billion. In an uncertain
investment environment, the Fund may stress defensive investment methods.
Please refer to "Investment Policies and Strategies" for more information
about the types of securities in which the Fund invests, its investment
methods 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).
(OppenheimerFunds logo)
Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, and 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 THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
PAGE
<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 Fund Who Were Shareholders of the Former Quest for Value Funds
<PAGE>
A B O U T T H E F U N D
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. The numbers below are based on the Fund's expenses during its
last fiscal year ended October 31, 1995.
-- 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.
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales 5.75% None None
Charge on Purchases
(as a % of offering price)
- ----------------------------------------------------------------------
Sales Charge on None None None
Reinvested Dividends
- ----------------------------------------------------------------------
Deferred Sales Charge None(1) 5% in the first 1.0% if
(as a % of the lower of the year, declining shares are
original purchase price or to 1% in the redeemed
redemption proceeds) sixth year and within 12
eliminated months of
thereafter(2) purchase(2)
- ----------------------------------------------------------------------
Exchange Fee None None None
</TABLE>
(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 18 calendar months from the end of the calendar month during
which you purchased those shares, depending upon when you purchased
such shares. See "How to Buy Shares - Buying Class A Shares,"
below. Class A shares of the Fund 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.
(2)See "How to Buy Shares - Buying Class B Shares" and "How to Buy
Shares - Buying Class C Shares," below, for more information on the
contingent deferred sales charges.
-- Annual Fund Operating Expenses are paid out of the Fund's
assets and represent the Fund's expenses in operating its business.
For example, the Fund pays management fees to its investment
adviser, OppenheimerFunds, Inc.(which is 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 chart 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 each class of the Fund's shares for that
year. The "12b-1 Distribution Plan Fees" for Class A shares are
the service plan fees (the maximum fee is 0.25% of average annual
net assets of that class), and a distribution fee of 0.25% of the
average annual net assets of that class. For Class B and Class C
shares, the "12b-1 Distribution Plan Fees" are the service plan
fees of 0.25% of average annual net assets of the class, and the
asset-based sales charge of 0.75% of the average annual net assets
of the class. These plans 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 chart, depending on a
number of factors, including the actual value of the Fund's assets
represented by each class of shares.
Class A Class B Class C
Shares Shares Shares
- ------------------------------------------------------------
Management Fees % % %
- ------------------------------------------------------------
12b-1 Distribution
Plans Fees % % %
- ------------------------------------------------------------
Other Expenses % % %
- ------------------------------------------------------------
Total Fund
Operating Expenses % % %
-- Examples. To try to show the effect of these expenses on
an investment over time, we have created the hypothetical examples
shown below. Assume that you make a $1,000 investment in each class
of shares of the Fund, that the Fund's annual return is 5%, that
its operating expenses for each class are the ones shown in the
Annual Fund Operating Expenses chart above and that Class B shares
automatically convert into Class A shares six years after purchase.
If you were to redeem your shares at the end of each period shown
below, your investment would incur the following expenses by the
end of each 1, 3, 5 and 10 years:
1 year 3 years 5 years 10 years(1)
- -------------------------------------------------------------
Class A Shares $ $ $ $
Class B Shares $ $ $ $
Class C Shares $ $ $ $
If you did not redeem your investment, it would incur the
following expenses:
1 year 3 years 5 years 10 years(1)
- ------------------------------------------------------------
Class A Shares $ $ $ $
Class B Shares $ $ $ $
Class C Shares $ $ $ $
(1)The Class B expenses in years 7 through 10 are based on the Class
A expenses shown above, because the Fund automatically converts
Class B shares into Class A shares after 6 years. Because of the
effect of the asset-based sales charge and the contingent deferred
sales charge on Class B and Class C shares, long-term Class B and
Class C shareholders could pay the economic equivalent of more
than the maximum front-end sales charge allowed under applicable
regulations. For Class B shareholders, the automatic conversion of
Class B shares to Class A shares is designed to minimize the
likelihood that this will occur. Please refer to "How to Buy
Shares - Buying Class B Shares" for more information.
These examples show the effect of expenses on an investment,
but are not meant to state or predict actual or expected costs or
investment returns of the Fund, all of which 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 accounts, such as how to
sell or exchange shares.
-- What is the Fund's Investment Objective? The Fund's
investment objective is to seek capital appreciation through
investments in a diversified portfolio which under normal
conditions will have at least 65% of its assets invested in equity
securities of companies with market capitalizations under $1
billion.
-- What does the Fund Invest in? The Fund emphasizes
investments in equity securities of companies the Fund believes
have favorable stock prices in relation to their book values and/or
sales, and in equity securities of companies the Fund believes have
limited operating leverage and/or financial leverage. The Fund may
assume a temporary defensive position when appropriate to do so by
investing in money market instruments, as defined on page __ under
"Investment Policies and Strategies." These investments and
investment methods 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. The Manager (including a
subsidiary) manages investment company portfolios having over $40
billion in assets. The Manager handles the day-to-day business of
the Fund. The Fund also has a sub-adviser, OpCap Advisors (the
"Sub-Adviser") who is responsible for choosing the Fund's
investments. The Manager is paid an advisory fee by the Fund. The
Manager, not the Fund, pays the Sub-Adviser. The Fund has two
portfolio managers, Ms. Jenny Beth Jones and Mr. Louis Goldstein,
who are employed by the Sub-Adviser and are primarily responsible
for the selection of the Fund's securities. The Fund's Board of
Trustees, elected by shareholders, oversees the investment adviser
and the portfolio managers. 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. 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 bond and stock market movements, or the change in value of
particular stocks or bonds because of an event affecting the
issuer. Changes in interest rates can affect stock and bond
prices. These changes affect the value of the Fund's investments
and its price per share. Investments in small cap issuers involve
certain risks. See "Stock Investment Risks" on page __. 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.
Smaller capitalization companies may experience higher growth
rates and higher failure rates than do larger capitalization
companies. The trading volume of securities of smaller
capitalization companies is normally less than that of larger
capitalization companies, and may disproportionately affect their
market price. This will tend to make the price of smaller
capitalization companies rise more in response to buying demand and
fall more in response to selling pressure than is the case with
larger capitalization companies. While the Manager tries to reduce
risks by diversifying investments, by carefully researching
securities before they are purchased for the Fund's portfolio, and
in some cases by using hedging techniques, there is no guarantee of
success in achieving the Fund's investment 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 OppenheimerFunds Distributor, Inc. (the
"Distributor") by completing an Application or by using an
Automatic Investment Plan under AccountLink. Please refer to "How
to Buy Shares" on page __ for more details.
-- Will I Pay a Sales Charge to Buy Shares? The Fund offers
the individual investor three classes of shares. Each class has
the same investment portfolio but different expenses. Class A
shares are offered with a front-end sales charge, starting at
5.75%, and reduced for larger purchases. Class B and Class C
shares are offered without a front-end sales charge, but may be
subject to a contingent deferred sales charge if redeemed within
certain periods of time following their purchase. There is also an
annual asset-based sales charge on Class B and Class C shares.
Please review "How to Buy Shares" starting on page __ for more
details, including a discussion about 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 returns and
cumulative total returns, 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 broad-based market indices,
which we have done on pages __ and __. Please remember that past
performance does not guarantee future results.
Financial Highlights
The table on the following pages presents selected financial
information about the Fund, including per share data, expense
ratios and other data based on the Fund's average net assets. This
information has been audited by Price Waterhouse LLP, the Fund's
independent accountants, whose report on the Fund's financial
statements for the fiscal year ended October 31, 1995, is included
in the Statement of Additional Information.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS CLASS A
---------------------------------------------------------------------------------------
PERIOD
ENDED
YEAR ENDED OCTOBER 31, OCT. 31,
1995 1994 1993 1992 1991 1990 1989(2)
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value,
beginning of period $16.33 $17.68 $14.60 $13.52 $8.80 $10.91 $10.00(3)
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income
(loss)(4) .11 (.03) (.04) -- (.05) .07 .08
Net realized and unrealized
gain (loss) on investments 1.29 .01 4.26 1.50 4.85 (2.04) .83
-------- ------ ------ ------ ------ ------- ------
Total income (loss) from
investment operations 1.40 (.02) 4.22 1.50 4.80 (1.97) .91
- --------------------------------------------------------------------------------------------------------------------------
Dividends and distributions
to shareholders:
Dividends from net
investment income -- -- -- -- (.08) (.08) --
Distributions from
net realized
gain on investments (.42) (1.33) (1.14) (.42) -- (.06) --
-------- ------ ------ ------ ------ ------- ------
Total dividends
and distributions
to shareholders (.42) (1.33) (1.14) (.42) (.08) (.14) --
- --------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $17.31 $16.33 $17.68 $14.60 $13.52 $8.80 $10.91
======== ======== ======== ======== ======== ======== ========
==========================================================================================================================
TOTAL RETURN, AT
NET ASSET VALUE(5) 8.82% .04% 30.21% 11.60% 55.01% (18.33)% 9.10%
==========================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (in thousands) $116,307 $120,102 $104,898 $39,693 $20,686 $1,880 $2,085
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) .67%(6) (.14)% (.36)% (.04)% (.41)%(7) .71%(7) 1.34%(7,8)
Expenses 1.80%(6) 1.88% 1.89% 2.11% 2.25%(7) 2.00%(7) 1.74%(7,8)
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(9) 76.0% 67.0% 74.0% 95.0% 103.0% 18.0% 32.0%
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS CLASS B CLASS C
--------------------------------- ---------------------------------
PERIOD PERIOD
ENDED ENDED
YEAR ENDED OCTOBER 31, OCT. 31, YEAR ENDED OCTOBER 31, OCT. 31,
1995 1994 1993(1) 1995 1994 1993(1)
==============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value,
beginning of period $16.24 $17.66 $17.19(3) $16.23 $17.67 $17.19(3)
- --------------------------------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income
(loss)(4) .02 (.11) (.02) .01 (.13) (.02)
Net realized and unrealized
gain (loss) on investments 1.27 .02 .49 1.29 .02 .50
------ ------ ------ ------ ------ ------
Total income (loss) from
investment operations 1.29 (.09) .47 1.30 (.11) (.48)
- --------------------------------------------------------------------------------------------------------------
Dividends and distributions
to shareholders:
Dividends from net
investment income -- -- -- -- -- --
Distributions from
net realized
gain on investments (.42) (1.33) -- (.42) (1.33) --
------ ------ ------ ------ ------ ------
Total dividends
and distributions
to shareholders (.42) (1.33) -- (.42) (1.33) --
- --------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $17.11 $16.24 $17.66 $17.11 $16.23 $17.67
====== ====== ====== ====== ====== ======
==============================================================================================================
TOTAL RETURN, AT
NET ASSET VALUE(5) 8.17% (.39)% 2.73% 8.24% (.51)% 2.79%
==============================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (in thousands) $23,440 $16,144 $1,754 $9,068 $3,344 $235
- -------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) .09%(6) (.70)% (1.15)%(8) .08%(6) (.81)% (1.20)%(8)
Expenses 2.37%(6) 2.48% 2.57%(8) 2.38%(6) 2.59% 2.57%(8)
- -------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(9) 76.0% 67.0% 74.0% 76.0% 67.0% 74.0%
</TABLE>
1. Initial offering of Class B and Class C shares. For the period from
September 2, 1993 (inception of offering) to October 31, 1993.
2. For the period from January 1, 1989 (commencement of operations) to October
31, 1989.
3. Offering price.
4. Based on average shares outstanding for the period.
5. Assumes reinvestment of all dividends and distributions, but does not
reflect deductions for sales charges. Aggregate (not annualized) total
return is shown for any period shorter than one year.
6. Average net assets for the year ended October 31, 1995, for Classes A, B,
and C were $119,440,010, $20,105,476 and $6,113,900, respectively.
7. During the periods noted above, the former Adviser voluntarily waived all or
a portion of its fees and assumed some operating expenses of the Fund. Without
such waivers and assumptions, the ratios of net investment income (loss) to
average net assets and the ratios of expenses to average net assets would have
been, respectively: Class A shares--(1.43)% and 3.27% for the year ended
10/31/91, (3.11)% and 5.82% for the year ended 10/31/90 and (3.19)% and 6.27%
(annualized) for the period 1/1/89 (commencement of operations) to 10/31/89.
8. Annualized.
9. 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 $92,530,292 and $99,613,323,
respectively.
<PAGE>
Investment Objective and Policies
Objective. The Fund seeks capital appreciation through investments
in a diversified portfolio which under normal conditions will have
at least 65% of its assets invested in equity securities of
companies with market capitalizations under $1 billion.
Investment Policies and Strategies. The Fund's investment approach
will attempt to identify securities of companies the Fund believes
have favorable stock prices in relation to their book values and/or
sales, and securities of companies which have limited operating
leverage and/or limited financial leverage. Operating leverage
generally refers to a company's sensitivity to changes in the
general economy. Financial leverage generally refers to a
company's ratio of debt to assets, or cost of debt service to
income.
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"). As a non-fundamental policy, the Fund may also
invest up to 5% of its total assets in "lower-grade" debt
securities. "Lower grade" debt securities (commonly known as "junk
bonds") are rated below investment grade, which means that have a
rating lower than "Baa" by Moody's Investors Service, Inc. or lower
than "BBB" by Standard & Poor's Corporation, or similar rating by
other rating organizations, or, if unrated, determined by the Sub-
Adviser to be of comparable quality to securities rated below
investment grade. The Fund does not intend to invest in debt
securities that are in default.
For temporary defensive purposes, the Fund may invest up to
100% of its assets in money market instruments. At any time that
the Fund invests in money market instruments for temporary
defensive purposes, 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 policies. Except
as indicated, the investment objective and policies described above
are fundamental policies.
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 may invest a
substantial portion of its assets in stocks, the value of the
Fund's portfolio will be affected by changes in the stock markets.
At times, the stock markets can be volatile, and stock prices can
change substantially. Smaller capitalization companies may
experience higher growth rates and higher failure rates than do
larger capitalization companies. The trading volume of securities
of smaller capitalization companies is generally less than that of
larger capitalization companies and thus may disproportionately
affect their market price, causing their price to rise more in
response to buying demand and fall more in response to selling
pressure than is the case with larger capitalization companies.
These market risks will affect the Fund's net asset values per
share, which will fluctuate as the values of the Fund's portfolio
securities change. Not all stock prices change uniformly or at the
same time, not all stock markets move in the same direction at the
same time, and other factors can affect a particular stock's prices
(for example, poor earnings reports by an issuer, loss of major
customers, major litigation against an issuer, and 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. There is no limit to
the amount of such foreign securities the Fund may acquire. The
Fund may buy securities in any country, including emerging market
countries. The Fund presently does not intend to purchase
securities issued by emerging market countries, or by companies
located in those countries. Foreign currency will be held by the
Fund only in connection with the purchase or sale of foreign
securities.
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. Certain developing countries may have relatively
unstable governments, economies based on only a few industries that
are dependent upon international trade and reduced secondary market
liquidity. Foreign investment in certain emerging market countries
is restricted or controlled in varying degrees. In the past,
securities in emerging countries have experienced greater price
movement, both positive and negative, than securities of companies
located in developed countries. More information about the risks
and potential rewards of investing in foreign securities is
contained in the Statement of Additional Information.
-- Warrants and Rights. The Fund may invest up to 5% of its
total assets in rights or warrants which entitle the holder to buy
equity securities at a specific price for a specific period of
time.
-- Portfolio Turnover. A change in the securities held by the
Fund is known as "portfolio turnover." The Fund may engage in
short-term trading to try to achieve its objective. It is
anticipated that the Fund's annual portfolio turnover rate will not
exceed 100%. The "Financial Highlights," above, show the Fund's
portfolio turnover rate during past fiscal years. High turnover
and short-term trading may cause the Fund to have relatively larger
commission expenses and transaction costs than funds that do not
engage in short-term trading. Additionally, high portfolio
turnover may affect the ability of the Fund to qualify as a
"regulated investment company" under the Internal Revenue Code for
tax deductions for dividends and capital gain 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 reduce some of the
risks.
-- Temporary Defensive Investments. In times of unstable
market or economic conditions, when the Sub-Adviser determines it
appropriate to do so to attempt to reduce fluctuations in the value
of the Fund's net assets, the Fund may assume a temporary defensive
position and invest an unlimited amount of assets in money market
instruments of the type identified on page __ under "Investment
Policies and Strategies."
-- When-Issued and Delayed Delivery Transactions. The Fund
may purchase securities on a "when-issued" basis, and may purchase
or sell such securities on a "delayed delivery" basis. These terms
refer to securities whose terms and indenture are available and for
which a market exists, but which are not available for immediate
delivery. The Fund does not intend to make such purchases for
speculative purposes. During the period between the purchase and
settlement, the underlying securities are subject to market
fluctuations and no interest accrues prior to delivery of the
securities.
-- Repurchase Agreements. The Fund may enter into repurchase
agreements. They are primarily used for liquidity purposes. In a
repurchase transaction, the Fund buys a security and simultaneously
sells it to the vendor for delivery at a future date. Repurchase
agreements must be fully collateralized. However, if the vendor
fails to pay the resale price on the delivery date, the Fund may
incur costs in disposing of the collateral and may experience
losses if there is any delay in its ability to do so. 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. Repurchase agreements
with a maturity beyond seven days are subject to the Fund's
limitations on investments in illiquid and restricted securities,
discussed below.
-- Illiquid Securities. Under the policies established by the
Board of Trustees, the Manager determines the liquidity 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. As a
fundamental policy, the Fund will not invest more than 10% of its
total assets in illiquid securities. Restricted securities are
considered illiquid securities for purposes of this restriction.
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. Certain restricted securities,
eligible for resale to qualified institutional purchasers, are not
subject to that limit.
-- 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 10% of the Fund's
total assets. 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.
-- Hedging. As described below, the Fund may purchase and
sell certain kinds of futures contracts, put and call options,
forward contracts, and options on securities, futures and broadly-
based stock indices. These are all referred to as "hedging
instruments." The Fund does not use hedging instruments for
speculative purposes, and has limits on the use of them, described
below. The hedging instruments the Fund may use are described
below and in greater detail in "Other Investment Techniques and
Strategies" in the Statement of Additional Information.
The Fund may buy and sell options, futures and forward
contracts for a number of purposes. It may do so to try to manage
its exposure to the possibility that the prices of its portfolio
securities may decline, or to establish a position in the
securities market as a temporary substitute for purchasing
individual securities. It may do so to try to manage its exposure
to changing interest rates. Some of these strategies, such as
selling futures, buying puts and writing covered calls, hedge the
Fund's portfolio against price fluctuations. Other hedging
strategies, such as buying futures and call options, tend to
increase the Fund's exposure to the securities market.
Forward contracts are used to try to manage foreign currency
risks on the Fund's foreign investments. Foreign currency options
are used to try to protect against declines in the dollar value of
foreign securities the Fund owns, or to protect against an increase
in the dollar cost of buying foreign securities. Writing covered
call options may also provide income to the Fund for liquidity
purposes or to raise cash to distribute to shareholders.
- 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). The Fund will not
enter into any financial futures or options contract unless such
transactions are for bona fide hedging purposes, or for other
purposes only if the aggregate initial margins and related option
premiums would not exceed 5% of the Fund's total assets.
- Put and Call Options. The Fund may buy and sell certain
kinds of put options (puts) and call options (calls). Calls the
Fund buys or sells must be listed on a securities or commodities
exchange, or quoted on the automated quotation system of NASDAQ, or
traded in the over-the-counter market. In the case of puts and
calls on a foreign currency, they must be traded on a securities or
commodities exchange or in the over-the-counter market, or must be
quoted by recognized dealers in those options.
The Fund may buy calls on securities, broadly-based stock
indices, or Stock Index Futures. The Fund may buy calls to
terminate its obligation on a call the Fund previously wrote.
The Fund may write (that is, sell) covered call options. 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. 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. After the Fund writes a
call, not more than 25% of the Fund's assets may be subject to
calls. When the Fund writes 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).
The Fund may purchase and sell put options. Buying a put on
an investment gives the Fund the right to sell the investment at a
set price to a seller of a put on that investment. The Fund can
buy only those puts that relate to securities the Fund owns,
broadly-based stock indices or Stock Index Futures. The Fund may
write puts on broadly-based stock indices or Stock Index Futures,
but only if those puts are covered by segregated liquid assets.
- 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.
Other Investment Restrictions.
The Fund has certain investment restrictions that 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;
- Purchase more than 10% of any class of security of any
issuer (other than the U.S. Government or any of its agencies of
instrumentalities), with all outstanding debt securities and all
preferred stock of an issuer each being considered as one class;
- 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);
- Borrow money in excess of 10% of the value of the Fund's
total assets; the Fund may borrow only from banks and only as
temporary measure for extraordinary or emergency purposes and will
make no additional investments while such borrowings exceed 5% of
the Fund's total assets;
- Invest more than 10% 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; and
- 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 continuous operation.
Notwithstanding the above restriction on illiquid securities,
the Fund may purchase securities which are not registered under the
Securities Act of 1933 (the "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,
provided that the Sub-Advisor, under guidelines established by the
Fund's Board of Trustees, determines that an adequate trading
market exists for that security.
The Fund has undertaken, in connection with the qualification
of its shares for sale in certain states, to limit investments in
restricted securities to 5% of its total assets excluding
restricted securities that may be resold to "qualified
institutional buyers". This undertaking will terminate if the Fund
ceases to qualify its shares for sale in those states, or if the
applicable state rule or regulations are amended.
All of the percentage restrictions described above and
elsewhere in this Prospectus and in the Statement of Additional
Information 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 is one of four portfolios of
Oppenheimer Quest For Value Funds, an open-end management
investment company organized as a Massachusetts business trust in
April, 1987. The Fund is an open-end, diversified management
investment company, with an unlimited number of authorized shares
of beneficial interest.
The Fund is governed by a Board of Trustees, which is
responsible under Massachusetts law for protecting the interests of
shareholders. The Trustees meet periodically throughout the year
to oversee the Fund's activities, review its performance, and
review the actions of the Manager. "Trustees and Officers of the
Fund" in the Statement of Additional Information names the Trustees
and provides more information about them and the officers of the
Fund. Although the Fund is not required by law to hold annual
meetings, it may hold shareholder meetings from time to time on
important matters, and shareholders have the right under certain
circumstances to call a meeting to remove a Trustee or to take
other action described in the Fund's Declaration of 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 on matters
submitted to the vote of shareholders. 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. OpCap Advisors is a majority-owned subsidiary of Oppenheimer
Capital, a registered investment advisor, whose employees perform
all investment advisory services provided to the Fund by OpCap
Advisors. 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 November 24, 1995, 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, effective
November 24, 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 Managers. The portfolio managers of the Fund are
Ms. Jenny Beth Jones, Senior Vice President of Oppenheimer Capital,
and Mr. Louis Goldstein, Vice President of Oppenheimer Capital.
Ms. Jones has been a portfolio manager of the Fund since 1990, and
Mr. Goldstein has been a portfolio manager of the Fund since
January, 1995.
-- Fees and Expenses. Under the Investment Advisory
Agreement, the Fund pays the Manager an annual fee based on the
Fund's daily net assets, as follows: 1% of the first $400 million
of net assets, .90% of the next $400 million, and .85% of net
assets over $800 million. This management fee is higher than that
paid by most other investment companies. The Fund also reimburses
the Manager for bookkeeping and accounting services performed on
behalf of the Fund.
The Manager will pay OpCap Advisors 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, OpCap
Advisors may consider their record of sales of shares of the Fund.
Further information about the Fund's brokerage policies and
practices is set forth in "Brokerage Policies of the Fund" in the
Statement of Additional Information.
- -- 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
Distributor. The Distributor also distributes the shares of other
mutual funds managed by the Manager (the "Oppenheimer funds") and
is sub-distributor for funds managed by a subsidiary of the
Manager.
-- Transfer Agent and Shareholder Servicing Agent. The
transfer agent and shareholder servicing agent is OppenheimerFunds
Services. 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.
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
investment in the Fund over various periods, and do not show the
performance of each shareholder's investment (which will vary if
dividends are received in cash or shares are sold or additional
shares are purchased). The Fund's performance information may help
you see how well your 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 considering the effect
of the sales charge, and those returns would be reduced if sales
charges were deducted.
How Has the Fund Performed? Below is a discussion of the Fund's
performance during its last fiscal year ended October 31, 1995,
followed by a graphical comparison of the Fund's performance to
appropriate broad-based market indices. Prior to November 22,
1995, the Fund was known as Quest for Value Small Capitalization
Fund, and the Sub-Adviser was the Fund's investment manager.
-- Management's Discussion of Performance. During the Fund's
fiscal year ended October 31, 1995, common stocks of smaller
companies generally increased in value, but at a less rapid rate
than larger capitalization issues. The Fund underperformed the
small-cap market for two main reasons: it was underweighted in
high-technology and financial service company stocks, the small-cap
market's strongest sectors during the period, and it held above-
average cash reserves through most of the year in a rising market.
The Manager invests conservatively in the small-cap sector, seeking
to preserve capital and achieve growth by purchasing the shares of
companies believed by the Sub-Adviser to be undervalued with
established operating histories, excellent balance sheets and cash
flow, and skilled, experienced managements who are dedicated to the
creation of shareholder value. As of October 31, 1995, the Fund
had a diversified portfolio of common stocks of 76 companies, no
one of which account for more than 4% of the Fund's net assets.
Major industry positions were in the real estate sector, 9.6% of
the Fund's net assets; electronics, 8.9%; energy 6.8%; and
advertising, 6.2%.
-- Comparing the Fund's Performance to the Market. The graphs
below show the performance of a hypothetical $10,000 investment in
each class of shares of the Fund held until October 31, 1995. In
the case of Class A shares, performance is measured from the
commencement of operations on January 1, 1989, and in the case of
Class B and Class C shares, from inception of those classes on
September 1, 1993.
The Fund's performance is compared to the performance of the
Russell 2000 Index. The Russell 2000 Index is an index of the 2000
smallest securities in the Russell 3000 Index with market values
ranging from $25 million to $275 million. These securities
represent approximately 7% of the Russell 3000 total market
capitalization.
Index performance reflects the reinvestment of dividends but
does not consider the effect of capital gains or transaction costs,
and none of the data in the graphs below shows the effect of taxes.
Moreover, index performance data does not reflect any assessment of
the risk of the investments included in the index. The Fund's
performance reflects the effect of Fund business and operating
expenses. While index comparisons may be useful to provide a
benchmark for the Fund's performance, it must be noted that the
Fund's investments are not limited to the securities in the index
shown.
Oppenheimer Quest Small Cap Value Fund
Comparison of Change in Value
of $10,000 Hypothetical Investments
in Oppenheimer Quest Small Cap Value Fund
and the Russell 2000 Index
[Graph]
Past Performance is not predictive of future performance.
Oppenheimer Quest Small Cap Value Fund
Average Annual Total Returns of the Fund at 10/31/95
- ----------------------------------------------------
Class A Shares(1)
- -----------------
1-Year 5-Year Life
------ ------ ----
2.56% 18.23% 11.15%
Class B Shares(2)
- -----------------
1-Year Life
------ ----
3.17% 3.49%
Class C Shares(3)
- -----------------
1-Year Life
------ ----
7.24% 4.81%
- ---------------------
Total returns and the ending account values in the graphs reflect
reinvestment of all dividends and capital gains distributions.
(1) The commencement of operations of the Fund (Class A shares) was
1/1/89. Class A returns are shown net of the current applicable
5.75% maximum initial sales charge.
(2) Class B shares of the Fund were first publicly offered on
9/01/93. Returns are shown net of the applicable 5% and 3%
contingent deferred sales charge, respectively, for the 1-year
period and life of the class. The ending account value in the
graph is net of the applicable 3% contingent deferred sales charge.
(3) Class C shares of the Fund were first publicly offered on
9/01/93. The 1-year return is shown net of the applicable 1%
contingent deferred sales charge.
About Your Account
How to Buy Shares
Classes of Shares. The Fund offers investors three different
classes of shares. The different classes of shares represent
investments in the same portfolio of securities but 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 Funds,
you will not pay an initial sales charge, but if you sell any of
those shares within 18 months of buying them, you may pay a
contingent deferred sales charge 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. Class A shares of the
Fund purchased subject to a contingent deferred sales charge on or
prior to November 24, 1995 will be subject to a contingent deferred
sales charge at the applicable rate set forth in Appendix A to this
Prospectus. 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 and how long you plan to
hold your investment. If your goals and objectives change over
time and you plan to purchase additional shares, you should re-
evaluate those factors to see if you should consider another class
of shares.
In the following discussion, to help provide you and your
financial advisor with a framework in which to choose a class, we
have made some assumptions using a hypothetical investment in the
Fund. We used the sales charge rates that apply to each class, and
considered the effect of the 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
of shares you invest in.
The factors discussed below are not intended to be investment
advice or recommendations, because each investor's financial
considerations are different. The discussion below of the factors
to consider in purchasing a particular class of shares assumes that
you will purchase only one class of shares and not a combination of
shares of different classes.
-- How Long Do You Expect to Hold Your Investment? While
future financial needs cannot be predicted with certainty, knowing
how long you expect to hold your investment will assist you in
selecting the appropriate class of shares. 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 Oppenheimer
funds (a list of them appears in the Statement of Additional
Information, or you can ask your dealer or call the Transfer
Agent), or by reinvesting distributions from unit investment trusts
that have made arrangements with the Distributor.
-- How Are Shares Purchased? You can buy shares several ways:
through any dealer, broker or financial institution that has a
sales agreement with the Distributor, directly through the
Distributor, or automatically from your bank account through an
Asset Builder Plan under the OppenheimerFunds AccountLink service.
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 AccountLink on the
regular business day the Distributor is instructed by you to
initiate the ACH transfer to buy shares. You can provide those
instructions automatically, under an Asset Builder Plan, described
below, or by telephone instructions using OppenheimerFunds
PhoneLink, also described below. You should request AccountLink
privileges on the application or dealer settlement instructions
used to establish your account. Please refer to "AccountLink" below
for more details.
-- Asset Builder Plans. You may purchase shares of the Fund
(and up to four other 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.
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 Oppenheimer funds 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 class of the Oppenheimer funds 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 Oppenheimer funds you purchased subject to the Class
A contingent deferred sales charge. Class A shares of the Fund
purchased subject to a contingent deferred sales charge on or prior
to November 24, 1995 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 18 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 Oppenheimer funds (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 Oppenheimer funds to
reduce the sales charge rate that applies to current purchases of
Class A shares. You can also count Class A and Class B shares of
Oppenheimer funds you previously purchased subject to an initial or
contingent deferred sales charge to reduce the sales charge rate
for current purchases of Class A shares, provided that you still
hold that investment in one of the Oppenheimer funds. The value of
those shares will be based on the greater of the amount you paid
for the shares or their current value (at offering price). The
Oppenheimer funds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from
the Transfer Agent. The reduced sales charge will apply only to
current purchases and must be requested when you buy your shares.
-- Letter of Intent. Under a Letter of Intent, if you
purchase Class A shares or Class A and Class B shares of the Fund
and other Oppenheimer funds during a 13-month period, you can
reduce the sales charge rate that applies to your purchases of
Class A shares. The total amount of your intended purchases of
both Class A and Class B shares will determine the reduced sales
charge rate for the Class A shares purchased during that period.
This can include purchases made up to 90 days before the date of
the Letter. More information is contained in the Application and
in "Reduced Sales Charges" in the Statement of Additional
Information.
-- Waivers of Class A Sales Charges. The Class A sales
charges are not imposed in the circumstances described below.
There is an explanation of this policy in "Reduced Sales Charges"
in the Statement of Additional Information.
Waivers of Initial and Contingent Deferred Sales Charges for
Certain Purchasers. Class A shares purchased by the following
investors are not subject to any Class A sales charges:
- the Manager or its affiliates;
- present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced
Sales Charges" in the Statement of Additional Information) of the
Fund, the Manager and its affiliates, and retirement plans
established by them for their employees;
- registered management investment companies, or separate
accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose;
- dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
- employees and registered representatives (and their spouses)
of dealers or brokers described above or financial institutions
that have entered into sales arrangements with such dealers or
brokers (and are identified to the Distributor) or with the
Distributor; the purchaser must certify to the Distributor at the
time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor
children);
- dealers, brokers or registered investment advisers that have
entered into an agreement with the Distributor (1) providing
specifically for the use of shares of the Fund in particular
investment products made available to their clients (those clients
may be charged a transaction fee by their dealer, broker or advisor
for the purchase or sale of Fund shares) and (2) to sell shares of
defined contribution employee retirement plans for which the
dealer, broker or investment adviser provides administrative
services;
- 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 Oppenheimer funds
(other than Oppenheimer Cash Reserves) or unit investment trusts
for which reinvestment arrangements have been made with the
Distributor; or
- 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
- 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% annually 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. This Plan is described below under "Buying
Class C Shares - Distribution and Service Plans for Class B and
Class C Shares."
-- Waivers of Class B Sales Charges. The Class B contingent
deferred sales charge will not apply to shares purchased in certain
types of transactions, nor will it apply to shares redeemed in
certain circumstances, as described below under "Buying Class C
Share - 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.
The Distributor currently 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 retains the asset-based sales
charge during the first year Class C shares are outstanding to
recoup sales commissions it has paid, the advances of service fee
payments it has made, and its financing costs and other expenses.
The Distributor plans to pay the asset-based sales charge as an
ongoing commission to the dealer on Class C shares that have been
outstanding for a year or more.
-- Distribution and Service Plans for Class B and Class C
Shares. The Fund has adopted Distribution and Service Plans for
Class B and Class C shares to compensate the Distributor for
distributing Class B and Class C shares and servicing accounts.
Under the Plans, the Fund pays the Distributor an annual "asset-
based sales charge" of 0.75% per year on Class B shares that are
outstanding for 6 years or less and on Class C shares. The
Distributor also receives a service fee of 0.25% per year.
Under each Plan, both fees are computed on the average of the
net asset value of shares in the respective class, determined as of
the close of each regular business day during the period. The
asset-based sales charge allows investors to buy Class B or Class
C shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell those shares.
The Distributor uses the service fees to compensate dealers
for providing personal services for accounts that hold Class B or
Class C shares. Those services are similar to those provided under
the Class A Service Plan, described above. The Distributor pays
the 0.25% service fees to dealers in advance for the first year
after Class B or Class C shares have been sold by the dealer and
retains the service fee paid by the Fund in that year. After the
shares have been held for a year, the Distributor pays the service
fees to dealers on a quarterly basis.
The Distributor currently pays sales commissions of 3.75%
of the purchase price of Class B shares to dealers from its own
resources at the time of sale. The Fund pays the asset-based sales
charge to the Distributor for its services rendered in connection
with the distribution of Class B and Class C 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.
The Distributor currently 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 retains the asset-based sales
charge during the first year Class C shares are outstanding to
recoup sales commissions it has paid, the advances of service fee
payments it has made, and its financing costs and other expenses.
The Distributor plans to pay the asset-based sales charge as an
ongoing commission to the dealer on Class C shares that have been
outstanding for a year or more.
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, as appropriate, before its Plan was terminated.
-- Waivers of Class B and Class C Sales Charges. The Class B
and Class C contingent deferred sales charges will not be applied
to shares purchased in certain types of transactions nor will it
apply to Class B and Class C shares redeemed in certain
circumstances as described below. The reasons for this policy are
in "Reduced Sales Charges" in the Statement of Additional
Information.
Waivers for Redemptions in Certain Cases. The Class B and
Class C contingent deferred sales charges will be waived for
redemptions of shares in the following cases if the Transfer Agent
is notified that these conditions apply to the redemption:
- distributions to participants or beneficiaries from
Retirement Plans, if the distributions are made (a) under an
Automatic Withdrawal Plan after the participant reaches age 59-1/2,
as long as the payments are no more than 10% of the account value
annually (measured from the date the Transfer Agent 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 Investors Services
AccountLink. OppenheimerFunds AccountLink links your Fund account
to your account at your bank or other financial institution to
enable you to send money electronically between those accounts to
perform a number of types of account transactions. These include
purchases of shares by telephone (either through a service
representative or by PhoneLink, described below), automatic
investments under Asset Builder Plans, and sending dividends and
distributions or Automatic Withdrawal Plan payments directly to
your bank account. Please refer to the Application for details or
call the Transfer Agent for more information.
AccountLink privileges should be requested on the Application
you use to buy shares, or on your dealer's settlement instructions
if you buy your shares through your dealer. After your account is
established, you can request AccountLink privileges 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 Oppenheimer funds on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange
Plan. The minimum purchase for each other Oppenheimer funds
account is $25. These exchanges are subject to the terms of the
Exchange Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class A
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
Oppenheimer funds without paying a sales charge. This privilege
applies to Class A shares that you purchased subject to an initial
sales charge and to Class A 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 by selling
(redeeming) some or all of your shares on any regular business day.
Your shares will be sold at the next net asset value calculated
after your order is received and accepted by the Transfer Agent.
The Fund offers you a number of ways to sell your shares: in
writing or by telephone. You can also set up Automatic Withdrawal
Plans to redeem shares on a regular basis, as described above. If
you have questions about any of these procedures, and especially if
you are redeeming shares in a special situation, such as due to the
death of the owner, or from a retirement plan, please call the
Transfer Agent first, at 1-800-525-7048, for assistance.
-- Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must
submit a withholding form with your request to avoid delay. If your
retirement plan account is held for you by your employer, you must
arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the
Statement of Additional Information.
-- Certain Requests Require A Signature Guarantee. To protect
you and each Fund from fraud, certain redemption requests must be
in writing and must include a signature guarantee in the following
situations (there may be other situations also requiring a
signature guarantee):
- You wish to redeem more than $50,000 worth of shares and
receive a check
- The redemption check is not payable to all shareholders
listed on the account statement
- The redemption check is not sent to the address of record on
your account statement
- Shares are being transferred to a Fund account with a
different owner or name
- Shares are redeemed by someone other than the owners (such
as an Executor)
-- Where Can I Have My Signature Guaranteed? The Transfer
Agent will accept a guarantee of your signature by a number of
financial institutions, including: a U.S. bank, trust company,
credit union or savings association, or by a foreign bank that has
a U.S. correspondent bank, or by a U.S. registered dealer or broker
in securities, municipal securities or government securities, or by
a U.S. national securities exchange, a registered securities
association or a clearing agency. If you are signing as a fiduciary
or on behalf of a corporation, partnership or other business, you
must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that
includes:
- Your name
- The Fund's name
- Your Fund account number (from your account statement)
- The dollar amount or number of shares to be redeemed
- Any special payment instructions
- Any share certificates for the shares you are selling,
- The signatures of all registered owners exactly as the
account is registered, and
- Any special requirements or documents requested by the
Transfer Agent to assure proper authorization of the person asking
to sell shares.
Use the following address for Send courier or Express Mail
request by mail: requests to:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Ave., 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
Oppenheimer funds at net asset value per share at the time of
exchange, without sales charge. To exchange shares, you must meet
several conditions:
- Shares of the fund selected for exchange must be available
for sale in your state of residence
- The prospectuses of this Fund and the fund whose shares you
want to buy must offer the exchange privilege
- You must hold the shares you buy when you establish your
account for at least 7 days before you can exchange them; after the
account is open 7 days, you can exchange shares every regular
business day
- You must meet the minimum purchase requirements for the fund
you purchase by exchange
- Before exchanging into a fund, you should obtain and read
its prospectus
Shares of a particular class may be exchanged only for shares
of the same class in the other Oppenheimer funds. For example, you
can exchange Class A shares of this Fund only for Class A shares of
another fund. At present, Oppenheimer Money Market Fund, Inc.
offers only one class of shares, which are considered Class A
shares for this purpose. In some cases, sales charges may be
imposed on exchange transactions. Please refer to "How to Exchange
Shares" in the Statement of Additional Information for more
details.
Exchanges may be requested in writing or by telephone:
-- Written Exchange Requests. Submit an OppenheimerFunds
Exchange Request form, signed by all owners of the account. Send
it to the Transfer Agent at the addresses listed in "How to Sell
Shares."
-- Telephone Exchange Requests. Telephone exchange requests
may be made either by calling a service representative at 1-800-
852-8457 or by using PhoneLink for automated exchanges, by calling
1-800-533-3310. Telephone exchanges may be made only between
accounts that are registered with the same name(s) and address.
Shares held under certificates may not be exchanged by telephone.
You can find a list of Oppenheimer funds currently available
for exchanges in the Statement of Additional Information or 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.
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 Oppenheimer Fund
Account. You can reinvest all distributions in another Oppenheimer
fund account you have established.
Taxes. If your account is not a tax-deferred retirement account,
you should be aware of the following tax implications of investing
in 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 Fund
Who Were 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 of the Fund 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 Global Income Fund, Quest for Value New York
Tax-Exempt Fund, Quest for Value National Tax-Exempt Fund and Quest
for Value California Tax-Exempt Fund when those funds merged into
various Oppenheimer funds on November 24, 1995. The funds listed
above are referred to in this Prospectus as the "Former Quest for
Value Funds." The waivers of initial and contingent deferred sales
charges described in this Appendix apply to shares of the Fund (i)
acquired by such shareholder pursuant to an exchange of shares of
one of the Oppenheimer funds that was one of the Former Quest for
Value Funds or (ii) received by such shareholder pursuant to the
merger of any of the Former Quest for Value Funds into an
Oppenheimer fund on November 24, 1995.
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
Number of as a as a Percentage
Eligible Percentage Percentage of
Employees of Offering of Amount Offering
or Members Price Invested Price
- --------------------------------------------------------------
9 or fewer 2.50% 2.56% 2.00%
- --------------------------------------------------------------
At least 10 but not
more than 49 2.00% 2.04% 1.60%
For purchases by Qualified Retirement plans and Associations
having 50 or more eligible employees or members, there is no
initial sales charge on purchases of Class A shares, but those
shares are subject to the Class A contingent deferred sales charge
described on pages __ and __ of this Prospectus.
Purchases made under this arrangement qualify for the lower of
the sales charge rate in the table based on the number of eligible
employees in a Qualified Retirement Plan or members of an
Association or the sales charge rate that applies under the Rights
of Accumulation described above in the Prospectus. In addition,
purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they
qualified to purchase shares of any of the Former Quest For Value
Funds by virtue of projected contributions or investments of $1
million or more each year. Individuals who qualify under this
arrangement for reduced sales charge rates as members of
Associations, or as eligible employees in Qualified Retirement
Plans also may purchase shares for their individual or custodial
accounts at these reduced sales charge rates, upon request to the
Fund's Distributor.
- -- Special Class A Contingent Deferred Sales Charge Rates
Class A shares of the Fund purchased by exchange of shares of other
Oppenheimer funds that were acquired as a result of the merger of
Former Quest for Value Funds into those Oppenheimer funds, and
which shares were subject to a Class A contingent deferred sales
charge prior to November 24, 1995 will be subject to a contingent
deferred sales charge at the following rates: if they are redeemed
within 18 months of the end of the calendar month in which they
were purchased, at a rate equal to 1.0% if the redemption occurs
within 12 months of their initial purchase and at a rate of 0.50 of
1.0% if the redemption occurs in the subsequent six months. Class
A shares of any of the Former Quest for Value Funds purchased
without an initial sales charge on or before November 22, 1995 will
continue to be subject to the applicable contingent deferred sales
charge in effect as of that date as set forth in the then-current
prospectus for such fund.
- -- Waiver of Class A Sales Charges for Certain Shareholders
Class A shares of the Fund purchased by the following investors are
not subject to any Class A initial or contingent deferred sales
charges:
- Shareholders of the Fund who were shareholders of the AMA
Family of Funds on February 28, 1991 and who acquired shares of any
of the Former Quest for Value Funds by merger of a portfolio of the
AMA Family of Funds.
- Shareholders of the Fund who acquired shares of any Former
Quest for Value Fund by merger of any of the portfolios of the
Unified Funds.
- -- Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions
The Class A contingent deferred sales charge will not apply to
redemptions of Class A shares of the Fund purchased by the
following investors who were shareholders of any Former Quest for
Value Fund:
- Investors who purchased Class A shares from a dealer that is
or was not permitted to receive a sales load or redemption fee
imposed on a shareholder with whom that dealer has a fiduciary
relationship under the Employee Retirement Income Security Act of
1974 and regulations adopted under that law.
- Participants in Qualified Retirement Plans that purchased
shares of any of the Former Quest For Value Funds pursuant to a
special "strategic alliance" with the distributor of those funds.
The Fund's Distributor will pay a commission to the dealer for
purchases of Fund shares as described above in "Class A Contingent
Deferred Sales Charge."
Class A, Class B and Class C Contingent Deferred Sales Charge
Waivers
- -- Waivers for Redemptions of Shares Purchased Prior to March 6,
1995
In the following cases, the contingent deferred sales charge will
be waived for redemptions of Class A, B or C shares of the Fund
acquired by merger of a Former Quest for Value Fund into the Fund
or by exchange from an Oppenheimer fund that was a Former Quest for
Value Fund or into which such fund merged, if those shares were
purchased prior to March 6, 1995: in connection with
(i) distributions to participants or beneficiaries of plans
qualified under Section 401(a) of the Internal Revenue Code or from
custodial accounts under Section 403(b)(7) of the Code, Individual
Retirement Accounts, deferred compensation plans under Section 457
of the Code, and other employee benefit plans, and returns of
excess contributions made to each type of plan, (ii) withdrawals
under an automatic withdrawal plan holding only either Class B or
C shares if the annual withdrawal does not exceed 10% of the
initial value of the account, and (iii) liquidation of a
shareholder's account if the aggregate net asset value of shares
held in the account is less than the required minimum value of such
accounts.
- -- Waivers for Redemptions of Shares Purchased on or After March 6,
1995 but Prior to November 24, 1995.
In the following cases, the contingent deferred sales charge will
be waived for redemptions of Class A, B or C shares of the Fund
acquired by merger of a Former Quest for Value Fund into the Fund
or by exchange from an Oppenheimer fund that was a Former Quest For
Value Fund or into which such fund merged, if those shares were
purchased on or after March 6, 1995, but prior to November 24,
1995: (1) distributions to participants or beneficiaries from
Individual Retirement Accounts under Section 408(a) of the Internal
Revenue Code or retirement plans under Section 401(a), 401(k),
403(b) and 457 of the Code, if those distributions are made either
(a) to an individual participant as a result of separation from
service or (b) following the death or disability (as defined in the
Code) of the participant or beneficiary; (2) returns of excess
contributions to such retirement plans; (3) redemptions other than
from retirement plans following the death or disability of the
shareholder(s) (as evidenced by a determination of total disability
by the U.S. Social Security Administration); (4) withdrawals under
an automatic withdrawal plan (but only for Class B or C shares)
where the annual withdrawals do not exceed 10% of the initial value
of the account; and (5) liquidation of a shareholder's account if
the aggregate net asset value of shares held in the account is less
than the required minimum account value. A shareholder's account
will be credited with the amount of any contingent deferred sales
charge paid on the redemption of any Class A, B or C shares of the
Fund described in this section if within 90 days after that
redemption, the proceeds are invested in the same Class of shares
in this Fund or another Oppenheimer fund.
Special Dealer Arrangements
Dealers who sold Class B shares of a Former Quest for Value Fund to
Quest for Value prototype 401(k) plans that were maintained on the
TRAC-2000 recordkeeping system and that were transferred to an
OppenheimerFunds prototype 401(k) plan shall be eligible for an
additional one-time payment by the Distributor of 1% of the value
of the plan assets transferred, but that payment may not exceed
$5,000 as to any one plan.
Dealers who sold Class C shares of a Former Quest for Value Fund to
Quest for Value prototype 401(k) plans that were maintained on the
TRAC-2000 recordkeeping system and (i) the shares held by those
plans were exchanged for Class A shares, or (ii) the plan assets
were transferred to an OppenheimerFunds prototype 401(k) plan,
shall be eligible for an additional one-time payment by the
Distributor of 1% of the value of the plan assets transferred, but
that payment may not exceed $5,000.
<PAGE>
<PAGE>
SCHEDULE TO PROSPECTUS OF
OPPENHEIMER QUEST SMALL CAP VALUE FUND
Graphic material included in Prospectus of Oppenheimer Quest
Small Cap Value Fund: "Comparison of Total Return of Oppenheimer
Quest Small Cap Value Fund with the Russell 2000 Index - Change in
Value of $10,000 Hypothetical Investments in Class A, Class B and
Class C Shares of Oppenheimer Quest Small Cap Value Fund and the
Russell 2000 Index."
Linear graphs will be included in the Prospectus of
Oppenheimer Quest Small Cap Value Fund (the "Fund") depicting the
initial account value and subsequent account value of a
hypothetical $10,000 investment in the Fund. In the case of the
Fund's Class A shares, that graph will cover the period from
inception (1/1/89) through 10/31/95, and in the case of the Fund's
Class B and Class C shares, will cover the period from the
inception of the class (September 2, 1993) through 10/31/95. The
graph will compare such values with hypothetical $10,000
investments over the same time periods in the Russell 2000 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 and Russell 2000 Index,
is set forth in the Prospectus under "Performance of the Fund -
Comparing the Fund's Performance to the Market."
Oppenheimer
Fiscal Quest Small Cap Russell
Period Ended Fund A 2000 Index
- ------------ --------------- ----------
01/03/89 $ 9,425 $10,000
10/31/89 $10,283 $11,504
10/31/90 $ 8,398 $ 8,363
10/31/91 $13,018 $13,265
10/31/92 $14,528 $14,523
10/31/93 $18,917 $19,227
10/31/94 $18,924 $19,180
10/31/95 $20,593 $22,699
Oppenheimer
Fiscal Quest Small Cap Russell
Period Ended Fund B 2000 Index
- ------------ --------------- ----------
9/01/93(2) $10,000 $10,000
10/31/93 $10,273 $10,503
10/31/94 $10,233 $10,477
10/31/95 $10,771 $12,400
Oppenheimer
Fiscal Quest Small Cap Russell
Period Ended Fund C 2000 Index
9/01/93(2) $10,000 $10,000
10/31/93 $10,279 $10,503
10/31/94 $10,277 $10,477
10/31/95 $11,070 $12,400
- ---------------------
(2) Class B shares of the Fund were first publicly offered on
9/01/93.
(3) Class C shares of the Fund were first publicly offered on
9/01/93.
<PAGE>
Oppenheimer Quest Small Cap Value Fund
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Sub-Adviser
OpCap Advisors
One World Financial Center
New York, New York 10281
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
State Street Bank and Trust Company
P.O. Box 8505
Boston, Massachusetts 02266-8505
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, broker, salesperson or any other person has been
authorized to give any information or to make any representations
other than those contained in this Prospectus or the Statement of
Additional Information, and if given or made, such information and
representations must not be relied upon as having been authorized
by the Fund, Oppenheimer Management Corporation, Oppenheimer Funds
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\q251psp<PAGE>
<PAGE>
OPPENHEIMER QUEST SMALL CAP 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.
<TABLE>
<CAPTION>
Contents
Page
<S>
<C>
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: Description of Ratings A-1
Appendix B: Corporate Industry Classifications B-1
</TABLE>
<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.
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 or
depositories holding them must be approved by the Corporation's
Board of Directors to the extent that approval is required under
applicable rules of the Securities and Exchange Commission.
- 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.
- Emerging Market Countries: Certain developing countries may
have relatively unstable governments, economies based on only a few
industries that are dependent upon international trade, and reduced
secondary market liquidity. Foreign investment in certain emerging
market countries is restricted or controlled in varying degrees.
In the past, securities in these countries have experienced greater
price movement, both positive and negative, than securities of
companies located in developed countries. Lower-rated high-
yielding emerging market securities may be considered to have
speculative elements.
-- U.S. Government Securities. Obligations of U.S. Government
agencies or instrumentalities (including mortgage-backed
securities) may or may not be guaranteed or supported by the "full
faith and credit" of the United States. Some are backed by the
right of the issuer to borrow from the U.S. Treasury; others, by
discretionary authority of the U.S. Government to purchase the
agencies' obligations; while others are supported only by the
credit of the instrumentality. All U.S. Treasury obligations are
backed by the full faith and credit of the United States. If the
securities are not backed by the full faith and credit of the
United States, the owner of the securities must look principally to
the agency issuing the obligation for repayment and may not be able
to assert a claim against the United States in the event that the
agency or instrumentality does not meet its commitment. The Fund
will invest in U.S. Government Securities of such agencies and
instrumentalities only when the Manager is satisfied that the
credit risk with respect to such instrumentality is minimal.
Money Market Securities. As stated in the Prospectus, the
Fund typically invests a part of its assets in money market
securities, and may invest up to 100% of its total assets in money
market securities for temporary defensive purposes. Money market
securities in which the Fund may invest include the following:
- Time Deposits and Variable Rate Notes. The Fund may invest
in fixed time deposits, whether or not subject to withdrawal
penalties. However, investment in such deposits which are subject
to withdrawal penalties, other than overnight deposits, are subject
to the 10% 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 each 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 10% 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.
-- Lower-Grade Securities. The Fund may invest up to 5% of
its total assets in lower-grade securities. Lower-grade securities
(commonly known as "junk bonds") are rated less than "BBB" by
Standard & Poor's Corporation, or less than "Baa" by Moody's
Investors Service, Inc., or have a comparable rating from another
rating organization. If unrated, the security is determined by the
Sub-Adviser to be of comparable quality to securities rated less
than investment grade.
- Special Risks of Lower-Grade Securities. High yield, lower-
grade securities, whether rated or unrated, often have speculative
characteristics. Lower-grade securities have 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.
These risks mean that the Fund may not achieve the expected
income from lower-grade securities, and that the Fund's net asset
value per share may be affected by declines in value of these
securities. However, the Fund's limitations on investments in
these types of securities may reduce some of the risk, as will the
Fund's policy of diversifying its investments.
-- Rights and Warrants. 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.
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. 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 agrees to resell 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.
-- 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 on
Stock Index Futures (as described in the Prospectus). When hedging
to establish a position in the equity securities markets as a
temporary substitute for the purchase of individual equity
securities the Fund may: (i) buy Stock Index Futures, or (ii) buy
calls on Stock Index Futures. Normally, the Fund would then
purchase the equity securities and terminate the hedging portion.
The Fund's strategy of hedging with Futures and options on
Futures will be incidental to the Fund's investment activities in
the underlying cash market. In the future, the Fund may employ
hedging instruments and strategies that are not presently
contemplated but which may be subsequently developed, to the extent
such investment methods are consistent with the Fund's investment
objective, and are legally permissible and disclosed in the
Prospectus. Additional information about the hedging instruments
the Fund may use is provided below.
- Writing Call Options. As described in the Prospectus, the
Fund may write covered calls. When the Fund writes a call on an
investment, it receives a premium and agrees to sell the callable
investment to a purchaser of a corresponding call during the call
period (usually not more than 9 months) at a fixed exercise price
(which may differ from the market price of the underlying
investment) regardless of market price changes during the call
period. To terminate its obligation on a call it has written, the
Fund may purchase a corresponding call in a "closing purchase
transaction." A profit or loss will be realized, depending upon
whether the net of the amount of option transaction costs and the
premium received on the call the Fund has written is more or less
than the price of the call the Fund subsequently purchased. A
profit may also be realized if the call lapses unexercised because
the Fund retains the underlying investment and the premium
received. Those profits are considered short-term capital gains
for Federal income tax purposes, as are premiums on lapsed calls,
and when distributed by the Fund are taxable as ordinary income.
If the Fund could not effect a closing purchase transaction due to
the lack of a market, it would have to hold the callable investment
until the call lapsed or was exercised.
The Fund may also write calls on Futures without owning a
futures contract or deliverable securities, provided that at the
time the call is written, the Fund covers the call by segregating
in escrow an equivalent dollar value of deliverable securities or
liquid assets. The Fund will segregate additional liquid assets if
the value of the escrowed assets drops below 100% of the current
value of the Future. In no circumstances would an exercise notice
as to a Future put the Fund in a short futures position.
- Writing Put Options. A put option on securities gives the
purchaser the right to sell, and the writer the obligation to buy,
the underlying investment at the exercise price during the option
period. Writing a put covered by segregated liquid assets equal to
the exercise price of the put has the same economic effect to the
Fund as writing a covered call. The premium the Fund receives from
writing a put option represents a profit, as long as the price of
the underlying investment remains above the exercise price.
However, the Fund has also assumed the obligation during the option
period to buy the underlying investment from the buyer of the put
at the exercise price, even though the value of the investment may
fall below the exercise price. If the put expires unexercised, the
Fund (as the writer of the put) realizes a gain in the amount of
the premium less transaction costs. If the put is exercised, the
Fund must fulfill its obligation to purchase the underlying
investment at the exercise price, which will usually exceed the
market value of the investment at that time. In that case, the
Fund may incur a loss, equal to the sum of the sale price of the
underlying investment and the premium received minus the sum of the
exercise price and any transaction costs incurred.
When writing put options on securities or on foreign
currencies, to secure its obligation to pay for the underlying
security, the Fund will deposit in escrow liquid assets with a
value equal to or greater than the exercise price of the underlying
securities. The Fund therefore forgoes the opportunity of
investing the segregated assets or writing calls against those
assets. As long as the obligation of the Fund as the put writer
continues, it may be assigned an exercise notice by the exchange or
broker-dealer through whom such option was sold, requiring the Fund
to exchange currency at the specified rate of exchange or to take
delivery of the underlying security against payment of the exercise
price. The Fund may have no control over when it may be required
to purchase the underlying security, since it may be assigned an
exercise notice at any time prior to the termination of its
obligation as the writer of the put. This obligation terminates
upon expiration of the put, or such earlier time at which the Fund
effects a closing purchase transaction by purchasing a put of the
same series as that previously sold. Once the Fund has been
assigned an exercise notice, it is thereafter not allowed to effect
a closing purchase transaction.
The Fund may effect a closing purchase transaction to realize
a profit on an outstanding put 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.
The Trustees have adopted a non-fundamental policy that the
Fund may write covered call options or write covered put options
with respect to not more than 5% of the value of its net assets.
Similarly, the Fund may only purchase call options and put options
with a value of up to 5% of its net assets.
- 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 (although it reserves the right not to
qualify). That qualification enables the Fund to "pass through"
its income and realized capital gains to shareholders without
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 physical commodities or physical commodity
contracts or speculate in financial commodity contracts, but the
Fund is authorized to purchase and sell financial futures contracts
and options on such futures contracts exclusively for hedging and
other non-speculative purposes to the extent specified in the
Prospectus;
- invest in real estate or real estate limited partnerships
(direct participation programs); however, the Fund may purchase
securities of issuers which engage in real estate operations and
securities which are secured by real estate or interests therein;
- purchase securities on margin (except for such short-term
loans as are necessary for the clearance of purchases of portfolio
securities) or make short sales of securities except "against the
box" (collateral arrangements in connection with transactions in
futures and options are not deemed to be margin transactions);
- underwrite securities of other companies except in so far as
the Fund may be deemed to be an underwriter under the Securities
Act of 1933 in disposing of a security ;
- invest in securities of other investment companies except in
connection with a merger, consolidation, reorganization or
acquisition of assets;
- invest in interests in oil, gas or other mineral exploration
or development programs or leases;
- purchase warrants if as a result the Fund would then have
either more than 5% of its total assets (determined at the time of
investment) invested in warrants or more than 2% of its total
assets invested in warrants not listed on the New York or American
Stock Exchange;
- invest in securities of any issuer if, to the knowledge of
the Trust, any officer or trustee of the Trust or any officer or
director of the Manager or Sub-Adviser owns more than 1/2 of 1% of
the outstanding securities of such issuer, and such officers,
trustees and directors who own more than 1/2 of l% own in the
aggregate more than 5% of the outstanding securities of such
issuer;
- pledge its assets or assign or otherwise encumber its assets
in excess of 10% of its net assets (taken at market value at the
time of pledging) and then only to secure borrowings effected
within the limitations set forth in the Prospectus;
- invest for the purpose of exercising control or management
of another company;
- issue senior securities as defined in the 1940 Act except
insofar as the Fund may be deemed to have issued a senior security
by reason of: (a) entering into any repurchase agreement; (b)
borrowing money in accordance with restrictions described above; or
(c) lending portfolio securities; or
- make loans to any person or individual except that portfolio
securities may be loaned by the Fund within the limitations set
forth in the Prospectus.
For purposes of the Fund's policy not to concentrate its
assets described in the Prospectus, the Fund has adopted, as a
matter of non-fundamental policy, the corporate industry
classifications set forth in Appendix B to this Statement of
Additional Information.
How the Fund is Managed
Organization and History. Oppenheimer Quest Small Cap 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. Each Trustee is also a
Trustee of Oppenheimer Quest Growth & Income Value Fund,
Oppenheimer Quest Opportunity Value Fund, Oppenheimer Quest
Officers Fund, Oppenheimer Quest Value Fund, Inc., Oppenheimer
Quest Global Value Fund, Inc. (collectively, the "Oppenheimer Quest
Funds"), Rochester Portfolio Series - Limited-Term New York
Municipal Fund, Rochester Fund Series - The Bond Fund For Growth
and Rochester Fund Municipals (collectively, the "Rochester
Funds"). The address of each is Two World Trade Center, New York,
New York 10048, except as noted. As of January __, 1996, the
trustees and officers of the Trust as a group owned less than 1% of
the outstanding shares of class of the Fund.
Bridget A. Macaskill, Chairman of the Board of Trustees and
President*; Age: 47.
President, Chief Executive Officer and Chief Operating Officer of
OppenheimerFunds, Inc. (the "Manager"); prior thereto, Executive
Vice President and Chief Operating Officer 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., Director of Main Street Advisers,
Inc., and Director of HarbourView Asset Management Corporation, all
of which are subsidiaries of the Manager; a Trustee of certain
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, a national real
estate owner and property management corporation; formerly
President of Essex Management Corporation, a 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 Oppenheimer Quest Value Fund, Inc., Oppenheimer
Quest Global Value Fund, Inc., and 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, a venture capital partnership; formerly a
general partner of Essex Limited Partnership, an investment
partnership; formerly President of Geneve Corp., a venture capital
fund; formerly Chairman of Woodland Capital Corp., a small business
investment company; formerly Vice President of W.R. Grace & Co.
Thomas W, Courtney, Trustee; Age: 62
P.O. Box 580, Sewickley, Pennsylvania 15143
Principal of Courtney Associates, Inc., a venture capital firm;
former General Partner of Trivest Venture Fund, a 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., Oppenheimer Quest Value
Fund, Inc. and Oppenheimer Quest Global Value Fund, 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 or Trustee of Quest
Cash Reserves, Inc., Oppenheimer Quest Global Value Fund, Inc. and
Oppenheimer Quest Value Fund, 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.,
Oppenheimer Quest Value Fund, Inc. and Oppenheimer Quest Global
Value Fund, 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.
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 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 Asset Management
Corporation; 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 the Transfer Agent and Shareholder
Financial Services, Inc., a transfer agent subsidiary of the
Manager; an officer of other Oppenheimer funds.
Jenny Beth Jones, Portfolio Manager; Age: ___
Two World Financial Center, 225 Liberty Street, New York, New York
10080
Senior Vice President of Oppenheimer Capital.
Louis Goldstein, Portfolio Manager; Age: ___
Vice President of Oppenheimer Capital, formerly a security analyst
with Oppenheimer Capital; previously a security analyst with David
J. Greene & Co.
Robert Bishop, Assistant Treasurer; Age: 37
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: 30
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 International Mutual Fund
Supervisor for Brown Brothers, Harriman Co., a bank, and previously
a Senior Fund Accountant for State Street Bank & Trust Company.
Robert G. Zack, Assistant Secretary; Age: 47
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI, SFSI; an officer of other Oppenheimer
funds.
-- 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, who was not a Trustee prior to
November 22, 1995) received the total amounts shown below from (i)
the Fund during its fiscal period ended 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 Estimated
Aggregate Benefits Annual Total
Compensation Accrued as Benefits Compensation
from the Part of Fund Upon From Fund
Name of Person Fund Expenses Retirement Complex
<S> <C> <C> <C> <C>
Paul Y. Clinton $ None None $
Thomas W. Courtney $ None None $
Lacy B. Herrmann $ None None $
George Loft $ None None $
</TABLE>
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. As of January __, 1996, the only
persons who owned of record or were known by the Fund to own
beneficially 5% or more of the Fund's outstanding Class A, Class B
or Class C shares were the following:
Number and Class
of Shares Owned Percentage
Beneficially of Record Name & Address of Class
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 has 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 Funds pursuant to the terms of an
Investment Advisory Agreement dated as of November 22, 1995. OpCap
Advisors, the Fund's Sub-Adviser, served as the Fund's investment
adviser from its inception to 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
or 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.
-- Fees Paid Under the Prior Investment Advisory Agreement.
OpCap Advisors served as investment adviser to the Fund from its
inception until November 22, 1995. Under the prior Investment
Advisory Agreement, the total advisory fees accrued or paid by the
Fund were $756,765 for the fiscal year ended October 31, 1993,
$1,260,578 for the fiscal year ended October 31, 1994, and $_______
for the fiscal year ended October 31, 1995.
For the fiscal years ended October 31, 1993, 1994 and 1995,
the Fund paid or accrued accounting services fees to OpCap
Advisors in the amounts of $23,448, $67,578 and $______,
respectively. Commencing in 1993, the Trust retained the services
of State Street Bank and Trust Company ("State Street") to
calculate the net asset value of each class of shares and to
prepare the books and records. For such services, the Fund accrued
or paid fees for the fiscal years ended October 31, 1993, 1994 and
1995 in the amounts of $27,917, $55,000 and $_______, respectively.
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 OpCap Advisors (previously named Quest for Value
Advisors) pursuant to a separate Subadvisory Agreement dated as of
November 22, 1995 with respect to the Fund.
-- The Subadvisory Agreement. The Subadvisory Agreement
provides that OpCap Advisors shall regularly provide investment
advice with respect to the Fund and invest and reinvest cash,
securities and the property comprising the assets of the Fund.
Under the Subadvisory Agreement, OpCap Advisors 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 OpCap
Advisors an annual fee payable monthly, based on the average daily
net assets of the Fund, equal to 40% of the investment advisory fee
collected by 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, OpCap Advisors 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 its Class A, Class B and Class C shares but is not
obligated to sell a specific number of shares. Expenses normally
attributable to sales, including advertising and the cost of
printing and mailing prospectuses, other than those furnished to
existing shareholders, are borne by the Distributor. During the
Fund's fiscal year ended October 31, 1995, the aggregate amount of
sales charges on sales of the Fund's Class A shares was $________,
of which Quest for Value Distributors, the Fund's distributor prior
to November 22, 1995, retained $_________ and an affiliated broker-
dealer retained $_________, respectively. During the fiscal year
ended October 31, 1995, Quest for Value Distributors received
contingent deferred sales charges of $___________ upon redemption
of Class B shares, and received contingent deferred sales charges
of $___________, upon redemption of Class C shares. 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, the Fund's
Transfer Agent, is responsible for maintaining the Fund's
shareholder registry and shareholder accounting records, and for
shareholder servicing and administrative functions.
- 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 Securities and Exchange Commission ("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 years
ended October 31, 1993, 1994 and 1995:
<TABLE>
<CAPTION> Total Amount of Transactions
For the Total Brokerage Commissions Where Brokerage Commissions
Fiscal Year Brokerage Paid to Opco Paid to Opco
Ended Commissions Dollar Dollar
October 31, Paid Amounts % Amounts %
<S> <C> <C> <C> <C> <C>
1993 $314,604 $234,334 74.5% $56,166,571 71.0%
1994 $300,037 $143,991 48.0% $44,408,800 48.5%
1995 $ $ % $ %
</TABLE>
During the Fund's fiscal year ended October 31, 1995, $_____ was
paid by the Fund to brokers as commissions in return for research
services; the aggregate dollar amount of those transactions was
$3,116,281.
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 SEC rules, 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.
-- 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 )
The "average annual total returns" on an investment in Class
A shares of the Fund (using the method described above) for the one
and five year periods ended October 31, 1995 and for the period
from January 3, 1989 (commencement of operations) to October 31,
1995 were 2.56%, 18.23% and 11.15%, respectively.
The average annual total return on Class B shares for the one-
year period ended October 31, 1995 and for the period September 1,
1993 (commencement of the public offering of the class) through
October 31, 1995 were 3.17% and 3.49%, respectively.
The average annual total return on Class C shares for the one-
year period ended October 31, 1995 and for the period September 1,
1993 (commencement of the public offering of the class) through
October 31, 1995 were 7.24% and 4.81%, respectively.
-- 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 January 3, 1989 (commencement of operations) to October 31,
1995 was _____%. The cumulative total return on Class B shares for
the period from September 1, 1993 (commencement of the public
offering of the class) through October 31, 1995 was _____%. The
cumulative total return on Class C shares for the period from
September 1, 1993 (commencement of the public offering of the
class) through October 31, 1995 was _____%.
-- Total Returns at Net Asset Value. From time to time the
Fund may also quote an "average annual total return at net asset
value" or a "cumulative total return at net asset value" for Class
A, Class B or Class C shares. Each is based on the difference in
net asset value per share at the beginning and the end of the
period for a hypothetical investment in that class of shares
(without considering front-end or contingent deferred sales
charges) and takes into consideration the reinvestment of dividends
and capital gains distributions.
The average annual total returns at net asset value on the
Fund's Class A shares for the one and five year periods ended
October 31, 1995 and for the period from January 1, 1989
(commencement of operations) to October 31, 1995 were ____%, ____%
and ____%, respectively. The cumulative total return at net asset
value on the Fund's Class A shares for the period January 1, 1989
through October 31, 1995 was _______%.
The average annual total returns at net asset value on the
Fund's Class B shares for the one year period ended October 31,
1995 and for the period from September 1, 1993 (commencement of the
public offering of the class) through October 31, 1995 were _____%
and ______%, respectively. The cumulative total return at net
asset value on the Fund's Class B shares for the period September
1, 1993 through October 31, 1995 was _____%.
The average annual total returns at net asset value on the
Fund's Class C shares for the one-year period ended October 31,
1995 and for the period September 1, 1993 (commencement of the
public offering of the class) through October 31, 1995 were _____%
and _____%, respectively. The cumulative total return at net asset
value on the Fund's Class C shares for the period September 1, 1993
through October 31, 1995 was _____%.
Other Performance Comparisons. From time to time the Fund may
publish the ranking of its Class A, Class B or Class C shares by
Lipper Analytical Services, Inc. ("Lipper"), a widely-recognized
independent mutual fund monitoring service. Lipper monitors the
performance of regulated investment companies, including the Fund,
and ranks their performance for various periods based on categories
relating to investment objectives. The performance of the Fund is
ranked against (i) all other funds, (ii) all other __________ funds
and (iii) all other __________________ funds in a specific size
category. The Lipper performance rankings are based on total
returns that include the reinvestment of capital gain distributions
and income dividends but do not take sales charges or taxes into
consideration.
From time to time the Fund may publish the ranking of the
performance of its Class A, Class B or Class C shares by
Morningstar, Inc., an independent mutual fund monitoring service
that ranks mutual funds, including the Fund, monthly in broad
investment categories (equity, taxable bond, municipal bond and
hybrid) based on risk-adjusted investment return. Investment
return measures a fund's three, five and ten-year average annual
total returns (when available) in excess of 90-day U.S. Treasury
bill returns after considering sales charges and expenses. Risk
measures fund performance below 90-day U.S. Treasury bill monthly
returns. Risk and investment return are combined to produce star
rankings reflecting performance relative to the average fund in a
fund's category. Five stars is the "highest" ranking (top 10%),
four stars is "above average" (next 22.5%), three stars is
"average" (next 35%), two stars is "below average" (next 22.5%) and
one star is "lowest" (bottom 10%). Morningstar ranks the Fund in
relation to other rated growth and income funds. Rankings are
subject to change.
The total return on an investment in the Fund's Class A, Class
B or Class C shares may be compared with performance for the same
period of either the Lipper __________ Index, or the Russell 2000
or S&P 500 Index as described in the Prospectus. The performance
of each 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 a separate Distribution and Service Plan
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
reimburse the Distributor for all or a portion of its costs
incurred in connection with the distribution and/or servicing of
the shares of that class, as described in the Prospectus. Each
Plan has been approved by a vote of (i) the Board of 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,
and (ii) the holders of a "majority" (as defined in the Investment
Company Act) of the shares of each class at a meeting on November
3, 1995.
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 shares are
outstanding, and thereafter on a quarterly basis, as described in
the Prospectus. The advance payment is based on the net assets of
shares of that class sold. An exchange of shares does not entitle
the Recipient to an advance service fee payment. In the event
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 Plans,
(ii) compensation and expenses of personnel employed by the
Distributor to support distribution of shares, and (iii) costs of
sales literature, advertising and prospectuses (other than those
furnished to current shareholders).
- The Prior Plans. From the inception date of the Fund
through November 22, 1995, OCC Distributors (formerly known as
Quest for Value Distributors) served as Distributor to the Fund.
OCC Distributors provided distribution services for the Fund's
Class A, Class B and Class C shares pursuant to separate plans
adopted for each class under the Investment Company Act (the "Prior
Plans"). The total distribution fees accrued or paid by Class A,
Class B and Class C shares of the Fund under the Prior Plans for
the fiscal year ended October 31, 1995 were $______, $______ and
$______, respectively.
OCC Distributors has estimated it spent approximately the
following amounts with respect to Class A, B and C shares of the
Fund for the fiscal year ended October 31, 1995:
Printing and
mailing of
prospectuses
Sales to other Compensation
Material and than current Compensation to Sales
Class Advertising shareholders to Dealers
Personnel Other (1)
Class A $ $ $ $ $
Class B $ $ $ $ $
Class C $ $ $ $ $
(1) Includes cost of telephone and overhead.
During the fiscal year ended October 31, 1995, OCC
Distributors received the following compensation with respect to
the Fund:
Portion of
Sales Charge Compensation on
on Class A Shares Redemptions (CDSC's)
$ $
For the fiscal year ended October 31, 1995, OCC Distributors
paid $_____ in 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 net asset values
per share of Class A, Class B and Class C shares of the Fund are
determined as of the close of business of The New York Stock
Exchange (the "Exchange") on each day that the Exchange is open, by
dividing the value of the Fund's net assets attributable to that
class by the total number of Fund shares of that class outstanding.
The Exchange normally closes at 4:00 P.M. New York time, but may
close earlier on some days (for example, in case of weather
emergencies or days falling before a holiday). The Exchange's most
recent annual holiday schedule (which is subject to change) states
that it will close on New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. It may also close on other days. The Fund may
invest a substantial portion of its assets in foreign securities
primarily listed on foreign exchanges which may trade on Saturdays
or customary U.S. business holidays on which the Exchange is
closed. Because the Fund's net asset values will not be calculated
on those days, the Fund's net asset value per share may be
significantly affected on such days when shareholders may not
purchase or redeem shares.
The Trust's Board of Trustees has established procedures for
the valuation of the Trust's securities generally as follows: (i)
equity securities traded on a U.S. securities exchange or on NASDAQ
for which last sale information is regularly reported are valued at
the last reported sale price on their primary exchange or NASDAQ
that day (or, in the absence of sales that day, at values based on
the last sale prices of the preceding trading day or closing bid
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 prices reported on a principal exchange, or, if
none, at the mean between the closing bid and asked prices and
reflect prevailing rates of exchange taken from the closing price
on the London foreign exchange market that day as provided by a
reliable bank, dealer or pricing service.
Trading in securities on European and Asian exchanges and
over-the-counter markets is normally completed before the close of
the Exchange. Events affecting the values of foreign securities
traded in such markets that occur between the time their prices are
determined and the close of the Exchange will not be reflected in
the Fund's calculation of its net asset value unless the Board of
Trustees or the Manager, under procedures established by the Board,
determines that the particular event would materially affect the
Fund's net asset values, 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 values
of securities denominated in foreign currency will be converted to
U.S. dollars at the closing price in the London foreign exchange
market that day as provided by a reliable bank, dealer or pricing
service. In the case of U.S. government securities and corporate
bonds, where last sale information is not generally available, such
pricing procedures may include "matrix" comparisons to the prices
for comparable instruments on the basis of quality, yield, maturity
and other special factors involved. The Trustees will monitor the
accuracy of pricing services by comparing prices used for portfolio
evaluation to actual sales prices of selected securities.
Puts, calls and Futures are valued at the last sales price on
the principal exchanges on which they are traded or on NASDAQ, as
applicable, as determined by a pricing service approved by the
Board of Trustees or by the Manager, or if there are no sales that
day, in accordance with (i) above. When the Fund writes an option,
an amount equal to the premium received by the Fund is included in
the Fund's Statement of Assets and Liabilities as an asset, and an
equivalent deferred credit is included in the liability section.
The deferred credit is adjusted ("marked-to-market") to reflect the
current market value of the option. If a call written by the Fund
is exercised, the proceeds are increased by the premium received.
AccountLink. When shares are purchased through AccountLink, each
purchase must be at least $25.00. Shares will be purchased on the
regular business day the Distributor is instructed to initiate the
Automated Clearing House ("ACH") transfer to buy the shares.
Dividends will begin to accrue on shares purchased by the proceeds
of ACH transfers on the business day the Fund receives Federal
Funds for the purchase through the ACH system before the close of
The New York Stock Exchange. The Exchange normally closes at 4:00
P.M., but may close earlier on certain days. If Federal Funds are
received on a business day after the close of the Exchange, the
shares will be purchased and dividends will begin to accrue on the
next regular business day. The proceeds of ACH transfers are
normally received by the Fund 3 days after the transfers are
initiated. The Distributor and the Fund are not responsible for
any delays in purchasing shares resulting from delays in ACH
transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced
sales charge rate may be obtained for Class A shares under Rights
of Accumulation and Letters of Intent because of the economies of
sales efforts and reduction in expenses realized by the
Distributor, dealers and brokers making such sales. No sales
charge is imposed in certain other circumstances described in the
Prospectus because the Distributor or dealer or broker incurs
little or no selling expenses. The term "immediate family" refers
to one's spouse, children, grandchildren, parents, grandparents,
parents-in-law, sons- and daughters-in-law, 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 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.
Rochester Portfolio Series - Limited-Term New York Municipal Fund
Rochester Fund Series - The Bond Fund For Growth
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 up to 5% of the intended purchase amount specified in the
Letter shall be held in escrow by the Transfer Agent. For example,
if the intended purchase amount is $50,000, the escrow shall be
shares valued in the amount of $2,500 (computed at the public
offering price adjusted for a $50,000 purchase). Any dividends and
capital gains distributions on the escrowed shares will be credited
to the investor's account.
2. If the 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.
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 Directors has the
right to cause the involuntary redemption of the shares held in any
Fund account if the aggregate net asset value of those shares is
less than $200 or such lesser amount as the Board may fix. The
Board of Directors will not cause the involuntary redemption of
shares in an account if the aggregate net asset value of the shares
has fallen below the stated minimum solely as a result of market
fluctuations. Should the Board elect to exercise this right, it
may also fix, in accordance with the 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 and the Fund
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
The Rochester Funds are not Eligible Funds for purposes of the
Exchange Privilege set forth in the Prospectus. As stated in the
Prospectus, shares of a particular class of Oppenheimer funds
having more than one class of shares may be exchanged only for
shares of the same class of other Oppenheimer funds. Shares of the
Oppenheimer funds that have a single class without a class
designation are deemed "Class A" shares for this purpose. All of
the Oppenheimer funds offer Class A, 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 Directors and the Manager might determine in a
particular year that it would be in the best interest of
shareholders for the Fund not to make such distributions at the
required levels and to pay the excise tax on the undistributed
amounts. That would reduce the amount of income or capital gains
available for distribution to shareholders.
If the Fund qualifies as a "regulated investment company"
under the Internal Revenue Code, it will not be liable for Federal
income taxes on amounts paid by it as dividends and 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 are the
independent auditors of the Fund. Their services include examining
the annual financial statements of the Fund as well as other
related services.
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.
<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>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of
Quest for Value Family of Funds:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Opportunity Fund, the Small
Capitalization Fund, the Growth and Income Fund, the U.S. Government Income
Fund, and the Investment Quality Income Fund (constituting part of Quest for
Value Family of Funds, hereafter referred to as the "Fund") at October 31, 1995,
the results of each of their operations for the year then ended, the changes in
each of their net assets for each of the two years in the period then ended and
the financial highlights for each of the periods indicated, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1995 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
December 20, 1995
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
QUEST FOR VALUE FUND, INC.
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 19.9%
AUTOMOTIVE -- 6.0%
Ford Motor Credit Co.
$ 2,400,000 5.72%, 11/20/95 $ 2,392,755
6,600,000 5.73%, 11/27/95 6,572,687
General Motors Acceptance Corp.
335,000 5.74%, 11/20/95 333,985
10,700,000 5.77%, 11/20/95 10,667,415
------------
19,966,842
------------
BANKING -- 1.4%
4,700,000 Norwest Financial, Inc.
5.73%, 11/13/95 4,691,023
------------
COMPUTERS -- 0.1%
430,000 IBM Credit Corp.
5.70%, 11/06/95 429,660
------------
MACHINERY & ENGINEERING -- 2.1%
Deere (John) Capital Corp.
3,300,000 5.71%, 11/13/95 3,293,719
3,600,000 5.75%, 11/13/95 3,593,100
------------
6,886,819
------------
MISCELLANEOUS FINANCIAL SERVICES -- 10.1%
Beneficial Corp.
1,300,000 5.72%, 11/27/95 1,294,629
225,000 5.74%, 11/27/95 224,067
800,000 CIT Group Holdings, Inc.
5.73%, 11/13/95 798,472
Household Finance Corp.
14,200,000 5.72%, 12/04/95 14,125,545
1,000,000 5.73%, 11/27/95 995,862
Merrill Lynch & Co., Inc.
500,000 5.72%, 11/06/95 499,603
15,345,000 5.75%, 11/06/95 15,332,745
------------
33,270,923
------------
OIL/GAS -- 0.2%
500,000 Chevron Oil Finance Co.
5.71%, 11/08/95 499,445
------------
Total Short-Term Corporate Notes
(cost -- $65,744,712) $ 65,744,712
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
CONVERTIBLE CORPORATE BONDS -- 0.7%
REAL ESTATE
$ 2,330,921 Security Capital Realty, Inc. (A)
12.00%, 6/30/14
(cost -- $2,198,259) $ 2,330,921
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
COMMON STOCKS -- 79.3%
AEROSPACE -- 6.0%
127,000 AlliedSignal, Inc. $ 5,397,500
177,000 McDonnell Douglas Corp. 14,469,750
------------
19,867,250
------------
APPAREL -- 1.4%
202,600 Warnaco Group, Inc. (Class A)* 4,710,450
------------
BANKING -- 3.4%
110,000 Citicorp 7,136,250
81,215 Mellon Bank Corp. 4,070,902
------------
11,207,152
------------
CHEMICALS -- 4.5%
60,000 du Pont (E.I.) de Nemours & Co. 3,742,500
81,000 Hercules, Inc. 4,323,375
64,000 Monsanto Co. 6,704,000
------------
14,769,875
------------
CONGLOMERATES -- 1.7%
90,200 General Electric Co. 5,705,150
------------
CONSUMER PRODUCTS -- 1.5%
149,000 Reebok International Ltd. 5,066,000
------------
CONTAINERS -- 2.2%
160,000 Temple - Inland, Inc. 7,280,000
------------
COSMETICS/TOILETRIES -- 1.5%
67,800 Avon Products, Inc. 4,822,275
------------
DRUGS & MEDICAL PRODUCTS -- 4.8%
179,000 Becton, Dickinson & Co. 11,635,000
48,000 Warner-Lambert Co. 4,086,000
------------
15,721,000
------------
</TABLE>
* Non-income producing security.
15
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------
ELECTRONICS -- 5.3%
177,000 Arrow Electronics, Inc.* $ 8,982,750
122,000 Intel Corp. 8,524,750
------------
17,507,500
------------
HEALTHCARE SERVICES -- 2.4%
440,000 Tenet Healthcare Corp. 7,865,000
------------
INSURANCE -- 17.2%
216,200 Ace Ltd. 7,350,800
35,300 AFLAC, Inc. 1,438,475
99,000 American International Group, Inc. 8,353,125
464,200 EXEL Ltd. 24,834,700
197,000 Progressive Corp., Ohio 8,175,500
101,000 Transamerica Corp. 6,842,750
------------
56,995,350
------------
METALS/MINING -- 2.7%
66,333 Freeport McMoRan, Inc. 2,479,208
8,518 Freeport McMoRan, Copper & Gold
(Class A) 194,849
279,290 Freeport McMoRan, Copper & Gold
(Class B) 6,353,848
------------
9,027,905
------------
MISCELLANEOUS FINANCIAL SERVICES -- 8.8%
200,000 American Express Co. 8,125,000
290,000 Countrywide Credit Industries, Inc. 6,416,250
214,000 Federal Home Loan Mortgage Corp. 14,819,500
------------
29,360,750
------------
PAPER PRODUCTS -- 1.9%
120,000 Champion International Corp. $ 6,420,000
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
REAL ESTATE -- 0.8%
3,050 Security Capital Realty, Inc. (A) 2,689,844
------------
RETAIL -- 6.3%
373,000 May Department Stores Co. 14,640,250
140,000 Mercantile Stores Co., Inc. 6,282,500
------------
20,922,750
------------
TELECOMMUNICATIONS -- 2.6%
344 Bell Atlantic Corp. 21,887
225,200 Sprint Corp. 8,670,200
------------
8,692,087
------------
TEXTILES -- 1.3%
340,000 Shaw Industries, Inc. 4,335,000
------------
TOYS/GAMES/HOBBY -- 0.9%
92,000 Hasbro, Inc. 2,806,000
------------
TRANSPORTATION -- 2.1%
84,000 CSX Corp. 7,035,000
------------
Total Common Stocks
(cost -- $190,764,443) $262,806,338
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $258,707,414)) 99.9% $330,881,971
Other Assets in Excess of
Other Liabilities 0.1 429,932
------ ------------
TOTAL NET ASSETS 100.0 % $331,311,903
------ ------------
------ ------------
</TABLE>
* Non-income producing security.
(A) Restricted Securities (the Fund will not bear any costs, including those
involved in registration under the Securities Act of 1933, in connection
with the disposition of these securities):
<TABLE>
<CAPTION>
UNIT
VALUATION
AS
DATE OF UNIT OF OCTOBER
DESCRIPTION ACQUISITION PAR AMOUNT SHARES COST 31, 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Security Capital
Realty, Inc.
12.00%, 6/30/14 9/15/94 $2,330,921 -- $ 94 $ 100
Security Capital
Realty, Inc.
Common Stock 9/15/94 -- 3,050 926 882
</TABLE>
16
<PAGE>
- --------------------------------------------------------------------------------
OPPORTUNITY FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 15.6%
AUTOMOTIVE -- 2.4%
$15,000,000 General Motors Acceptance Corp.
5.77%, 11/20/95 $ 14,954,321
------------
BANKING -- 2.8%
Norwest Financial, Inc.
1,800,000 5.73%, 11/13/95 1,796,562
16,000,000 5.73%, 11/27/95 15,933,787
------------
17,730,349
------------
COMPUTERS -- 0.2%
1,490,000 IBM Credit Corp.
5.70%, 11/06/95 1,488,820
------------
MACHINERY & ENGINEERING -- 3.0%
Deere (John) Capital Corp.
13,600,000 5.71%, 11/13/95 13,574,115
5,235,000 5.74%, 11/13/95 5,224,984
------------
18,799,099
------------
MISCELLANEOUS FINANCIAL SERVICES -- 7.1%
Beneficial Corp.
1,200,000 5.72%, 11/20/95 1,196,377
10,455,000 5.73%, 11/20/95 10,423,382
1,800,000 CIT Group Holdings, Inc.
5.73%, 11/13/95 1,796,562
15,980,000 Household Finance Corp.
5.73%, 11/08/95 15,962,196
Merrill Lynch & Co., Inc.
4,500,000 5.75%, 11/02/95 4,499,281
11,475,000 5.75%, 11/06/95 11,465,836
------------
45,343,634
------------
OIL/GAS -- 0.1%
491,000 Chevron Oil Finance Co.
5.71%, 11/08/95 490,455
------------
Total Short-Term Corporate Notes
(cost -- $98,806,678) $ 98,806,678
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
U.S. TREASURY NOTES -- 0.5%
$ 1,000,000 7.50%, 11/15/01 $ 1,081,410
1,000,000 7.50%, 5/15/02 1,086,410
550,000 7.875%, 4/15/98 577,241
550,000 7.875%, 8/15/01 603,537
------------
Total U.S. Treasury Notes
(cost -- $3,143,397) $ 3,348,598
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
COMMON STOCKS -- 85.0%
AEROSPACE -- 9.0%
100,000 Loral Corp. $ 2,962,500
525,000 McDonnell Douglas Corp. 42,918,750
200,000 Northrop Grumman Corp. 11,450,000
------------
57,331,250
------------
AIRLINES -- 1.0%
100,000 AMR Corp.* 6,600,000
------------
BANKING -- 13.6%
525,000 Citicorp 34,059,375
34,100 First Empire State Corp. 6,709,175
450,000 Mellon Bank Corp. 22,556,250
110,000 Wells Fargo & Co. 23,113,750
------------
86,438,550
------------
CASINOS/GAMING -- 2.9%
750,000 Harrahs Entertainment, Inc. 18,562,500
------------
CHEMICALS -- 4.4%
260,000 du Pont (E.I.) de Nemours & Co. 16,217,500
220,000 Hercules, Inc. 11,742,500
------------
27,960,000
------------
CONSUMER PRODUCTS -- 3.2%
600,000 Reebok International Ltd. 20,400,000
------------
COSMETICS/TOILETRIES -- 0.7%
60,600 Avon Products, Inc. 4,310,175
------------
DRUGS & MEDICAL PRODUCTS -- 2.8%
275,000 Becton, Dickinson & Co. 17,875,000
------------
</TABLE>
* Non-income producing security.
17
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------
ELECTRONICS -- 8.1%
460,000 Intel Corp. $ 32,142,500
200,000 National Semiconductor Corp.* 4,875,000
50,000 Raychem Corp. 2,318,750
440,000 Unitrode Corp.* 11,825,000
------------
51,161,250
------------
INSURANCE -- 3.2%
300,000 EXEL Ltd. 16,050,000
60,000 Transamerica Corp. 4,065,000
------------
20,115,000
------------
METALS/MINING -- 5.2%
83,333 Freeport McMoRan, Inc. 3,114,583
1,302,100 Freeport McMoRan Copper & Gold
(Class B) 29,622,775
------------
32,737,358
------------
MISCELLANEOUS FINANCIAL SERVICES -- 10.5%
250,000 American Express Co. 10,156,250
500,000 Countrywide Credit Industries, Inc. 11,062,500
500,000 Federal Home Loan Mortgage Corp. 34,625,000
100,000 Federal National Mortgage Assoc. 10,487,500
------------
66,331,250
------------
OIL/GAS -- 6.0%
80,000 Mapco, Inc. 4,120,000
610,000 Tenneco, Inc. 26,763,750
149,300 Triton Energy Corp.* 6,961,113
------------
37,844,863
------------
PAPER PRODUCTS -- 7.2%
535,000 Champion International Corp. 28,622,500
325,000 Scott Paper Co. 17,306,250
------------
45,928,750
------------
TELECOMMUNICATIONS -- 1.8%
300,000 Sprint Corp. 11,550,000
------------
TEXTILES -- 2.4%
155,000 Collins & Aikman Corp.* $ 1,240,000
1,100,000 Shaw Industries, Inc. 14,025,000
------------
15,265,000
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
TOYS/GAMES/HOBBY -- 2.7%
600,000 Mattel, Inc. 17,250,000
------------
OTHER -- 0.3%
40,000 Alliant Techsystems, Inc.* 1,860,000
------------
Total Common Stocks
(cost -- $440,332,557) $539,520,946
------------
<CAPTION>
- ------------------------------------------------------
WARRANTS VALUE
- ------------------------------------------------------
<C> <S> <C>
WARRANTS -- 0.0%
HEALTHCARE SERVICES
34 Laboratory Corp. of America
Holdings
(cost -- $81) $ 21
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $542,282,713) 101.1% $641,676,243
Other Liabilities in Excess of
Other Assets (1.1) (7,165,129)
------ ------------
TOTAL NET ASSETS 100.0% $634,511,114
------ ------------
------ ------------
</TABLE>
SMALL CAPITALIZATION FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 15.1%
AUTOMOTIVE -- 1.8%
$ 2,758,000 General Motors Acceptance Corp.
5.81%, 11/06/95 $ 2,755,774
------------
BANKING -- 4.0%
6,000,000 Norwest Financial, Inc.
5.73%, 11/14/95 5,987,585
------------
INSURANCE -- 4.7%
7,000,000 Prudential Funding Corp.
5.73%, 11/27/95 6,971,031
------------
</TABLE>
* Non-income producing security.
18
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
MACHINERY & ENGINEERING -- 1.8%
Deere (John) Capital Corp.
$ 1,560,000 5.71%, 11/13/95 $ 1,557,031
1,074,000 5.75%, 11/13/95 1,071,942
------------
2,628,973
------------
MISCELLANEOUS FINANCIAL SERVICES -- 2.8%
3,635,000 Beneficial Corp.
5.73%, 11/22/95 3,622,850
575,000 Household Finance Corp.
5.72%, 11/13/95 573,904
------------
4,196,754
------------
Total Short-Term Corporate Notes
(cost -- $22,540,117) $ 22,540,117
------------
CORPORATE NOTES & BONDS -- 0.4%
AUTOMOTIVE -- 0.0%
$ 62,950 Collins Industries, Inc.
8.75%, 1/11/00 $ 57,577
------------
OIL/GAS -- 0.4%
500,000 Global Marine, Inc.
12.75%, 12/15/99 552,500
------------
Total Corporate Notes & Bonds
(cost -- $585,111) $ 610,077
------------
CONVERTIBLE CORPORATE BONDS -- 0.9%
REAL ESTATE
$ 1,404,189 Security Capital Realty, Inc. (A)
12.00%, 6/30/14
(cost -- $1,325,889) $ 1,404,189
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS -- 0.2%
RETAIL
36,000 Family Bargain Corp.
$0.95 Conv. Pfd.
(cost -- $360,000) $ 220,500
------------
COMMON STOCKS -- 84.4%
ADVERTISING -- 6.2%
77,600 Katz Media Group, Inc.* $ 1,396,800
30,000 Omnicom Group, Inc. 1,916,250
292,400 True North Communications 5,921,100
------------
9,234,150
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
AEROSPACE -- 0.5%
97,500 BE Aerospace, Inc.* $ 767,813
------------
AUTOMOTIVE -- 1.7%
126,000 Collins Industries, Inc.* 259,875
120,100 Masland Corp. 1,681,400
70,000 Sudbury, Inc.* 586,250
------------
2,527,525
------------
BUILDING & CONSTRUCTION -- 5.8%
57,300 Carlisle Cos., Inc. 2,356,462
190,547 D.R. Horton, Inc. 2,119,835
26,500 Insituform Technologies (Class A)* 331,250
204,000 Martin Marietta Materials, Inc. 3,876,000
------------
8,683,547
------------
CHEMICALS -- 1.7%
86,400 OM Group, Inc. 2,505,600
------------
COMPUTER SERVICES -- 3.6%
149,900 BancTec, Inc.* 2,810,625
52,000 DST Systems, Inc. 1,092,000
114,000 Exabyte Corp.* 1,474,875
------------
5,377,500
------------
CONTAINERS -- 1.9%
169,000 Shorewood Packaging Corp.* 2,830,750
------------
DRUGS & MEDICAL PRODUCTS -- 1.9%
49,900 Amerisource Health Corp. (Class A) 1,359,775
33,900 Sybron International Corp. -
Wisconsin* 1,440,750
------------
2,800,525
------------
ELECTRONICS -- 8.9%
35,700 Arrow Electronics, Inc* 1,811,775
174,900 EG&G, Inc. 3,257,512
146,500 Marshall Industries* 5,164,125
111,000 Oak Industries, Inc.* 2,317,125
26,200 Unitrode Corp.* 704,125
------------
13,254,662
------------
</TABLE>
* Non-income producing security.
19
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------
ENTERTAINMENT -- 0.2%
25,000 Hollywood Park, Inc.* $ 243,750
------------
FOOD SERVICES -- 1.0%
70,000 IHOP Corp.* 1,505,000
------------
HEALTHCARE SERVICES -- 2.8%
16,000 Charter Medical Corp.* 288,000
20,000 Community Health Systems, Inc.* 635,000
51,900 Dentsply International, Inc. 1,790,550
54,000 SpaceLabs Medical, Inc.* 1,390,500
------------
4,104,050
------------
HOUSEHOLD PRODUCTS -- 2.4%
120,000 Singer Co. 2,820,000
35,000 The Rival Co. 682,500
------------
3,502,500
------------
INSURANCE -- 5.3%
47,000 Ace Ltd. 1,598,000
62,800 Capsure Holdings Corp.* 855,650
119,400 E.W. Blanch Holdings, Inc. 2,298,450
112,500 Guaranty National Corp. 1,603,125
7,000 Horace Mann Educators Corp. 186,375
64,200 Prudential Reinsurance Holdings,
Inc. 1,308,075
------------
7,849,675
------------
LEASING -- 1.1%
101,700 Interpool, Inc.* 1,627,200
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
MACHINERY & ENGINEERING -- 6.0%
50,000 Baldwin Technologies Co., Inc
(Class A)* $ 268,750
40,000 Briggs & Stratton Corp. 1,615,000
52,100 BW/IP Holdings, Inc. (Class A) 872,675
145,000 Crane Co. 5,129,375
67,400 Harmon Industries, Inc. 994,150
------------
8,879,950
------------
MANUFACTURING -- 1.9%
94,000 North American Watch Corp. 1,703,750
50,000 Pall Corp. 1,218,750
------------
2,922,500
------------
METALS/MINING -- 0.4%
70,000 Olympic Steel, Inc.* 568,750
------------
OFFICE EQUIPMENT -- 0.8%
60,600 Nu-Kote Holdings, Inc. (Class A)* 1,257,450
------------
OIL/GAS -- 6.4%
92,800 Aquila Gas Pipeline Corp. 1,020,800
84,000 Belden & Blake Corp.* 1,219,313
200,000 Global Natural Resources, Inc.* 2,000,000
137,500 Noble Drilling Corp.* 962,500
165,000 Petroleum Heat & Power Co., Inc.
(Class A) 1,278,750
105,400 St. Mary Land & Exploration Co. 1,409,725
34,000 Triton Energy Corp.* 1,585,250
------------
9,476,338
------------
PAPER PRODUCTS -- 1.8%
422,000 Repap Enterprises, Inc.* 2,663,875
------------
PRINTING/PUBLISHING -- 1.4%
69,000 International Imaging Materials,
Inc. 1,742,250
20,000 Merrill Corp. 320,000
------------
2,062,250
------------
</TABLE>
* Non-income producing security.
20
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------
REAL ESTATE -- 8.7%
151,800 Cousins Properties, Inc. $ 2,637,525
44,000 Post Properties, Inc. 1,320,000
231,600 Security Capital Industrial Trust,
Inc. 3,792,450
199,363 Security Capital Pacific Trust,
Inc. 3,563,614
1,800 Security Capital Realty, Inc. (A) 1,587,600
------------
12,901,189
------------
RETAIL -- 0.7%
10,900 Blair Corp. 321,550
60,000 The Maxim Group, Inc.* 780,000
------------
1,101,550
------------
TELECOMMUNICATIONS -- 1.2%
94,500 ECI Telecommunications Ltd. 1,795,500
------------
TEXTILES -- 4.8%
89,000 Collins & Aikman Corp.* 712,000
64,000 Culp, Inc. 624,000
42,700 Fab Industries, Inc. 1,248,975
149,600 Mohawk Industries, Inc.* 2,244,000
110,500 WestPoint Stevens, Inc.* 2,334,313
------------
7,163,288
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS -- 2.6%
55,900 Morningstar Group, Inc.* 433,225
111,800 Ralcorp Holdings, Inc. 2,571,400
84,700 Sylvan, Inc.* 899,937
------------
3,904,562
------------
TRANSPORTATION -- 0.1%
8,000 MTL, Inc.* 117,000
------------
UTILITIES -- 1.5%
34,600 Sithe Energies, Inc.* 246,525
96,000 UGI Corp. 2,016,000
------------
2,262,525
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
OTHER -- 1.1%
93,300 McGrath RentCorp. $ 1,632,750
------------
Total Common Stocks
(cost -- $116,900,149) $125,523,724
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $141,711,266) 101.0% $150,298,607
Other Liabilities in Excess of
Other Assets (1.0) (1,483,609)
------ ------------
TOTAL NET ASSETS 100.0% $148,814,998
------ ------------
------ ------------
</TABLE>
GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 1.9%
AUTOMOTIVE -- 0.4%
$ 200,000 Ford Motor Credit Co.
5.73%, 11/06/95 $ 199,841
------------
MISCELLANEOUS FINANCIAL SERVICES -- 1.5%
Beneficial Corp.
447,000 5.72%, 11/02/95 446,929
230,000 5.74%, 11/15/95 229,486
------------
676,415
------------
Total Short-Term Corporate Notes
(cost -- $876,256) $ 876,256
------------
CORPORATE NOTES & BONDS -- 18.2%
CASINOS/GAMING -- 1.9%
$ 1,000,000 Harrah's Jazz Co.
14.25%, 11/15/01 $ 875,000
------------
COSMETICS/TOILETRIES -- 3.8%
2,000,000 Playtex Family Products Corp.
9.00%, 12/15/03 1,790,000
------------
</TABLE>
* Non-income producing security.
(A) Restricted Securities (the Fund will not bear any costs, including those
involved in registration under the Securities Act of 1933, in connection
with the disposition of these securities):
<TABLE>
<CAPTION>
UNIT
VALUATION
AS
DATE OF UNIT OF OCTOBER
DESCRIPTION ACQUISITION PAR AMOUNT SHARES COST 31, 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Security Capital
Realty, Inc.
12.00%, 6/30/14 6/16/94 $1,404,189 -- $ 94 $ 100
Security Capital
Realty, Inc.
Common Stock 8/02/93 -- 1,800 684 882
</TABLE>
21
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL VALUE
AMOUNT
- ------------------------------------------------------
<C> <S> <C>
ENTERTAINMENT -- 3.7%
$ 5,000,000 Time Warner, Inc.
Zero Coupon, 12/17/12 $ 1,725,000
------------
FOOD SERVICES -- 0.9%
1,000,000 Shoney's, Inc.
Zero Coupon, 4/11/04 402,500
------------
OIL/GAS -- 3.7%
2,000,000 Triton Energy Corp.
Zero Coupon, 11/01/97 1,700,000
------------
TELECOMMUNICATIONS -- 4.2%
1,000,000 Comcast Corp.
10.625%, 7/15/12 1,097,500
1,500,000 Nextel Communications, Inc.
0.00/11.50%, 9/01/03** 870,000
------------
1,967,500
------------
Total Corporate Notes & Bonds
(cost -- $8,705,038) $ 8,460,000
------------
CONVERTIBLE CORPORATE BONDS -- 6.5%
MANUFACTURING
$ 4,000,000 Mascotech, Inc.
4.50%, 12/15/03
(cost -- $3,042,591) $ 3,040,000
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
COMMON STOCKS -- 72.6%
AEROSPACE -- 4.4%
25,000 McDonnell Douglas Corp. $ 2,043,750
------------
AUTOMOTIVE -- 3.8%
40,000 General Motors Corp. 1,750,000
------------
BANKING -- 7.6%
32,000 Citicorp 2,076,000
50,000 U.S. Bancorp 1,481,250
------------
3,557,250
------------
CHEMICALS -- 2.7%
20,000 du Pont (E.I.) de Nemours & Co. 1,247,500
------------
COMPUTER SOFTWARE -- 1.1%
5,000 Microsoft Corp.* $ 500,000
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
CONGLOMERATES -- 3.4%
100,000 Canadian Pacific Ltd. 1,600,000
------------
CONTAINERS -- 3.9%
40,000 Temple-Inland, Inc. 1,820,000
------------
ELECTRONICS -- 0.2%
1,000 Intel Corp. 69,875
------------
HEALTHCARE SERVICES -- 1.0%
10,000 Columbia/HCA Healthcare Corp. 491,250
------------
HOUSEHOLD PRODUCTS -- 4.0%
40,000 Premark International, Inc. 1,850,000
------------
INSURANCE -- 6.8%
15,000 Ace, Ltd. 510,000
10,000 AFLAC, Inc. 407,500
30,000 Progressive Corp., Ohio 1,245,000
20,000 Travelers, Inc. 1,010,000
------------
3,172,500
------------
MACHINERY & ENGINEERING -- 3.9%
45,000 Briggs & Stratton Corp. 1,816,875
------------
MEDIA/BROADCASTING -- 4.0%
20,000 Tele-Communications Liberty Media
Group (Series A)* 492,500
80,000 Tele-Communications TCI Group
(Series A)* 1,360,000
------------
1,852,500
------------
METALS/MINING -- 6.6%
133,687 Freeport McMoRan, Copper & Gold
(Class A) 3,058,090
------------
MISCELLANEOUS FINANCIAL SERVICES -- 0.5%
1,000 Countrywide Credit Industries, Inc. 22,125
3,000 Federal Home Loan Mortgage Corp. 207,750
------------
229,875
------------
OIL/GAS -- 1.6%
10,000 Triton Energy Corp.* $ 466,250
15,000 Union Texas Petroleum Holdings,
Inc. 270,000
------------
736,250
------------
</TABLE>
* Non-income producing security.
** Represents a step-up floater which will receive 0.00% interest until 9/01/98,
then will "step-up" to 11.50% until maturity.
22
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------
PAPER PRODUCTS -- 4.0%
35,000 Champion International Corp. 1,872,500
------------
TELECOMMUNICATIONS -- 4.5%
55,000 Sprint Corp. 2,117,500
------------
TEXTILES -- 8.6%
20,000 Shaw Industries, Inc. 255,000
50,000 Unifi, Inc. 1,125,000
55,000 VF Corp. 2,633,125
------------
4,013,125
------------
Total Common Stocks
(cost -- $30,820,524) $ 33,798,840
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $43,444,409) 99.2% $ 46,175,096
Other Assets in Excess of
Other Liabilities 0.8 358,263
------ ------------
TOTAL NET ASSETS 100.0 % $ 46,533,359
------ ------------
------ ------------
</TABLE>
U.S. GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
REPURCHASE AGREEMENT -- 24.6%
$28,300,000 J.P. Morgan, 5.85%, 11/01/95
(proceeds at maturity:
$28,304,599, collateralized by
$27,265,000 par, $28,866,819
value, U.S. Treasury Notes,
7.50%, 10/31/99)
(cost -- $28,300,000) $ 28,300,000
------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION -- 0.6%
$ 652,460 9.50%, 12/01/02 - 11/01/03
(cost -- $657,455) $ 679,981
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION I -- 43.6%
$19,729,923 7.00%, 2/15/22 - 11/15/23 $ 19,594,181
10,813,268 7.50%, 2/15/22 - 5/15/24 10,955,138
7,998,232 8.00%, 4/15/02 - 5/15/25 8,250,767
10,522,241 8.50%, 6/15/01 - 9/15/24 10,956,944
449,937 10.50%, 1/15/98 - 12/15/00 472,573
------------
Total Government National Mortgage
Association I (cost -- $50,865,933) $ 50,229,603
------------
U.S. TREASURY NOTES -- 30.4%
$15,000,000 5.875%, 8/15/98 $ 15,070,350
5,000,000 6.125%, 5/31/97 5,035,950
14,000,000 7.75%, 11/30/99 14,975,660
------------
Total U.S. Treasury Notes
(cost -- $34,397,838) $ 35,081,960
------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments
(cost -- $114,221,226) 99.2% $114,291,544
------ ------------
- ------------------------------------------------
PRINCIPAL
AMOUNT
SUBJECT
TO PUT VALUE
- ------------------------------------------------------
WRITTEN PUT OPTIONS OUTSTANDING -- (0.1%)
$25,000,000 U.S. Treasury Notes, 6.125%,
9/30/00, expiring Nov. '95, strike
@ $101.3125
(premium received: $132,812) $ (117,188)
------------
Other Assets in Excess of
Other Liabilities 0.9 1,067,411
------ ------------
TOTAL NET ASSETS 100.0 % $115,241,767
------ ------------
------ ------------
</TABLE>
* Non-income producing security.
23
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
INVESTMENT QUALITY INCOME FUND
<TABLE>
<CAPTION>
<C> <S> <C>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 4.5%
MISCELLANEOUS FINANCIAL SERVICES
$ 1,800,000 Beneficial Corp.
5.75%, 11/06/95 $ 1,798,563
570,000 Household Finance Corp.
5.73%, 11/06/95 569,546
425,000 Merrill Lynch & Co., Inc.
5.75%, 11/02/95 424,932
------------
Total Short-Term Corporate Notes
(cost -- $2,793,041) $ 2,793,041
------------
CORPORATE NOTES & BONDS -- 93.6%
AEROSPACE -- 3.4%
$ 2,000,000 Boeing Co.
7.50%, 8/15/42 $ 2,092,300
------------
AIRLINES -- 2.9%
1,000,000 American Airlines
9.73%, 9/29/14 1,133,870
550,000 Delta Air Lines, Inc.
10.375%, 2/01/11 650,551
------------
1,784,421
------------
AUTOMOTIVE -- 3.6%
2,000,000 Ford Motor Credit Co. (A)
8.875%, 11/15/22 2,234,600
------------
BANKING -- 6.5%
70,000 NatWest Bancorp, Inc.
9.375%, 11/15/03 81,979
1,300,000 NCNB Corp.
10.20%, 7/15/15 1,680,731
500,000 RBSG Capital Corp.
10.125%, 3/01/04 606,020
1,500,000 Westpac Banking Corp.
9.125%, 8/15/01 1,680,810
------------
4,049,540
------------
CHEMICALS -- 1.0%
500,000 Rohm & Haas Co.
9.50%, 4/01/21 607,720
------------
CONGLOMERATES -- 4.0%
2,000,000 Canadian Pacific Ltd.
9.45%, 8/01/21 2,517,380
------------
ENTERTAINMENT -- 5.2%
3,000,000 Time Warner, Inc.
9.15%, 2/01/23 3,253,800
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
INSURANCE -- 11.6%
$ 1,000,000 Aetna Life & Casualty Co.
8.00%, 1/15/17 $ 1,015,020
1,200,000 Capital Holding Corp.
8.75%, 1/15/17 1,263,636
2,000,000 CNA Financial Corp.
7.25%, 11/15/23 1,900,200
3,000,000 Torchmark, Inc.
7.875%, 5/15/23 3,064,440
------------
7,243,296
------------
LEASING -- 2.7%
1,600,000 Ryder Systems, Inc.
8.75%, 3/15/17 1,712,464
------------
MACHINERY & ENGINEERING -- 3.3%
1,750,000 Caterpillar, Inc.
9.75%, 6/01/19 2,056,373
------------
MISCELLANEOUS FINANCIAL SERVICES -- 11.4%
20,000 Beneficial Corp.
12.875%, 8/01/13 24,110
1,500,000 BHP Finance USA Ltd.
8.50%, 12/01/12 1,700,430
Lehman Brothers, Inc.
865,000 9.875%, 10/15/00 955,280
115,000 10.00%, 5/15/99 127,045
205,000 Midland American Capital Corp.
12.75%, 11/15/03 240,533
3,000,000 Prudential Funding Corp.
6.75%, 9/15/23 (B) 2,672,760
1,250,000 Source One Mortgage Services Corp.
9.00%, 6/01/12 1,363,087
------------
7,083,245
------------
OIL/GAS -- 5.9%
3,000,000 Occidental Petroleum Corp.
11.125%, 6/01/19 3,677,430
------------
PAPER PRODUCTS -- 0.2%
100,000 Union Camp Corp.
10.00%, 5/01/19 113,709
------------
PIPELINES -- 3.1%
1,500,000 TransCanada Pipelines Ltd.
9.875%, 1/01/21 1,930,965
------------
RETAIL -- 1.3%
May Department Stores Co.
250,000 9.875%, 6/01/17 276,337
405,000 10.625%, 11/01/10 541,542
------------
817,879
------------
</TABLE>
24
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
TELECOMMUNICATIONS -- 11.8%
$ 2,500,000 New York Telephone Co.
9.375%, 7/15/31 $ 2,965,900
2,000,000 Pacific Bell
8.50%, 8/15/31 2,191,900
2,000,000 Southern New England Telephone Co.
8.70%, 8/15/31 2,168,720
------------
7,326,520
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS -- 3.5%
2,000,000 American Brands, Inc.
7.875%, 1/15/23 2,153,300
------------
UTILITIES -- 7.0%
2,000,000 Hydro-Quebec
8.50%, 12/01/29 2,203,280
2,000,000 Southern California Edison Co.
8.875%, 6/01/24 2,140,540
------------
4,343,820
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
OTHER -- 5.2%
$ 1,447,305 DLJ Mortgage Acceptance Corp.
8.75%, 11/25/24 $ 1,471,276
1,500,000 Nova Scotia (Province of)
8.875%, 7/01/19 1,733,370
------------
3,204,646
------------
Total Corporate Notes & Bonds
(cost -- $54,144,780) $ 58,203,408
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $56,937,821) 98.1 % $ 60,996,449
Other Assets in Excess of
Other Liabilities 1.9 1,192,720
------ ------------
TOTAL NET ASSETS 100.0 % $ 62,189,169
------ ------------
------ ------------
</TABLE>
(A) Security segregated (partial) as collateral for open futures contracts. The
aggregate market value of such security is $558,650.
(B) Resale of the security is restricted to qualified institutional investors.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
QUEST FOR SMALL GROWTH U.S. INVESTMENT
VALUE FUND, OPPORTUNITY CAPITALIZATION AND GOVERNMENT QUALITY
INC. FUND FUND INCOME FUND INCOME FUND INCOME FUND
------------ ------------ ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at value (cost --
$258,707,414, $542,282,713,
$141,711,266, $43,444,409,
$85,921,226 and $56,937,821,
respectively)...................... $330,881,971 $641,676,243 $150,298,607 $46,175,096 $ 85,991,544 $60,996,449
Repurchase agreement
(cost -- $28,300,000).............. -- -- -- -- 28,300,000 --
Cash................................ 45,640 547,052 554,656 43,048 147,175 59,556
Receivable for fund shares sold..... 530,951 3,886,531 429,526 135,588 112,467 66,286
Dividends receivable 243,046 997,122 50,222 40,770 -- --
Interest receivable................. 70,681 80,486 85,156 232,993 1,100,769 1,428,564
Receivable for investments sold..... -- 3,775,999 1,519,249 -- -- --
Receivable for mortgage
prepayments........................ -- -- -- -- 9,512 --
Deferred organization expenses...... -- -- -- 19,361 -- 1,598
Other assets........................ 39,549 22,478 12,365 17,891 30,144 12,304
------------ ------------ ------------ ----------- ------------ -----------
Total Assets...................... 331,811,838 650,985,911 152,949,781 46,664,747 115,691,611 62,564,757
------------ ------------ ------------ ----------- ------------ -----------
LIABILITIES
Written put options outstanding, at
value (premiums received:
$132,812).......................... -- -- -- -- 117,188 --
Payable for fund shares redeemed.... 246,415 541,931 381,171 39,485 94,741 182,432
Distribution fee payable............ 57,478 218,953 31,207 9,227 13,696 14,560
Investment advisory fee payable..... 54,437 103,767 24,467 6,603 11,374 6,111
Payable for investments purchased... -- 15,310,750 3,596,750 -- -- --
Dividends payable................... -- -- -- -- 100,543 79,161
Payable for futures variation
margin............................. -- -- -- -- -- 33,750
Other payables and accrued
expenses........................... 141,605 299,396 101,188 76,073 112,302 59,574
------------ ------------ ------------ ----------- ------------ -----------
Total Liabilities................. 499,935 16,474,797 4,134,783 131,388 449,844 375,588
------------ ------------ ------------ ----------- ------------ -----------
NET ASSETS
Par value........................... 22,865,787 259,205 86,170 42,633 102,228 57,180
Paid-in-surplus..................... 211,941,042 523,701,982 131,509,611 41,486,396 124,603,694 59,929,025
Accumulated undistributed net
investment income (loss)........... 2,115,981 3,043,582 817,130 62,229 (100,543) (1,302)
Accumulated undistributed net
realized gain (loss) on
investments........................ 22,214,536 8,112,815 7,814,746 2,211,414 (9,449,554) (1,441,862)
Net unrealized appreciation on
investments........................ 72,174,557 99,393,530 8,587,341 2,730,687 85,942 3,646,128
------------ ------------ ------------ ----------- ------------ -----------
Total Net Assets.................. $331,311,903 $634,511,114 $148,814,998 $46,533,359 $115,241,767 $62,189,169
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
CLASS A:
Fund shares outstanding............. 19,476,461 14,934,153 6,717,417 3,395,059 9,111,820 4,144,692
------------ ------------ ------------ ----------- ------------ -----------
Net asset value per share........... $ 14.51 $ 24.59 $ 17.31 $ 10.92 $ 11.27 $ 10.88
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
Maximum offering price per share*... $ 15.35 $ 26.02 $ 18.32 $ 11.46 $ 11.83 $ 11.42
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
CLASS B:
Fund shares outstanding............. 2,682,851 8,945,500 1,369,612 700,417 855,263 1,207,703
------------ ------------ ------------ ----------- ------------ -----------
Net asset value and offering price
per share.......................... $ 14.37 $ 24.33 $ 17.11 $ 10.88 $ 11.27 $ 10.88
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
CLASS C:
Fund shares outstanding............. 706,475 2,040,801 529,946 167,833 255,735 365,603
------------ ------------ ------------ ----------- ------------ -----------
Net asset value and offering price
per share.......................... $ 14.35 $ 24.31 $ 17.11 $ 10.89 $ 11.27 $ 10.88
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
</TABLE>
*Sales charges decrease on purchases of $50,000 or higher.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
GROWTH
QUEST FOR SMALL AND U.S. INVESTMENT
VALUE OPPORTUNITY CAPITALIZATION INCOME GOVERNMENT QUALITY
FUND, INC. FUND FUND FUND INCOME FUND INCOME FUND
----------- ----------- ------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends*................... $4,933,153 $5,805,392 $ 1,902,266 $ 693,240 $ -- $
- --
Interest..................... 2,545,437 4,798,092 1,684,966 1,089,203 8,894,940 4,872,959
----------- ----------- ------------- ---------- ----------- -----------
Total investment income.... 7,478,590 10,603,484 3,587,232 1,782,443 8,894,940 4,872,959
----------- ----------- ------------- ---------- ----------- -----------
OPERATING EXPENSES
Investment advisory fees
(note 2a)................... 2,893,435 3,923,159 1,456,594 333,289 755,883 351,860
Distribution fees (note
2c)......................... 1,607,236 2,665,031 859,394 191,723 455,179 311,219
Transfer and dividend
disbursing agent fees (note
1i)......................... 330,355 410,006 206,267 73,852 130,367 71,201
Accounting service fees (note
2b)......................... -- 103,747 108,951 112,800 121,310 105,362
Registration fees............ 54,800 141,636 34,952 34,042 32,098 33,871
Custodian fees............... 40,216 47,751 22,819 18,724 70,657 21,556
Reports and notices to
shareholders................ 40,057 44,869 27,492 8,814 17,517 10,688
Auditing, consulting and tax
return preparation fees..... 24,597 18,515 18,514 14,435 40,367 17,355
Directors'(Trustees') fees
and expenses................ 17,270 17,270 17,270 8,870 17,270 17,270
Legal fees................... 11,749 10,120 7,222 4,721 6,836 5,236
Amortization of deferred
organization expenses (note
1c)......................... -- -- -- 19,148 -- 12,374
Miscellaneous................ 19,575 13,337 9,189 4,500 14,726 5,566
----------- ----------- ------------- ---------- ----------- -----------
Total operating expenses... 5,039,290 7,395,441 2,768,664 824,918 1,662,210 963,558
Less: Investment advisory
fees waived (note 2a)..... -- -- -- (8,286) -- (42,245)
----------- ----------- ------------- ---------- ----------- -----------
Net operating expenses... 5,039,290 7,395,441 2,768,664 816,632 1,662,210 921,313
----------- ----------- ------------- ---------- ----------- -----------
Net investment income.... 2,439,300 3,208,043 818,568 965,811 7,232,730 3,951,646
----------- ----------- ------------- ---------- ----------- -----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS -- NET
Net realized gain (loss) on
security transactions....... 22,321,532 8,125,065 8,630,413 2,227,731 (3,475,568) (24,232)
Net realized loss on option
transactions (note 1f).... -- -- -- -- (267,734) --
Net realized loss on futures
transactions (note 1g)...... -- -- (86,670) -- -- (464,750)
----------- ----------- ------------- ---------- ----------- -----------
Net realized gain (loss) on
investments............... 22,321,532 8,125,065 8,543,743 2,227,731 (3,743,302) (488,982)
Net change in unrealized
appreciation (depreciation)
on investments.............. 39,322,642 85,013,107 3,040,965 2,324,387 9,332,957 7,336,722
----------- ----------- ------------- ---------- ----------- -----------
Net realized gain (loss)
and change in unrealized
appreciation
(depreciation) on
investments............... 61,644,174 93,138,172 11,584,708 4,552,118 5,589,655 6,847,740
----------- ----------- ------------- ---------- ----------- -----------
Net increase in net assets
resulting from operations... $64,083,474 $96,346,215 $ 12,403,276 $5,517,929 $12,822,385 $10,799,386
----------- ----------- ------------- ---------- ----------- -----------
----------- ----------- ------------- ---------- ----------- -----------
<FN>
* Net of withholding taxes of $6,473, $732 and $1,752 for Quest for Value, Small
Capitalization and Growth and Income, respectively.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>
27
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
QUEST FOR VALUE FUND,
INC. OPPORTUNITY FUND
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
------------------------ ------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income (loss).............................. $ 2,439,300 $ 1,726,225 $ 3,208,043 $ 1,397,364
Net realized gain (loss) on investments................... 22,321,532 16,664,331 8,125,065 7,139,720
Net change in unrealized appreciation (depreciation) on
investments.............................................. 39,322,642 (6,250,090) 85,013,107 4,721,481
----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting from
operations............................................. 64,083,474 12,140,466 96,346,215 13,258,565
----------- ----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS*
Net investment income -- Class A.......................... (1,649,576) (819,873) (1,066,642) (2,269,483)
Net investment income -- Class B.......................... (108,497) (11,801) (335,822) (98,258)
Net investment income -- Class C.......................... (29,366) (2,040) (56,920) (21,098)
Net realized gains -- Class A............................. (15,501,438) (9,227,704) (5,314,298) (1,498,248)
Net realized gains -- Class B............................. (1,014,005) (115,604) (1,562,718) (30,484)
Net realized gains -- Class C............................. (255,884) (11,081) (267,734) (11,476)
Tax return of capital -- Class A.......................... -- -- -- --
Tax return of capital -- Class B.......................... -- -- -- --
Tax return of capital -- Class C.......................... -- -- -- --
----------- ----------- ----------- -----------
Total dividends and distributions to shareholders....... (18,558,766) (10,188,103) (8,604,134) (3,929,047)
----------- ----------- ----------- -----------
FUND SHARE TRANSACTIONS
CLASS A
Net proceeds from sales................................... 53,027,793 61,908,256 201,988,591 90,332,759
Reinvestment of dividends and distributions............... 16,047,556 9,385,655 6,034,648 3,405,284
Cost of shares redeemed................................... (64,462,161) (80,014,950) (60,771,127) (65,200,453)
----------- ----------- ----------- -----------
Net increase (decrease) -- Class A...................... 4,613,188 (8,721,039) 147,252,112 28,537,590
----------- ----------- ----------- -----------
CLASS B
Net proceeds from sales................................... 22,392,431 12,409,864 160,670,137 40,604,196
Reinvestment of dividends and distributions............... 1,045,812 123,599 1,804,130 124,021
Cost of shares redeemed................................... (3,681,109) (544,061) (14,031,965) (1,026,439)
----------- ----------- ----------- -----------
Net increase -- Class B................................. 19,757,134 11,989,402 148,442,302 39,701,778
----------- ----------- ----------- -----------
CLASS C
Net proceeds from sales................................... 6,835,837 3,521,667 40,882,367 6,945,412
Reinvestment of dividends and distributions............... 280,898 13,020 314,274 32,567
Cost of shares redeemed................................... (1,738,997) (271,901) (4,067,767) (254,081)
----------- ----------- ----------- -----------
Net increase -- Class C................................. 5,377,738 3,262,786 37,128,874 6,723,898
----------- ----------- ----------- -----------
Total net increase (decrease) in net assets from fund
share transactions....................................... 29,748,060 6,531,149 332,823,288 74,963,266
----------- ----------- ----------- -----------
Total increase (decrease) in net assets................. 75,272,768 8,483,512 420,565,369 84,292,784
NET ASSETS
Beginning of year......................................... 256,039,135 247,555,623 213,945,745 129,652,961
----------- ----------- ----------- -----------
End of year (including undistributed net investment income
(loss) of $2,115,981, $1,464,120; $3,043,582, $1,291,867;
$817,130, ($238,336); $62,229, $127,460; ($100,543), $0
and ($1,302), $0, respectively).......................... $331,311,903 $256,039,135 $634,511,114 $213,945,745
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
<FN>
*Certain figures have been restated to conform to current year presentation for
Opportunity, Growth and Income and U.S. Government.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>
28
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAPITALIZATION U.S. GOVERNMENT INCOME
FUND GROWTH AND INCOME FUND FUND INVESTMENT QUALITY
INCOME FUND
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
- -------------------------- ------------------------ -------------------------- ------------------------
1995 1994 1995 1994 1995 1994 1995 1994
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 818,568 $ (238,336) $ 965,811 $ 966,108 $ 7,232,730 $ 8,291,969 $ 3,951,646 $ 3,846,353
8,543,743 3,366,835 2,227,731 1,768,686 (3,743,302) (4,366,839) (488,982) (952,880)
3,040,965 (3,118,979) 2,324,387 (189,442) 9,332,957 (11,007,688) 7,336,722 (9,068,979)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
12,403,276 9,520 5,517,929 2,545,352 12,822,385 (7,082,558) 10,799,386 (6,175,506)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
-- -- (917,781) (936,128) (6,680,576) (8,071,564) (3,164,967) (3,482,793)
-- -- (105,700) (41,545) (464,033) (196,735) (586,935) (244,424)
-- -- (17,697) (7,305) (89,583) (39,362) (199,744) (119,136)
(3,010,761) (8,036,736) (1,275,011) (4,278,474) -- (3,218,859) -- (367,910)
(434,007) (160,831) (129,812) (152,311) -- (42,833) -- (10,112)
(91,772) (19,543) (20,124) (19,378) -- (7,144) -- (637)
-- -- -- -- (140,061) -- -- --
-- -- -- -- (8,675) -- -- --
-- -- -- -- (1,431) -- -- --
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
(3,536,540) (8,217,110) (2,466,125) (5,435,141) (7,384,359) (11,576,497) (3,951,646) (4,225,012)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
38,194,245 127,081,752 8,471,883 5,937,491 18,642,107 17,007,814 8,023,597 12,621,718
2,840,961 7,215,556 2,097,137 5,008,623 5,896,557 9,588,703 2,288,961 2,758,350
(52,052,199) (111,134,238) (6,705,888) (6,040,040) (50,011,121) (74,313,512) (17,520,761) (20,364,228)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
(11,016,993) 23,163,070 3,863,132 4,906,074 (25,472,457) (47,716,995) (7,208,203) (4,984,160)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
10,160,304 15,275,222 4,674,731 2,763,975 5,110,647 6,748,251 7,327,816 6,440,954
408,265 148,570 217,205 188,513 319,245 187,137 462,628 185,172
(4,495,109) (811,203) (533,417) (260,750) (3,026,400) (964,994) (2,363,759) (800,932)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
6,073,460 14,612,589 4,358,519 2,691,738 2,403,492 5,970,394 5,426,685 5,825,194
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
6,393,572 3,345,761 1,497,250 341,819 2,026,463 1,424,484 1,204,849 3,141,700
88,907 18,810 36,149 26,593 85,658 46,127 93,152 93,436
(1,180,484) (229,505) (232,677) (4,696) (533,211) (289,465) (285,205) (422,838)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
5,301,995 3,135,066 1,300,722 363,716 1,578,910 1,181,146 1,012,796 2,812,298
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
358,462 40,910,725 9,522,373 7,961,528 (21,490,055) (40,565,455) (768,722) 3,653,332
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
9,225,198 32,703,135 12,574,177 5,071,739 (16,052,029) (59,224,510) 6,079,018 (6,747,186)
139,589,800 106,886,665 33,959,182 28,887,443 131,293,796 190,518,306 56,110,151 62,857,337
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
$148,814,998 $139,589,800 $46,533,359 $33,959,182 $115,241,767 $131,293,796 $62,189,169 $56,110,151
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
</TABLE>
29
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Quest for Value Funds are registered under the Investment Company Act of
1940, as diversified, open-end management investment companies. Quest for Value
Fund, Inc. ("Quest for Value") is a Maryland corporation. Opportunity Fund
("Opportunity"), Small Capitalization Fund ("Small Capitalization"), Growth and
Income Fund ("Growth and Income"), U.S. Government Income Fund ("U.S.
Government") and Investment Quality Income Fund ("Investment Quality") are five
of nine funds offered in the Quest for Value Family of Funds, a Massachusetts
business trust. Quest for Value Advisors (the "Adviser") serves as investment
adviser and provides accounting and administrative services to each fund. Quest
for Value Distributors (the "Distributor") serves as each fund's distributor.
Both the Adviser and Distributor are majority-owned (99%) subsidiaries of
Oppenheimer Capital.
Prior to September 1, 1993, the funds issued only one class of shares which
were redesignated Class A shares. Subsequent to that date all funds were
authorized to issue Class A, Class B and Class C shares. Shares of each Class
represent an identical interest in the investment portfolio of their respective
fund and generally have the same rights, but are offered under different sales
charges 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 each 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 securites are valued at the last quoted bid price. Other
securities traded over-the-counter and not part of the National Market System
are valued at the last quoted bid price. Investment debt securities (other than
short-term obligations) are valued each day by an independent pricing service
approved by the Board of Directors (Trustees) using methods which include
current market quotations from major market makers in the securities and
trader-reviewed "matrix" prices. Futures contracts are valued based upon their
daily settlement value as of the close of the exchange upon which they trade.
OTC options are valued based upon formulas which utilize the market value of the
underlying securities, strike prices and expiration dates of the options.
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 values as determined in good faith under
procedures established by each fund's Board of Directors (Trustees). The ability
of issuers of debt securities held by the funds to meet their obligations may be
affected by economic or political development in a specific state, industry or
region.
(B) FEDERAL INCOME TAXES
It is each 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
The following approximate costs were incurred in connection with their
organization: Growth and Income -- $96,000 and Investment Quality -- $62,000.
These costs have been deferred and are being amortized to expense on a
straight-line basis over sixty months from commencement of each fund's
operations.
(D) SECURITY 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 is
determined on the basis of identified cost. Dividend income is recorded on the
ex-dividend
30
<PAGE>
- --------------------------------------------------------------------------------
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. Net investment income, other than class specific
expenses and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets, as defined, of each
class.
(E) DIVIDENDS AND DISTRIBUTIONS
The following table summarizes each fund's dividend and capital gain
declaration policy:
<TABLE>
<CAPTION>
SHORT-TERM LONG-TERM
INCOME CAPITAL CAPITAL
DIVIDENDS GAINS GAINS
---------- ---------- ----------
<S> <C> <C> <C>
Quest for Value annually annually annually
Opportunity annually annually annually
Small Capitalization annually annually annually
Growth and Income quarterly annually annually
U.S. Government daily * quarterly annually
Investment Quality daily * annually annually
* paid monthly.
</TABLE>
Each fund records dividends and distributions to its shareholders on the
ex-dividend date. The amount of dividends and distributions from net investment
income and net realized capital gains are determined in accordance with federal
income tax regulations, which may differ from generally accepted accounting
principles. These "book-tax" differences are either considered temporary or
permanent in nature. To the extent these differences are permanent in nature,
such amounts are reclassified within the capital accounts based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Dividends and distributions which exceed net investment income and net realized
capital gains for financial reporting purposes but not for tax purposes are
reported as dividends in excess of net investment income or distributions in
excess of net realized capital gains, respectively. To the extent distributions
exceed current and accumulated earnings and profits for federal income tax
purposes, they are reported as distributions of paid-in-surplus or tax return of
capital. Accordingly, permanent book-tax differences relating to shareholder
distributions have been reclassified to paid-in-surplus. Net investment
income(loss), net realized gain(loss) and net assets were not affected.
As required by Statement of Position 93 - 2, Determination, Disclosure and
Financial Statement Presentation of Income, Capital Gain and Return of Capital
Distributions by Investment Companies, the following table discloses the
reclassifications from accumulated undistributed net investment income(loss) and
accumulated undistributed capital gain(loss) on investments to paid-in-surplus
during the fiscal year ended October 31, 1995:
<TABLE>
<CAPTION>
ACCUMULATED
UNDISTRIBUTED
NET ACCUMULATED
INVESTMENT UNDISTRIBUTED PAID
INCOME NET REALIZED IN
(LOSS) GAIN (LOSS) SURPLUS
---------- --------------- --------
<S> <C> <C> <C>
Quest for Value -- -- --
Opportunity 3,056 (5,991) 2,935
Small Capitalization 236,898 (559,292) 322,394
Growth and Income 10,136 (152,783) 142,647
U.S. Government (99,081) (407,920) 507,001
Investment Quality (1,302) -- 1,302
</TABLE>
31
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(F) WRITTEN OPTIONS ACCOUNTING POLICIES
When a fund writes a call option or a put option, an amount equal to the
premium received by the fund is included in the fund's Statement of Assets and
Liabilities as an asset and an equivalent liability. The amount of the liability
is subsequently marked-to-market to reflect the current market value of the
option written. If the option expires on its stipulated expiration date or if a
fund enters into a closing purchase transaction, the fund will realize a gain
(or loss if the cost of a closing purchase tranaction exceeds the premium
received when the option was written) without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option will
be extinguished. If a call option which a fund has written is exercised, the
fund realizes a gain or loss from the sale of the underlying security and the
proceeds from such sale are increased by the premium originally received. If a
put option which a fund has written is exercised, the amount of the premium
originally received will reduce the cost of the security which the fund
purchases upon exercise of the option.
(G) FUTURES ACCOUNTING POLICIES
Futures contracts are agreements between two parties to buy and sell a
financial instrument at a set price on a future date. Upon entering into such a
contract, a fund is required to pledge to the broker an amount of cash, cash
equivalents or U.S. Government securities equal to the minimum "initial margin"
requirements of the exchange. Pursuant to the contract, a fund agrees to receive
from or pay to the broker an amount of cash equal to the daily fluctuation in
the value of the contract. Such receipts or payments are known as "variation
margin" and are recorded by the fund as unrealized appreciation or depreciation.
When a contract is closed, the fund records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed and reverses any unrealized appreciation or
depreciation previously recorded. At October 31, 1995, Investment Quality had
the following futures contracts open:
<TABLE>
<CAPTION>
NET
NUMBER OF UNREALIZED
TYPE CONTRACTS SHORT VALUE EXPIRATION LOSS
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------
CBT U.S. Treasury Bond 120 $13,635,000 Dec. '95 $412,500
</TABLE>
(H) REPURCHASE AGREEMENTS
U.S. Government enters into repurchase agreements as part of its investment
program. The fund's custodian takes possession of collateral pledged by the
counterparty. The collateral is marked-to-market daily to ensure that the value,
plus accrued interest, is at least equal to the repurchase price. In the event
of default by the obligor to repurchase, the fund has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. Under
certain circumstances, in the event of default or bankruptcy by the other party
to the agreement, realization and/or retention of the collateral or proceeds may
be subject to legal proceedings.
(I) ALLOCATION OF EXPENSES
Expenses specifically identifiable to a particular fund or class are borne
by that fund or class. Other expenses are allocated to each fund or class based
on its net assets in relation to the total net assets of all applicable funds or
classes or on another reasonable basis. For the year ended October 31, 1995,
transfer and dividend disbursing agent fees accrued to classes A, B and C were
$279,089, $36,906 and $14,360, respectively, for Quest for Value; $236,086,
$141,736 and $32,184, respectively, for Opportunity; $146,564, $44,501 and
$15,202, respectively, for Small Capitalization; $61,191, $8,864 and $3,797,
respectively, for Growth and Income; $117,106, $8,732 and $4,529, respectively,
for U.S. Government and $58,422, $8,814 and $3,965, respectively, for Investment
Quality Income. These expenses are consolidated, by fund, in the accompanying
Statements of Operations.
32
<PAGE>
- --------------------------------------------------------------------------------
2. INVESTMENT ADVISORY FEE, ACCOUNTING SERVICES FEE, DISTRIBUTION FEE AND OTHER
TRANSACTIONS WITH AFFILIATES
(A) The investment advisory fee is payable monthly to the Adviser, and is
computed as a percentage of each fund's net assets as of the close of business
each day at the following annual rates: 1.00% for Quest for Value, Opportunity
and Small Capitalization, respectively; .85% for Growth and Income and .60% for
U.S. Government and Investment Quality, respectively. For the year ended October
31, 1995, the Adviser voluntarily waived $8,286 and $42,245 in investment
advisory fees for Growth and Income and Investment Quality, respectively.
(B) A portion of the accounting services fee for Opportunity, Small
Capitalization, Growth and Income, U.S. Government and Investment Quality is
payable monthly to the Adviser. These funds reimburse the Adviser for a portion
of the salaries of officers and employees of Oppenheimer Capital based upon the
amount of time such persons spend in providing services to each fund in
accordance with the provisions of the Investment Advisory Agreement. For the
year ended October 31, 1995, the Adviser received $48,747, $53,951, $57,800,
$56,310 and $50,362, respectively.
(C) The funds have adopted a Plan and Agreement of Distribution (the
"Plan") pursuant to which each fund is permitted to compensate the Distributor
in connection with the distribution of fund shares. Under the Plan, the
Distributor has entered 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 funds pay the Distributor compensation, accrued
daily and payable monthly on each fund's average daily net assets for Class A
shares at the following annual rates: .25% for Quest for Value, Opportunity and
Small Capitalization, .05% for U.S. Government and .15% for Investment Quality
and Growth and Income. Each fund's Class A shares also pay a service fee at the
annual rate of .25%. Compensation for Class B and Class C shares of each fund is
at an annual rate of .75% of average daily net assets. Each fund's Class B and
Class C shares also pay a service fee at the 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 fund
shares. 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 year ended October 31, 1995, distribution and service fees charged
to classes A, B and C were $1,286,200, $253,926 and $67,110, respectively, for
Quest for Value; $1,258,129, $1,165,226 and $241,676, respectively, for
Opportunity; $597,200, $201,055 and $61,139, respectively, for Small
Capitalization; $133,588, $48,455 and $9,680, respectively, for Growth and
Income; $344,839, $92,104 and $18,236, respectively, for U.S. Government and
$183,475, $95,449 and $32,295, respectively, for Investment Quality Income.
These expenses are consolidated, by fund, in the accompanying Statements of
Operations.
(D) Total brokerage commissions paid by Quest for Value, Opportunity, Small
Capitalization and Growth and Income were $309,310, $647,240, $400,477 and
$112,411, respectively, of which Oppenheimer & Co., Inc., an affiliate of the
Adviser, received $156,970, $266,868, $161,399 and $54,131, respectively, for
the year ended October 31, 1995.
(E) Oppenheimer & Co., Inc. has informed the funds that it received
approximately $390,000, $959,000, $241,000, $35,000, $162,000 and $88,000 in
connection with the sale of Class A shares for Quest for Value, Opportunity,
Small Capitalization, Growth and Income, U.S. Government and Investment Quality,
respectively, for the year ended October 31, 1995.
33
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Distributor has also informed the funds that it received contingent
deferred sales charges on the redemption of Class A and Class C shares of
approximately $10,000, $20,000, $10,000, $100, $6,000 and $2,000 for Quest for
Value, Opportunity, Small Capitalization, Growth and Income, U.S. Government and
Investment Quality, respectively, for the year ended October 31, 1995.
For the year ended October 31, 1995, the Distributor had assigned the right
to receive the compensation and contingent deferred sales charge on Class B
shares to a bank in return for the bank's reimbursement to the Distributor of
commissions paid by the Distributor to brokers/dealers on the sale of Class B
shares.
3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1995, purchases and sales of investment
securities, other than short-term securities, were as follows:
<TABLE>
<CAPTION>
QUEST FOR SMALL GROWTH AND U.S. INVESTMENT
VALUE OPPORTUNITY CAPITALIZATION INCOME GOVERNMENT QUALITY
------------ ------------- ---------------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Purchases $ 89,609,378 $ 350,805,248 $ 92,530,292 $54,163,330 $259,064,073 $5,329,244
Sales 116,160,440 67,743,053 99,613,323 41,657,071 304,565,951 4,275,980
</TABLE>
The following table summarizes activity in written option transactions for U.S.
Government for the year ended October 31, 1995:
<TABLE>
<CAPTION>
CONTRACTS PREMIUMS
----------- -----------
<S> <C> <C>
Option contracts written: Outstanding
beginning of year 2 $ 142,188
Options written 47 3,306,327
Options terminated in closing purchase
transactions (25) (1,788,359)
Options exercised (15) (920,313)
Options expired (8) (607,031)
--- -----------
Option contracts written: Outstanding end of
year 1 $ 132,812
--- -----------
--- -----------
</TABLE>
34
<PAGE>
- --------------------------------------------------------------------------------
4. FUND SHARE TRANSACTIONS
The following tables summarize the fund share activity for the two years
ended October 31, 1995:
<TABLE>
<CAPTION>
QUEST FOR VALUE OPPORTUNITY SMALL CAPITALIZATION
------------------------- ------------------------- -------------------------
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
------------------------- ------------------------- -------------------------
1995 1994 1995 1994 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Issued................................ 4,045,256 5,077,999 9,028,138 4,781,210 2,307,655 7,804,081
Dividends and distributions
reinvested........................... 1,440,961 797,941 328,864 186,714 181,647 450,409
Redeemed.............................. (4,924,606) (6,566,112) (2,718,312) (3,470,990) (3,125,095) (6,835,042)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease)............. 561,611 (690,172) 6,638,690 1,496,934 (635,793) 1,419,448
----------- ----------- ----------- ----------- ----------- -----------
CLASS B
Issued................................ 1,718,575 1,020,362 7,259,921 2,145,988 620,242 936,328
Dividends and distributions
reinvested........................... 94,418 10,514 98,923 6,821 26,272 9,286
Redeemed.............................. (277,524) (44,566) (624,721) (54,500) (271,244) (50,575)
----------- ----------- ----------- ----------- ----------- -----------
Net increase........................ 1,535,469 986,310 6,734,123 2,098,309 375,270 895,039
----------- ----------- ----------- ----------- ----------- -----------
CLASS C
Issued................................ 523,083 289,679 1,828,198 367,367 389,503 205,454
Dividends and distributions
reinvested........................... 25,381 1,106 17,240 1,789 5,721 1,176
Redeemed.............................. (127,913) (22,509) (176,839) (13,680) (71,284) (13,923)
----------- ----------- ----------- ----------- ----------- -----------
Net increase........................ 420,551 268,276 1,668,599 355,476 323,940 192,707
----------- ----------- ----------- ----------- ----------- -----------
Total net increase................ 2,517,631 564,414 15,041,412 3,950,719 63,417 2,507,194
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME U.S. GOVERNMENT INVESTMENT QUALITY
------------------------- ------------------------- -------------------------
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
------------------------- ------------------------- -------------------------
1995 1994 1995 1994 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Issued................................ 790,817 591,037 1,685,034 1,484,549 777,291 1,194,443
Dividends and distributions
reinvested........................... 216,701 506,743 534,322 839,276 222,241 263,168
Redeemed.............................. (641,530) (600,435) (4,526,190) (6,552,668) (1,706,041) (1,940,417)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease)............. 365,988 497,345 (2,306,834) (4,228,843) (706,509) (482,806)
----------- ----------- ----------- ----------- ----------- -----------
CLASS B
Issued................................ 438,682 269,571 467,177 594,901 708,238 614,495
Dividends and distributions
reinvested........................... 22,368 19,104 28,912 16,698 44,636 18,150
Redeemed.............................. (51,318) (26,407) (272,297) (86,599) (228,114) (77,488)
----------- ----------- ----------- ----------- ----------- -----------
Net increase........................ 409,732 262,268 223,792 525,000 524,760 555,157
----------- ----------- ----------- ----------- ----------- -----------
CLASS C
Issued................................ 140,694 33,894 182,514 123,553 116,706 290,357
Dividends and distributions
reinvested........................... 3,711 2,697 7,733 4,123 8,984 9,047
Redeemed.............................. (21,778) (469) (47,976) (25,877) (27,176) (41,081)
----------- ----------- ----------- ----------- ----------- -----------
Net increase........................ 122,627 36,122 142,271 101,799 98,514 258,323
----------- ----------- ----------- ----------- ----------- -----------
Total net increase (decrease)..... 898,347 795,735 (1,940,771) (3,602,044) (83,235) 330,674
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
35
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. UNREALIZED APPRECIATION (DEPRECIATION) AND COST OF INVESTMENTS FOR FEDERAL
INCOME TAX PURPOSES
At October 31, 1995, the composition of unrealized appreciation
(depreciation) of investment securities and the cost of investments for Federal
income tax purposes were as follows:
<TABLE>
<CAPTION>
APPRECIATION (DEPRECIATION) NET TAX COST
------------ -------------- ----------- ------------
<S> <C> <C> <C> <C>
Quest for Value $72,832,935 $ (782,009) $72,050,926 $258,831,045
Opportunity 107,623,664 (8,230,134) 99,393,530 542,282,713
Small Capitalization 13,114,205 (4,646,081) 8,468,124 141,830,483
Growth and Income 3,674,355 (1,106,543) 2,567,812 43,607,284
U.S. Government 852,086 (2,085,345) (1,233,259) 115,524,803
Investment Quality 4,461,416 (402,788) 4,058,628 56,937,821
</TABLE>
6. AUTHORIZED FUND SHARES AND PAR VALUE PER SHARE
<TABLE>
<CAPTION>
QUEST SMALL GROWTH U.S. INVESTMENT
FOR VALUE OPPORTUNITY CAPITALIZATION AND INCOME GOVERNMENT QUALITY
---------- ----------- -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Authorized fund shares 35,000,000 unlimited unlimited unlimited unlimited unlimited
Par value per share $1.00 $.01 $.01 $.01 $.01 $.01
</TABLE>
7. DIVIDENDS AND DISTRIBUTIONS
The following tables summarize the per share dividends and distributions
made for the two years ended October 31, 1995:
<TABLE>
<CAPTION>
QUEST FOR SMALL
VALUE OPPORTUNITY CAPITALIZATION
-------------- -------------- --------------
YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
-------------- -------------- --------------
1995 1994 1995 1994 1995 1994
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME:
Class A.......................... $ 0.083 $ 0.040 $ 0.117 $ 0.326 -- --
Class B.......................... 0.074 0.031 0.117 0.313 -- --
Class C.......................... 0.081 0.033 0.117 0.312 -- --
NET REALIZED GAINS:
Class A.......................... $ 0.828 $ 0.469 $ 0.614 $ 0.219 $ 0.415 $ 1.331
Class B.......................... 0.828 0.469 0.614 0.219 0.415 1.331
Class C.......................... 0.828 0.469 0.614 0.219 0.415 1.331
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND U.S. INVESTMENT
INCOME GOVERNMENT QUALITY
-------------- -------------- --------------
YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
-------------- -------------- --------------
1995 1994 1995 1994 1995 1994
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME:
Class A.......................... $ 0.289 $ 0.319 $ 0.639 $ 0.593 $ 0.707 $ 0.680
Class B.......................... 0.242 0.265 0.562 0.510 0.646 0.609
Class C.......................... 0.209 0.261 0.549 0.509 0.643 0.608
NET REALIZED GAINS:
Class A.......................... $ 0.422 $ 1.669 -- $ 0.213 -- $ 0.069
Class B.......................... 0.422 1.669 -- 0.213 -- 0.069
Class C.......................... 0.422 1.669 -- 0.213 -- 0.069
TAX RETURN OF CAPITAL:
Class A.......................... -- -- $ 0.013 -- -- --
Class B.......................... -- -- 0.013 -- -- --
Class C.......................... -- -- 0.013 -- -- --
</TABLE>
36
<PAGE>
- --------------------------------------------------------------------------------
8. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
During the year ended October 31, 1995, U.S. Government wrote covered
options and Small Capitalization and Investment Quality entered into futures
contracts in order to hedge their existing portfolio securities against
fluctuations in value. Written options and futures contracts involve elements of
market risk in excess of the amounts reflected in the fund's Statements of
Assets and Liabilities. A fund, as a writer of an option, has no control over
whether the option is exercised. The underlying security may be sold and, as a
result, a fund bears the market risk of an unfavorable change in the price of
the security underlying the written option. For futures contracts, the contract
amount reflects the extent of a fund's exposure to off balance sheet risk.
Written options and futures contracts also have elements of credit risk; i.e.
the risk that the counterparty may not perform. If the option or futures
contracts are traded through a regulated exchange, the counterparty risk is
generally eliminated since the exchange interposes itself into the transaction.
If, however, the option or futures contracts are traded in the over-the-counter
market, counterparty risk can exist.
9. NET CAPITAL LOSS CARRYOVERS
For the fiscal year ended October 31, 1995, Growth and Income will utilize
$188,067 of net capital loss carryovers. Growth and Income has net capital loss
carryovers of $233,749 of which $177,811 and $55,938 will be available, to the
extent provided by regulations, to offset future net capital gains realized
through the fiscal years ending 1996 and 2000, respectively. However, due to the
acquisition of the Unified Income Fund and the Unified Mutual Shares Fund in
1992, the loss carryovers are further limited by IRC Section 382 to $188,067
annually. As a result, Growth and Income had $370,083 of net capital loss
carryover expire on October 31, 1995 which is no longer available for future
periods. In addition, U.S. Government, at October 31, 1995, had a net capital
loss carryover of $8,145,977 available, to the extent provided by regulations,
to offset future net capital gains realized before the end of fiscal year 2003.
Also at October 31, 1995, Investment Quality had a net capital loss carryover of
$1,854,362 of which $952,880 and $901,482 will be available to offset future net
capital gains realized through the fiscal years ending 2002 and 2003,
respectively. To the extent that the capital loss carryovers are used to offset
future net capital gains, it is probable that the gains so offset will not be
distributed to shareholders.
10. SUBSEQUENT EVENTS
(a) On November 22, 1995, OCC Distributors (previously Quest for Value
Distributors), OpCap Advisors (previously Quest for Value Advisors) and their
parent Oppenheimer Capital consummated a transaction with Oppenheimer Management
Corporation ("OMC") 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 and the
Opportunity Fund, the Small Capitalization Fund, the Growth and Income Fund and
the Officers Fund, portfolios of the 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 merged, as part of a tax-free
reorganization, 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.
(b) On November 22, 1995, U.S. Government and Investment Quality paid the
following per share net investment income dividends to shareholders of record on
the close of business November 22, 1995:
<TABLE>
<CAPTION>
CLASS CLASS CLASS
A B C
------ ------ ------
<S> <C> <C> <C>
U.S. Government $0.0352 $0.0302 $0.0298
Investment Quality 0.0384 0.0345 0.0343
</TABLE>
37
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
---------------------------------- ----------------------------------
Net
Realized Distributions
and Dividends to
Unrealized to Shareholders
Net Asset Net Gain Total Shareholders from Net Total
Value, Investment (Loss) from from Net Realized Dividends
Beginning Income on Investment Investment Gain on and
of Period (Loss)* Investments Operations Income Investments Distributions
<S> <C> <C> <C> <C> <C> <C> <C>
Quest for Value Fund, Inc.
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 12.59 $ 0.12 $ 2.71 $ 2.83 ($ 0.08) ($ 0.83) ($ 0.91)
1994 12.51 0.09 0.50 0.59 (0.04) (0.47) (0.51)
1993 11.71 0.05 1.34 1.39 (0.05) (0.54) (0.59)
1992 10.61 0.04 1.77 1.81 (0.07) (0.64) (0.71)
1991 7.84 0.09 2.84 2.93 (0.16) -- (0.16)
Class B,
YEAR ENDED OCTOBER 31,
1995 12.53 0.05 2.69 2.74 (0.07) (0.83) (0.90)
1994 12.51 0.02 0.50 0.52 (0.03) (0.47) (0.50)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.66(3) (0.01) (0.14) (0.15) -- -- --
Class C,
YEAR ENDED OCTOBER 31,
1995 12.52 0.04 2.70 2.74 (0.08) (0.83) (0.91)
1994 12.50 0.01 0.51 0.52 (0.03) (0.47) (0.50)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.66(3) (0.01) (0.15) (0.16) -- -- --
<CAPTION>
RATIOS
-----------------------------------
Ratio of
Net Ratio of
Operating Net
Net Net Expenses Investment
Asset Assets to Income
Value, End of Average (Loss) Portfolio
End of Total Period Net to Average Turnover
Period Return** (000's) Assets Net Assets Rate
<S> <C> <C> <C> <C> <C> <C>
Quest for Value Fund, Inc.
Class A,
YEAR ENDED OCTOBER 31,
1995 $14.51 24.74% $282,615 1.68%(1) 0.90%(1) 36%
1994 12.59 5.01% 238,085 1.71% 0.72% 49%
1993 12.51 12.27% 245,320 1.75% 0.40% 27%
1992 11.71 18.45% 142,939 1.75% 0.53% 41%
1991 10.61 37.94% 79,914 1.83% 1.06% 48%
Class B,
YEAR ENDED OCTOBER 31,
1995 14.37 24.08% 38,557 2.21%(1) 0.36%(1) 36%
1994 12.53 4.43% 14,373 2.24% 0.14% 49%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.51 (1.19%) 2,015 2.27%(5) (1.19%)(5) 27%
Class C,
YEAR ENDED OCTOBER 31,
1995 14.35 24.10% 10,140 2.26%(1) 0.31%(1) 36%
1994 12.52 4.45% 3,581 2.28% 0.09% 49%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.50 (1.26%) 221 2.27%(5) (0.90%)(5) 27%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995, FOR CLASSES A, B,
AND C WERE $257,239,913, $25,392,617 AND $6,711,023, RESPECTIVELY.
Opportunity Fund
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 19.69 $ 0.23 $ 5.40 $ 5.63 ($ 0.12) ($ 0.61) ($ 0.73)
1994 18.71 0.18 1.35 1.53 (0.33) (0.22) (0.55)
1993 16.73 0.35 2.02 2.37 (0.07) (0.32) (0.39)
1992 14.29 0.09 2.93 3.02 (0.03) (0.55) (0.58)
1991 9.74 0.03 4.78 4.81 (0.23) (0.03) (0.26)
Class B,
YEAR ENDED OCTOBER 31,
1995 19.59 0.11 5.36 5.47 (0.12) (0.61) (0.73)
1994 18.70 0.08 1.34 1.42 (0.31) (0.22) (0.53)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 18.73(3) 0.02 (0.05) (0.03) -- -- --
Class C,
YEAR ENDED OCTOBER 31,
1995 19.58 0.08 5.38 5.46 (0.12) (0.61) (0.73)
1994 18.70 0.08 1.33 1.41 (0.31) (0.22) (0.53)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 18.73(3) 0.02 (0.05) (0.03) -- -- --
<CAPTION>
Class A,
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31,
1995 $24.59 29.88% $367,240 1.69%(1) 1.02%(1) 21%
1994 19.69 8.41% 163,340 1.78% 0.96% 42%
1993 18.71 14.34% 127,225 1.83% 2.69% 24%
1992 16.73 21.93% 40,563 2.27% 0.72% 32%
1991 14.29 50.44% 8,446 2.35%(2) 0.30%(2) 88%
Class B,
YEAR ENDED OCTOBER 31,
1995 24.33 29.19% 217,663 2.21%(1) 0.48%(1) 21%
1994 19.59 7.84% 43,317 2.34% 0.43% 42%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 18.70 (0.16%) 2,115 2.52%(5) 1.32%(5) 24%
Class C,
YEAR ENDED OCTOBER 31,
1995 24.31 29.16% 49,608 2.31%(1) 0.37%(1) 21%
1994 19.58 8.06% 7,289 2.35% 0.43% 42%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 18.70 (0.16%) 313 2.52%(5) 1.13%(5) 24%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995, FOR CLASSES A, B,
AND C WERE $251,625,672, $116,522,609 AND $24,167,608, RESPECTIVELY.
(2) DURING THE PERIOD NOTED ABOVE, THE ADVISER VOLUNTARILY WAIVED ITS FEE AND
ASSUMED A PORTION OF THE OPERATING EXPENSES. IF SUCH WAIVER AND ASSUMPTION
HAD NOT BEEN IN EFFECT, THE RATIO OF NET OPERATING EXPENSES TO AVERAGE NET
ASSETS AND THE RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS
WOULD HAVE BEEN 3.33% AND (0.68%), RESPECTIVELY, FOR THE YEAR ENDED OCTOBER
31, 1991.
- ----------------------------------
(3) OFFERING PRICE.
(4) INITIAL OFFERING OF CLASS B AND CLASS C SHARES.
(5) ANNUALIZED.
* BASED ON AVERAGE SHARES OUTSTANDING FOR THE PERIOD.
** ASSUMES REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS, BUT DOES NOT
REFLECT DEDUCTIONS FOR SALES CHARGES. AGGREGATE (NOT ANNUALIZED) TOTAL
RETURN IS SHOWN FOR ANY PERIOD SHORTER THAN ONE YEAR.
38
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
---------------------------------- ----------------------------------
Net
Realized Distributions
and Dividends to
Unrealized to Shareholders
Net Asset Net Gain Total Shareholders from Net Total
Value, Investment (Loss) from from Net Realized Dividends
Beginning Income on Investment Investment Gain on and
of Period (Loss)* Investments Operations Income Investments Distributions
<S> <C> <C> <C> <C> <C> <C> <C>
Small Capitalization Fund
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 16.33 $ 0.11 $ 1.29 $ 1.40 $ -- ($ 0.42) ($ 0.42)
1994 17.68 (0.03) 0.01 (0.02) -- (1.33) (1.33)
1993 14.60 (0.04) 4.26 4.22 -- (1.14) (1.14)
1992 13.52 -- 1.50 1.50 -- (0.42) (0.42)
1991 8.80 (0.05) 4.85 4.80 (0.08) -- (0.08)
Class B,
YEAR ENDED OCTOBER 31,
1995 16.24 0.02 1.27 1.29 -- (0.42) (0.42)
1994 17.66 (0.11) 0.02 (0.09) -- (1.33) (1.33)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 17.19(3) (0.02) 0.49 0.47 -- -- --
Class C,
YEAR ENDED OCTOBER 31,
1995 16.23 0.01 1.29 1.30 -- (0.42) (0.42)
1994 17.67 (0.13) 0.02 (0.11) -- (1.33) (1.33)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 17.19(3) (0.02) 0.50 0.48 -- -- --
<CAPTION>
RATIOS
-----------------------------------
Ratio of
Net Ratio of
Operating Net
Net Net Expenses Investment
Asset Assets to Income
Value, End of Average (Loss) Portfolio
End of Total Period Net to Average Turnover
Period Return** (000's) Assets Net Assets Rate
<S> <C> <C> <C> <C> <C> <C>
Small Capitalization Fund
Class A,
YEAR ENDED OCTOBER 31,
1995 $17.31 8.82% $116,307 1.80%(1) 0.67%(1) 76%
1994 16.33 0.04% 120,102 1.88% (0.14%) 67%
1993 17.68 30.21% 104,898 1.89% (0.36%) 74%
1992 14.60 11.60% 39,693 2.11% (0.04%) 95%
1991 13.52 55.01% 20,686 2.25%(2) (0.41%)(2) 103%
Class B,
YEAR ENDED OCTOBER 31,
1995 17.11 8.17% 23,440 2.37%(1) 0.09%(1) 76%
1994 16.24 (0.39%) 16,144 2.48% (0.70%) 67%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 17.66 2.73% 1,754 2.57%(5) (1.15%)(5) 74%
Class C,
YEAR ENDED OCTOBER 31,
1995 17.11 8.24% 9,068 2.38%(1) 0.08%(1) 76%
1994 16.23 (0.51%) 3,344 2.59% (0.81%) 67%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 17.67 2.79% 235 2.57%(5) (1.20%)(5) 74%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995, FOR CLASSES A, B,
AND C WERE $119,440,010, $20,105,476 AND $6,113,900, RESPECTIVELY.
(2) DURING THE PERIOD NOTED ABOVE, THE ADVISER VOLUNTARILY WAIVED ITS FEE AND
ASSUMED A PORTION OF THE OPERATING EXPENSES. IF SUCH WAIVER AND ASSUMPTION
HAD NOT BEEN IN EFFECT, THE RATIO OF NET OPERATING EXPENSES TO AVERAGE NET
ASSETS AND THE RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS
WOULD HAVE BEEN 3.27% AND (1.43%), RESPECTIVELY, FOR THE YEAR ENDED OCTOBER
31, 1991.
Growth and Income Fund
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 10.09 $ 0.27 $ 1.27 $ 1.54 ($ 0.29) ($ 0.42) ($ 0.71)
1994 11.24 0.32 0.55 0.87 (0.32) (1.70) (2.02)
1993 10.80 0.30 0.73 1.03 (0.26) (0.33) (0.59)
NOVEMBER 4, 1991 (6)
TO OCTOBER 31, 1992 10.00(3) 0.28 0.80 1.08 (0.28) -- (0.28)
Class B,
YEAR ENDED OCTOBER 31,
1995 10.07 0.19 1.28 1.47 (0.24) (0.42) (0.66)
1994 11.23 0.25 0.56 0.81 (0.27) (1.70) (1.97)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.21(3) 0.04 0.05 0.09 (0.07) -- (0.07)
Class C,
YEAR ENDED OCTOBER 31,
1995 10.07 0.15 1.30 1.45 (0.21) (0.42) (0.63)
1994 11.23 0.24 0.56 0.80 (0.26) (1.70) (1.96)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.21(3) 0.04 0.05 0.09 (0.07) -- (0.07)
<CAPTION>
Class A,
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31,
1995 $10.92 16.35% $37,082 1.99%(1,2) 2.60%(1,2) 130%
1994 10.09 8.64% 30,576 1.86%(2) 3.16%(2) 113%
1993 11.24 9.93% 28,466 1.90%(2) 2.66%(2) 192%
NOVEMBER 4, 1991 (6)
TO OCTOBER 31, 1992 10.80 10.84% 8,057 2.23%(2,5) 2.73%(2,5) 77%
Class B,
YEAR ENDED OCTOBER 31,
1995 10.88 15.65% 7,623 2.59%(1,2) 1.71%(1,2) 130%
1994 10.07 7.96% 2,928 2.47%(2) 2.53%(2) 113%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.23 0.81% 319 2.49%(2,5) 1.83%(2,5) 192%
Class C,
YEAR ENDED OCTOBER 31,
1995 10.89 15.38% 1,828 2.88%(1,2) 1.39%(1,2) 130%
1994 10.07 7.91% 455 2.62%(2) 2.39%(2) 113%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.23 0.81% 102 2.49%(2,5) 2.18%(2,5) 192%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995 FOR CLASSES A, B, AND
C WERE $33,396,923, $4,845,598 AND $967,910, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED A PORTION
OF ITS FEES. IF SUCH WAIVERS HAD NOT BEEN IN EFFECT, THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS FOR CLASS A WOULD HAVE BEEN 2.02% AND 2.57%,
RESPECTIVELY, FOR THE YEAR ENDED OCOTBER 31, 1995, 2.32% AND 2.70%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1994, 2.18% AND 2.38%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1993 AND 2.98% AND 1.98%,
ANNUALIZED, RESPECTIVELY, FOR THE PERIOD NOVEMBER 4, 1991 (COMMENCEMENT OF
OPERATIONS) TO OCTOBER 31, 1992. THE RATIOS OF NET OPERATING EXPENSES TO
AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT INCOME TO AVERAGE NET
ASSETS WOULD HAVE BEEN 2.57% AND 1.73%, RESPECTIVELY, FOR CLASS B AND 2.84%
AND 1.43%, RESPECTIVELY, FOR CLASS C, FOR THE YEAR ENDED OCTOBER 31, 1995,
2.93% AND 2.07%, RESPECTIVELY, FOR CLASS B AND 3.10% AND 1.91%,
RESPECTIVELY, FOR CLASS C, FOR THE YEAR ENDED OCTOBER 31, 1994 AND 2.88% AND
1.44%, ANNUALIZED, RESPECTIVELY, FOR CLASS B AND 2.87% AND 1.80%,
ANNUALIZED, RESPECTIVELY, FOR CLASS C, FOR THE PERIOD SEPTEMBER 2, 1993
(INITIAL OFFERING) TO OCTOBER 31, 1993.
- ----------------------------------
(3) OFFERING PRICE.
(4) INITIAL OFFERING OF CLASS B AND CLASS C SHARES.
(5) ANNUALIZED.
(6) COMMENCEMENT OF OPERATIONS.
* BASED ON AVERAGE SHARES OUTSTANDING FOR THE PERIOD.
** ASSUMES REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS, BUT DOES NOT
REFLECT DEDUCTIONS FOR SALES CHARGES. AGGREGATE (NOT ANNUALIZED) TOTAL
RETURN IS SHOWN FOR ANY PERIOD SHORTER THAN ONE YEAR.
39
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
(CONTINUED)
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
---------------------------------- ----------------------------------
Net
Realized Distributions
and Dividends to
Unrealized to Shareholders
Net Asset Net Gain Total Shareholders from Net Tax
Value, Investment (Loss) from from Net Realized return
Beginning Income on Investment Investment Gain on of
of Period (Loss) Investments Operations Income Investments Capital
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. Government Income Fund
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 10.79 $ 0.64 $ 0.49 $ 1.13 ($ 0.64) $ -- ($ 0.01)
1994 12.08 0.59 (1.08) (0.49) (0.59) (0.21) --
1993 11.92 0.65 0.35 1.00 (0.68) (0.16) --
1992 11.80 0.74 0.18 0.92 (0.74) (0.06) --
1991 11.35 0.85 0.61 1.46 (0.86) (0.15) --
Class B,
YEAR ENDED OCTOBER 31,
1995 10.79 0.56 0.49 1.05 (0.56) -- (0.01)
1994 12.08 0.51 (1.08) (0.57) (0.51) (0.21) --
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.13(3) 0.08 (0.04) 0.04 (0.08) (0.01) --
Class C,
YEAR ENDED OCTOBER 31,
1995 10.79 0.55 0.49 1.04 (0.55) -- (0.01)
1994 12.08 0.51 (1.08) (0.57) (0.51) (0.21) --
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.13(3) 0.08 (0.04) 0.04 (0.08) (0.01) --
<CAPTION>
RATIOS
-----------------------------------
Ratio of
Net Ratio of
Operating Net
Net Net Expenses Investment
Asset Assets to Income
Total Value, End of Average (Loss) Portfolio
Dividends and End of Total Period Net to Average Turnover
Distributions Period Return* (000's) Assets Net Assets Rate
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. Government Income Fund
Class A,
YEAR ENDED OCTOBER 31,
1995 ($0.65) $11.27 10.78% $102,718 1.26%(1) 5.81%(1) 245%
1994 (0.80) 10.79 (4.15%) 123,257 1.20%(2) 5.19%(2) 126%
1993 (0.84) 12.08 8.55% 189,091 1.15%(2) 5.33%(2) 315%
1992 (0.80) 11.92 7.98% 151,197 1.15%(2) 6.26%(2) 207%
1991 (1.01) 11.80 13.40% 82,400 1.15%(2) 7.24%(2) 309%
Class B,
YEAR ENDED OCTOBER 31,
1995 (0.57) 11.27 10.01% 9,641 1.94%(1) 5.04%(1) 245%
1994 (0.72) 10.79 (4.84%) 6,813 1.92%(2) 4.53%(2) 126%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 (0.09) 12.08 0.29% 1,286 1.85%(2,5) 3.07%(2,5) 315%
Class C,
YEAR ENDED OCTOBER 31,
1995 (0.56) 11.27 9.89% 2,883 2.06%(1) 4.91%(1) 245%
1994 (0.72) 10.79 (4.84%) 1,224 1.94%(2) 4.57%(2) 126%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 (0.09) 12.08 0.34% 141 1.85%(2,5) 3.89%(2,5) 315%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995, FOR CLASSES A, B,
AND C WERE $114,946,501, $9,210,406 AND $1,823,599, RESPECTIVELY.
(2) DURING THE PERIODS NOTED ABOVE, THE ADVISER VOLUNTARILY WAIVED A PORTION OF
ITS FEES. IF SUCH WAIVERS HAD NOT BEEN IN EFFECT, THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS FOR CLASS A WOULD HAVE BEEN 1.23% AND 5.16%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1994, 1.20% AND 5.28%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1993, 1.17% AND 6.24%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1992, AND 1.46% AND 6.93%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1991. THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS WOULD HAVE BEEN 1.93% AND 4.52%, RESPECTIVELY,
FOR CLASS B AND 1.95% AND 4.56%, RESPECTIVELY, FOR CLASS C, FOR THE YEAR
ENDED OCTOBER 31, 1994 AND 1.96% AND 2.96%, ANNUALIZED, RESEPCTIVELY, FOR
CLASS B AND 1.96% AND 3.78%, ANNUALIZED, RESPECTIVELY, FOR CLASS C, FOR THE
PERIOD SEPTEMBER 2, 1993 (INITIAL OFFERING) TO OCTOBER 31, 1993.
Investment Quality Income Fund
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 9.67 $ 0.71 $ 1.21 $ 1.92 ($ 0.71) $ -- $ --
1994 11.49 0.68 (1.75) (1.07) (0.68) (0.07) --
1993 10.36 0.68 1.19 1.87 (0.68) (0.06) --
1992 10.06 0.80 0.30 1.10 (0.80) -- --
DECEMBER 18, 1990 (6)
TO OCTOBER 31, 1991 10.00(3) 0.71 0.06 0.77 (0.71) -- --
Class B,
YEAR ENDED OCTOBER 31,
1995 9.67 0.65 1.21 1.86 (0.65) -- --
1994 11.49 0.61 (1.75) (1.14) (0.61) (0.07) --
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.52(3) 0.08 (0.03) 0.05 (0.08) -- --
Class C,
YEAR ENDED OCTOBER 31,
1995 9.67 0.64 1.21 1.85 (0.64) -- --
1994 11.49 0.61 (1.75) (1.14) (0.61) (0.07) --
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.52(3) 0.09 (0.03) 0.06 (0.09) -- --
<CAPTION>
Class A,
<S> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31,
1995 ($0.71) $10.88 20.49% $ 45,078 1.44%(1,2) 6.90%(1,2) 8%
1994 (0.75) 9.67 (9.61%) 46,922 1.29%(2) 6.47%(2) 33%
1993 (0.74) 11.49 18.64% 61,288 1.20%(2) 6.07%(2) 12%
1992 (0.80) 10.36 11.21% 29,701 0.95%(2) 7.62%(2) 18%
DECEMBER 18, 1990 (6)
TO OCTOBER 31, 1991 (0.71) 10.06 8.11% 17,235 0.82%(2,5) 8.25%(2,5) 19%
Class B,
YEAR ENDED OCTOBER 31,
1995 (0.65) 10.88 19.78% 13,134 2.03%(1,2) 6.15%(1,2) 8%
1994 (0.68) 9.67 (10.22%) 6,605 1.92%(2) 5.85%(2) 33%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 (0.08) 11.49 0.45% 1,468 1.84%(2,5) 3.68%(2,5) 12%
Class C,
YEAR ENDED OCTOBER 31,
1995 (0.64) 10.88 19.72% 3,977 2.08%(1,2) 6.18%(1,2) 8%
1994 (0.68) 9.67 (10.23%) 2,583 1.90%(2) 6.01%(2) 33%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 (0.09) 11.49 0.55% 101 1.84%(2,5) 4.83%(2,5) 12%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995, FOR CLASSES A, B,
AND C WERE $45,868,837, $9,544,915 AND $3,229,501, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED ALL OR A
PORTION OF ITS FEES AND ASSUMED A PORTION OF ITS OPERATING EXPENSES. IF SUCH
WAIVERS AND ASSUMPTIONS HAD NOT BEEN IN EFFECT, THE RATIOS OF NET OPERATING
EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS FOR CLASS A WOULD HAVE BEEN 1.52% AND 6.82%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1995, 1.59% AND 6.71%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1994, 1.50% AND 5.77%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1993, 1.72% AND 6.85%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1992, AND 2.11% AND 6.96%,
ANNUALIZED, RESPECTIVELY, FOR THE PERIOD DECEMBER 18, 1990 (COMMENCEMENT OF
OPERATIONS) TO OCTOBER 31, 1991. THE RATIOS OF NET OPERATING EXPENSES TO
AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT INCOME TO AVERAGE NET
AASETS WOULD HAVE BEEN 2.09% AND 6.09%, RESPECTIVELY, FOR CLASS B AND 2.15%
AND 6.11%, RESPECTIVELY FOR CLASS C, FOR THE YEAR ENDED OCTOBER 31, 1995,
2.23% AND 5.54%, RESPECTIVELY, FOR CLASS B AND 2.21% AND 5.70%,
RESPECTIVELY, FOR CLASS C, FOR THE YEAR ENDED OCTOBER 31, 1994 AND 2.07% AND
3.45%, ANNUALIZED, RESPECTIVELY, FOR CLASS B AND 2.06% AND 4.61%,
ANNUALIZED, RESPECTIVELY, FOR CLASS C FOR THE PERIOD SEPTEMBER 2, 1993
(INITIAL OFFERING) TO OCTOBER 31, 1993.
- ----------------------------------
(3) OFFERING PRICE.
(4) INITIAL OFFERING OF CLASS B AND CLASS C SHARES.
(5) ANNUALIZED.
(6) COMMENCEMENT OF OPERATIONS.
* ASSUMES REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS, BUT DOES NOT
REFLECT DEDUCTIONS FOR SALES CHARGES. AGGREGATE (NOT ANNUALIZED) TOTAL
RETURN IS SHOWN FOR ANY PERIOD SHORTER THAN ONE YEAR.
<PAGE>
Appendix A
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 B
Corporate Industry Classification
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
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Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
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Nondurable Household Goods
Oil - Integrated
Paper
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B-1
<PAGE>
Oppenheimer Quest Small Cap Value Fund
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Sub-Adviser
OpCap Advisors
One World Financial Center
New York, New York 10281
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
State Street Bank and Trust Company
P.O. Box 8505
Boston, Massachusetts 02266-8505
Independent Auditors
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
prosp\q251sai
<PAGE>
OPPENHEIMER
QUEST OPPORTUNITY VALUE FUND
Prospectus dated February 15, 1996
Oppenheimer Quest Opportunity Value Fund (the "Fund"), a series of
Oppenheimer Quest for Value Funds, is a mutual fund that seeks
growth of capital over time through investments in a diversified
portfolio of common stocks, bonds and cash equivalents, the
proportions of which will vary based upon management's assessment
of the relative values of each investment under prevailing market
conditions. In an uncertain investment environment, the Fund may
stress defensive investment methods. Please refer to "Investment
Policies and Strategies" for more information about the types of
securities in which the Fund invests, its investment methods 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).
(OppenheimerFunds logo)
Shares of the Fund are not deposits or obligations of any bank, are
not guaranteed by any bank, are not insured by the F.D.I.C. or any
other agency, and involve investment risks, including the possible
loss of the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THE 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 Fund Who Were Shareholders of the
Former Quest for Value Funds
<PAGE>
A B O U T T H E F U N D
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. The numbers below are based on the Fund's expenses
during its last fiscal year ended October 31, 1995.
-- 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.
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales 5.75% None None
Charge on Purchases
(as a % of offering price)
- ----------------------------------------------------------------------
Sales Charge on None None None
Reinvested Dividends
- ----------------------------------------------------------------------
Deferred Sales Charge None(1) 5% in the first 1.0% if
(as a % of the lower of the year, declining shares are
original purchase price or to 1% in the redeemed
redemption proceeds) sixth year and within 12
eliminated months of
thereafter(2) purchase(2)
- ----------------------------------------------------------------------
Exchange Fee None None None
</TABLE>
(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 18 calendar months from the end of the calendar month during
which you purchased those shares, depending upon when you purchased
such shares. See "How to Buy Shares - Class A Shares," below.
Class A shares of the Fund 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.
(2)See "How to Buy Shares - Buying Class B Shares" and "How to Buy
Shares - Buying Class C Shares," below, for more information on the
contingent deferred sales charges.
-- Annual Fund Operating Expenses are paid out of the Fund's
assets and represent the Fund's expenses in operating its business.
For example, the Fund pays management fees to its investment
adviser, OppenheimerFunds, Inc. (which is 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 chart 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 each class of the Fund's shares for that
year. The "12b-1 Distribution Plan Fees" for Class A shares are
the service plan fees (the maximum fee is 0.25% of average annual
net assets of that class), and a distribution fee of 0.25% of the
average annual net assets of that class. For Class B and Class C
shares, the "12b-1 Distribution Plan Fees" are the service plan
fees of 0.25% of average annual net assets of the class, and the
asset-based sales charge of 0.75% of the average annual net assets
of the class. These plans 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 chart, depending on a
number of factors, including the actual value of the Fund's assets
represented by each class of shares.
Class A Class B Class C
Shares Shares Shares
- ----------------------------------------------------------
Management Fees % % %
- ----------------------------------------------------------
12b-1 Distribution
Plans Fees % % %
- ----------------------------------------------------------
Other Expenses % % %
- ----------------------------------------------------------
Total Fund
Operating Expenses % % %
-- Examples. To try to show the effect of these expenses on
an investment over time, we have created the hypothetical examples
shown below. Assume that you make a $1,000 investment in each class
of shares of the Fund, that the Fund's annual return is 5%, that
its operating expenses for each class are the ones shown in the
Annual Fund Operating Expenses chart above and that Class B shares
automatically convert into Class A shares six years after purchase.
If you were to redeem your shares at the end of each period shown
below, your investment would incur the following expenses by the
end of each 1, 3, 5 and 10 years:
1 year 3 years 5 years 10 years(1)
- -------------------------------------------------------------
Class A Shares $ $ $ $
Class B Shares $ $ $ $
Class C Shares $ $ $ $
If you did not redeem your investment, it would incur the
following expenses:
1 year 3 years 5 years 10 years(1)
- -------------------------------------------------------------
Class A Shares $ $ $ $
Class B Shares $ $ $ $
Class C Shares $ $ $ $
(1)The Class B expenses in years 7 through 10 are based on the Class
A expenses shown above, because the Fund automatically converts
Class B shares into Class A shares after 6 years. Because of the
effect of the asset-based sales charge and the contingent deferred
sales charge on Class B and Class C shares, long-term Class B and
Class C shareholders could pay the economic equivalent of more than
the maximum front-end sales charge allowed under applicable
regulations. For Class B shareholders, the automatic conversion of
Class B shares to Class A shares is designed to minimize the
likelihood that this will occur. Please refer to "How to Buy
Shares - Buying Class B Shares" for more information.
These examples show the effect of expenses on an investment,
but are not meant to state or predict actual or expected costs or
investment returns of the Fund, all of which 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 accounts, such as how to
sell or exchange shares.
-- What is the Fund's Investment Objective? The Fund's
investment objective is to seek growth of capital over time through
investments in a diversified portfolio of common stocks, bonds and
cash equivalents, the proportions of which will vary based upon
management's assessment of the relative values of each investment
under prevailing market conditions.
-- What does the Fund Invest in? The Fund will normally
invest primarily in common stocks and securities convertible into
common stock. During periods when common stocks appear to be
overvalued and when value differentials are such that fixed-income
obligations appear to present meaningful capital growth
opportunities relative to common stocks or pending investment in
securities with capital growth opportunities, the Fund may invest
up to 50% or more of its total assets in bonds and other fixed-
income obligations, including money market instruments as defined
herein which do not generate capital appreciation. The bonds in
which the Fund invests will be limited to U.S. government
obligations, mortgage-backed securities, investment-grade corporate
debt obligations and unrated obligations, including those of
foreign issuers, which the Sub-Adviser believes to be of comparable
quality. The Fund may assume a temporary defensive position when
appropriate to do so by investing up to 100% of its total assets in
money market securities. These investments and investment methods
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. The Manager (including a
subsidiary) manages investment company portfolios having over $38
billion in assets. The Manager handles the day-to-day business of
the Fund. The Fund also has a sub-adviser, OpCap Advisors (the
"Sub-Adviser") who is responsible for choosing the Fund's
investments. The Manager is paid an advisory fee by the Fund. The
Manager, not the Fund, pays the Sub-Adviser. The Fund has a
portfolio manager, Mr. Richard J. Glasebrook II, who 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 investment 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. 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 bond and stock market movements, or the change in value of
particular stocks or bonds because of an event affecting the
issuer. Changes in interest rates can affect stock and 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 Fund's portfolio, and in some cases by using
hedging techniques, there is no guarantee of success in achieving
the Fund's investment objective and your shares may be worth more
or less than their original cost when you redeem them. Please
refer to "Investment 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 OppenheimerFunds Distributor, Inc. (the
"Distributor") by completing an Application or by using an
Automatic Investment Plan under AccountLink. Please refer to "How
to Buy Shares" on page __ for more details.
-- Will I Pay a Sales Charge to Buy Shares? The Fund offers
the individual investor three classes of shares. Each class has
the same investment portfolio but different expenses. Class A
shares are offered with a front-end sales charge, starting at
5.75%, and reduced for larger purchases. Class B and Class C
shares are offered without a front-end sales charge, but may be
subject to a contingent deferred sales charge if redeemed within
certain periods of time following their purchase. There is also an
annual asset-based sales charge on Class B and Class C shares.
Please review "How to Buy Shares" starting on page __ for more
details, including a discussion about 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 39.
-- How Has the Fund Performed? The Fund measures its
performance by quoting its average annual total returns and
cumulative total returns, 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 broad-based market indices,
which we have done on pages __ and __. Please remember that past
performance does not guarantee future results.
Financial Highlights
The table on the following pages presents selected financial
information about the Fund, including per share data, expense
ratios and other data based on the Fund's average net assets. This
information has been audited by Price Waterhouse LLP, the Fund's
independent accountants, whose report on the Fund's financial
statements for the fiscal year ended October 31, 1995, is included
in the Statement of Additional Information.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS CLASS A
----------------------------------------------------------------------------------
PERIOD
ENDED
YEAR ENDED OCTOBER 31, OCT. 31,
1995 1994 1993 1992 1991 1990 1989(2)
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value,
beginning of period $19.69 $18.71 $16.73 $14.29 $ 9.74 $11.59 $10.00(3)
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income(4) .23 .18 .35 .09 .03 .25 .17
Net realized and unrealized gain
(loss) on investments 5.40 1.35 2.02 2.93 4.78 (1.64) 1.42
------ ------ ------ ------ ------ ------- ------
Total income (loss) from
investment operations 5.63 1.53 2.37 3.02 4.81 (1.39) 1.59
- -------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net
investment income (.12) (.33) (.07) (.03) (.23) (.22) --
Distributions from net realized
gain on investments (.61) (.22) (.32) (.55) (.03) (.24) --
------ ------ ------ ------ ------ ------- ------
Total dividends and
distributions to shareholders (.73) (.55) (.39) (.58) (.26) (.46) --
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $24.59 $19.69 $18.71 $16.73 $14.29 $ 9.74 $11.59
====== ====== ====== ====== ====== ======= ======
===============================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(5) 29.88% 8.41% 14.34% 21.93% 50.44% (12.62)% 15.90%
===============================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $367,240 $163,340 $127,225 $40,563 $8,446 $4,570 $3,868
- -------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 1.02%(6) 0.96% 2.69% .72% .30%(7) 2.30%(7) 3.75%(7,8)
Expenses 1.69%(6) 1.78% 1.83% 2.27% 2.35%(7) 2.00%(7) 1.84%(7,8)
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(9) 21.0% 42.0% 24.0% 32.0% 88.0% 206.0% 103.0%
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS CLASS B CLASS C
--------------------------------- --------------------------------
PERIOD PERIOD
ENDED ENDED
YEAR ENDED OCTOBER 31, OCT. 31, YEAR ENDED OCTOBER 31, OCT. 31,
1995 1994 1993(1) 1995 1994 1993(1)
====================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value,
beginning of period $19.59 $18.70 $18.73(3) $19.58 $18.70 $18.73(3)
- --------------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income(4) .11 .08 .02 .08 .08 .02
Net realized and unrealized gain
(loss) on investments 5.36 1.34 (.05) 5.38 1.33 (.05)
------ ------ ----- ---- ---- -----
Total income (loss) from
investment operations 5.47 1.42 (.03) 5.46 1.41 (.03)
- --------------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net
investment income (.12) (.31) -- (.12) (.31) --
Distributions from net realized
gain on investments (.61) (.22) -- (.61) (.22) --
------ ------ ------ ------ ------ ------
Total dividends and
distributions to shareholders (.73) (.53) -- (.73) (.53) --
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $24.33 $19.59 $18.70 $24.31 $19.58 $18.70
====== ====== ====== ====== ====== ======
====================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(5) 29.19% 7.84% (.16)% 29.16% 7.78% (.16)%
====================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $217,663 $43,317 $2,115 $49,608 $7,289 $313
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) .48%(6) .43% 1.32%(8) .37%(6) .43% 1.13%(8)
Expenses 2.21%(6) 2.34% 2.52%(8) 2.31%(6) 2.35% 2.52%(8)
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(9) 21.0% 42.0% 24.0% 21.0% 42.0% 24.0%
</TABLE>
1. Initial offering of Class B and Class C shares. For the period from
September 2, 1993 (inception of offering) to October 31, 1993.
2. For the period from January 1, 1989 (inception of offering) to October 31,
1989.
3. Offering price.
4. Based on average shares outstanding for the period.
5. Assumes reinvestment of all dividends and distributions, but does not
reflect deductions for sales charges. Aggregate (not annualized) total
return is shown for any period shorter than one year.
6. Average net assets for the year ended October 31, 1995, for Classes A, B,
and C were $251,625,672, $116,522,609 and $24,167,608, respectively.
7. During the periods noted above, the former Adviser voluntarily waived all or
a portion of its fees and assumed some operating expenses of the Fund. Without
such waivers and assumptions, the ratios of net investment income (loss) to
average net assets and the ratios of expenses to average net assets would have
been, respectively. Class A shares--(.68)% and 3.33% for the year ended
10/31/91, .61% and 3.69% for the year ended 10/31/90, and .27% and 5.32%
(annualized) for the period ended 10/31/89.
8. Annualized.
9. 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 $350,805,248 and $67,743,053,
respectively.
<PAGE>
Investment Objective and Policies
Objective. The Fund seeks growth of capital over time through
investments in a diversified portfolio of common stocks, bonds and
cash equivalents, the proportions of which will vary based upon
management's assessment of the relative values of each investment
under prevailing market conditions.
Investment Policies and Strategies. The Fund will normally invest
primarily in common stocks and securities convertible into common
stock. During periods when common stocks appear to be overvalued
and when value differentials are such that fixed-income obligations
appear to present meaningful capital growth opportunities relative
to common stocks or pending investment in securities with capital
growth opportunities, the Fund may invest up to 50% or more of its
total assets in bonds and other fixed-income obligations, including
money market instruments as defined below which do not generate
capital appreciation. The bonds in which the Fund invests will be
limited to U.S. Government obligations, mortgage-backed securities,
investment-grade corporate debt securities and unrated obligations,
including those of foreign issuers, that the Sub-Adviser believes
to be of comparable quality.
To provide liquidity for the purchase of new instruments and
to effect redemptions of shares, the Fund typically invests a part
of its assets in various types of U.S. government securities, and
high quality, short-term debt securities with remaining maturities
of one year or less such as government obligations, certificates of
deposit, bankers' acceptances, commercial paper, short-term
corporate securities and repurchase agreements ("money market
instruments").
For temporary defensive purposes, the Fund may invest up to
100% of its assets in money market securities. At any time that the
Fund invests in money market securities for temporary defensive
purposes, 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 policies. Except
as indicated, the investment objective and policies described above
are fundamental policies.
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 may invest a
substantial portion of its assets in stocks, the value of the
Fund's portfolio will be affected by changes in the stock markets.
At times, the stock markets can be volatile, and stock prices can
change substantially. This market risk will affect the Fund's net
asset values per share, which will fluctuate as the values of the
Fund's portfolio securities change. Not all stock prices change
uniformly or at the same time, not all stock markets move in the
same direction at the same time, and other factors can affect a
particular stock's prices (for example, poor earnings reports by an
issuer, loss of major customers, major litigation against an
issuer, and 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, by not investing too great a percentage
of the Fund's assets in any one company, and by investing a varying
portion of its portfolio in bonds and convertible securities, as
discussed below. 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.
-- Investments in Bonds and Convertible Securities. The Fund
may also invest in bonds, debentures and other fixed-income
securities. The Fund's investments in corporate debt obligations
will be limited to those rated investment-grade, including those of
foreign issuers, or, if unrated, determined by the Fund to be of
comparable quality. Investment-grade rated obligations are those
rated at least "BBB" by Standard & Poor's Corporation or at least
"Baa" by Moody's Investors Service, Inc., or a comparable rating by
another rating organization. While securities rated "BBB" by
Standard & Poor's or "Baa" by Moody's are investment-grade, they
may be subject to greater market fluctuations and risks of loss of
income and principal than higher-grade securities and may be
considered to have certain speculative characteristics.
The value of a convertible security is a function of its
"investment value" and its "conversion value." If the "investment
value" exceeds the "conversion value," the security's price will
likely increase when interest rates fall and decrease when interest
rates rise, as with a fixed-income security. If the "conversion
value" exceeds the "investment value," the convertible security
will likely sell at a premium over its conversion value and its
price will tend to fluctuate directly with the price of the
underlying security.
-- Risks of Fixed-Income Securities. 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.
-- U.S. Government Obligations, including Mortgage-Backed
Securities. U.S. Government obligations are obligations supported
by any of the following: (a) the full faith and credit of the U.S.
Government, such as obligations of Government National Mortgage
Association ("Ginnie Mae"), (b) the right of the issuer to borrow
an amount limited to a specific line of credit from the U.S.
Government, such as obligations of Federal National Mortgage
Association ("Fannie Mae"), and (c) the credit of this U.S.
Government instrumentality, such as obligations of Federal Home
Loan Mortgage Corporation ("Freddie Mac").
The Fund may invest in mortgage-backed securities issued by
the U.S. Government, its agencies or instrumentalities, including
Ginnie Mae, Fannie Mae or Freddie Mac. Also known as pass-through
securities, the homeowner's principal and interest payments pass
from the originating bank or savings and loan through the
appropriate governmental agency to investors, net of service
charges.
The effective maturity of a mortgage-backed security may be
shortened by unscheduled or early payment of principal and interest
on the underlying mortgages, which may affect the effective yield
of such securities. The principal that is returned may be invested
in instruments having a higher or lower yield than the prepaid
instruments depending on then-current market conditions.
The Fund may invest in collateralized mortgage obligations
("CMOs") that are issued or guaranteed by the U.S. Government or
its agencies or instrumentalities, or that are collateralized by a
portfolio of mortgages or mortgage-related securities guaranteed by
such an agency or instrumentality. Payment of the interest and
principal generated by the pool of mortgages is passed through to
the holders as the payments are received by the issuer of the CMO.
CMOs may be issued in a variety of classes or series ("tranches")
that have different maturities. The principal value of certain CMO
tranches may be more volatile than other types of mortgage-related
securities, because of the possibility that the principal value of
the CMO may be prepaid earlier than the maturity of the CMO as a
result of prepayments of the underlying mortgage loans by the
borrowers.
- -- 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. There is no limit to
the amount of such foreign securities the Fund may acquire. The
Fund may buy securities in any country, including emerging market
countries. The Fund presently does not intend to purchase
securities issued by emerging market countries, or by companies
located in those countries. Foreign currency will be held by the
Fund only in connection with the purchase or sale of foreign
securities.
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. Foreign investment in certain emerging market
countries is restricted or controlled in varying degrees. In the
past, securities in emerging countries have experienced greater
price movement, both positive and negative, than securities of
companies located in developed countries. More information about
the risks and potential rewards of investing in foreign securities
is contained in the Statement of Additional Information.
-- Portfolio Turnover. A change in the securities held by the
Fund is known as "portfolio turnover." The Fund may engage in
short-term trading to try to achieve its objective. It is
anticipated that the Fund's annual portfolio turnover rate will
generally not exceed 100%. The "Financial Highlights," above, show
the Fund's portfolio turnover rate during past fiscal years. High
turnover and short-term trading may cause the Fund to have
relatively larger commission expenses and transaction costs than
funds that do not engage in short-term trading. Additionally, high
portfolio turnover may affect the ability of the Fund to qualify as
a "regulated investment company" under the Internal Revenue Code
for tax deductions for dividends and capital gain distributions the
Fund pays to shareholders. The Fund qualified in its last fiscal
year and intends to do so in the coming year, although there is no
guarantee that it will qualify.
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 reduce some of the
risks.
-- Temporary Defensive Investments. In times of unstable
market or economic conditions, when the Sub-Adviser determines it
appropriate to do so to attempt to reduce fluctuations in the value
of the Fund's net assets, the Fund may assume a temporary defensive
position and invest an unlimited amount of assets in money market
instruments of the type identified on page __ under "Investment
Policies and Strategies."
-- When-Issued and Delayed Delivery Transactions. The Fund
may purchase securities on a "when-issued" basis, and may purchase
or sell such securities on a "delayed delivery" basis. These terms
refer to securities whose terms and indenture are available and for
which a market exists, but which are not available for immediate
delivery. The Fund does not intend to make such purchases for
speculative purposes. During the period between the purchase and
settlement, the underlying securities are subject to market
fluctuations and no interest accrues prior to delivery of the
securities.
-- Repurchase Agreements. The Fund may enter into repurchase
agreements. They are primarily used for liquidity purposes. In a
repurchase transaction, the Fund buys a security and simultaneously
sells it to the vendor for delivery at a future date. Repurchase
agreements must be fully collateralized. However, if the vendor
fails to pay the resale price on the delivery date, the Fund may
incur costs in disposing of the collateral and may experience
losses if there is any delay in its ability to do so. 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. Repurchase agreements
with a maturity beyond seven days are subject to the Fund's
limitations on investments in illiquid and restricted securities,
discussed below.
-- Illiquid Securities. Under the policies established by the
Board of Trustees, the Manager determines the liquidity 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. As a
fundamental policy, the Fund will not invest more than 10% of its
total assets in illiquid securities. Restricted securities are
considered illiquid securities for purposes of this restriction.
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. Certain restricted securities,
eligible for resale to qualified institutional purchasers, are not
subject to that limit.
-- 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 10% of the Fund's
total assets. 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.
Other Investment Restrictions.
The Fund has certain investment restrictions that 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;
- Purchase more than 10% of any class of security of any
issuer (other than the U.S. Government or any of its agencies of
instrumentalities), with all outstanding debt securities and all
preferred stock of an issuer each being considered as one class;
- 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);
- Borrow money in excess of 10% of the value of the Fund's
total assets; the Fund may borrow only from banks and only as
temporary measure for extraordinary or emergency purposes and will
make no additional investments while such borrowings exceed 5% of
the Fund's total assets;
- Invest more than 10% 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; and
- 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 continuous operation.
Notwithstanding the above restriction on illiquid securities,
the Fund may purchase securities which are not registered under the
Securities Act of 1933 (the "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,
provided that the Sub-Advisor, under guidelines established by the
Fund's Board of Trustees, determines that an adequate trading
market exists for that security.
The Fund has undertaken, in connection with the qualification
of its shares for sale in certain states, to limit investments in
restricted securities to 5% of its total assets, excluding
restricted securities that may be resold to "qualified
institutional buyers". This undertaking will terminate if the Fund
ceases to qualify its shares for sale in those states, or if the
applicable state rule or regulations are amended.
All of the percentage restrictions described above and
elsewhere in this Prospectus and in the Statement of Additional
Information 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 is one of four portfolios of
Oppenheimer Quest For Value Funds, an open-end management
investment company organized as a Massachusetts business trust in
April, 1987. The Fund is an open-end, diversified management
investment company, with an unlimited number of authorized shares
of beneficial interest.
The Fund is governed by a Board of Trustees, which is
responsible under Massachusetts law for protecting the interests of
shareholders. The Trustees meet periodically throughout the year
to oversee the Fund's activities, review its performance, and
review the actions of the Manager. "Trustees and Officers of the
Fund" in the Statement of Additional Information names the Trustees
and provides more information about them and the officers of the
Fund. Although the Fund is not required by law to hold annual
meetings, it may hold shareholder meetings from time to time on
important matters, and shareholders have the right under certain
circumstances to call a meeting to remove a Trustee or to take
other action described in the Fund's Declaration of 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 on matters
submitted to the vote of shareholders. 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. OpCap Advisors is a majority-owned subsidiary of Oppenheimer
Capital, a registered investment advisor, whose employees perform
all investment advisory services provided to the Fund by OpCap
Advisors. 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 November 24, 1995, 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, effective
November 24, 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 portfolio manager of the Fund is
Mr. Richard J. Glasebrook II, who is also a Senior Vice President
of Oppenheimer Capital. He has been the Fund's portfolio manager
since April, 1991.
-- Fees and Expenses. Under the Investment Advisory
Agreement, the Fund pays the Manager an annual fee based on the
Fund's daily net assets, as follows: 1% of the first $400 million
of net assets, .90% of the next $400 million, and .85% of net
assets over $800 million. This management fee is higher than that
paid by most other investment companies. This management fee is
higher than that paid by most other investment companies. The Fund
also reimburses the Manager for bookkeeping and accounting services
performed on behalf of the Fund.
The Manager will pay OpCap Advisors 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, OpCap
Advisors may consider their record of sales of shares of the Fund.
Further information about the Fund's brokerage policies and
practices is set forth in "Brokerage Policies of the Fund" in the
Statement of Additional Information.
-- 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
Distributor. The Distributor also distributes the shares of other
mutual funds managed by the Manager (the "OppenheimerFunds") and is
sub-distributor for funds managed by a subsidiary of the Manager.
-- Transfer Agent and Shareholder Servicing Agent. The
transfer agent and shareholder servicing agent is OppenheimerFunds
Services. 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.
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
investment in the Fund over various periods, and do not show the
performance of each shareholder's investment (which will vary if
dividends are received in cash or shares are sold or additional
shares are purchased). The Fund's performance information may help
you see how well your 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 considering the effect
of the sales charge, and those returns would be reduced if sales
charges were deducted.
How Has the Fund Performed? Below is a discussion of the Fund's
performance during its last fiscal year ended October 31, 1995,
followed by a graphical comparison of the Fund's performance to
appropriate broad-based market indices. Prior to November 22,
1995, the Fund was known as Quest for Value Small Capitalization
Fund, and the Sub-Adviser was the Fund's investment manager.
-- Management's Discussion of Performance. Although the Fund
can invest in stocks, bonds and cash equivalents, in practice it
invests primarily in common stocks based on the premise that stocks
provide the best total returns over time. As much as was possible,
given the large daily inflows of cash from sales of shares, the
Fund remained fully invested throughout the fiscal year ended
October 31, 1995. The Fund's performance in that fiscal year
benefited from its significant holdings of financial service
company stocks, one of the market's strong sectors. Investments in
banking, insurance and miscellaneous financial services stocks
accounted for 27.3% of the Fund's net assets as of October 31,
1995. The Fund seeks to invest in quality undervalued stocks and
hold them for price appreciation. Its portfolio is generally
characterized by low turnover. The Fund's five largest positions
as of October 31, 1995 accounted for 27.3% of the Fund's net
assets.
-- Comparing the Fund's Performance to the Market. The graphs
below show the performance of a hypothetical $10,000 investment in
each class of shares of the Fund held until October 31, 1995. In
the case of Class A shares, performance is measured from the
commencement of operations on January 3, 1989, and in the case of
Class B and Class C shares, from inception of those classes on
September 1, 1993.
The Fund's performance is compared to the performance of the
Standard & Poor's ("S&P") 500 Index. The S&P 500 Index is a broad
based index of equity securities widely regarded as the general
measure of the performance of the U.S. equity securities market.
Index performance reflects the reinvestment of dividends but
does not consider the effect of capital gains or transaction costs,
and none of the data in the graphs below shows the effect of taxes.
Moreover, index performance data does not reflect any assessment of
the risk of the investments included in the index. The Fund's
performance reflects the effect of Fund business and operating
expenses. While index comparisons may be useful to provide a
benchmark for the Fund's performance, it must be noted that the
Fund's investments are not limited to the securities in the indices
shown.
Oppenheimer Quest Opportunity Value Fund
Comparison of Change in Value
of $10,000 Hypothetical Investments in
Oppenheimer Quest Opportunity Value Fund and
the S&P 500 Index
[Graph]
Past Performance is not predictive of future performance.
Oppenheimer Quest Opportunity Value Fund
Average Annual Total Returns of the Fund at 10/31/95
- ----------------------------------------------------
Class A Shares(1)
- -----------------
1-Year 5-Year Life
------ ------ ----
22.42% 22.71% 16.37%
Class B Shares(2)
- -----------------
1-Year Life
------ ----
24.14% 15.30%
Class C Shares(3)
- -----------------
1-Year Life
------ ----
28.16% 16.42%
- ---------------------
Total returns and the ending account values in the graphs reflect
reinvestment of all dividends and capital gains distributions.
Total returns are based upon inception date of the Fund (for Class
A shares) or date of first public offering (for Class B and Class
C shares).
(1) The commencement of operations of the Fund (Class A shares) was
1/3/89. Class A returns are shown net of the current applicable
5.75% maximum initial sales charge.
(2) Class B shares of the Fund were first publicly offered on
9/01/93. Returns are shown net of the applicable 5% and 3%
contingent deferred sales charge, respectively, for the 1-year
period and life of the class. The ending account value in the
graph is net of the applicable 3% contingent deferred sales charge.
(3) Class C shares of the Fund were first publicly offered on
9/01/93. The 1-year return is shown net of the applicable 1%
contingent deferred sales charge.
About Your Account
How to Buy Shares
Classes of Shares. The Fund offers investors three different
classes of shares. The different classes of shares represent
investments in the same portfolio of securities but 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 Oppenheimer funds prototype 401(k) plans)
in shares of one or more OppenheimerFunds or former Quest Funds,
you will not pay an initial sales charge, but if you sell any of
those shares within 18 months of buying them, you may pay a
contingent deferred sales charge 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. Class A shares of the
Fund purchased subject to a contingent deferred sales charge on or
prior to November 24, 1995 will be subject to a contingent deferred
sales charge at the applicable rate set forth in Appendix A to this
Prospectus. 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 and how long you plan to
hold your investment. If your goals and objectives change over
time and you plan to purchase additional shares, you should re-
evaluate those factors to see if you should consider another class
of shares.
In the following discussion, to help provide you and your
financial advisor with a framework in which to choose a class, we
have made some assumptions using a hypothetical investment in the
Fund. We used the sales charge rates that apply to each class, and
considered the effect of the 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
of shares you invest in.
The factors discussed below are not intended to be investment
advice or recommendations, because each investor's financial
considerations are different. The discussion below of the factors
to consider in purchasing a particular class of shares assumes that
you will purchase only one class of shares and not a combination of
shares of different classes.
-- How Long Do You Expect to Hold Your Investment? While
future financial needs cannot be predicted with certainty, knowing
how long you expect to hold your investment will assist you in
selecting the appropriate class of shares. 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 Oppenheimer
funds (a list of them appears in the Statement of Additional
Information, or you can ask your dealer or call the Transfer
Agent), or by reinvesting distributions from unit investment trusts
that have made arrangements with the Distributor.
-- How Are Shares Purchased? You can buy shares several ways:
through any dealer, broker or financial institution that has a
sales agreement with the Distributor, directly through the
Distributor, or automatically from your bank account through an
Asset Builder Plan under the OppenheimerFunds AccountLink service.
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 "Oppenheimer Funds 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 AccountLink on the
regular business day the Distributor is instructed by you to
initiate the ACH transfer to buy shares. You can provide those
instructions automatically, under an Asset Builder Plan, described
below, or by telephone instructions using OppenheimerFunds
PhoneLink, also described below. You should request AccountLink
privileges on the application or dealer settlement instructions
used to establish your account. Please refer to "AccountLink" below
for more details.
-- Asset Builder Plans. You may purchase shares of the Fund
(and up to four other 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.
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 Oppenheimer funds 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 class of the Oppenheimer funds 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 Oppenheimer funds 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
November 24, 1995 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 18 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 Oppenheimer funds (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 Oppenheimer funds to
reduce the sales charge rate that applies to current purchases of
Class A shares. You can also count Class A and Class B shares of
Oppenheimer funds you previously purchased subject to an initial or
contingent deferred sales charge to reduce the sales charge rate
for current purchases of Class A shares, provided that you still
hold that investment in one of the Oppenheimer funds. The value of
those shares will be based on the greater of the amount you paid
for the shares or their current value (at offering price). The
Oppenheimer funds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from
the Transfer Agent. The reduced sales charge will apply only to
current purchases and must be requested when you buy your shares.
-- Letter of Intent. Under a Letter of Intent, if you
purchase Class A shares or Class A and Class B shares of the Fund
and other Oppenheimer funds during a 13-month period, you can
reduce the sales charge rate that applies to your purchases of
Class A shares. The total amount of your intended purchases of
both Class A and Class B shares will determine the reduced sales
charge rate for the Class A shares purchased during that period.
This can include purchases made up to 90 days before the date of
the Letter. More information is contained in the Application and
in "Reduced Sales Charges" in the Statement of Additional
Information.
-- Waivers of Class A Sales Charges. The Class A sales
charges are not imposed in the circumstances described below.
There is an explanation of this policy in "Reduced Sales Charges"
in the Statement of Additional Information.
Waivers of Initial and Contingent Deferred Sales Charges for
Certain Purchasers. Class A shares purchased by the following
investors are not subject to any Class A sales charges:
- the Manager or its affiliates;
- present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced
Sales Charges" in the Statement of Additional Information) of the
Fund, the Manager and its affiliates, and retirement plans
established by them for their employees;
- registered management investment companies, or separate
accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose;
- dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
- employees and registered representatives (and their spouses)
of dealers or brokers described above or financial institutions
that have entered into sales arrangements with such dealers or
brokers (and are identified to the Distributor) or with the
Distributor; the purchaser must certify to the Distributor at the
time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor
children);
- dealers, brokers or registered investment advisers that have
entered into an agreement with the Distributor (1) providing
specifically for the use of shares of the Fund in particular
investment products made available to their clients (those clients
may be charged a transaction fee by their dealer, broker or adviser
for purchase or sale of Fund shares) or (2) 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 Oppenheimer funds
(other than Oppenheimer Cash Reserves) or unit investment trusts
for which reinvestment arrangements have been made with the
Distributor;
- shares purchased and paid for with the proceeds of shares
redeemed in the 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
- 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% 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. This Plan is described below under "Buying
Class C Shares - Distribution and Service Plans for Class B and
Class C Shares."
-- 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 Plans for Class B and Class C
Shares. The Fund has adopted Distribution and Service Plans for
Class B and Class C shares to compensate the Distributor for
distributing Class B and Class C shares and servicing accounts.
Under the Plans, the Fund pays the Distributor an annual "asset-
based sales charge" of 0.75% per year on Class B shares that are
outstanding for 6 years or less and on Class C shares. The
Distributor also receives a service fee of 0.25% per year.
Under each Plan, both fees are computed on the average of the
net asset value of shares in the respective class, determined as of
the close of each regular business day during the period. The
asset-based sales charge allows investors to buy Class B or Class
C shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell those shares.
The Distributor uses the service fees to compensate dealers
for providing personal services for accounts that hold Class B or
Class C shares. Those services are similar to those provided under
the Class A Service Plan, described above. The Distributor pays
the 0.25% service fees to dealers in advance for the first year
after Class B or Class C shares have been sold by the dealer and
retains the service fee paid by the Fund in that year. After the
shares have been held for a year, the Distributor pays the service
fees to dealers on a quarterly basis.
The Distributor currently pays sales commissions of 3.75% of
the purchase price to dealers from its own resources at the time of
sale. The total amount paid by the Distributor to the dealer at
the time of sales of Class B shares is therefore 4.00% of the
purchase price. The Fund pays the asset-based sales charge to the
Distributor for its services rendered in connection with the
distribution of Class B and Class C 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 and 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 B shares before the Plan was
terminated.
-- Waivers of Class B and Class C Sales Charges. The Class B
and Class C contingent deferred sales charges will not be applied
to shares purchased in certain types of transactions nor will it
apply to Class B and Class C shares redeemed in certain
circumstances as described below. The reasons for this policy are
in "Reduced Sales Charges" in the Statement of Additional
Information.
Waivers for Redemptions in Certain Cases. The Class B and
Class C contingent deferred sales charges will be waived for
redemptions of shares in the following cases if the Transfer Agent
is notified that these conditions apply to the redemption:
- distributions to participants or beneficiaries from
Retirement Plans, if the distributions are made (a) under an
Automatic Withdrawal Plan after the participant reaches age 59-1/2,
as long as the payments are no more than 10% of the account value
annually (measured from the date the Transfer Agent 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.
The Class B and Class C contingent deferred sales charge will
be waived for certain additional types of redemptions, if the
shares were purchased prior to November 24, 1995, as set forth in
Appendix A to this Prospectus.
Special Investors Services
AccountLink. OppenheimerFunds AccountLink links your Fund account
to your account at your bank or other financial institution to
enable you to send money electronically between those accounts to
perform a number of types of account transactions. These include
purchases of shares by telephone (either through a service
representative or by PhoneLink, described below), automatic
investments under Asset Builder Plans, and sending dividends and
distributions or Automatic Withdrawal Plan payments directly to
your bank account. Please refer to the Application for details or
call the Transfer Agent for more information.
AccountLink privileges should be requested on the Application
you use to buy shares, or on your dealer's settlement instructions
if you buy your shares through your dealer. After your account is
established, you can request AccountLink privileges 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 Oppenheimer funds 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 Oppenheimer funds on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange
Plan. The minimum purchase for each other Oppenheimer funds
account is $25. These exchanges are subject to the terms of the
Exchange Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class A
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
Oppenheimer funds without paying a sales charge. This privilege
applies to Class A shares that you purchased subject to an initial
sales charge and to Class A 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 by selling
(redeeming) some or all of your shares on any regular business day.
Your shares will be sold at the next net asset value calculated
after your order is received and accepted by the Transfer Agent.
The Fund offers you a number of ways to sell your shares: in
writing or by telephone. You can also set up Automatic Withdrawal
Plans to redeem shares on a regular basis, as described above. If
you have questions about any of these procedures, and especially if
you are redeeming shares in a special situation, such as due to the
death of the owner, or from a retirement plan, please call the
Transfer Agent first, at 1-800-525-7048, for assistance.
-- Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must
submit a withholding form with your request to avoid delay. If your
retirement plan account is held for you by your employer, you must
arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the
Statement of Additional Information.
-- Certain Requests Require A Signature Guarantee. To protect
you and each Fund from fraud, certain redemption requests must be
in writing and must include a signature guarantee in the following
situations (there may be other situations also requiring a
signature guarantee):
- You wish to redeem more than $50,000 worth of shares and
receive a check
- The redemption check is not payable to all shareholders
listed on the account statement
- The redemption check is not sent to the address of record on
your account statement
- Shares are being transferred to a Fund account with a
different owner or name
- Shares are redeemed by someone other than the owners (such
as an Executor)
-- Where Can I Have My Signature Guaranteed? The Transfer
Agent will accept a guarantee of your signature by a number of
financial institutions, including: a U.S. bank, trust company,
credit union or savings association, or by a foreign bank that has
a U.S. correspondent bank, or by a U.S. registered dealer or broker
in securities, municipal securities or government securities, or by
a U.S. national securities exchange, a registered securities
association or a clearing agency. If you are signing as a fiduciary
or on behalf of a corporation, partnership or other business, you
must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that
includes:
- Your name
- The Fund's name
- Your Fund account number (from your account statement)
- The dollar amount or number of shares to be redeemed
- Any special payment instructions
- Any share certificates for the shares you are selling,
- The signatures of all registered owners exactly as the
account is registered, and
- Any special requirements or documents requested by the
Transfer Agent to assure proper authorization of the person asking
to sell shares.
Use the following address for Send courier or Express Mail
request by mail: requests to:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Ave., 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
Oppenheimer funds at net asset value per share at the time of
exchange, without sales charge. To exchange shares, you must meet
several conditions:
- Shares of the fund selected for exchange must be available
for sale in your state of residence
- The prospectuses of this Fund and the fund whose shares you
want to buy must offer the exchange privilege
- You must hold the shares you buy when you establish your
account for at least 7 days before you can exchange them; after the
account is open 7 days, you can exchange shares every regular
business day
- You must meet the minimum purchase requirements for the fund
you purchase by exchange
- Before exchanging into a fund, you should obtain and read
its prospectus
Shares of a particular class may be exchanged only for shares
of the same class in the other Oppenheimer funds. For example, you
can exchange Class A shares of this Fund only for Class A shares of
another fund. At present, Oppenheimer Money Market Fund, Inc.
offers only one class of shares, which are considered Class A
shares for this purpose. In some cases, sales charges may be
imposed on exchange transactions. Please refer to "How to Exchange
Shares" in the Statement of Additional Information for more
details.
Exchanges may be requested in writing or by telephone:
-- Written Exchange Requests. Submit an OppenheimerFunds
Exchange Request form, signed by all owners of the account. Send
it to the Transfer Agent at the addresses listed in "How to Sell
Shares."
-- Telephone Exchange Requests. Telephone exchange requests
may be made either by calling a service representative at 1-800-
852-8457 or by using PhoneLink for automated exchanges, by calling
1-800-533-3310. Telephone exchanges may be made only between
accounts that are registered with the same name(s) and address.
Shares held under certificates may not be exchanged by telephone.
You can find a list of Oppenheimer funds currently available
for exchanges in the Statement of Additional Information or 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.
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 Oppenheimer fund
Account. You can reinvest all distributions in another Oppenheimer
fund account you have established.
Taxes. If your account is not a tax-deferred retirement account,
you should be aware of the following tax implications of investing
in 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 Fund
Who Were 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 of the Fund 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 Global Income Fund, Quest for Value New York
Tax-Exempt Fund, Quest for Value National Tax-Exempt Fund and Quest
for Value California Tax-Exempt Fund when those funds merged into
various Oppenheimer funds on November 24, 1995. The funds listed
above are referred to in this Prospectus as the "Former Quest for
Value Funds." The waivers of initial and contingent deferred sales
charges described in this Appendix apply to shares of the Fund (i)
acquired by such shareholder pursuant to an exchange of shares of
one of the Oppenheimer funds that was one of the Former Quest for
Value Funds or (ii) received by such shareholder pursuant to the
merger of any of the Former Quest for Value Funds into an
Oppenheimer fund on November 24, 1995.
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
Number of as a as a Percentage
Eligible Percentage Percentage of
Employees of Offering of Amount Offering
or Members Price Invested Price
- --------------------------------------------------------------
9 or fewer 2.50% 2.56% 2.00%
- --------------------------------------------------------------
At least 10 but not
more than 49 2.00% 2.04% 1.60%
For purchases by Qualified Retirement plans and Associations
having 50 or more eligible employees or members, there is no
initial sales charge on purchases of Class A shares, but those
shares are subject to the Class A contingent deferred sales charge
described on pages __ and __ of this Prospectus.
Purchases made under this arrangement qualify for the lower of
the sales charge rate in the table based on the number of eligible
employees in a Qualified Retirement Plan or members of an
Association or the sales charge rate that applies under the Rights
of Accumulation described above in the Prospectus. In addition,
purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they
qualified to purchase shares of any of the Former Quest For Value
Funds by virtue of projected contributions or investments of $1
million or more each year. Individuals who qualify under this
arrangement for reduced sales charge rates as members of
Associations, or as eligible employees in Qualified Retirement
Plans also may purchase shares for their individual or custodial
accounts at these reduced sales charge rates, upon request to the
Fund's Distributor.
- -- Special Class A Contingent Deferred Sales Charge Rates
Class A shares of the Fund purchased by exchange of shares of other
Oppenheimer funds that were acquired as a result of the merger of
Former Quest for Value Funds into those Oppenheimer funds, and
which shares were subject to a Class A contingent deferred sales
charge prior to November 24, 1995 will be subject to a contingent
deferred sales charge at the following rates: if they are redeemed
within 18 months of the end of the calendar month in which they
were purchased, at a rate equal to 1.0% if the redemption occurs
within 12 months of their initial purchase and at a rate of 0.50 of
1.0% if the redemption occurs in the subsequent six months. Class
A shares of any of the Former Quest for Value Funds purchased
without an initial sales charge on or before November 22, 1995 will
continue to be subject to the applicable contingent deferred sales
charge in effect as of that date as set forth in the then-current
prospectus for such fund.
- -- Waiver of Class A Sales Charges for Certain Shareholders
Class A shares of the Fund purchased by the following investors are
not subject to any Class A initial or contingent deferred sales
charges:
- Shareholders of the Fund who were shareholders of the AMA
Family of Funds on February 28, 1991 and who acquired shares of any
of the Former Quest for Value Funds by merger of a portfolio of the
AMA Family of Funds.
- Shareholders of the Fund who acquired shares of any Former
Quest for Value Fund by merger of any of the portfolios of the
Unified Funds.
- -- Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions
The Class A contingent deferred sales charge will not apply to
redemptions of Class A shares of the Fund purchased by the
following investors who were shareholders of any Former Quest for
Value Fund:
- Investors who purchased Class A shares from a dealer that is
or was not permitted to receive a sales load or redemption fee
imposed on a shareholder with whom that dealer has a fiduciary
relationship under the Employee Retirement Income Security Act of
1974 and regulations adopted under that law.
- Participants in Qualified Retirement Plans that purchased
shares of any of the Former Quest For Value Funds pursuant to a
special "strategic alliance" with the distributor of those funds.
The Fund's Distributor will pay a commission to the dealer for
purchases of Fund shares as described above in "Class A Contingent
Deferred Sales Charge."
Class A, Class B and Class C Contingent Deferred Sales Charge
Waivers
- -- Waivers for Redemptions of Shares Purchased Prior to March 6,
1995
In the following cases, the contingent deferred sales charge will
be waived for redemptions of Class A, B or C shares of the Fund
acquired by merger of a Former Quest for Value Fund into the Fund
or by exchange from an Oppenheimer fund that was a Former Quest for
Value Fund or into which such fund merged, if those shares were
purchased prior to March 6, 1995: in connection with
(i) distributions to participants or beneficiaries of plans
qualified under Section 401(a) of the Internal Revenue Code or from
custodial accounts under Section 403(b)(7) of the Code, Individual
Retirement Accounts, deferred compensation plans under Section 457
of the Code, and other employee benefit plans, and returns of
excess contributions made to each type of plan, (ii) withdrawals
under an automatic withdrawal plan holding only either Class B or
C shares if the annual withdrawal does not exceed 10% of the
initial value of the account, and (iii) liquidation of a
shareholder's account if the aggregate net asset value of shares
held in the account is less than the required minimum value of such
accounts.
- -- Waivers for Redemptions of Shares Purchased on or After March 6,
1995 but Prior to November 24, 1995.
In the following cases, the contingent deferred sales charge will
be waived for redemptions of Class A, B or C shares of the Fund
acquired by merger of a Former Quest for Value Fund into the Fund
or by exchange from an Oppenheimer fund that was a Former Quest For
Value Fund or into which such fund merged, if those shares were
purchased on or after March 6, 1995, but prior to November 24,
1995: (1) distributions to participants or beneficiaries from
Individual Retirement Accounts under Section 408(a) of the Internal
Revenue Code or retirement plans under Section 401(a), 401(k),
403(b) and 457 of the Code, if those distributions are made either
(a) to an individual participant as a result of separation from
service or (b) following the death or disability (as defined in the
Code) of the participant or beneficiary; (2) returns of excess
contributions to such retirement plans; (3) redemptions other than
from retirement plans following the death or disability of the
shareholder(s) (as evidenced by a determination of total disability
by the U.S. Social Security Administration); (4) withdrawals under
an automatic withdrawal plan (but only for Class B or C shares)
where the annual withdrawals do not exceed 10% of the initial value
of the account; and (5) liquidation of a shareholder's account if
the aggregate net asset value of shares held in the account is less
than the required minimum account value. A shareholder's account
will be credited with the amount of any contingent deferred sales
charge paid on the redemption of any Class A, B or C shares of the
Fund described in this section if within 90 days after that
redemption, the proceeds are invested in the same Class of shares
in this Fund or another Oppenheimer fund.
Special Dealer Arrangements
Dealers who sold Class B shares of a Former Quest for Value Fund to
Quest for Value prototype 401(k) plans that were maintained on the
TRAC-2000 recordkeeping system and that were transferred to an
OppenheimerFunds prototype 401(k) plan shall be eligible for an
additional one-time payment by the Distributor of 1% of the value
of the plan assets transferred, but that payment may not exceed
$5,000 as to any one plan.
Dealers who sold Class C shares of a Former Quest for Value Fund to
Quest for Value prototype 401(k) plans that were maintained on the
TRAC-2000 recordkeeping system and (i) the shares held by those
plans were exchanged for Class A shares, or (ii) the plan assets
were transferred to an OppenheimerFunds prototype 401(k) plan,
shall be eligible for an additional one-time payment by the
Distributor of 1% of the value of the plan assets transferred, but
that payment may not exceed $5,000.
<PAGE>
SCHEDULE TO PROSPECTUS OF
OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
Graphic material included in Prospectus of Oppenheimer Quest
Opportunity Value Fund: "Comparison of Total Return of Oppenheimer
Quest Opportunity Value Fund with the S&P 500 Index - Change in
Value of $10,000 Hypothetical Investments in Class A, Class B and
Class C Shares of Oppenheimer Quest Opportunity Value Fund and the
S&P 500 Index."
Linear graphs will be included in the Prospectus of
Oppenheimer Quest Opportunity Value Fund (the "Fund") depicting the
initial account value and subsequent account value of a
hypothetical $10,000 investment in the Fund. In the case of the
Fund's Class A shares, that graph will cover the period from
inception (1/3/89) through 10/31/95, and in the case of the Fund's
Class B and Class C shares, will cover the period from the
inception of the class (9/1/93) through 10/31/95. The graph will
compare such values with hypothetical $10,000 investments over the
same time periods in the S&P 500 Index. Set forth below are the
relevant data points that will appear on the linear graph.
Additional information with respect to the foregoing, including a
description of the S&P 500 Index, is set forth in the Prospectus
under "Performance of the Fund - Comparing the Fund's Performance
to the Market."
Oppenheimer Quest
Fiscal Opportunity Value S&P 500
Period Ended Fund A Index
- ------------ ----------------- -------
1/03/89 $ 9,425 $10,000
10/31/89 $10,924 $12,603
10/31/90 $ 9,545 $11,660
10/31/91 $14,360 $15,566
10/31/92 $17,509 $17,116
10/31/93 $20,021 $19,672
10/31/94 $21,703 $20,431
10/31/95 $28,189 $25,835
Oppenheimer Quest
Fiscal Opportunity Value S&P 500
Period Ended Fund B Index
- ------------ ----------------- -------
9/01/93(2) $10,000 $10,000
10/31/93 $ 9,984 $10,136
10/31/94 $10,766 $10,528
10/31/95 $13,609 $13,312
Oppenheimer Quest
Fiscal Opportunity Value S&P 500
Period Ended Fund C Index
- ------------ ----------------- -------
9/01/93(2) $10,000 $10,000
10/31/93 $ 9,984 $10,136
10/31/94 $10,760 $10,528
10/31/95 $13,898 $13,312
- ---------------------
(2) Class B shares of the Fund were first publicly offered on
9/01/93.
(3) Class C shares of the Fund were first publicly offered on
9/01/93.
<PAGE>
Oppenheimer Quest Opportunity Value Fund
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Sub-Adviser
OpCap Advisors
One World Financial Center
New York, New York 10281
Distributor
Oppenheimer Funds 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
1177 Avenue of the Americas
New York, New York 10036
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, broker, salesperson or any other person has been
authorized to give any information or to make any representations
other than those contained in this Prospectus or the Statement of
Additional Information, and if given or made, such information and
representations must not be relied upon as having been authorized
by the Fund, OppenheimerFunds, Inc., OppenheimerFunds Distributor,
Inc. or any affiliate thereof. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any state to any person to whom it is
unlawful to make such an offer in such state.
prosp\q236psp
<PAGE>
OPPENHEIMER QUEST OPPORTUNITY 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.
<TABLE>
<CAPTION>
Contents
Page
<S> <C>
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: Description of Ratings . . . . . . . . . . A-1
Appendix B: Corporate Industry Classifications . . . . B-1
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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.
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 or
depositories holding them must be approved by the Corporation's
Board of Directors to the extent that approval is required under
applicable rules of the Securities and Exchange Commission.
- 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.
- Emerging Market Countries: Certain developing countries may
have relatively unstable governments, economies based on only a few
industries that are dependent upon international trade, and reduced
secondary market countries is restricted or controlled in varying
degrees. In the past, securities in these countries have
experienced greater price movement, both positive and negative,
than securities of companies located in developed countries.
Lower-rated high-yielding emerging market securities may be
considered to have speculative elements.
-- U.S. Government Securities. Obligations of U.S. Government
agencies or instrumentalities (including mortgage-backed
securities) may or may not be guaranteed or supported by the "full
faith and credit" of the United States. Some are backed by the
right of the issuer to borrow from the U.S. Treasury; others, by
discretionary authority of the U.S. Government to purchase the
agencies' obligations; while others are supported only by the
credit of the instrumentality. All U.S. Treasury obligations are
backed by the full faith and credit of the United States. If the
securities are not backed by the full faith and credit of the
United States, the owner of the securities must look principally to
the agency issuing the obligation for repayment and may not be able
to assert a claim against the United States in the event that the
agency or instrumentality does not meet its commitment. The Fund
will invest in U.S. Government Securities of such agencies and
instrumentalities only when the Manager is satisfied that the
credit risk with respect to such instrumentality is minimal.
- Mortgage-Backed Securities. Also known as pass-through
securities, the homeowner's principal and interest payments pass
from the originating bank or savings and loan through the
appropriate governmental agency to investors, net of service
charges. These pass-through securities include participation
certificates of Ginnie Mae, Freddie Mac and Fannie Mae.
The investment characteristics of mortgage-backed securities
differ from those of traditional debt securities. The effective
maturity of a mortgage-backed security may be shortened by
unscheduled or early payment of principal and interest on the
underlying mortgages, which may affect the effective yield of such
securities. The principal that is returned may be invested in
instruments having a higher or lower yield than the prepaid
instruments depending on then-current market conditions. Such
securities therefore may be less effective as a means of "locking
in" attractive long-term interest rates and may have less potential
for appreciation during periods of declining interest rates than
conventional bonds with comparable stated maturities. The
investment characteristics of mortgage-backed securities differ
from those of traditional debt securities. If the Fund purchases
mortgage-backed securities at a premium, a prepayment rate that is
faster than expected will reduce both the market value and the
yield to maturity from that which was anticipated, while a
prepayment rate that is slower than expected will have the opposite
effect of increasing yield to maturity and market value.
Conversely, if the Fund purchases mortgage-backed securities at a
discount, faster than expected prepayments will increase, while
slower than expected prepayments will reduce, yield to maturity and
market value.
The Fund may invest in collateralized mortgage obligations
("CMOs") that are issued or guaranteed by the U.S. Government or
its agencies or instrumentalities, or that are collateralized by a
portfolio of mortgages or mortgage-related securities guaranteed by
such an agency or instrumentality. Payment of the interest and
principal generated by the pool of mortgages is passed through to
the holders as the payments are received by the issuer of the CMO.
CMOs may be issued in a variety of classes or series ("tranches")
that have different maturities. The principal value of certain CMO
tranches may be more volatile than other types of mortgage-related
securities, because of the possibility that the principal value of
the CMO may be prepaid earlier than the maturity of the CMO as a
result of prepayments of the underlying mortgage loans by the
borrowers.
As with other bond investments, the value of U.S. Government
Securities and mortgage-backed securities will tend to rise when
interest rates fall and to fall when interest rates rise. The
value of mortgage-backed securities may also be affected by changes
in the market's perception of the creditworthiness of the entity
issuing or guaranteeing them or by changes in government
regulations and tax policies. Because of these factors, the Fund's
share value and yield are not guaranteed and will fluctuate, and
there can be no assurance that the Fund's objective will be
achieved. The magnitude of these fluctuations generally will be
greater when the average maturity of the Fund's portfolio
securities is longer.
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 10% 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 each 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 10% 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 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. 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.
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. 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 agrees to resell 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.
-- 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.
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 physical commodities or physical commodity
contracts or speculate in financial commodity contracts, but the
Fund is authorized to purchase and sell financial futures contracts
and options on such futures contracts exclusively for hedging and
other non-speculative purposes to the extent specified in the
Prospectus;
- invest in real estate or real estate limited partnerships
(direct participation programs); however, the Fund may purchase
securities of issuers which engage in real estate operations and
securities which are secured by real estate or interests therein;
- purchase securities on margin (except for such short-term
loans as are necessary for the clearance of purchases of portfolio
securities) or make short sales of securities except "against the
box" (collateral arrangements in connection with transactions in
futures and options are not deemed to be margin transactions);
- underwrite securities of other companies except in so far as
the Fund may be deemed to be an underwriter under the Securities
Act of 1933 in disposing of a security ;
- invest in securities of other investment companies except in
connection with a merger, consolidation, reorganization or
acquisition of assets;
- invest in interests in oil, gas or other mineral exploration
or development programs or leases;
- purchase warrants if as a result the Fund would then have
either more than 5% of its total assets (determined at the time of
investment) invested in warrants or more than 2% of its total
assets invested in warrants not listed on the New York or American
Stock Exchange;
- invest in securities of any issuer if, to the knowledge of
the Trust, any officer or trustee of the Trust or any officer or
director of the Manager or Sub-Adviser owns more than 1/2 of 1% of
the outstanding securities of such issuer, and such officers,
trustees and directors who own more than 1/2 of l% own in the
aggregate more than 5% of the outstanding securities of such
issuer;
- pledge its assets or assign or otherwise encumber its assets
in excess of 10% of its net assets (taken at market value at the
time of pledging) and then only to secure borrowings effected
within the limitations set forth in the Prospectus;
- invest for the purpose of exercising control or management
of another company;
- issue senior securities as defined in the 1940 Act except
insofar as the Fund may be deemed to have issued a senior security
by reason of: (a) entering into any repurchase agreement; (b)
borrowing money in accordance with restrictions described above; or
(c) lending portfolio securities; or
- make loans to any person or individual except that portfolio securities may be loaned by
the Fund within the limitations set forth in the Prospectus.
For purposes of the Fund's policy not to concentrate its
assets described in the Prospectus, the Fund has adopted, as a
matter of non-fundamental policy, the corporate industry
classifications set forth in Appendix B to this Statement of
Additional Information.
How the Fund is Managed
Organization and History. Oppenheimer Quest Opportunity 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. Each Trustee is also a
Trustee of Oppenheimer Quest Growth & Income Value Fund,
Oppenheimer Quest Small Cap Value Fund, Oppenheimer Quest Officers
Fund, Oppenheimer Quest Value Fund, Inc., Oppenheimer Quest Global
Value Fund, Inc. (collectively, the "Oppenheimer Quest Funds"),
Rochester Portfolio Series - Limited-Term New York Municipal Fund,
Rochester Fund Series - The Bond Fund For Growth and Rochester Fund
Municipals (collectively, the "Rochester Funds"). The address of
each is Two World Trade Center, New York, New York 10048, except as
noted. As of January __, 1996, the trustees and officers of the
Trust as a group owned less than 1% of the outstanding shares of
the Fund.
Bridget A. Macaskill, Chairman of the Board of Trustees and
President*; Age: 47.
President, Chief Executive Officer and Chief Operating Officer of
OppenheimerFunds, Inc. (the "Manager"); prior thereto, Executive
Vice President and Chief Operating Officer 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., Director of Main Street Advisers,
Inc., and Director of HarbourView Asset Management Corporation, all
of which are subsidiaries of the Manager; a Trustee of the New
York-based Oppenheimer funds.
<FN>
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*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, a national real
estate owner and property management corporation; formerly
President of Essex Management Corporation, a 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 Oppenheimer Quest Value Fund, Inc., Oppenheimer
Quest Global Value Fund, Inc., and 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, a venture capital partnership; formerly a
general partner of Essex Limited Partnership, an investment
partnership; formerly President of Geneve Corp., a venture capital
fund; formerly Chairman of Woodland Capital Corp., a small business
investment company; formerly Vice President of W.R. Grace & Co.
Thomas W. Courtney, Trustee; Age: 62
P.O. Box 580, Sewickley, Pennsylvania 15143
Principal of Courtney Associates, Inc., a venture capital firm;
former General Partner of Trivest Venture Fund, a 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., Oppenheimer Quest Value
Fund, Inc. and Oppenheimer Quest Global Value Fund, 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 or Trustee of Quest
Cash Reserves, Inc., Oppenheimer Quest Global Value Fund, Inc. and
Oppenheimer Quest Value Fund, 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.,
Oppenheimer Quest Value Fund, Inc. and Oppenheimer Quest Global
Value Fund, 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.
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 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 Asset Management
Corporation; 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 the Transfer Agent and Shareholder
Financial Services, Inc., a transfer agent subsidiary of the
Manager; an officer of other Oppenheimer funds.
Richard J. Glasebrook, II, Portfolio Manager; Age ___
Two World Financial Center, 225 Liberty Street, New York, New York
10080
Managing Director of Oppenheimer Capital; previously a partner with
Delafield Asset Management, where he was a portfolio manager and
analyst.
Robert Bishop, Assistant Treasurer; Age: 37
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: 30
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 International Mutual Fund
Supervisor for Brown Brothers, Harriman Co., a bank, and previously
a Senior Fund Accountant for State Street Bank & Trust Company.
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.
-- 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, who was not a Trustee prior to
November 22, 1995) received the total amounts shown below from (i)
the Fund during its fiscal period ended 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>
<TABLE>
<CAPTION>
Pension or
Retirement Estimated
Aggregate Benefits Annual Total
Compensation Accrued as Benefits Compensation
from the Part of Fund Upon From Fund
Name of Person Fund Expenses Retirement Complex
<S> <C> <C> <C> <C>
Paul Y. Clinton $ None None $
Thomas W. Courtney $ None None $
Lacy B. Herrmann $ None None $
George Loft $ None None $
</TABLE>
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. As of January __, 1996, the only
persons who owned of record or were known by the Fund to own
beneficially 5% or more of the Fund's outstanding Class A, Class B
or Class C shares were the following:
Number and Class
of Shares Owned Percentage
Beneficially of Record Name & Address of Class
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 has 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 its 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 Funds pursuant to the terms of an
Investment Advisory Agreement dated as of November 22, 1995, the
Fund's Sub-Adviser, served as the Fund's investment adviser from
its inception to 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
or 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.
-- Fees Paid Under the Prior Investment Advisory Agreement.
OpCap Advisors served as investment adviser to the Fund from its
inception until November 22, 1995. Under the prior Investment
Advisory Agreement, the total advisory fees accrued or paid by the
Fund were $880,856 for the fiscal year ended October 31, 1993,
$1,555,447 for the fiscal year ended October 31, 1994, and
$________ for the fiscal year ended October 31, 1995..
For the fiscal years ended October 31, 1993, 1994 and 1995,
the Fund paid or accrued accounting services fees to OpCap
Advisors in the amounts of $14,798, $37,715 and $______,
respectively. Commencing in 1993, the Trust retained the services
of State Street Bank and Trust Company ("State Street") to
calculate the net asset value of each class of shares and to
prepare the books and records. For such services, the Fund accrued
or paid fees for the fiscal years ended October 31, 1993, 1994 and
1995 in the amounts of $27,917, $55,000 and $_________,
respectively.
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 OpCap Advisors (previously named Quest for Value
Advisors) pursuant to a separate Subadvisory Agreement dated as of
November 22, 1995 with respect to the Fund.
-- The Subadvisory Agreement. The Subadvisory Agreement
provides that OpCap Advisors shall regularly provide investment
advice with respect to the Fund and invest and reinvest cash,
securities and the property comprising the assets of the Fund.
Under the Subadvisory Agreement, OpCap Advisors 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 OpCap
Advisors an annual fee payable monthly, based on the average daily
net assets of the Fund, equal to 40% of the investment advisory fee
collected by 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, OpCap Advisors 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 its Class A, Class B and Class C shares but is not
obligated to sell a specific number of shares. Expenses normally
attributable to sales, including advertising and the cost of
printing and mailing prospectuses, other than those furnished to
existing shareholders, are borne by the Distributor. During the
Fund's fiscal year ended October 31, 1995, the aggregate amount of
sales charges on sales of the Fund's Class A shares was $________,
of which Quest for Value Distributors, the Fund's distributor prior
to November 22, 1995, retained $_________, and an affiliated
broker-dealer retained $_________, respectively. During the fiscal
year ended October 31, 1995, Quest for Value Distributors received
contingent deferred sales charges of $___________ upon redemption
of Class B shares, and received contingent deferred sales charges
of $___________ upon redemption of Class C shares. 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, the Fund's
Transfer Agent, is responsible for maintaining the Fund's
shareholder registry and shareholder accounting records, and for
shareholder servicing and administrative functions.
- 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 Securities and Exchange Commission ("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 Subadvisor or its affiliates, the
transactions are generally executed as received, although a fund or
advisory account that does not direct trades to a specific broker
("free trades") usually will have its order executed first.
Purchases are combined where possible for the purpose of
negotiating brokerage commissions, which in some cases might have
a detrimental effect on the price or volume of the security in a
particular transaction as far as the Fund is concerned. Orders
placed by accounts that direct trades to a specific broker will
generally be executed after the free trades. All orders placed on
behalf of the Fund are considered free trades. However, having an
order placed first in the market does not necessarily guarantee the
most favorable price.
The following table presents information as to the allocation
of brokerage commissions paid by the Fund for the fiscal years
ended October 31, 1993, 1994 and 1995:
<TABLE>
<CAPTION>
Total Amount of Transactions
For the Total Brokerage Commissions Where Brokerage Commissions
Fiscal Year Brokerage Paid to Opco Paid to Opco
Ended Commissions Dollar Dollar
October 31, Paid Amounts % Amounts %
<S> <C> <C> <C> <C> <C>
1993 $174,608 $104,705 60.0% $68,765,141 61.7%
1994 $189,680 $ 94,589 49.9% $78,351,168 17.6%
1995 $ $ % $ %
</TABLE>
During the Fund's fiscal year ended October 31, 1995 $______
was paid by the Fund to brokers as commissions in return for
research services; the aggregate dollar amount of those
transactions was $________. During the fiscal year ended October
31, 1994, the Fund acquired common stock of Morgan Stanley Group
Incorporated and Lehman Brothers Holdings Incorporated, each of
which is a parent of one of the Fund's regular broker dealers. The
market values of such aggregate holdings are $_______ for Morgan
Stanley Group Incorporated and $_______ for Lehman Brothers
Holdings Incorporated at October 31, 1995.
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 SEC rules, 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.
-- 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 )
The "average annual total returns" on an investment in Class
A shares of the Fund (using the method described above) for the one
and five year periods ended October 31, 1995 and for the period
from January 3, 1989 (commencement of operations) to October 31,
1995 were 22.42%, 22.71% and 16.37%, respectively.
The average annual total return on Class B shares for the one-
year period ended October 31, 1995 and for the period September 1,
1993 (commencement of the public offering of the class) through
October 31, 1995 were 24.19% and 15.30%, respectively.
The average annual total return on Class C shares for the one-
year period ended October 31, 1995 and for the period September 1,
1993 (commencement of the public offering of the class) through
October 31, 1995 were 28.16% and 16.42%, respectively.
-- Cumulative Total Returns. The cumulative "total return"
calculation measures the change in value of a hypothetical
investment of $1,000 over an entire period of years. Its
calculation uses some of the same factors as average annual total
return, but it does not average the rate of return on an annual
basis. Cumulative total return is determined as follows:
ERV - P
------- = Total Return
P
In calculating total returns for Class A shares, the current
maximum sales charge of 5.75% (as a percentage of the offering
price) is deducted from the initial investment ("P") (unless the
return is shown at net asset value, as described below). Prior to
the date of this Prospectus, 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 January 3, 1989 (commencement of operations) to October 31,
1995 was _____%. The cumulative total return on Class B shares for
the period from September 1, 1993 (commencement of the public
offering of the class) through October 31, 1995 was _____%. The
cumulative total return on Class C shares for the period from
September 1, 1993 (commencement of the public offering of the
class) through October 31, 1995 was _____%.
-- Total Returns at Net Asset Value. From time to time the
Fund may also quote an "average annual total return at net asset
value" or a "cumulative total return at net asset value" for Class
A, Class B or Class C shares. Each is based on the difference in
net asset value per share at the beginning and the end of the
period for a hypothetical investment in that class of shares
(without considering front-end or contingent deferred sales
charges) and takes into consideration the reinvestment of dividends
and capital gains distributions.
The average annual total returns at net asset value on the
Fund's Class A shares for the one and five year periods ended
October 31, 1995 and for the period from January 3, 1989
(commencement of operations) to October 31, 1995 were _____%,
_____% and _____%, respectively. The cumulative total return at
net asset value on the Fund's Class A shares for the period January
1, 1989 through October 31, 1995 was ______%.
The average annual total returns at net asset value on the
Fund's Class B shares for the one year period ended October 31,
1995 and for the period from September 1, 1993 (commencement of the
public offering of the class) through October 31, 1995 were _____%
and _____%, respectively. The cumulative total return at net asset
value on the Fund's Class B shares for the period September 1, 1993
through October 31, 1995 was _____%.
The average annual total returns at net asset value on the
Fund's Class C shares for the one-year period ended October 31,
1994 and for the period September 2, 1993 (commencement of the
public offering of the class) through October 31, 1994 were 7.78%
and 6.49%, respectively. The cumulative total return at net asset
value on the Fund's Class C shares for the period September 2, 1993
through October 31, 1994 was 7.60%.
Other Performance Comparisons. From time to time the Fund may
publish the ranking of its Class A, Class B or Class C shares by
Lipper Analytical Services, Inc. ("Lipper"), a widely-recognized
independent mutual fund monitoring service. Lipper monitors the
performance of regulated investment companies, including the Fund,
and ranks their performance for various periods based on categories
relating to investment objectives. The performance of the Fund is
ranked against (i) all other funds, (ii) all other __________ funds
and (iii) all other __________________ funds in a specific size
category. The Lipper performance rankings are based on total
returns that include the reinvestment of capital gain distributions
and income dividends but do not take sales charges or taxes into
consideration.
From time to time the Fund may publish the ranking of the
performance of its Class A, Class B or Class C shares by
Morningstar, Inc., an independent mutual fund monitoring service
that ranks mutual funds, including the Fund, monthly in broad
investment categories (equity, taxable bond, municipal bond and
hybrid) based on risk-adjusted investment return. Investment
return measures a fund's three, five and ten-year average annual
total returns (when available) in excess of 90-day U.S. Treasury
bill returns after considering sales charges and expenses. Risk
measures fund performance below 90-day U.S. Treasury bill monthly
returns. Risk and investment return are combined to produce star
rankings reflecting performance relative to the average fund in a
fund's category. Five stars is the "highest" ranking (top 10%),
four stars is "above average" (next 22.5%), three stars is
"average" (next 35%), two stars is "below average" (next 22.5%) and
one star is "lowest" (bottom 10%). Morningstar ranks the Fund in
relation to other rated growth and income funds. Rankings are
subject to change.
The total return on an investment in the Fund's Class A, Class
B or Class C shares may be compared with performance for the same
period of either the Lipper __________ Index, or the S&P 500 Index
as described in the Prospectus. The performance of each 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 a separate Distribution and Service Plan
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
reimburse the Distributor for all or a portion of its costs
incurred in connection with the distribution and/or servicing of
the shares of that class, as described in the Prospectus. Each
Plan has been approved by a vote of (i) the Board of 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,
and (ii) the holders of a "majority" (as defined in the Investment
Company Act) of the shares of each class at a meeting on November
3, 1995.
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 shares are
outstanding, and thereafter on a quarterly basis, as described in
the Prospectus. The advance payment is based on the net assets of
shares of that class sold. An exchange of shares does not entitle
the Recipient to an advance service fee payment. In the event
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 Plans,
(ii) compensation and expenses of personnel employed by the
Distributor to support distribution of shares, and (iii) costs of
sales literature, advertising and prospectuses (other than those
furnished to current shareholders).
- The Prior Plans. From the inception date of the Fund
through November 22, 1995, OCC Distributors (formerly known as
Quest for Value Distributors) served as Distributor to the Fund.
OCC Distributors provided distribution services for the Fund's
Class A, Class B and Class C shares pursuant to separate plans
adopted for each class under the Investment Company Act (the "Prior
Plans"). The total distribution fees accrued or paid by Class A,
Class B and Class C shares of the Fund under the Prior Plans for
the fiscal year ended October 31, 1995 were $______, $_______ and
$________, respectively.
OCC Distributors has estimated it spent approximately the
following amounts with respect to Class A, B and C shares of the
Fund for the fiscal year ended October 31, 1995:
Printing and
mailing of
prospectuses
Sales to other Compensation
Material and than current Compensation to Sales
Class Advertising shareholders to Dealers Personnel
Other (1)
Class A $ $ $ $ $
Class B $ $ $ $ $
Class C $ $ $ $ $
(1) Includes cost of telephone and overhead.
During the fiscal year ended October 31, 1995, OCC
Distributors received the following compensation with respect to
the Fund:
Portion of
Sales Charge Compensation on
on Class A Shares Redemptions (CDSC's)
$ $
For the fiscal year ended October 31, 1995, OCC Distributors
paid $_______ in 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 net asset values
per share of Class A, Class B and Class C shares of the Fund are
determined as of the close of business of The New York Stock
Exchange (the "Exchange") on each day that the Exchange is open, by
dividing the value of the Fund's net assets attributable to that
class by the total number of Fund shares of that class outstanding.
The Exchange normally closes at 4:00 P.M. New York time, but may
close earlier on some days (for example, in case of weather
emergencies or days falling before a holiday). The Exchange's most
recent annual holiday schedule (which is subject to change) states
that it will close on New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. It may also close on other days. The Fund may
invest a substantial portion of its assets in foreign securities
primarily listed on foreign exchanges which may trade on Saturdays
or customary U.S. business holidays on which the Exchange is
closed. Because the Fund's net asset values will not be calculated
on those days, the Fund's net asset value per share may be
significantly affected on such days when shareholders may not
purchase or redeem shares.
The Trust's Board of Trustees has established procedures for
the valuation of the Trust's securities generally as follows: (i)
equity securities traded on a U.S. securities exchange or on NASDAQ
for which last sale information is regularly reported are valued at
the last reported sale price on their primary exchange or NASDAQ
that day (or, in the absence of sales that day, at values based on
the last sale prices of the preceding trading day or closing bid
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 the 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 as provided by a
reliable bank, dealer or pricing service.
Trading in securities on European and Asian exchanges and
over-the-counter markets is normally completed before the close of
the Exchange. Events affecting the values of foreign securities
traded in such markets that occur between the time their prices are
determined and the close of the Exchange will not be reflected in
the Fund's calculation of its net asset value unless the Board of
Trustees or the Manager, under procedures established by the Board,
determines that the particular event would materially affect the
Fund's net asset values, 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 values
of securities denominated in foreign currency will be converted to
U.S. dollars at the closing price in the London foreign exchange
market that day as provided by a reliable bank, dealer or pricing
service. In the case of U.S. government securities and corporate
bonds, where last sale information is not generally available, such
pricing procedures may include "matrix" comparisons to the prices
for comparable instruments on the basis of quality, yield, maturity
and other special factors involved. The Trustees will monitor the
accuracy of pricing services by comparing prices used for portfolio
evaluation to actual sales prices of selected securities.
Puts, calls and Futures are valued at the last sales price on
the principal exchanges on which they are traded or on NASDAQ, as
applicable as determined by a pricing service approved by the Board
of Trustees or by the Manager, or, if there are no sales that day,
in accordance with (i) above. When the Fund writes an option, an
amount equal to the premium received by the Fund is included in the
Fund's Statement of Assets and Liabilities as an asset, and an
equivalent deferred credit is included in the liability section.
The deferred credit is adjusted ("marked-to-market") to reflect the
current market value of the option. If a call written by the Fund
is exercised, the proceeds are increased by the premium received.
AccountLink. When shares are purchased through AccountLink, each
purchase must be at least $25.00. Shares will be purchased on the
regular business day the Distributor is instructed to initiate the
Automated Clearing House ("ACH") transfer to buy the shares.
Dividends will begin to accrue on shares purchased by the proceeds
of ACH transfers on the business day the Fund receives Federal
Funds for the purchase through the ACH system before the close of
The New York Stock Exchange. The Exchange normally closes at 4:00
P.M., but may close earlier on certain days. If Federal Funds are
received on a business day after the close of the Exchange, the
shares will be purchased and dividends will begin to accrue on the
next regular business day. The proceeds of ACH transfers are
normally received by the Fund 3 days after the transfers are
initiated. The Distributor and the Fund are not responsible for
any delays in purchasing shares resulting from delays in ACH
transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced
sales charge rate may be obtained for Class A shares under Rights
of Accumulation and Letters of Intent because of the economies of
sales efforts and reduction in expenses realized by the
Distributor, dealers and brokers making such sales. No sales
charge is imposed in certain other circumstances described in the
Prospectus because the Distributor or dealer or broker incurs
little or no selling expenses. The term "immediate family" refers
to one's spouse, children, grandchildren, parents, grandparents,
parents-in-law, sons- and daughters-in-law, 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 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.
Rochester Portfolio Series - Limited-Term New York Municipal
Fund*
Rochester Fund Series - The Bond Fund For Growth*
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.
* Shares of the Fund are not presently exchangeable for shares of
this fund.
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 up to 5% of the intended purchase amount specified in the
Letter shall be held in escrow by the Transfer Agent. For example,
if the intended purchase amount is $50,000, the escrow shall be
shares valued in the amount of $2,500 (computed at the public
offering price adjusted for a $50,000 purchase). Any dividends and
capital gains distributions on the escrowed shares will be credited
to the investor's account.
2. If the 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.
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 Directors has the
right to cause the involuntary redemption of the shares held in any
Fund account if the aggregate net asset value of those shares is
less than $200 or such lesser amount as the Board may fix. The
Board of Directors will not cause the involuntary redemption of
shares in an account if the aggregate net asset value of the shares
has fallen below the stated minimum solely as a result of market
fluctuations. Should the Board elect to exercise this right, it
may also fix, in accordance with the 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 and the Fund
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
The Rochester Funds are not Eligible Funds for purposes of the
Exchange Privilege set forth in the Prospectus. As stated in the
Prospectus, shares of a particular class of Oppenheimer funds
having more than one class of shares may be exchanged only for
shares of the same class of other Oppenheimer funds. Shares of the
Oppenheimer funds that have a single class without a class
designation are deemed "Class A" shares for this purpose. All of
the Oppenheimer funds offer Class A, 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 Directors and the Manager might determine in a
particular year that it would be in the best interest of
shareholders for the Fund not to make such distributions at the
required levels and to pay the excise tax on the undistributed
amounts. That would reduce the amount of income or capital gains
available for distribution to shareholders.
If the Fund qualifies as a "regulated investment company"
under the Internal Revenue Code, it will not be liable for Federal
income taxes on amounts paid by it as dividends and 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 are the
independent auditors of the Fund. Their services include examining
the annual financial statements of the Fund as well as other
related services.
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.
<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>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of
Quest for Value Family of Funds:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Opportunity Fund, the Small
Capitalization Fund, the Growth and Income Fund, the U.S. Government Income
Fund, and the Investment Quality Income Fund (constituting part of Quest for
Value Family of Funds, hereafter referred to as the "Fund") at October 31, 1995,
the results of each of their operations for the year then ended, the changes in
each of their net assets for each of the two years in the period then ended and
the financial highlights for each of the periods indicated, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1995 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
December 20, 1995
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
QUEST FOR VALUE FUND, INC.
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 19.9%
AUTOMOTIVE -- 6.0%
Ford Motor Credit Co.
$ 2,400,000 5.72%, 11/20/95 $ 2,392,755
6,600,000 5.73%, 11/27/95 6,572,687
General Motors Acceptance Corp.
335,000 5.74%, 11/20/95 333,985
10,700,000 5.77%, 11/20/95 10,667,415
------------
19,966,842
------------
BANKING -- 1.4%
4,700,000 Norwest Financial, Inc.
5.73%, 11/13/95 4,691,023
------------
COMPUTERS -- 0.1%
430,000 IBM Credit Corp.
5.70%, 11/06/95 429,660
------------
MACHINERY & ENGINEERING -- 2.1%
Deere (John) Capital Corp.
3,300,000 5.71%, 11/13/95 3,293,719
3,600,000 5.75%, 11/13/95 3,593,100
------------
6,886,819
------------
MISCELLANEOUS FINANCIAL SERVICES -- 10.1%
Beneficial Corp.
1,300,000 5.72%, 11/27/95 1,294,629
225,000 5.74%, 11/27/95 224,067
800,000 CIT Group Holdings, Inc.
5.73%, 11/13/95 798,472
Household Finance Corp.
14,200,000 5.72%, 12/04/95 14,125,545
1,000,000 5.73%, 11/27/95 995,862
Merrill Lynch & Co., Inc.
500,000 5.72%, 11/06/95 499,603
15,345,000 5.75%, 11/06/95 15,332,745
------------
33,270,923
------------
OIL/GAS -- 0.2%
500,000 Chevron Oil Finance Co.
5.71%, 11/08/95 499,445
------------
Total Short-Term Corporate Notes
(cost -- $65,744,712) $ 65,744,712
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
CONVERTIBLE CORPORATE BONDS -- 0.7%
REAL ESTATE
$ 2,330,921 Security Capital Realty, Inc. (A)
12.00%, 6/30/14
(cost -- $2,198,259) $ 2,330,921
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
COMMON STOCKS -- 79.3%
AEROSPACE -- 6.0%
127,000 AlliedSignal, Inc. $ 5,397,500
177,000 McDonnell Douglas Corp. 14,469,750
------------
19,867,250
------------
APPAREL -- 1.4%
202,600 Warnaco Group, Inc. (Class A)* 4,710,450
------------
BANKING -- 3.4%
110,000 Citicorp 7,136,250
81,215 Mellon Bank Corp. 4,070,902
------------
11,207,152
------------
CHEMICALS -- 4.5%
60,000 du Pont (E.I.) de Nemours & Co. 3,742,500
81,000 Hercules, Inc. 4,323,375
64,000 Monsanto Co. 6,704,000
------------
14,769,875
------------
CONGLOMERATES -- 1.7%
90,200 General Electric Co. 5,705,150
------------
CONSUMER PRODUCTS -- 1.5%
149,000 Reebok International Ltd. 5,066,000
------------
CONTAINERS -- 2.2%
160,000 Temple - Inland, Inc. 7,280,000
------------
COSMETICS/TOILETRIES -- 1.5%
67,800 Avon Products, Inc. 4,822,275
------------
DRUGS & MEDICAL PRODUCTS -- 4.8%
179,000 Becton, Dickinson & Co. 11,635,000
48,000 Warner-Lambert Co. 4,086,000
------------
15,721,000
------------
</TABLE>
* Non-income producing security.
15
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------
ELECTRONICS -- 5.3%
177,000 Arrow Electronics, Inc.* $ 8,982,750
122,000 Intel Corp. 8,524,750
------------
17,507,500
------------
HEALTHCARE SERVICES -- 2.4%
440,000 Tenet Healthcare Corp. 7,865,000
------------
INSURANCE -- 17.2%
216,200 Ace Ltd. 7,350,800
35,300 AFLAC, Inc. 1,438,475
99,000 American International Group, Inc. 8,353,125
464,200 EXEL Ltd. 24,834,700
197,000 Progressive Corp., Ohio 8,175,500
101,000 Transamerica Corp. 6,842,750
------------
56,995,350
------------
METALS/MINING -- 2.7%
66,333 Freeport McMoRan, Inc. 2,479,208
8,518 Freeport McMoRan, Copper & Gold
(Class A) 194,849
279,290 Freeport McMoRan, Copper & Gold
(Class B) 6,353,848
------------
9,027,905
------------
MISCELLANEOUS FINANCIAL SERVICES -- 8.8%
200,000 American Express Co. 8,125,000
290,000 Countrywide Credit Industries, Inc. 6,416,250
214,000 Federal Home Loan Mortgage Corp. 14,819,500
------------
29,360,750
------------
PAPER PRODUCTS -- 1.9%
120,000 Champion International Corp. $ 6,420,000
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
REAL ESTATE -- 0.8%
3,050 Security Capital Realty, Inc. (A) 2,689,844
------------
RETAIL -- 6.3%
373,000 May Department Stores Co. 14,640,250
140,000 Mercantile Stores Co., Inc. 6,282,500
------------
20,922,750
------------
TELECOMMUNICATIONS -- 2.6%
344 Bell Atlantic Corp. 21,887
225,200 Sprint Corp. 8,670,200
------------
8,692,087
------------
TEXTILES -- 1.3%
340,000 Shaw Industries, Inc. 4,335,000
------------
TOYS/GAMES/HOBBY -- 0.9%
92,000 Hasbro, Inc. 2,806,000
------------
TRANSPORTATION -- 2.1%
84,000 CSX Corp. 7,035,000
------------
Total Common Stocks
(cost -- $190,764,443) $262,806,338
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $258,707,414)) 99.9% $330,881,971
Other Assets in Excess of
Other Liabilities 0.1 429,932
------ ------------
TOTAL NET ASSETS 100.0 % $331,311,903
------ ------------
------ ------------
</TABLE>
* Non-income producing security.
(A) Restricted Securities (the Fund will not bear any costs, including those
involved in registration under the Securities Act of 1933, in connection
with the disposition of these securities):
<TABLE>
<CAPTION>
UNIT
VALUATION
AS
DATE OF UNIT OF OCTOBER
DESCRIPTION ACQUISITION PAR AMOUNT SHARES COST 31, 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Security Capital
Realty, Inc.
12.00%, 6/30/14 9/15/94 $2,330,921 -- $ 94 $ 100
Security Capital
Realty, Inc.
Common Stock 9/15/94 -- 3,050 926 882
</TABLE>
16
<PAGE>
- --------------------------------------------------------------------------------
OPPORTUNITY FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 15.6%
AUTOMOTIVE -- 2.4%
$15,000,000 General Motors Acceptance Corp.
5.77%, 11/20/95 $ 14,954,321
------------
BANKING -- 2.8%
Norwest Financial, Inc.
1,800,000 5.73%, 11/13/95 1,796,562
16,000,000 5.73%, 11/27/95 15,933,787
------------
17,730,349
------------
COMPUTERS -- 0.2%
1,490,000 IBM Credit Corp.
5.70%, 11/06/95 1,488,820
------------
MACHINERY & ENGINEERING -- 3.0%
Deere (John) Capital Corp.
13,600,000 5.71%, 11/13/95 13,574,115
5,235,000 5.74%, 11/13/95 5,224,984
------------
18,799,099
------------
MISCELLANEOUS FINANCIAL SERVICES -- 7.1%
Beneficial Corp.
1,200,000 5.72%, 11/20/95 1,196,377
10,455,000 5.73%, 11/20/95 10,423,382
1,800,000 CIT Group Holdings, Inc.
5.73%, 11/13/95 1,796,562
15,980,000 Household Finance Corp.
5.73%, 11/08/95 15,962,196
Merrill Lynch & Co., Inc.
4,500,000 5.75%, 11/02/95 4,499,281
11,475,000 5.75%, 11/06/95 11,465,836
------------
45,343,634
------------
OIL/GAS -- 0.1%
491,000 Chevron Oil Finance Co.
5.71%, 11/08/95 490,455
------------
Total Short-Term Corporate Notes
(cost -- $98,806,678) $ 98,806,678
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
U.S. TREASURY NOTES -- 0.5%
$ 1,000,000 7.50%, 11/15/01 $ 1,081,410
1,000,000 7.50%, 5/15/02 1,086,410
550,000 7.875%, 4/15/98 577,241
550,000 7.875%, 8/15/01 603,537
------------
Total U.S. Treasury Notes
(cost -- $3,143,397) $ 3,348,598
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
COMMON STOCKS -- 85.0%
AEROSPACE -- 9.0%
100,000 Loral Corp. $ 2,962,500
525,000 McDonnell Douglas Corp. 42,918,750
200,000 Northrop Grumman Corp. 11,450,000
------------
57,331,250
------------
AIRLINES -- 1.0%
100,000 AMR Corp.* 6,600,000
------------
BANKING -- 13.6%
525,000 Citicorp 34,059,375
34,100 First Empire State Corp. 6,709,175
450,000 Mellon Bank Corp. 22,556,250
110,000 Wells Fargo & Co. 23,113,750
------------
86,438,550
------------
CASINOS/GAMING -- 2.9%
750,000 Harrahs Entertainment, Inc. 18,562,500
------------
CHEMICALS -- 4.4%
260,000 du Pont (E.I.) de Nemours & Co. 16,217,500
220,000 Hercules, Inc. 11,742,500
------------
27,960,000
------------
CONSUMER PRODUCTS -- 3.2%
600,000 Reebok International Ltd. 20,400,000
------------
COSMETICS/TOILETRIES -- 0.7%
60,600 Avon Products, Inc. 4,310,175
------------
DRUGS & MEDICAL PRODUCTS -- 2.8%
275,000 Becton, Dickinson & Co. 17,875,000
------------
</TABLE>
* Non-income producing security.
17
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------
ELECTRONICS -- 8.1%
460,000 Intel Corp. $ 32,142,500
200,000 National Semiconductor Corp.* 4,875,000
50,000 Raychem Corp. 2,318,750
440,000 Unitrode Corp.* 11,825,000
------------
51,161,250
------------
INSURANCE -- 3.2%
300,000 EXEL Ltd. 16,050,000
60,000 Transamerica Corp. 4,065,000
------------
20,115,000
------------
METALS/MINING -- 5.2%
83,333 Freeport McMoRan, Inc. 3,114,583
1,302,100 Freeport McMoRan Copper & Gold
(Class B) 29,622,775
------------
32,737,358
------------
MISCELLANEOUS FINANCIAL SERVICES -- 10.5%
250,000 American Express Co. 10,156,250
500,000 Countrywide Credit Industries, Inc. 11,062,500
500,000 Federal Home Loan Mortgage Corp. 34,625,000
100,000 Federal National Mortgage Assoc. 10,487,500
------------
66,331,250
------------
OIL/GAS -- 6.0%
80,000 Mapco, Inc. 4,120,000
610,000 Tenneco, Inc. 26,763,750
149,300 Triton Energy Corp.* 6,961,113
------------
37,844,863
------------
PAPER PRODUCTS -- 7.2%
535,000 Champion International Corp. 28,622,500
325,000 Scott Paper Co. 17,306,250
------------
45,928,750
------------
TELECOMMUNICATIONS -- 1.8%
300,000 Sprint Corp. 11,550,000
------------
TEXTILES -- 2.4%
155,000 Collins & Aikman Corp.* $ 1,240,000
1,100,000 Shaw Industries, Inc. 14,025,000
------------
15,265,000
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
TOYS/GAMES/HOBBY -- 2.7%
600,000 Mattel, Inc. 17,250,000
------------
OTHER -- 0.3%
40,000 Alliant Techsystems, Inc.* 1,860,000
------------
Total Common Stocks
(cost -- $440,332,557) $539,520,946
------------
<CAPTION>
- ------------------------------------------------------
WARRANTS VALUE
- ------------------------------------------------------
<C> <S> <C>
WARRANTS -- 0.0%
HEALTHCARE SERVICES
34 Laboratory Corp. of America
Holdings
(cost -- $81) $ 21
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $542,282,713) 101.1% $641,676,243
Other Liabilities in Excess of
Other Assets (1.1) (7,165,129)
------ ------------
TOTAL NET ASSETS 100.0% $634,511,114
------ ------------
------ ------------
</TABLE>
SMALL CAPITALIZATION FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 15.1%
AUTOMOTIVE -- 1.8%
$ 2,758,000 General Motors Acceptance Corp.
5.81%, 11/06/95 $ 2,755,774
------------
BANKING -- 4.0%
6,000,000 Norwest Financial, Inc.
5.73%, 11/14/95 5,987,585
------------
INSURANCE -- 4.7%
7,000,000 Prudential Funding Corp.
5.73%, 11/27/95 6,971,031
------------
</TABLE>
* Non-income producing security.
18
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
MACHINERY & ENGINEERING -- 1.8%
Deere (John) Capital Corp.
$ 1,560,000 5.71%, 11/13/95 $ 1,557,031
1,074,000 5.75%, 11/13/95 1,071,942
------------
2,628,973
------------
MISCELLANEOUS FINANCIAL SERVICES -- 2.8%
3,635,000 Beneficial Corp.
5.73%, 11/22/95 3,622,850
575,000 Household Finance Corp.
5.72%, 11/13/95 573,904
------------
4,196,754
------------
Total Short-Term Corporate Notes
(cost -- $22,540,117) $ 22,540,117
------------
CORPORATE NOTES & BONDS -- 0.4%
AUTOMOTIVE -- 0.0%
$ 62,950 Collins Industries, Inc.
8.75%, 1/11/00 $ 57,577
------------
OIL/GAS -- 0.4%
500,000 Global Marine, Inc.
12.75%, 12/15/99 552,500
------------
Total Corporate Notes & Bonds
(cost -- $585,111) $ 610,077
------------
CONVERTIBLE CORPORATE BONDS -- 0.9%
REAL ESTATE
$ 1,404,189 Security Capital Realty, Inc. (A)
12.00%, 6/30/14
(cost -- $1,325,889) $ 1,404,189
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS -- 0.2%
RETAIL
36,000 Family Bargain Corp.
$0.95 Conv. Pfd.
(cost -- $360,000) $ 220,500
------------
COMMON STOCKS -- 84.4%
ADVERTISING -- 6.2%
77,600 Katz Media Group, Inc.* $ 1,396,800
30,000 Omnicom Group, Inc. 1,916,250
292,400 True North Communications 5,921,100
------------
9,234,150
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
AEROSPACE -- 0.5%
97,500 BE Aerospace, Inc.* $ 767,813
------------
AUTOMOTIVE -- 1.7%
126,000 Collins Industries, Inc.* 259,875
120,100 Masland Corp. 1,681,400
70,000 Sudbury, Inc.* 586,250
------------
2,527,525
------------
BUILDING & CONSTRUCTION -- 5.8%
57,300 Carlisle Cos., Inc. 2,356,462
190,547 D.R. Horton, Inc. 2,119,835
26,500 Insituform Technologies (Class A)* 331,250
204,000 Martin Marietta Materials, Inc. 3,876,000
------------
8,683,547
------------
CHEMICALS -- 1.7%
86,400 OM Group, Inc. 2,505,600
------------
COMPUTER SERVICES -- 3.6%
149,900 BancTec, Inc.* 2,810,625
52,000 DST Systems, Inc. 1,092,000
114,000 Exabyte Corp.* 1,474,875
------------
5,377,500
------------
CONTAINERS -- 1.9%
169,000 Shorewood Packaging Corp.* 2,830,750
------------
DRUGS & MEDICAL PRODUCTS -- 1.9%
49,900 Amerisource Health Corp. (Class A) 1,359,775
33,900 Sybron International Corp. -
Wisconsin* 1,440,750
------------
2,800,525
------------
ELECTRONICS -- 8.9%
35,700 Arrow Electronics, Inc* 1,811,775
174,900 EG&G, Inc. 3,257,512
146,500 Marshall Industries* 5,164,125
111,000 Oak Industries, Inc.* 2,317,125
26,200 Unitrode Corp.* 704,125
------------
13,254,662
------------
</TABLE>
* Non-income producing security.
19
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------
ENTERTAINMENT -- 0.2%
25,000 Hollywood Park, Inc.* $ 243,750
------------
FOOD SERVICES -- 1.0%
70,000 IHOP Corp.* 1,505,000
------------
HEALTHCARE SERVICES -- 2.8%
16,000 Charter Medical Corp.* 288,000
20,000 Community Health Systems, Inc.* 635,000
51,900 Dentsply International, Inc. 1,790,550
54,000 SpaceLabs Medical, Inc.* 1,390,500
------------
4,104,050
------------
HOUSEHOLD PRODUCTS -- 2.4%
120,000 Singer Co. 2,820,000
35,000 The Rival Co. 682,500
------------
3,502,500
------------
INSURANCE -- 5.3%
47,000 Ace Ltd. 1,598,000
62,800 Capsure Holdings Corp.* 855,650
119,400 E.W. Blanch Holdings, Inc. 2,298,450
112,500 Guaranty National Corp. 1,603,125
7,000 Horace Mann Educators Corp. 186,375
64,200 Prudential Reinsurance Holdings,
Inc. 1,308,075
------------
7,849,675
------------
LEASING -- 1.1%
101,700 Interpool, Inc.* 1,627,200
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
MACHINERY & ENGINEERING -- 6.0%
50,000 Baldwin Technologies Co., Inc
(Class A)* $ 268,750
40,000 Briggs & Stratton Corp. 1,615,000
52,100 BW/IP Holdings, Inc. (Class A) 872,675
145,000 Crane Co. 5,129,375
67,400 Harmon Industries, Inc. 994,150
------------
8,879,950
------------
MANUFACTURING -- 1.9%
94,000 North American Watch Corp. 1,703,750
50,000 Pall Corp. 1,218,750
------------
2,922,500
------------
METALS/MINING -- 0.4%
70,000 Olympic Steel, Inc.* 568,750
------------
OFFICE EQUIPMENT -- 0.8%
60,600 Nu-Kote Holdings, Inc. (Class A)* 1,257,450
------------
OIL/GAS -- 6.4%
92,800 Aquila Gas Pipeline Corp. 1,020,800
84,000 Belden & Blake Corp.* 1,219,313
200,000 Global Natural Resources, Inc.* 2,000,000
137,500 Noble Drilling Corp.* 962,500
165,000 Petroleum Heat & Power Co., Inc.
(Class A) 1,278,750
105,400 St. Mary Land & Exploration Co. 1,409,725
34,000 Triton Energy Corp.* 1,585,250
------------
9,476,338
------------
PAPER PRODUCTS -- 1.8%
422,000 Repap Enterprises, Inc.* 2,663,875
------------
PRINTING/PUBLISHING -- 1.4%
69,000 International Imaging Materials,
Inc. 1,742,250
20,000 Merrill Corp. 320,000
------------
2,062,250
------------
</TABLE>
* Non-income producing security.
20
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------
REAL ESTATE -- 8.7%
151,800 Cousins Properties, Inc. $ 2,637,525
44,000 Post Properties, Inc. 1,320,000
231,600 Security Capital Industrial Trust,
Inc. 3,792,450
199,363 Security Capital Pacific Trust,
Inc. 3,563,614
1,800 Security Capital Realty, Inc. (A) 1,587,600
------------
12,901,189
------------
RETAIL -- 0.7%
10,900 Blair Corp. 321,550
60,000 The Maxim Group, Inc.* 780,000
------------
1,101,550
------------
TELECOMMUNICATIONS -- 1.2%
94,500 ECI Telecommunications Ltd. 1,795,500
------------
TEXTILES -- 4.8%
89,000 Collins & Aikman Corp.* 712,000
64,000 Culp, Inc. 624,000
42,700 Fab Industries, Inc. 1,248,975
149,600 Mohawk Industries, Inc.* 2,244,000
110,500 WestPoint Stevens, Inc.* 2,334,313
------------
7,163,288
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS -- 2.6%
55,900 Morningstar Group, Inc.* 433,225
111,800 Ralcorp Holdings, Inc. 2,571,400
84,700 Sylvan, Inc.* 899,937
------------
3,904,562
------------
TRANSPORTATION -- 0.1%
8,000 MTL, Inc.* 117,000
------------
UTILITIES -- 1.5%
34,600 Sithe Energies, Inc.* 246,525
96,000 UGI Corp. 2,016,000
------------
2,262,525
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
OTHER -- 1.1%
93,300 McGrath RentCorp. $ 1,632,750
------------
Total Common Stocks
(cost -- $116,900,149) $125,523,724
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $141,711,266) 101.0% $150,298,607
Other Liabilities in Excess of
Other Assets (1.0) (1,483,609)
------ ------------
TOTAL NET ASSETS 100.0% $148,814,998
------ ------------
------ ------------
</TABLE>
GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 1.9%
AUTOMOTIVE -- 0.4%
$ 200,000 Ford Motor Credit Co.
5.73%, 11/06/95 $ 199,841
------------
MISCELLANEOUS FINANCIAL SERVICES -- 1.5%
Beneficial Corp.
447,000 5.72%, 11/02/95 446,929
230,000 5.74%, 11/15/95 229,486
------------
676,415
------------
Total Short-Term Corporate Notes
(cost -- $876,256) $ 876,256
------------
CORPORATE NOTES & BONDS -- 18.2%
CASINOS/GAMING -- 1.9%
$ 1,000,000 Harrah's Jazz Co.
14.25%, 11/15/01 $ 875,000
------------
COSMETICS/TOILETRIES -- 3.8%
2,000,000 Playtex Family Products Corp.
9.00%, 12/15/03 1,790,000
------------
</TABLE>
* Non-income producing security.
(A) Restricted Securities (the Fund will not bear any costs, including those
involved in registration under the Securities Act of 1933, in connection
with the disposition of these securities):
<TABLE>
<CAPTION>
UNIT
VALUATION
AS
DATE OF UNIT OF OCTOBER
DESCRIPTION ACQUISITION PAR AMOUNT SHARES COST 31, 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Security Capital
Realty, Inc.
12.00%, 6/30/14 6/16/94 $1,404,189 -- $ 94 $ 100
Security Capital
Realty, Inc.
Common Stock 8/02/93 -- 1,800 684 882
</TABLE>
21
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL VALUE
AMOUNT
- ------------------------------------------------------
<C> <S> <C>
ENTERTAINMENT -- 3.7%
$ 5,000,000 Time Warner, Inc.
Zero Coupon, 12/17/12 $ 1,725,000
------------
FOOD SERVICES -- 0.9%
1,000,000 Shoney's, Inc.
Zero Coupon, 4/11/04 402,500
------------
OIL/GAS -- 3.7%
2,000,000 Triton Energy Corp.
Zero Coupon, 11/01/97 1,700,000
------------
TELECOMMUNICATIONS -- 4.2%
1,000,000 Comcast Corp.
10.625%, 7/15/12 1,097,500
1,500,000 Nextel Communications, Inc.
0.00/11.50%, 9/01/03** 870,000
------------
1,967,500
------------
Total Corporate Notes & Bonds
(cost -- $8,705,038) $ 8,460,000
------------
CONVERTIBLE CORPORATE BONDS -- 6.5%
MANUFACTURING
$ 4,000,000 Mascotech, Inc.
4.50%, 12/15/03
(cost -- $3,042,591) $ 3,040,000
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
COMMON STOCKS -- 72.6%
AEROSPACE -- 4.4%
25,000 McDonnell Douglas Corp. $ 2,043,750
------------
AUTOMOTIVE -- 3.8%
40,000 General Motors Corp. 1,750,000
------------
BANKING -- 7.6%
32,000 Citicorp 2,076,000
50,000 U.S. Bancorp 1,481,250
------------
3,557,250
------------
CHEMICALS -- 2.7%
20,000 du Pont (E.I.) de Nemours & Co. 1,247,500
------------
COMPUTER SOFTWARE -- 1.1%
5,000 Microsoft Corp.* $ 500,000
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
CONGLOMERATES -- 3.4%
100,000 Canadian Pacific Ltd. 1,600,000
------------
CONTAINERS -- 3.9%
40,000 Temple-Inland, Inc. 1,820,000
------------
ELECTRONICS -- 0.2%
1,000 Intel Corp. 69,875
------------
HEALTHCARE SERVICES -- 1.0%
10,000 Columbia/HCA Healthcare Corp. 491,250
------------
HOUSEHOLD PRODUCTS -- 4.0%
40,000 Premark International, Inc. 1,850,000
------------
INSURANCE -- 6.8%
15,000 Ace, Ltd. 510,000
10,000 AFLAC, Inc. 407,500
30,000 Progressive Corp., Ohio 1,245,000
20,000 Travelers, Inc. 1,010,000
------------
3,172,500
------------
MACHINERY & ENGINEERING -- 3.9%
45,000 Briggs & Stratton Corp. 1,816,875
------------
MEDIA/BROADCASTING -- 4.0%
20,000 Tele-Communications Liberty Media
Group (Series A)* 492,500
80,000 Tele-Communications TCI Group
(Series A)* 1,360,000
------------
1,852,500
------------
METALS/MINING -- 6.6%
133,687 Freeport McMoRan, Copper & Gold
(Class A) 3,058,090
------------
MISCELLANEOUS FINANCIAL SERVICES -- 0.5%
1,000 Countrywide Credit Industries, Inc. 22,125
3,000 Federal Home Loan Mortgage Corp. 207,750
------------
229,875
------------
OIL/GAS -- 1.6%
10,000 Triton Energy Corp.* $ 466,250
15,000 Union Texas Petroleum Holdings,
Inc. 270,000
------------
736,250
------------
</TABLE>
* Non-income producing security.
** Represents a step-up floater which will receive 0.00% interest until 9/01/98,
then will "step-up" to 11.50% until maturity.
22
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------
PAPER PRODUCTS -- 4.0%
35,000 Champion International Corp. 1,872,500
------------
TELECOMMUNICATIONS -- 4.5%
55,000 Sprint Corp. 2,117,500
------------
TEXTILES -- 8.6%
20,000 Shaw Industries, Inc. 255,000
50,000 Unifi, Inc. 1,125,000
55,000 VF Corp. 2,633,125
------------
4,013,125
------------
Total Common Stocks
(cost -- $30,820,524) $ 33,798,840
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $43,444,409) 99.2% $ 46,175,096
Other Assets in Excess of
Other Liabilities 0.8 358,263
------ ------------
TOTAL NET ASSETS 100.0 % $ 46,533,359
------ ------------
------ ------------
</TABLE>
U.S. GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
REPURCHASE AGREEMENT -- 24.6%
$28,300,000 J.P. Morgan, 5.85%, 11/01/95
(proceeds at maturity:
$28,304,599, collateralized by
$27,265,000 par, $28,866,819
value, U.S. Treasury Notes,
7.50%, 10/31/99)
(cost -- $28,300,000) $ 28,300,000
------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION -- 0.6%
$ 652,460 9.50%, 12/01/02 - 11/01/03
(cost -- $657,455) $ 679,981
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION I -- 43.6%
$19,729,923 7.00%, 2/15/22 - 11/15/23 $ 19,594,181
10,813,268 7.50%, 2/15/22 - 5/15/24 10,955,138
7,998,232 8.00%, 4/15/02 - 5/15/25 8,250,767
10,522,241 8.50%, 6/15/01 - 9/15/24 10,956,944
449,937 10.50%, 1/15/98 - 12/15/00 472,573
------------
Total Government National Mortgage
Association I (cost -- $50,865,933) $ 50,229,603
------------
U.S. TREASURY NOTES -- 30.4%
$15,000,000 5.875%, 8/15/98 $ 15,070,350
5,000,000 6.125%, 5/31/97 5,035,950
14,000,000 7.75%, 11/30/99 14,975,660
------------
Total U.S. Treasury Notes
(cost -- $34,397,838) $ 35,081,960
------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments
(cost -- $114,221,226) 99.2% $114,291,544
------ ------------
- ------------------------------------------------
PRINCIPAL
AMOUNT
SUBJECT
TO PUT VALUE
- ------------------------------------------------------
WRITTEN PUT OPTIONS OUTSTANDING -- (0.1%)
$25,000,000 U.S. Treasury Notes, 6.125%,
9/30/00, expiring Nov. '95, strike
@ $101.3125
(premium received: $132,812) $ (117,188)
------------
Other Assets in Excess of
Other Liabilities 0.9 1,067,411
------ ------------
TOTAL NET ASSETS 100.0 % $115,241,767
------ ------------
------ ------------
</TABLE>
* Non-income producing security.
23
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
INVESTMENT QUALITY INCOME FUND
<TABLE>
<CAPTION>
<C> <S> <C>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 4.5%
MISCELLANEOUS FINANCIAL SERVICES
$ 1,800,000 Beneficial Corp.
5.75%, 11/06/95 $ 1,798,563
570,000 Household Finance Corp.
5.73%, 11/06/95 569,546
425,000 Merrill Lynch & Co., Inc.
5.75%, 11/02/95 424,932
------------
Total Short-Term Corporate Notes
(cost -- $2,793,041) $ 2,793,041
------------
CORPORATE NOTES & BONDS -- 93.6%
AEROSPACE -- 3.4%
$ 2,000,000 Boeing Co.
7.50%, 8/15/42 $ 2,092,300
------------
AIRLINES -- 2.9%
1,000,000 American Airlines
9.73%, 9/29/14 1,133,870
550,000 Delta Air Lines, Inc.
10.375%, 2/01/11 650,551
------------
1,784,421
------------
AUTOMOTIVE -- 3.6%
2,000,000 Ford Motor Credit Co. (A)
8.875%, 11/15/22 2,234,600
------------
BANKING -- 6.5%
70,000 NatWest Bancorp, Inc.
9.375%, 11/15/03 81,979
1,300,000 NCNB Corp.
10.20%, 7/15/15 1,680,731
500,000 RBSG Capital Corp.
10.125%, 3/01/04 606,020
1,500,000 Westpac Banking Corp.
9.125%, 8/15/01 1,680,810
------------
4,049,540
------------
CHEMICALS -- 1.0%
500,000 Rohm & Haas Co.
9.50%, 4/01/21 607,720
------------
CONGLOMERATES -- 4.0%
2,000,000 Canadian Pacific Ltd.
9.45%, 8/01/21 2,517,380
------------
ENTERTAINMENT -- 5.2%
3,000,000 Time Warner, Inc.
9.15%, 2/01/23 3,253,800
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
INSURANCE -- 11.6%
$ 1,000,000 Aetna Life & Casualty Co.
8.00%, 1/15/17 $ 1,015,020
1,200,000 Capital Holding Corp.
8.75%, 1/15/17 1,263,636
2,000,000 CNA Financial Corp.
7.25%, 11/15/23 1,900,200
3,000,000 Torchmark, Inc.
7.875%, 5/15/23 3,064,440
------------
7,243,296
------------
LEASING -- 2.7%
1,600,000 Ryder Systems, Inc.
8.75%, 3/15/17 1,712,464
------------
MACHINERY & ENGINEERING -- 3.3%
1,750,000 Caterpillar, Inc.
9.75%, 6/01/19 2,056,373
------------
MISCELLANEOUS FINANCIAL SERVICES -- 11.4%
20,000 Beneficial Corp.
12.875%, 8/01/13 24,110
1,500,000 BHP Finance USA Ltd.
8.50%, 12/01/12 1,700,430
Lehman Brothers, Inc.
865,000 9.875%, 10/15/00 955,280
115,000 10.00%, 5/15/99 127,045
205,000 Midland American Capital Corp.
12.75%, 11/15/03 240,533
3,000,000 Prudential Funding Corp.
6.75%, 9/15/23 (B) 2,672,760
1,250,000 Source One Mortgage Services Corp.
9.00%, 6/01/12 1,363,087
------------
7,083,245
------------
OIL/GAS -- 5.9%
3,000,000 Occidental Petroleum Corp.
11.125%, 6/01/19 3,677,430
------------
PAPER PRODUCTS -- 0.2%
100,000 Union Camp Corp.
10.00%, 5/01/19 113,709
------------
PIPELINES -- 3.1%
1,500,000 TransCanada Pipelines Ltd.
9.875%, 1/01/21 1,930,965
------------
RETAIL -- 1.3%
May Department Stores Co.
250,000 9.875%, 6/01/17 276,337
405,000 10.625%, 11/01/10 541,542
------------
817,879
------------
</TABLE>
24
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
TELECOMMUNICATIONS -- 11.8%
$ 2,500,000 New York Telephone Co.
9.375%, 7/15/31 $ 2,965,900
2,000,000 Pacific Bell
8.50%, 8/15/31 2,191,900
2,000,000 Southern New England Telephone Co.
8.70%, 8/15/31 2,168,720
------------
7,326,520
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS -- 3.5%
2,000,000 American Brands, Inc.
7.875%, 1/15/23 2,153,300
------------
UTILITIES -- 7.0%
2,000,000 Hydro-Quebec
8.50%, 12/01/29 2,203,280
2,000,000 Southern California Edison Co.
8.875%, 6/01/24 2,140,540
------------
4,343,820
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
OTHER -- 5.2%
$ 1,447,305 DLJ Mortgage Acceptance Corp.
8.75%, 11/25/24 $ 1,471,276
1,500,000 Nova Scotia (Province of)
8.875%, 7/01/19 1,733,370
------------
3,204,646
------------
Total Corporate Notes & Bonds
(cost -- $54,144,780) $ 58,203,408
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $56,937,821) 98.1 % $ 60,996,449
Other Assets in Excess of
Other Liabilities 1.9 1,192,720
------ ------------
TOTAL NET ASSETS 100.0 % $ 62,189,169
------ ------------
------ ------------
</TABLE>
(A) Security segregated (partial) as collateral for open futures contracts. The
aggregate market value of such security is $558,650.
(B) Resale of the security is restricted to qualified institutional investors.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
QUEST FOR SMALL GROWTH U.S. INVESTMENT
VALUE FUND, OPPORTUNITY CAPITALIZATION AND GOVERNMENT QUALITY
INC. FUND FUND INCOME FUND INCOME FUND INCOME FUND
------------ ------------ ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at value (cost --
$258,707,414, $542,282,713,
$141,711,266, $43,444,409,
$85,921,226 and $56,937,821,
respectively)...................... $330,881,971 $641,676,243 $150,298,607 $46,175,096 $ 85,991,544 $60,996,449
Repurchase agreement
(cost -- $28,300,000).............. -- -- -- -- 28,300,000 --
Cash................................ 45,640 547,052 554,656 43,048 147,175 59,556
Receivable for fund shares sold..... 530,951 3,886,531 429,526 135,588 112,467 66,286
Dividends receivable 243,046 997,122 50,222 40,770 -- --
Interest receivable................. 70,681 80,486 85,156 232,993 1,100,769 1,428,564
Receivable for investments sold..... -- 3,775,999 1,519,249 -- -- --
Receivable for mortgage
prepayments........................ -- -- -- -- 9,512 --
Deferred organization expenses...... -- -- -- 19,361 -- 1,598
Other assets........................ 39,549 22,478 12,365 17,891 30,144 12,304
------------ ------------ ------------ ----------- ------------ -----------
Total Assets...................... 331,811,838 650,985,911 152,949,781 46,664,747 115,691,611 62,564,757
------------ ------------ ------------ ----------- ------------ -----------
LIABILITIES
Written put options outstanding, at
value (premiums received:
$132,812).......................... -- -- -- -- 117,188 --
Payable for fund shares redeemed.... 246,415 541,931 381,171 39,485 94,741 182,432
Distribution fee payable............ 57,478 218,953 31,207 9,227 13,696 14,560
Investment advisory fee payable..... 54,437 103,767 24,467 6,603 11,374 6,111
Payable for investments purchased... -- 15,310,750 3,596,750 -- -- --
Dividends payable................... -- -- -- -- 100,543 79,161
Payable for futures variation
margin............................. -- -- -- -- -- 33,750
Other payables and accrued
expenses........................... 141,605 299,396 101,188 76,073 112,302 59,574
------------ ------------ ------------ ----------- ------------ -----------
Total Liabilities................. 499,935 16,474,797 4,134,783 131,388 449,844 375,588
------------ ------------ ------------ ----------- ------------ -----------
NET ASSETS
Par value........................... 22,865,787 259,205 86,170 42,633 102,228 57,180
Paid-in-surplus..................... 211,941,042 523,701,982 131,509,611 41,486,396 124,603,694 59,929,025
Accumulated undistributed net
investment income (loss)........... 2,115,981 3,043,582 817,130 62,229 (100,543) (1,302)
Accumulated undistributed net
realized gain (loss) on
investments........................ 22,214,536 8,112,815 7,814,746 2,211,414 (9,449,554) (1,441,862)
Net unrealized appreciation on
investments........................ 72,174,557 99,393,530 8,587,341 2,730,687 85,942 3,646,128
------------ ------------ ------------ ----------- ------------ -----------
Total Net Assets.................. $331,311,903 $634,511,114 $148,814,998 $46,533,359 $115,241,767 $62,189,169
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
CLASS A:
Fund shares outstanding............. 19,476,461 14,934,153 6,717,417 3,395,059 9,111,820 4,144,692
------------ ------------ ------------ ----------- ------------ -----------
Net asset value per share........... $ 14.51 $ 24.59 $ 17.31 $ 10.92 $ 11.27 $ 10.88
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
Maximum offering price per share*... $ 15.35 $ 26.02 $ 18.32 $ 11.46 $ 11.83 $ 11.42
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
CLASS B:
Fund shares outstanding............. 2,682,851 8,945,500 1,369,612 700,417 855,263 1,207,703
------------ ------------ ------------ ----------- ------------ -----------
Net asset value and offering price
per share.......................... $ 14.37 $ 24.33 $ 17.11 $ 10.88 $ 11.27 $ 10.88
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
CLASS C:
Fund shares outstanding............. 706,475 2,040,801 529,946 167,833 255,735 365,603
------------ ------------ ------------ ----------- ------------ -----------
Net asset value and offering price
per share.......................... $ 14.35 $ 24.31 $ 17.11 $ 10.89 $ 11.27 $ 10.88
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
</TABLE>
*Sales charges decrease on purchases of $50,000 or higher.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
GROWTH
QUEST FOR SMALL AND U.S. INVESTMENT
VALUE OPPORTUNITY CAPITALIZATION INCOME GOVERNMENT QUALITY
FUND, INC. FUND FUND FUND INCOME FUND INCOME FUND
----------- ----------- ------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends*................... $4,933,153 $5,805,392 $ 1,902,266 $ 693,240 $ -- $
- --
Interest..................... 2,545,437 4,798,092 1,684,966 1,089,203 8,894,940 4,872,959
----------- ----------- ------------- ---------- ----------- -----------
Total investment income.... 7,478,590 10,603,484 3,587,232 1,782,443 8,894,940 4,872,959
----------- ----------- ------------- ---------- ----------- -----------
OPERATING EXPENSES
Investment advisory fees
(note 2a)................... 2,893,435 3,923,159 1,456,594 333,289 755,883 351,860
Distribution fees (note
2c)......................... 1,607,236 2,665,031 859,394 191,723 455,179 311,219
Transfer and dividend
disbursing agent fees (note
1i)......................... 330,355 410,006 206,267 73,852 130,367 71,201
Accounting service fees (note
2b)......................... -- 103,747 108,951 112,800 121,310 105,362
Registration fees............ 54,800 141,636 34,952 34,042 32,098 33,871
Custodian fees............... 40,216 47,751 22,819 18,724 70,657 21,556
Reports and notices to
shareholders................ 40,057 44,869 27,492 8,814 17,517 10,688
Auditing, consulting and tax
return preparation fees..... 24,597 18,515 18,514 14,435 40,367 17,355
Directors'(Trustees') fees
and expenses................ 17,270 17,270 17,270 8,870 17,270 17,270
Legal fees................... 11,749 10,120 7,222 4,721 6,836 5,236
Amortization of deferred
organization expenses (note
1c)......................... -- -- -- 19,148 -- 12,374
Miscellaneous................ 19,575 13,337 9,189 4,500 14,726 5,566
----------- ----------- ------------- ---------- ----------- -----------
Total operating expenses... 5,039,290 7,395,441 2,768,664 824,918 1,662,210 963,558
Less: Investment advisory
fees waived (note 2a)..... -- -- -- (8,286) -- (42,245)
----------- ----------- ------------- ---------- ----------- -----------
Net operating expenses... 5,039,290 7,395,441 2,768,664 816,632 1,662,210 921,313
----------- ----------- ------------- ---------- ----------- -----------
Net investment income.... 2,439,300 3,208,043 818,568 965,811 7,232,730 3,951,646
----------- ----------- ------------- ---------- ----------- -----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS -- NET
Net realized gain (loss) on
security transactions....... 22,321,532 8,125,065 8,630,413 2,227,731 (3,475,568) (24,232)
Net realized loss on option
transactions (note 1f).... -- -- -- -- (267,734) --
Net realized loss on futures
transactions (note 1g)...... -- -- (86,670) -- -- (464,750)
----------- ----------- ------------- ---------- ----------- -----------
Net realized gain (loss) on
investments............... 22,321,532 8,125,065 8,543,743 2,227,731 (3,743,302) (488,982)
Net change in unrealized
appreciation (depreciation)
on investments.............. 39,322,642 85,013,107 3,040,965 2,324,387 9,332,957 7,336,722
----------- ----------- ------------- ---------- ----------- -----------
Net realized gain (loss)
and change in unrealized
appreciation
(depreciation) on
investments............... 61,644,174 93,138,172 11,584,708 4,552,118 5,589,655 6,847,740
----------- ----------- ------------- ---------- ----------- -----------
Net increase in net assets
resulting from operations... $64,083,474 $96,346,215 $ 12,403,276 $5,517,929 $12,822,385 $10,799,386
----------- ----------- ------------- ---------- ----------- -----------
----------- ----------- ------------- ---------- ----------- -----------
<FN>
* Net of withholding taxes of $6,473, $732 and $1,752 for Quest for Value, Small
Capitalization and Growth and Income, respectively.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>
27
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
QUEST FOR VALUE FUND,
INC. OPPORTUNITY FUND
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
------------------------ ------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income (loss).............................. $ 2,439,300 $ 1,726,225 $ 3,208,043 $ 1,397,364
Net realized gain (loss) on investments................... 22,321,532 16,664,331 8,125,065 7,139,720
Net change in unrealized appreciation (depreciation) on
investments.............................................. 39,322,642 (6,250,090) 85,013,107 4,721,481
----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting from
operations............................................. 64,083,474 12,140,466 96,346,215 13,258,565
----------- ----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS*
Net investment income -- Class A.......................... (1,649,576) (819,873) (1,066,642) (2,269,483)
Net investment income -- Class B.......................... (108,497) (11,801) (335,822) (98,258)
Net investment income -- Class C.......................... (29,366) (2,040) (56,920) (21,098)
Net realized gains -- Class A............................. (15,501,438) (9,227,704) (5,314,298) (1,498,248)
Net realized gains -- Class B............................. (1,014,005) (115,604) (1,562,718) (30,484)
Net realized gains -- Class C............................. (255,884) (11,081) (267,734) (11,476)
Tax return of capital -- Class A.......................... -- -- -- --
Tax return of capital -- Class B.......................... -- -- -- --
Tax return of capital -- Class C.......................... -- -- -- --
----------- ----------- ----------- -----------
Total dividends and distributions to shareholders....... (18,558,766) (10,188,103) (8,604,134) (3,929,047)
----------- ----------- ----------- -----------
FUND SHARE TRANSACTIONS
CLASS A
Net proceeds from sales................................... 53,027,793 61,908,256 201,988,591 90,332,759
Reinvestment of dividends and distributions............... 16,047,556 9,385,655 6,034,648 3,405,284
Cost of shares redeemed................................... (64,462,161) (80,014,950) (60,771,127) (65,200,453)
----------- ----------- ----------- -----------
Net increase (decrease) -- Class A...................... 4,613,188 (8,721,039) 147,252,112 28,537,590
----------- ----------- ----------- -----------
CLASS B
Net proceeds from sales................................... 22,392,431 12,409,864 160,670,137 40,604,196
Reinvestment of dividends and distributions............... 1,045,812 123,599 1,804,130 124,021
Cost of shares redeemed................................... (3,681,109) (544,061) (14,031,965) (1,026,439)
----------- ----------- ----------- -----------
Net increase -- Class B................................. 19,757,134 11,989,402 148,442,302 39,701,778
----------- ----------- ----------- -----------
CLASS C
Net proceeds from sales................................... 6,835,837 3,521,667 40,882,367 6,945,412
Reinvestment of dividends and distributions............... 280,898 13,020 314,274 32,567
Cost of shares redeemed................................... (1,738,997) (271,901) (4,067,767) (254,081)
----------- ----------- ----------- -----------
Net increase -- Class C................................. 5,377,738 3,262,786 37,128,874 6,723,898
----------- ----------- ----------- -----------
Total net increase (decrease) in net assets from fund
share transactions....................................... 29,748,060 6,531,149 332,823,288 74,963,266
----------- ----------- ----------- -----------
Total increase (decrease) in net assets................. 75,272,768 8,483,512 420,565,369 84,292,784
NET ASSETS
Beginning of year......................................... 256,039,135 247,555,623 213,945,745 129,652,961
----------- ----------- ----------- -----------
End of year (including undistributed net investment income
(loss) of $2,115,981, $1,464,120; $3,043,582, $1,291,867;
$817,130, ($238,336); $62,229, $127,460; ($100,543), $0
and ($1,302), $0, respectively).......................... $331,311,903 $256,039,135 $634,511,114 $213,945,745
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
<FN>
*Certain figures have been restated to conform to current year presentation for
Opportunity, Growth and Income and U.S. Government.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>
28
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAPITALIZATION U.S. GOVERNMENT INCOME
FUND GROWTH AND INCOME FUND FUND INVESTMENT QUALITY
INCOME FUND
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
- -------------------------- ------------------------ -------------------------- ------------------------
1995 1994 1995 1994 1995 1994 1995 1994
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 818,568 $ (238,336) $ 965,811 $ 966,108 $ 7,232,730 $ 8,291,969 $ 3,951,646 $ 3,846,353
8,543,743 3,366,835 2,227,731 1,768,686 (3,743,302) (4,366,839) (488,982) (952,880)
3,040,965 (3,118,979) 2,324,387 (189,442) 9,332,957 (11,007,688) 7,336,722 (9,068,979)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
12,403,276 9,520 5,517,929 2,545,352 12,822,385 (7,082,558) 10,799,386 (6,175,506)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
-- -- (917,781) (936,128) (6,680,576) (8,071,564) (3,164,967) (3,482,793)
-- -- (105,700) (41,545) (464,033) (196,735) (586,935) (244,424)
-- -- (17,697) (7,305) (89,583) (39,362) (199,744) (119,136)
(3,010,761) (8,036,736) (1,275,011) (4,278,474) -- (3,218,859) -- (367,910)
(434,007) (160,831) (129,812) (152,311) -- (42,833) -- (10,112)
(91,772) (19,543) (20,124) (19,378) -- (7,144) -- (637)
-- -- -- -- (140,061) -- -- --
-- -- -- -- (8,675) -- -- --
-- -- -- -- (1,431) -- -- --
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
(3,536,540) (8,217,110) (2,466,125) (5,435,141) (7,384,359) (11,576,497) (3,951,646) (4,225,012)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
38,194,245 127,081,752 8,471,883 5,937,491 18,642,107 17,007,814 8,023,597 12,621,718
2,840,961 7,215,556 2,097,137 5,008,623 5,896,557 9,588,703 2,288,961 2,758,350
(52,052,199) (111,134,238) (6,705,888) (6,040,040) (50,011,121) (74,313,512) (17,520,761) (20,364,228)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
(11,016,993) 23,163,070 3,863,132 4,906,074 (25,472,457) (47,716,995) (7,208,203) (4,984,160)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
10,160,304 15,275,222 4,674,731 2,763,975 5,110,647 6,748,251 7,327,816 6,440,954
408,265 148,570 217,205 188,513 319,245 187,137 462,628 185,172
(4,495,109) (811,203) (533,417) (260,750) (3,026,400) (964,994) (2,363,759) (800,932)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
6,073,460 14,612,589 4,358,519 2,691,738 2,403,492 5,970,394 5,426,685 5,825,194
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
6,393,572 3,345,761 1,497,250 341,819 2,026,463 1,424,484 1,204,849 3,141,700
88,907 18,810 36,149 26,593 85,658 46,127 93,152 93,436
(1,180,484) (229,505) (232,677) (4,696) (533,211) (289,465) (285,205) (422,838)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
5,301,995 3,135,066 1,300,722 363,716 1,578,910 1,181,146 1,012,796 2,812,298
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
358,462 40,910,725 9,522,373 7,961,528 (21,490,055) (40,565,455) (768,722) 3,653,332
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
9,225,198 32,703,135 12,574,177 5,071,739 (16,052,029) (59,224,510) 6,079,018 (6,747,186)
139,589,800 106,886,665 33,959,182 28,887,443 131,293,796 190,518,306 56,110,151 62,857,337
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
$148,814,998 $139,589,800 $46,533,359 $33,959,182 $115,241,767 $131,293,796 $62,189,169 $56,110,151
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
</TABLE>
29
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Quest for Value Funds are registered under the Investment Company Act of
1940, as diversified, open-end management investment companies. Quest for Value
Fund, Inc. ("Quest for Value") is a Maryland corporation. Opportunity Fund
("Opportunity"), Small Capitalization Fund ("Small Capitalization"), Growth and
Income Fund ("Growth and Income"), U.S. Government Income Fund ("U.S.
Government") and Investment Quality Income Fund ("Investment Quality") are five
of nine funds offered in the Quest for Value Family of Funds, a Massachusetts
business trust. Quest for Value Advisors (the "Adviser") serves as investment
adviser and provides accounting and administrative services to each fund. Quest
for Value Distributors (the "Distributor") serves as each fund's distributor.
Both the Adviser and Distributor are majority-owned (99%) subsidiaries of
Oppenheimer Capital.
Prior to September 1, 1993, the funds issued only one class of shares which
were redesignated Class A shares. Subsequent to that date all funds were
authorized to issue Class A, Class B and Class C shares. Shares of each Class
represent an identical interest in the investment portfolio of their respective
fund and generally have the same rights, but are offered under different sales
charges 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 each 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 securites are valued at the last quoted bid price. Other
securities traded over-the-counter and not part of the National Market System
are valued at the last quoted bid price. Investment debt securities (other than
short-term obligations) are valued each day by an independent pricing service
approved by the Board of Directors (Trustees) using methods which include
current market quotations from major market makers in the securities and
trader-reviewed "matrix" prices. Futures contracts are valued based upon their
daily settlement value as of the close of the exchange upon which they trade.
OTC options are valued based upon formulas which utilize the market value of the
underlying securities, strike prices and expiration dates of the options.
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 values as determined in good faith under
procedures established by each fund's Board of Directors (Trustees). The ability
of issuers of debt securities held by the funds to meet their obligations may be
affected by economic or political development in a specific state, industry or
region.
(B) FEDERAL INCOME TAXES
It is each 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
The following approximate costs were incurred in connection with their
organization: Growth and Income -- $96,000 and Investment Quality -- $62,000.
These costs have been deferred and are being amortized to expense on a
straight-line basis over sixty months from commencement of each fund's
operations.
(D) SECURITY 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 is
determined on the basis of identified cost. Dividend income is recorded on the
ex-dividend
30
<PAGE>
- --------------------------------------------------------------------------------
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. Net investment income, other than class specific
expenses and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets, as defined, of each
class.
(E) DIVIDENDS AND DISTRIBUTIONS
The following table summarizes each fund's dividend and capital gain
declaration policy:
<TABLE>
<CAPTION>
SHORT-TERM LONG-TERM
INCOME CAPITAL CAPITAL
DIVIDENDS GAINS GAINS
---------- ---------- ----------
<S> <C> <C> <C>
Quest for Value annually annually annually
Opportunity annually annually annually
Small Capitalization annually annually annually
Growth and Income quarterly annually annually
U.S. Government daily * quarterly annually
Investment Quality daily * annually annually
* paid monthly.
</TABLE>
Each fund records dividends and distributions to its shareholders on the
ex-dividend date. The amount of dividends and distributions from net investment
income and net realized capital gains are determined in accordance with federal
income tax regulations, which may differ from generally accepted accounting
principles. These "book-tax" differences are either considered temporary or
permanent in nature. To the extent these differences are permanent in nature,
such amounts are reclassified within the capital accounts based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Dividends and distributions which exceed net investment income and net realized
capital gains for financial reporting purposes but not for tax purposes are
reported as dividends in excess of net investment income or distributions in
excess of net realized capital gains, respectively. To the extent distributions
exceed current and accumulated earnings and profits for federal income tax
purposes, they are reported as distributions of paid-in-surplus or tax return of
capital. Accordingly, permanent book-tax differences relating to shareholder
distributions have been reclassified to paid-in-surplus. Net investment
income(loss), net realized gain(loss) and net assets were not affected.
As required by Statement of Position 93 - 2, Determination, Disclosure and
Financial Statement Presentation of Income, Capital Gain and Return of Capital
Distributions by Investment Companies, the following table discloses the
reclassifications from accumulated undistributed net investment income(loss) and
accumulated undistributed capital gain(loss) on investments to paid-in-surplus
during the fiscal year ended October 31, 1995:
<TABLE>
<CAPTION>
ACCUMULATED
UNDISTRIBUTED
NET ACCUMULATED
INVESTMENT UNDISTRIBUTED PAID
INCOME NET REALIZED IN
(LOSS) GAIN (LOSS) SURPLUS
---------- --------------- --------
<S> <C> <C> <C>
Quest for Value -- -- --
Opportunity 3,056 (5,991) 2,935
Small Capitalization 236,898 (559,292) 322,394
Growth and Income 10,136 (152,783) 142,647
U.S. Government (99,081) (407,920) 507,001
Investment Quality (1,302) -- 1,302
</TABLE>
31
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(F) WRITTEN OPTIONS ACCOUNTING POLICIES
When a fund writes a call option or a put option, an amount equal to the
premium received by the fund is included in the fund's Statement of Assets and
Liabilities as an asset and an equivalent liability. The amount of the liability
is subsequently marked-to-market to reflect the current market value of the
option written. If the option expires on its stipulated expiration date or if a
fund enters into a closing purchase transaction, the fund will realize a gain
(or loss if the cost of a closing purchase tranaction exceeds the premium
received when the option was written) without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option will
be extinguished. If a call option which a fund has written is exercised, the
fund realizes a gain or loss from the sale of the underlying security and the
proceeds from such sale are increased by the premium originally received. If a
put option which a fund has written is exercised, the amount of the premium
originally received will reduce the cost of the security which the fund
purchases upon exercise of the option.
(G) FUTURES ACCOUNTING POLICIES
Futures contracts are agreements between two parties to buy and sell a
financial instrument at a set price on a future date. Upon entering into such a
contract, a fund is required to pledge to the broker an amount of cash, cash
equivalents or U.S. Government securities equal to the minimum "initial margin"
requirements of the exchange. Pursuant to the contract, a fund agrees to receive
from or pay to the broker an amount of cash equal to the daily fluctuation in
the value of the contract. Such receipts or payments are known as "variation
margin" and are recorded by the fund as unrealized appreciation or depreciation.
When a contract is closed, the fund records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed and reverses any unrealized appreciation or
depreciation previously recorded. At October 31, 1995, Investment Quality had
the following futures contracts open:
<TABLE>
<CAPTION>
NET
NUMBER OF UNREALIZED
TYPE CONTRACTS SHORT VALUE EXPIRATION LOSS
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------
CBT U.S. Treasury Bond 120 $13,635,000 Dec. '95 $412,500
</TABLE>
(H) REPURCHASE AGREEMENTS
U.S. Government enters into repurchase agreements as part of its investment
program. The fund's custodian takes possession of collateral pledged by the
counterparty. The collateral is marked-to-market daily to ensure that the value,
plus accrued interest, is at least equal to the repurchase price. In the event
of default by the obligor to repurchase, the fund has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. Under
certain circumstances, in the event of default or bankruptcy by the other party
to the agreement, realization and/or retention of the collateral or proceeds may
be subject to legal proceedings.
(I) ALLOCATION OF EXPENSES
Expenses specifically identifiable to a particular fund or class are borne
by that fund or class. Other expenses are allocated to each fund or class based
on its net assets in relation to the total net assets of all applicable funds or
classes or on another reasonable basis. For the year ended October 31, 1995,
transfer and dividend disbursing agent fees accrued to classes A, B and C were
$279,089, $36,906 and $14,360, respectively, for Quest for Value; $236,086,
$141,736 and $32,184, respectively, for Opportunity; $146,564, $44,501 and
$15,202, respectively, for Small Capitalization; $61,191, $8,864 and $3,797,
respectively, for Growth and Income; $117,106, $8,732 and $4,529, respectively,
for U.S. Government and $58,422, $8,814 and $3,965, respectively, for Investment
Quality Income. These expenses are consolidated, by fund, in the accompanying
Statements of Operations.
32
<PAGE>
- --------------------------------------------------------------------------------
2. INVESTMENT ADVISORY FEE, ACCOUNTING SERVICES FEE, DISTRIBUTION FEE AND OTHER
TRANSACTIONS WITH AFFILIATES
(A) The investment advisory fee is payable monthly to the Adviser, and is
computed as a percentage of each fund's net assets as of the close of business
each day at the following annual rates: 1.00% for Quest for Value, Opportunity
and Small Capitalization, respectively; .85% for Growth and Income and .60% for
U.S. Government and Investment Quality, respectively. For the year ended October
31, 1995, the Adviser voluntarily waived $8,286 and $42,245 in investment
advisory fees for Growth and Income and Investment Quality, respectively.
(B) A portion of the accounting services fee for Opportunity, Small
Capitalization, Growth and Income, U.S. Government and Investment Quality is
payable monthly to the Adviser. These funds reimburse the Adviser for a portion
of the salaries of officers and employees of Oppenheimer Capital based upon the
amount of time such persons spend in providing services to each fund in
accordance with the provisions of the Investment Advisory Agreement. For the
year ended October 31, 1995, the Adviser received $48,747, $53,951, $57,800,
$56,310 and $50,362, respectively.
(C) The funds have adopted a Plan and Agreement of Distribution (the
"Plan") pursuant to which each fund is permitted to compensate the Distributor
in connection with the distribution of fund shares. Under the Plan, the
Distributor has entered 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 funds pay the Distributor compensation, accrued
daily and payable monthly on each fund's average daily net assets for Class A
shares at the following annual rates: .25% for Quest for Value, Opportunity and
Small Capitalization, .05% for U.S. Government and .15% for Investment Quality
and Growth and Income. Each fund's Class A shares also pay a service fee at the
annual rate of .25%. Compensation for Class B and Class C shares of each fund is
at an annual rate of .75% of average daily net assets. Each fund's Class B and
Class C shares also pay a service fee at the 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 fund
shares. 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 year ended October 31, 1995, distribution and service fees charged
to classes A, B and C were $1,286,200, $253,926 and $67,110, respectively, for
Quest for Value; $1,258,129, $1,165,226 and $241,676, respectively, for
Opportunity; $597,200, $201,055 and $61,139, respectively, for Small
Capitalization; $133,588, $48,455 and $9,680, respectively, for Growth and
Income; $344,839, $92,104 and $18,236, respectively, for U.S. Government and
$183,475, $95,449 and $32,295, respectively, for Investment Quality Income.
These expenses are consolidated, by fund, in the accompanying Statements of
Operations.
(D) Total brokerage commissions paid by Quest for Value, Opportunity, Small
Capitalization and Growth and Income were $309,310, $647,240, $400,477 and
$112,411, respectively, of which Oppenheimer & Co., Inc., an affiliate of the
Adviser, received $156,970, $266,868, $161,399 and $54,131, respectively, for
the year ended October 31, 1995.
(E) Oppenheimer & Co., Inc. has informed the funds that it received
approximately $390,000, $959,000, $241,000, $35,000, $162,000 and $88,000 in
connection with the sale of Class A shares for Quest for Value, Opportunity,
Small Capitalization, Growth and Income, U.S. Government and Investment Quality,
respectively, for the year ended October 31, 1995.
33
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Distributor has also informed the funds that it received contingent
deferred sales charges on the redemption of Class A and Class C shares of
approximately $10,000, $20,000, $10,000, $100, $6,000 and $2,000 for Quest for
Value, Opportunity, Small Capitalization, Growth and Income, U.S. Government and
Investment Quality, respectively, for the year ended October 31, 1995.
For the year ended October 31, 1995, the Distributor had assigned the right
to receive the compensation and contingent deferred sales charge on Class B
shares to a bank in return for the bank's reimbursement to the Distributor of
commissions paid by the Distributor to brokers/dealers on the sale of Class B
shares.
3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1995, purchases and sales of investment
securities, other than short-term securities, were as follows:
<TABLE>
<CAPTION>
QUEST FOR SMALL GROWTH AND U.S. INVESTMENT
VALUE OPPORTUNITY CAPITALIZATION INCOME GOVERNMENT QUALITY
------------ ------------- ---------------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Purchases $ 89,609,378 $ 350,805,248 $ 92,530,292 $54,163,330 $259,064,073 $5,329,244
Sales 116,160,440 67,743,053 99,613,323 41,657,071 304,565,951 4,275,980
</TABLE>
The following table summarizes activity in written option transactions for U.S.
Government for the year ended October 31, 1995:
<TABLE>
<CAPTION>
CONTRACTS PREMIUMS
----------- -----------
<S> <C> <C>
Option contracts written: Outstanding
beginning of year 2 $ 142,188
Options written 47 3,306,327
Options terminated in closing purchase
transactions (25) (1,788,359)
Options exercised (15) (920,313)
Options expired (8) (607,031)
--- -----------
Option contracts written: Outstanding end of
year 1 $ 132,812
--- -----------
--- -----------
</TABLE>
34
<PAGE>
- --------------------------------------------------------------------------------
4. FUND SHARE TRANSACTIONS
The following tables summarize the fund share activity for the two years
ended October 31, 1995:
<TABLE>
<CAPTION>
QUEST FOR VALUE OPPORTUNITY SMALL CAPITALIZATION
------------------------- ------------------------- -------------------------
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
------------------------- ------------------------- -------------------------
1995 1994 1995 1994 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Issued................................ 4,045,256 5,077,999 9,028,138 4,781,210 2,307,655 7,804,081
Dividends and distributions
reinvested........................... 1,440,961 797,941 328,864 186,714 181,647 450,409
Redeemed.............................. (4,924,606) (6,566,112) (2,718,312) (3,470,990) (3,125,095) (6,835,042)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease)............. 561,611 (690,172) 6,638,690 1,496,934 (635,793) 1,419,448
----------- ----------- ----------- ----------- ----------- -----------
CLASS B
Issued................................ 1,718,575 1,020,362 7,259,921 2,145,988 620,242 936,328
Dividends and distributions
reinvested........................... 94,418 10,514 98,923 6,821 26,272 9,286
Redeemed.............................. (277,524) (44,566) (624,721) (54,500) (271,244) (50,575)
----------- ----------- ----------- ----------- ----------- -----------
Net increase........................ 1,535,469 986,310 6,734,123 2,098,309 375,270 895,039
----------- ----------- ----------- ----------- ----------- -----------
CLASS C
Issued................................ 523,083 289,679 1,828,198 367,367 389,503 205,454
Dividends and distributions
reinvested........................... 25,381 1,106 17,240 1,789 5,721 1,176
Redeemed.............................. (127,913) (22,509) (176,839) (13,680) (71,284) (13,923)
----------- ----------- ----------- ----------- ----------- -----------
Net increase........................ 420,551 268,276 1,668,599 355,476 323,940 192,707
----------- ----------- ----------- ----------- ----------- -----------
Total net increase................ 2,517,631 564,414 15,041,412 3,950,719 63,417 2,507,194
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME U.S. GOVERNMENT INVESTMENT QUALITY
------------------------- ------------------------- -------------------------
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
------------------------- ------------------------- -------------------------
1995 1994 1995 1994 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Issued................................ 790,817 591,037 1,685,034 1,484,549 777,291 1,194,443
Dividends and distributions
reinvested........................... 216,701 506,743 534,322 839,276 222,241 263,168
Redeemed.............................. (641,530) (600,435) (4,526,190) (6,552,668) (1,706,041) (1,940,417)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease)............. 365,988 497,345 (2,306,834) (4,228,843) (706,509) (482,806)
----------- ----------- ----------- ----------- ----------- -----------
CLASS B
Issued................................ 438,682 269,571 467,177 594,901 708,238 614,495
Dividends and distributions
reinvested........................... 22,368 19,104 28,912 16,698 44,636 18,150
Redeemed.............................. (51,318) (26,407) (272,297) (86,599) (228,114) (77,488)
----------- ----------- ----------- ----------- ----------- -----------
Net increase........................ 409,732 262,268 223,792 525,000 524,760 555,157
----------- ----------- ----------- ----------- ----------- -----------
CLASS C
Issued................................ 140,694 33,894 182,514 123,553 116,706 290,357
Dividends and distributions
reinvested........................... 3,711 2,697 7,733 4,123 8,984 9,047
Redeemed.............................. (21,778) (469) (47,976) (25,877) (27,176) (41,081)
----------- ----------- ----------- ----------- ----------- -----------
Net increase........................ 122,627 36,122 142,271 101,799 98,514 258,323
----------- ----------- ----------- ----------- ----------- -----------
Total net increase (decrease)..... 898,347 795,735 (1,940,771) (3,602,044) (83,235) 330,674
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
35
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. UNREALIZED APPRECIATION (DEPRECIATION) AND COST OF INVESTMENTS FOR FEDERAL
INCOME TAX PURPOSES
At October 31, 1995, the composition of unrealized appreciation
(depreciation) of investment securities and the cost of investments for Federal
income tax purposes were as follows:
<TABLE>
<CAPTION>
APPRECIATION (DEPRECIATION) NET TAX COST
------------ -------------- ----------- ------------
<S> <C> <C> <C> <C>
Quest for Value $72,832,935 $ (782,009) $72,050,926 $258,831,045
Opportunity 107,623,664 (8,230,134) 99,393,530 542,282,713
Small Capitalization 13,114,205 (4,646,081) 8,468,124 141,830,483
Growth and Income 3,674,355 (1,106,543) 2,567,812 43,607,284
U.S. Government 852,086 (2,085,345) (1,233,259) 115,524,803
Investment Quality 4,461,416 (402,788) 4,058,628 56,937,821
</TABLE>
6. AUTHORIZED FUND SHARES AND PAR VALUE PER SHARE
<TABLE>
<CAPTION>
QUEST SMALL GROWTH U.S. INVESTMENT
FOR VALUE OPPORTUNITY CAPITALIZATION AND INCOME GOVERNMENT QUALITY
---------- ----------- -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Authorized fund shares 35,000,000 unlimited unlimited unlimited unlimited unlimited
Par value per share $1.00 $.01 $.01 $.01 $.01 $.01
</TABLE>
7. DIVIDENDS AND DISTRIBUTIONS
The following tables summarize the per share dividends and distributions
made for the two years ended October 31, 1995:
<TABLE>
<CAPTION>
QUEST FOR SMALL
VALUE OPPORTUNITY CAPITALIZATION
-------------- -------------- --------------
YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
-------------- -------------- --------------
1995 1994 1995 1994 1995 1994
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME:
Class A.......................... $ 0.083 $ 0.040 $ 0.117 $ 0.326 -- --
Class B.......................... 0.074 0.031 0.117 0.313 -- --
Class C.......................... 0.081 0.033 0.117 0.312 -- --
NET REALIZED GAINS:
Class A.......................... $ 0.828 $ 0.469 $ 0.614 $ 0.219 $ 0.415 $ 1.331
Class B.......................... 0.828 0.469 0.614 0.219 0.415 1.331
Class C.......................... 0.828 0.469 0.614 0.219 0.415 1.331
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND U.S. INVESTMENT
INCOME GOVERNMENT QUALITY
-------------- -------------- --------------
YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
-------------- -------------- --------------
1995 1994 1995 1994 1995 1994
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME:
Class A.......................... $ 0.289 $ 0.319 $ 0.639 $ 0.593 $ 0.707 $ 0.680
Class B.......................... 0.242 0.265 0.562 0.510 0.646 0.609
Class C.......................... 0.209 0.261 0.549 0.509 0.643 0.608
NET REALIZED GAINS:
Class A.......................... $ 0.422 $ 1.669 -- $ 0.213 -- $ 0.069
Class B.......................... 0.422 1.669 -- 0.213 -- 0.069
Class C.......................... 0.422 1.669 -- 0.213 -- 0.069
TAX RETURN OF CAPITAL:
Class A.......................... -- -- $ 0.013 -- -- --
Class B.......................... -- -- 0.013 -- -- --
Class C.......................... -- -- 0.013 -- -- --
</TABLE>
36
<PAGE>
- --------------------------------------------------------------------------------
8. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
During the year ended October 31, 1995, U.S. Government wrote covered
options and Small Capitalization and Investment Quality entered into futures
contracts in order to hedge their existing portfolio securities against
fluctuations in value. Written options and futures contracts involve elements of
market risk in excess of the amounts reflected in the fund's Statements of
Assets and Liabilities. A fund, as a writer of an option, has no control over
whether the option is exercised. The underlying security may be sold and, as a
result, a fund bears the market risk of an unfavorable change in the price of
the security underlying the written option. For futures contracts, the contract
amount reflects the extent of a fund's exposure to off balance sheet risk.
Written options and futures contracts also have elements of credit risk; i.e.
the risk that the counterparty may not perform. If the option or futures
contracts are traded through a regulated exchange, the counterparty risk is
generally eliminated since the exchange interposes itself into the transaction.
If, however, the option or futures contracts are traded in the over-the-counter
market, counterparty risk can exist.
9. NET CAPITAL LOSS CARRYOVERS
For the fiscal year ended October 31, 1995, Growth and Income will utilize
$188,067 of net capital loss carryovers. Growth and Income has net capital loss
carryovers of $233,749 of which $177,811 and $55,938 will be available, to the
extent provided by regulations, to offset future net capital gains realized
through the fiscal years ending 1996 and 2000, respectively. However, due to the
acquisition of the Unified Income Fund and the Unified Mutual Shares Fund in
1992, the loss carryovers are further limited by IRC Section 382 to $188,067
annually. As a result, Growth and Income had $370,083 of net capital loss
carryover expire on October 31, 1995 which is no longer available for future
periods. In addition, U.S. Government, at October 31, 1995, had a net capital
loss carryover of $8,145,977 available, to the extent provided by regulations,
to offset future net capital gains realized before the end of fiscal year 2003.
Also at October 31, 1995, Investment Quality had a net capital loss carryover of
$1,854,362 of which $952,880 and $901,482 will be available to offset future net
capital gains realized through the fiscal years ending 2002 and 2003,
respectively. To the extent that the capital loss carryovers are used to offset
future net capital gains, it is probable that the gains so offset will not be
distributed to shareholders.
10. SUBSEQUENT EVENTS
(a) On November 22, 1995, OCC Distributors (previously Quest for Value
Distributors), OpCap Advisors (previously Quest for Value Advisors) and their
parent Oppenheimer Capital consummated a transaction with Oppenheimer Management
Corporation ("OMC") 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 and the
Opportunity Fund, the Small Capitalization Fund, the Growth and Income Fund and
the Officers Fund, portfolios of the 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 merged, as part of a tax-free
reorganization, 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.
(b) On November 22, 1995, U.S. Government and Investment Quality paid the
following per share net investment income dividends to shareholders of record on
the close of business November 22, 1995:
<TABLE>
<CAPTION>
CLASS CLASS CLASS
A B C
------ ------ ------
<S> <C> <C> <C>
U.S. Government $0.0352 $0.0302 $0.0298
Investment Quality 0.0384 0.0345 0.0343
</TABLE>
37
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
---------------------------------- ----------------------------------
Net
Realized Distributions
and Dividends to
Unrealized to Shareholders
Net Asset Net Gain Total Shareholders from Net Total
Value, Investment (Loss) from from Net Realized Dividends
Beginning Income on Investment Investment Gain on and
of Period (Loss)* Investments Operations Income Investments Distributions
<S> <C> <C> <C> <C> <C> <C> <C>
Quest for Value Fund, Inc.
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 12.59 $ 0.12 $ 2.71 $ 2.83 ($ 0.08) ($ 0.83) ($ 0.91)
1994 12.51 0.09 0.50 0.59 (0.04) (0.47) (0.51)
1993 11.71 0.05 1.34 1.39 (0.05) (0.54) (0.59)
1992 10.61 0.04 1.77 1.81 (0.07) (0.64) (0.71)
1991 7.84 0.09 2.84 2.93 (0.16) -- (0.16)
Class B,
YEAR ENDED OCTOBER 31,
1995 12.53 0.05 2.69 2.74 (0.07) (0.83) (0.90)
1994 12.51 0.02 0.50 0.52 (0.03) (0.47) (0.50)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.66(3) (0.01) (0.14) (0.15) -- -- --
Class C,
YEAR ENDED OCTOBER 31,
1995 12.52 0.04 2.70 2.74 (0.08) (0.83) (0.91)
1994 12.50 0.01 0.51 0.52 (0.03) (0.47) (0.50)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.66(3) (0.01) (0.15) (0.16) -- -- --
<CAPTION>
RATIOS
-----------------------------------
Ratio of
Net Ratio of
Operating Net
Net Net Expenses Investment
Asset Assets to Income
Value, End of Average (Loss) Portfolio
End of Total Period Net to Average Turnover
Period Return** (000's) Assets Net Assets Rate
<S> <C> <C> <C> <C> <C> <C>
Quest for Value Fund, Inc.
Class A,
YEAR ENDED OCTOBER 31,
1995 $14.51 24.74% $282,615 1.68%(1) 0.90%(1) 36%
1994 12.59 5.01% 238,085 1.71% 0.72% 49%
1993 12.51 12.27% 245,320 1.75% 0.40% 27%
1992 11.71 18.45% 142,939 1.75% 0.53% 41%
1991 10.61 37.94% 79,914 1.83% 1.06% 48%
Class B,
YEAR ENDED OCTOBER 31,
1995 14.37 24.08% 38,557 2.21%(1) 0.36%(1) 36%
1994 12.53 4.43% 14,373 2.24% 0.14% 49%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.51 (1.19%) 2,015 2.27%(5) (1.19%)(5) 27%
Class C,
YEAR ENDED OCTOBER 31,
1995 14.35 24.10% 10,140 2.26%(1) 0.31%(1) 36%
1994 12.52 4.45% 3,581 2.28% 0.09% 49%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.50 (1.26%) 221 2.27%(5) (0.90%)(5) 27%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995, FOR CLASSES A, B,
AND C WERE $257,239,913, $25,392,617 AND $6,711,023, RESPECTIVELY.
Opportunity Fund
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 19.69 $ 0.23 $ 5.40 $ 5.63 ($ 0.12) ($ 0.61) ($ 0.73)
1994 18.71 0.18 1.35 1.53 (0.33) (0.22) (0.55)
1993 16.73 0.35 2.02 2.37 (0.07) (0.32) (0.39)
1992 14.29 0.09 2.93 3.02 (0.03) (0.55) (0.58)
1991 9.74 0.03 4.78 4.81 (0.23) (0.03) (0.26)
Class B,
YEAR ENDED OCTOBER 31,
1995 19.59 0.11 5.36 5.47 (0.12) (0.61) (0.73)
1994 18.70 0.08 1.34 1.42 (0.31) (0.22) (0.53)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 18.73(3) 0.02 (0.05) (0.03) -- -- --
Class C,
YEAR ENDED OCTOBER 31,
1995 19.58 0.08 5.38 5.46 (0.12) (0.61) (0.73)
1994 18.70 0.08 1.33 1.41 (0.31) (0.22) (0.53)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 18.73(3) 0.02 (0.05) (0.03) -- -- --
<CAPTION>
Class A,
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31,
1995 $24.59 29.88% $367,240 1.69%(1) 1.02%(1) 21%
1994 19.69 8.41% 163,340 1.78% 0.96% 42%
1993 18.71 14.34% 127,225 1.83% 2.69% 24%
1992 16.73 21.93% 40,563 2.27% 0.72% 32%
1991 14.29 50.44% 8,446 2.35%(2) 0.30%(2) 88%
Class B,
YEAR ENDED OCTOBER 31,
1995 24.33 29.19% 217,663 2.21%(1) 0.48%(1) 21%
1994 19.59 7.84% 43,317 2.34% 0.43% 42%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 18.70 (0.16%) 2,115 2.52%(5) 1.32%(5) 24%
Class C,
YEAR ENDED OCTOBER 31,
1995 24.31 29.16% 49,608 2.31%(1) 0.37%(1) 21%
1994 19.58 8.06% 7,289 2.35% 0.43% 42%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 18.70 (0.16%) 313 2.52%(5) 1.13%(5) 24%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995, FOR CLASSES A, B,
AND C WERE $251,625,672, $116,522,609 AND $24,167,608, RESPECTIVELY.
(2) DURING THE PERIOD NOTED ABOVE, THE ADVISER VOLUNTARILY WAIVED ITS FEE AND
ASSUMED A PORTION OF THE OPERATING EXPENSES. IF SUCH WAIVER AND ASSUMPTION
HAD NOT BEEN IN EFFECT, THE RATIO OF NET OPERATING EXPENSES TO AVERAGE NET
ASSETS AND THE RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS
WOULD HAVE BEEN 3.33% AND (0.68%), RESPECTIVELY, FOR THE YEAR ENDED OCTOBER
31, 1991.
- ----------------------------------
(3) OFFERING PRICE.
(4) INITIAL OFFERING OF CLASS B AND CLASS C SHARES.
(5) ANNUALIZED.
* BASED ON AVERAGE SHARES OUTSTANDING FOR THE PERIOD.
** ASSUMES REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS, BUT DOES NOT
REFLECT DEDUCTIONS FOR SALES CHARGES. AGGREGATE (NOT ANNUALIZED) TOTAL
RETURN IS SHOWN FOR ANY PERIOD SHORTER THAN ONE YEAR.
38
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
---------------------------------- ----------------------------------
Net
Realized Distributions
and Dividends to
Unrealized to Shareholders
Net Asset Net Gain Total Shareholders from Net Total
Value, Investment (Loss) from from Net Realized Dividends
Beginning Income on Investment Investment Gain on and
of Period (Loss)* Investments Operations Income Investments Distributions
<S> <C> <C> <C> <C> <C> <C> <C>
Small Capitalization Fund
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 16.33 $ 0.11 $ 1.29 $ 1.40 $ -- ($ 0.42) ($ 0.42)
1994 17.68 (0.03) 0.01 (0.02) -- (1.33) (1.33)
1993 14.60 (0.04) 4.26 4.22 -- (1.14) (1.14)
1992 13.52 -- 1.50 1.50 -- (0.42) (0.42)
1991 8.80 (0.05) 4.85 4.80 (0.08) -- (0.08)
Class B,
YEAR ENDED OCTOBER 31,
1995 16.24 0.02 1.27 1.29 -- (0.42) (0.42)
1994 17.66 (0.11) 0.02 (0.09) -- (1.33) (1.33)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 17.19(3) (0.02) 0.49 0.47 -- -- --
Class C,
YEAR ENDED OCTOBER 31,
1995 16.23 0.01 1.29 1.30 -- (0.42) (0.42)
1994 17.67 (0.13) 0.02 (0.11) -- (1.33) (1.33)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 17.19(3) (0.02) 0.50 0.48 -- -- --
<CAPTION>
RATIOS
-----------------------------------
Ratio of
Net Ratio of
Operating Net
Net Net Expenses Investment
Asset Assets to Income
Value, End of Average (Loss) Portfolio
End of Total Period Net to Average Turnover
Period Return** (000's) Assets Net Assets Rate
<S> <C> <C> <C> <C> <C> <C>
Small Capitalization Fund
Class A,
YEAR ENDED OCTOBER 31,
1995 $17.31 8.82% $116,307 1.80%(1) 0.67%(1) 76%
1994 16.33 0.04% 120,102 1.88% (0.14%) 67%
1993 17.68 30.21% 104,898 1.89% (0.36%) 74%
1992 14.60 11.60% 39,693 2.11% (0.04%) 95%
1991 13.52 55.01% 20,686 2.25%(2) (0.41%)(2) 103%
Class B,
YEAR ENDED OCTOBER 31,
1995 17.11 8.17% 23,440 2.37%(1) 0.09%(1) 76%
1994 16.24 (0.39%) 16,144 2.48% (0.70%) 67%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 17.66 2.73% 1,754 2.57%(5) (1.15%)(5) 74%
Class C,
YEAR ENDED OCTOBER 31,
1995 17.11 8.24% 9,068 2.38%(1) 0.08%(1) 76%
1994 16.23 (0.51%) 3,344 2.59% (0.81%) 67%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 17.67 2.79% 235 2.57%(5) (1.20%)(5) 74%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995, FOR CLASSES A, B,
AND C WERE $119,440,010, $20,105,476 AND $6,113,900, RESPECTIVELY.
(2) DURING THE PERIOD NOTED ABOVE, THE ADVISER VOLUNTARILY WAIVED ITS FEE AND
ASSUMED A PORTION OF THE OPERATING EXPENSES. IF SUCH WAIVER AND ASSUMPTION
HAD NOT BEEN IN EFFECT, THE RATIO OF NET OPERATING EXPENSES TO AVERAGE NET
ASSETS AND THE RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS
WOULD HAVE BEEN 3.27% AND (1.43%), RESPECTIVELY, FOR THE YEAR ENDED OCTOBER
31, 1991.
Growth and Income Fund
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 10.09 $ 0.27 $ 1.27 $ 1.54 ($ 0.29) ($ 0.42) ($ 0.71)
1994 11.24 0.32 0.55 0.87 (0.32) (1.70) (2.02)
1993 10.80 0.30 0.73 1.03 (0.26) (0.33) (0.59)
NOVEMBER 4, 1991 (6)
TO OCTOBER 31, 1992 10.00(3) 0.28 0.80 1.08 (0.28) -- (0.28)
Class B,
YEAR ENDED OCTOBER 31,
1995 10.07 0.19 1.28 1.47 (0.24) (0.42) (0.66)
1994 11.23 0.25 0.56 0.81 (0.27) (1.70) (1.97)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.21(3) 0.04 0.05 0.09 (0.07) -- (0.07)
Class C,
YEAR ENDED OCTOBER 31,
1995 10.07 0.15 1.30 1.45 (0.21) (0.42) (0.63)
1994 11.23 0.24 0.56 0.80 (0.26) (1.70) (1.96)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.21(3) 0.04 0.05 0.09 (0.07) -- (0.07)
<CAPTION>
Class A,
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31,
1995 $10.92 16.35% $37,082 1.99%(1,2) 2.60%(1,2) 130%
1994 10.09 8.64% 30,576 1.86%(2) 3.16%(2) 113%
1993 11.24 9.93% 28,466 1.90%(2) 2.66%(2) 192%
NOVEMBER 4, 1991 (6)
TO OCTOBER 31, 1992 10.80 10.84% 8,057 2.23%(2,5) 2.73%(2,5) 77%
Class B,
YEAR ENDED OCTOBER 31,
1995 10.88 15.65% 7,623 2.59%(1,2) 1.71%(1,2) 130%
1994 10.07 7.96% 2,928 2.47%(2) 2.53%(2) 113%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.23 0.81% 319 2.49%(2,5) 1.83%(2,5) 192%
Class C,
YEAR ENDED OCTOBER 31,
1995 10.89 15.38% 1,828 2.88%(1,2) 1.39%(1,2) 130%
1994 10.07 7.91% 455 2.62%(2) 2.39%(2) 113%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.23 0.81% 102 2.49%(2,5) 2.18%(2,5) 192%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995 FOR CLASSES A, B, AND
C WERE $33,396,923, $4,845,598 AND $967,910, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED A PORTION
OF ITS FEES. IF SUCH WAIVERS HAD NOT BEEN IN EFFECT, THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS FOR CLASS A WOULD HAVE BEEN 2.02% AND 2.57%,
RESPECTIVELY, FOR THE YEAR ENDED OCOTBER 31, 1995, 2.32% AND 2.70%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1994, 2.18% AND 2.38%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1993 AND 2.98% AND 1.98%,
ANNUALIZED, RESPECTIVELY, FOR THE PERIOD NOVEMBER 4, 1991 (COMMENCEMENT OF
OPERATIONS) TO OCTOBER 31, 1992. THE RATIOS OF NET OPERATING EXPENSES TO
AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT INCOME TO AVERAGE NET
ASSETS WOULD HAVE BEEN 2.57% AND 1.73%, RESPECTIVELY, FOR CLASS B AND 2.84%
AND 1.43%, RESPECTIVELY, FOR CLASS C, FOR THE YEAR ENDED OCTOBER 31, 1995,
2.93% AND 2.07%, RESPECTIVELY, FOR CLASS B AND 3.10% AND 1.91%,
RESPECTIVELY, FOR CLASS C, FOR THE YEAR ENDED OCTOBER 31, 1994 AND 2.88% AND
1.44%, ANNUALIZED, RESPECTIVELY, FOR CLASS B AND 2.87% AND 1.80%,
ANNUALIZED, RESPECTIVELY, FOR CLASS C, FOR THE PERIOD SEPTEMBER 2, 1993
(INITIAL OFFERING) TO OCTOBER 31, 1993.
- ----------------------------------
(3) OFFERING PRICE.
(4) INITIAL OFFERING OF CLASS B AND CLASS C SHARES.
(5) ANNUALIZED.
(6) COMMENCEMENT OF OPERATIONS.
* BASED ON AVERAGE SHARES OUTSTANDING FOR THE PERIOD.
** ASSUMES REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS, BUT DOES NOT
REFLECT DEDUCTIONS FOR SALES CHARGES. AGGREGATE (NOT ANNUALIZED) TOTAL
RETURN IS SHOWN FOR ANY PERIOD SHORTER THAN ONE YEAR.
39
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
(CONTINUED)
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
---------------------------------- ----------------------------------
Net
Realized Distributions
and Dividends to
Unrealized to Shareholders
Net Asset Net Gain Total Shareholders from Net Tax
Value, Investment (Loss) from from Net Realized return
Beginning Income on Investment Investment Gain on of
of Period (Loss) Investments Operations Income Investments Capital
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. Government Income Fund
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 10.79 $ 0.64 $ 0.49 $ 1.13 ($ 0.64) $ -- ($ 0.01)
1994 12.08 0.59 (1.08) (0.49) (0.59) (0.21) --
1993 11.92 0.65 0.35 1.00 (0.68) (0.16) --
1992 11.80 0.74 0.18 0.92 (0.74) (0.06) --
1991 11.35 0.85 0.61 1.46 (0.86) (0.15) --
Class B,
YEAR ENDED OCTOBER 31,
1995 10.79 0.56 0.49 1.05 (0.56) -- (0.01)
1994 12.08 0.51 (1.08) (0.57) (0.51) (0.21) --
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.13(3) 0.08 (0.04) 0.04 (0.08) (0.01) --
Class C,
YEAR ENDED OCTOBER 31,
1995 10.79 0.55 0.49 1.04 (0.55) -- (0.01)
1994 12.08 0.51 (1.08) (0.57) (0.51) (0.21) --
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.13(3) 0.08 (0.04) 0.04 (0.08) (0.01) --
<CAPTION>
RATIOS
-----------------------------------
Ratio of
Net Ratio of
Operating Net
Net Net Expenses Investment
Asset Assets to Income
Total Value, End of Average (Loss) Portfolio
Dividends and End of Total Period Net to Average Turnover
Distributions Period Return* (000's) Assets Net Assets Rate
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. Government Income Fund
Class A,
YEAR ENDED OCTOBER 31,
1995 ($0.65) $11.27 10.78% $102,718 1.26%(1) 5.81%(1) 245%
1994 (0.80) 10.79 (4.15%) 123,257 1.20%(2) 5.19%(2) 126%
1993 (0.84) 12.08 8.55% 189,091 1.15%(2) 5.33%(2) 315%
1992 (0.80) 11.92 7.98% 151,197 1.15%(2) 6.26%(2) 207%
1991 (1.01) 11.80 13.40% 82,400 1.15%(2) 7.24%(2) 309%
Class B,
YEAR ENDED OCTOBER 31,
1995 (0.57) 11.27 10.01% 9,641 1.94%(1) 5.04%(1) 245%
1994 (0.72) 10.79 (4.84%) 6,813 1.92%(2) 4.53%(2) 126%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 (0.09) 12.08 0.29% 1,286 1.85%(2,5) 3.07%(2,5) 315%
Class C,
YEAR ENDED OCTOBER 31,
1995 (0.56) 11.27 9.89% 2,883 2.06%(1) 4.91%(1) 245%
1994 (0.72) 10.79 (4.84%) 1,224 1.94%(2) 4.57%(2) 126%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 (0.09) 12.08 0.34% 141 1.85%(2,5) 3.89%(2,5) 315%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995, FOR CLASSES A, B,
AND C WERE $114,946,501, $9,210,406 AND $1,823,599, RESPECTIVELY.
(2) DURING THE PERIODS NOTED ABOVE, THE ADVISER VOLUNTARILY WAIVED A PORTION OF
ITS FEES. IF SUCH WAIVERS HAD NOT BEEN IN EFFECT, THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS FOR CLASS A WOULD HAVE BEEN 1.23% AND 5.16%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1994, 1.20% AND 5.28%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1993, 1.17% AND 6.24%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1992, AND 1.46% AND 6.93%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1991. THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS WOULD HAVE BEEN 1.93% AND 4.52%, RESPECTIVELY,
FOR CLASS B AND 1.95% AND 4.56%, RESPECTIVELY, FOR CLASS C, FOR THE YEAR
ENDED OCTOBER 31, 1994 AND 1.96% AND 2.96%, ANNUALIZED, RESEPCTIVELY, FOR
CLASS B AND 1.96% AND 3.78%, ANNUALIZED, RESPECTIVELY, FOR CLASS C, FOR THE
PERIOD SEPTEMBER 2, 1993 (INITIAL OFFERING) TO OCTOBER 31, 1993.
Investment Quality Income Fund
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 9.67 $ 0.71 $ 1.21 $ 1.92 ($ 0.71) $ -- $ --
1994 11.49 0.68 (1.75) (1.07) (0.68) (0.07) --
1993 10.36 0.68 1.19 1.87 (0.68) (0.06) --
1992 10.06 0.80 0.30 1.10 (0.80) -- --
DECEMBER 18, 1990 (6)
TO OCTOBER 31, 1991 10.00(3) 0.71 0.06 0.77 (0.71) -- --
Class B,
YEAR ENDED OCTOBER 31,
1995 9.67 0.65 1.21 1.86 (0.65) -- --
1994 11.49 0.61 (1.75) (1.14) (0.61) (0.07) --
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.52(3) 0.08 (0.03) 0.05 (0.08) -- --
Class C,
YEAR ENDED OCTOBER 31,
1995 9.67 0.64 1.21 1.85 (0.64) -- --
1994 11.49 0.61 (1.75) (1.14) (0.61) (0.07) --
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.52(3) 0.09 (0.03) 0.06 (0.09) -- --
<CAPTION>
Class A,
<S> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31,
1995 ($0.71) $10.88 20.49% $ 45,078 1.44%(1,2) 6.90%(1,2) 8%
1994 (0.75) 9.67 (9.61%) 46,922 1.29%(2) 6.47%(2) 33%
1993 (0.74) 11.49 18.64% 61,288 1.20%(2) 6.07%(2) 12%
1992 (0.80) 10.36 11.21% 29,701 0.95%(2) 7.62%(2) 18%
DECEMBER 18, 1990 (6)
TO OCTOBER 31, 1991 (0.71) 10.06 8.11% 17,235 0.82%(2,5) 8.25%(2,5) 19%
Class B,
YEAR ENDED OCTOBER 31,
1995 (0.65) 10.88 19.78% 13,134 2.03%(1,2) 6.15%(1,2) 8%
1994 (0.68) 9.67 (10.22%) 6,605 1.92%(2) 5.85%(2) 33%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 (0.08) 11.49 0.45% 1,468 1.84%(2,5) 3.68%(2,5) 12%
Class C,
YEAR ENDED OCTOBER 31,
1995 (0.64) 10.88 19.72% 3,977 2.08%(1,2) 6.18%(1,2) 8%
1994 (0.68) 9.67 (10.23%) 2,583 1.90%(2) 6.01%(2) 33%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 (0.09) 11.49 0.55% 101 1.84%(2,5) 4.83%(2,5) 12%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995, FOR CLASSES A, B,
AND C WERE $45,868,837, $9,544,915 AND $3,229,501, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED ALL OR A
PORTION OF ITS FEES AND ASSUMED A PORTION OF ITS OPERATING EXPENSES. IF SUCH
WAIVERS AND ASSUMPTIONS HAD NOT BEEN IN EFFECT, THE RATIOS OF NET OPERATING
EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS FOR CLASS A WOULD HAVE BEEN 1.52% AND 6.82%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1995, 1.59% AND 6.71%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1994, 1.50% AND 5.77%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1993, 1.72% AND 6.85%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1992, AND 2.11% AND 6.96%,
ANNUALIZED, RESPECTIVELY, FOR THE PERIOD DECEMBER 18, 1990 (COMMENCEMENT OF
OPERATIONS) TO OCTOBER 31, 1991. THE RATIOS OF NET OPERATING EXPENSES TO
AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT INCOME TO AVERAGE NET
AASETS WOULD HAVE BEEN 2.09% AND 6.09%, RESPECTIVELY, FOR CLASS B AND 2.15%
AND 6.11%, RESPECTIVELY FOR CLASS C, FOR THE YEAR ENDED OCTOBER 31, 1995,
2.23% AND 5.54%, RESPECTIVELY, FOR CLASS B AND 2.21% AND 5.70%,
RESPECTIVELY, FOR CLASS C, FOR THE YEAR ENDED OCTOBER 31, 1994 AND 2.07% AND
3.45%, ANNUALIZED, RESPECTIVELY, FOR CLASS B AND 2.06% AND 4.61%,
ANNUALIZED, RESPECTIVELY, FOR CLASS C FOR THE PERIOD SEPTEMBER 2, 1993
(INITIAL OFFERING) TO OCTOBER 31, 1993.
- ----------------------------------
(3) OFFERING PRICE.
(4) INITIAL OFFERING OF CLASS B AND CLASS C SHARES.
(5) ANNUALIZED.
(6) COMMENCEMENT OF OPERATIONS.
* ASSUMES REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS, BUT DOES NOT
REFLECT DEDUCTIONS FOR SALES CHARGES. AGGREGATE (NOT ANNUALIZED) TOTAL
RETURN IS SHOWN FOR ANY PERIOD SHORTER THAN ONE YEAR.
<PAGE>
<PAGE>
Appendix A
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.
- -- 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.
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 B
Corporate Industry Classification
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
B-1
<PAGE>
Oppenheimer Quest Opportunity Value Fund
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Sub-Advisor
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
1177 Avenue of the Americas
New York, New York 10036
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
prosp\q236sai
<PAGE>
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.
- --------------------------------------------------------------------------------
<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
<PAGE>
Part C
Other Information
Item 24. Financial Statements and Exhibits
- ------- ---------------------------------
(a) Financial Statements:
--------------------
Included in the Prospectus:
Financial Highlights
Included in Part B:
Growth and Income, Small Capitalization and Opportunity
Funds:
Schedule of Investments, Statement of Assets and
Liabilities, Statement of Operations, Statement of Changes in Net
Assets for the two fiscal years ended October 31, 1995, Notes to
Financial Statements, Financial Highlights, and Report of
Independent Accountants for the fiscal year ended October 31, 1995.
Officers Fund:
Schedule of Investments, Statement of Assets and
Liabilities, Statement of Changes in Net Assets, Notes to Financial
Statements and Financial Highlights for the period November 8, 1994
(commencement of operations) to October 31, 1995.
Included in Part C:
None
(b) Exhibits:
--------
(1) Declaration of Trust, Amendment No. 3: Previously
filed with Post-Effective Amendment No. 33, and refiled herewith
pursuant to Item 102 of Regulation S-T.
(2) By-laws of Registrant: Previously filed with Post-
Effective Amendment No. 33, and refiled herewith pursuant to Item
102 of Regulation S-T.
(3) Not Applicable.
(4) Not Applicable.
(5) (a) Investment Advisory Agreement: Filed herewith.
(b) (1) Subadvisory Agreement with respect to the
Small Cap Value Fund: Filed herewith.
(2) Subadvisory Agreement with respect to the
Growth and Income Value Fund: Filed herewith.
(3) Subadvisory Agreement with respect to the
Opportunity Value Fund: Filed herewith.
(4) Subadvisory Agreement with respect to the
Officers Value Fund: Filed herewith.
(6) (a) General Distributor s Agreement: Filed herewith.
(b) (1) Form of Dealer Agreement of Oppenheimer
Funds Distributor, Inc.: Filed with Post-Effective Amendment No. 14
of Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850),
9/30/94, and incorporated herein by reference.
(2) Form of Oppenheimer Funds Distributor,
Inc. Broker Agreement: Filed with Post-Effective Amendment No. 14
of Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850),
9/30/94, and incorporated herein by reference.
(3) Form of Oppenheimer Funds Distributor,
Inc. Agency Agreement: Filed with Post-Effective Amendment No. 14
of Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850),
9/30/94, and incorporated herein by reference.
(4) Broker Agreement between Oppenheimer Funds
Distributor, Inc. and Newbridge Securities dated 10/1/86:
Previously filed with Post-Effective Amendment No. 25 of
Oppenheimer Special Fund (Reg. No. 2-45272), 11/1/86, refiled with
Post-Effective Amendment No. 45 of Oppenheimer Special Fund (Reg.
No. 2-45272), 8/22/94, pursuant to Item 102 of Regulation S-T, and
incorporated herein by reference.
(7) Not Applicable.
(8) Custody Agreement: Previously filed as Exhibit 8 to
Post-Effective Amendment No. 6, and refiled herewith pursuant to
Item 102 of Regulation S-T.
(9) Not Applicable.
(10) Opinion and consent of counsel as to the legality of
the securities being registered, indicating whether they will when
sold be legally issued, fully paid and non-assessable: Previously
filed with Post-Effective Amendment No. 33.
(11) Consent of Independent Accountants: Filed herewith.
(12) Not Applicable.
(13) Agreement relating to initial capital: Previously
filed with Post-Effective Amendment No. 33.
(14) (i) Form of Individual Retirement Account Trust
Agreement: Filed as Exhibit 14 of Post-Effective Amendment No. 21
of Oppenheimer U.S. Government Trust (Reg. No. 2-76645), 8/25/93,
and incorporated herein by reference.
(ii) Form of prototype Standardized and Non-
Standardized Profit-Sharing Plan and Money Purchase Pension Plan
for self-employed persons and corporations: Filed with Post-
Effective Amendment No. 15 to the Registration Statement of
Oppenheimer Mortgage Income Fund (Reg. No. 33-6614), 1/20/95, and
incorporated herein by reference.
(iii) Form of Tax-Sheltered Retirement Plan and
Custody Agreement for employees of public schools and tax-exempt
organizations: Filed with Post-Effective Amendment No. 47 to the
Registration Statement of Oppenheimer Growth Fund (Reg. No. 2-
45272), 10/21/94, and incorporated herein by reference.
(iv) Form of Simplified Employee Pension IRA: Filed
with Post-Effective Amendment No. 42 to the Registration Statement
of Oppenheimer Equity Income Fund (Reg. No. 2-33043), 10/28/94, and
incorporated herein by reference.
(v) Form of SAR-SEP Simplified Employee Pension
IRA: Filed with Post-Effective Amendment No. 36 to Oppenheimer
Equity Income Fund (Reg. No. 2-33043), 10/28/94, and incorporated
herein by reference.
(vi) Form of Prototype 401(k) plan: Filed with
Post-Effective Amendment No. 7 to the Registration Statement of
Oppenheimer Strategic Income & Growth Fund (33-47378), 9/28/95, and
incorporated herein by reference.
(vii) Prototype Trust Consultants, Inc. 401(k) Plan:
To be filed by Amendment.
(15) (a) (1) Amended and Restated Distribution and
Service Plan and Agreement with respect to Class A shares of the
Growth and Income Value Fund: Filed herewith.
(2) Amended and Restated Distribution and
Service Plan and Agreement with respect to Class A shares of the
Opportunity Value Fund: Filed herewith.
(3) Amended and Restated Distribution and
Service Plan and Agreement with respect to Class A shares of the
Small Cap Value Fund: Filed herewith.
(4) Amended and Restated Distribution and
Service Plan and Agreement with respect to Class A shares of the
Officers Value Fund: Filed herewith.
(b) (1) Amended and Restated Distribution and
Service Plan and Agreement with respect to Class B shares of the
Growth and Income Value Fund: Filed herewith.
(2) Amended and Restated Distribution and
Service Plan and Agreement with respect to Class B shares of the
Opportunity Value Fund: Filed herewith.
(3) Amended and Restated Distribution and
Service Plan and Agreement with respect to Class B shares of the
Small Cap Value Fund: Filed herewith.
(4) Amended and Restated Distribution and
Service Plan and Agreement with respect to Class B shares of the
Officers Value Fund: Filed herewith.
(c) (1) Amended and Restated Distribution and
Service Plan and Agreement with respect to Class C shares of the
Growth and Income Value Fund: Filed herewith.
(2) Amended and Restated Distribution and
Service Plan and Agreement with respect to Class C shares of the
Opportunity Value Fund: Filed herewith.
(3) Amended and Restated Distribution and
Service Plan and Agreement with respect to Class C shares of the
Small Cap Value Fund: Filed herewith.
(4) Amended and Restated Distribution and
Service Plan and Agreement with respect to Class C shares of the
Officers Value Fund: Filed herewith.
(16) (1) Performance Computation Schedule of
Oppenheimer Quest Growth & Income Value Fund: Filed herewith.
(2) Performance Computation Schedule of
Oppenheimer Quest Opportunity Value Fund: Filed herewith.
(3) Performance Computation Schedule of
Oppenheimer Quest Small Cap Value Fund: Filed herewith.
(4) Performance Computation Schedule of
Oppenheimer Quest Officers Value Fund: Filed herewith.
(17) (1) Financial Data Schedule for Class A shares of
Oppenheimer Quest Growth & Income Value Fund: Filed herewith.
(2) Financial Data Schedule for Class B shares of
Oppenheimer Quest Growth & Income Value Fund: Filed herewith.
(3) Financial Data Schedule for Class C shares of
Oppenheimer Quest Growth & Income Value Fund: Filed herewith.
(4) Financial Data Schedule for Class A shares of
Oppenheimer Opportunity Value Fund: Filed herewith.
(5) Financial Data Schedule for Class B shares of
Oppenheimer Opportunity Value Fund: Filed herewith.
(6) Financial Data Schedule for Class C shares of
Oppenheimer Opportunity Value Fund: Filed herewith.
(7) Financial Data Schedule for Class A shares of
Oppenheimer Small Cap Value Fund: Filed herewith.
(8) Financial Data Schedule for Class B shares of
Oppenheimer Small Cap Value Fund: Filed herewith.
(9) Financial Data Schedule for Class C shares of
Oppenheimer Small Cap Value Fund: Filed herewith.
(10) Financial Data Schedule for Class A shares of
Oppenheimer Officers Value Fund: Filed herewith.
(18) Oppenheimer Funds Multiple Class Plan under Rule
18f-3 dated 10/24/95: Filed with Post-Effective Amendment No. 12 to
the Registration Statement of Oppenheimer California Tax-Exempt
Fund (33-23566), 11/1/95, and incorporated herein by reference.
-- Powers of Attorney and Certified Board Resolutions
signed by Registrant's Trustees: Previously filed with Registrant's
Post-Effective Amendment No. 35, 11/24/95, and incorporated herein
by reference.
Item 25. Persons Controlled by or Under Common Control
with Registrant
- ------- ---------------------------------------------
No person is presently controlled by or under common control
with Registrant.
Item 26. Number of Holders of Securities
- ------- -------------------------------
Number of Record
Holders as of
Title of Class January 25, 1996
- -------------- -----------------
Shares of Beneficial Interest
Opportunity Value Fund - Class A 17,166
Opportunity Value Fund - Class B 17,920
Opportunity Value Fund - Class C 3,525
Small Cap Value Fund - Class A 5,991
Small Cap Value Fund - Class B 2,758
Small Cap Value Fund - Class C 815
Growth & Income Value Fund - Class A 867
Growth & Income Value Fund - Class B 654
Growth & Income Value Fund - Class C 139
Officers Value Fund - Class A 138
Item 27. Indemnification
- ------- ---------------
See Registration Statement, Form N-1A, File No. 33-15489, July
1, 1987, Item No. 27, which is incorporated herein by reference.
Item 28. Business and Other Connections of Investment Adviser
- -------- ----------------------------------------------------
(a) OppenheimerFunds, Inc. is the investment adviser of the
Registrant; it and certain subsidiaries and affiliates act in the
same capacity to other registered investment companies as described
in Parts A and B hereof and listed in Item 28(b) below.
(i) The directors and executive officers of Oppenheimer
Capital Advisors ("OpCap Advisors"), their positions and their
other business affiliations and business experience for the past
two years are listed in Item 28(b) below.
(b) There is set forth below information as to any other
business, profession, vocation or employment of a substantial
nature in which each officer and director of OppenheimerFunds, Inc.
is, or at any time during the past two fiscal years has been,
engaged for his/her own account or in the capacity of director,
officer, employee, partner or trustee.
<TABLE>
<CAPTION>
Name & Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- ------------------------------
<S> <C>
Lawrence Apolito, Vice President None.
Victor Babin,
Senior Vice President None.
Robert J. Bishop,
Assistant Vice President Treasurer of the Oppenheimer Funds
(listed below); previously a Fund
Controller for OppenheimerFunds, Inc.
(the "Manager").
Bruce Bartlett, Vice President Vice President and Portfolio Manager of
Oppenheimer Total Return Fund, Inc.,
Oppenheimer Main Street Funds, Inc. and
Oppenheimer Variable Account Funds;
formerly a Vice President and Senior
Portfolio Manager at First of America
Investment Corp.
George Bowen, Senior Vice
President & Treasurer Treasurer of the New York-based
Oppenheimer Funds; Vice President,
Secretary and Treasurer of the Denver-
based Oppenheimer Funds. Vice President
and Treasurer of OppenheimerFunds
Distributor, Inc. (the "Distributor")
and HarbourView Asset Management
Corporation ("HarbourView"), an
investment adviser subsidiary of the
Manager; Senior Vice President,
Treasurer, Assistant Secretary and a
director of Centennial Asset Management
Corporation ("Centennial"), an
investment adviser subsidiary of the
Manager; Vice President, Treasurer and
Secretary of Shareholder Services, Inc.
("SSI") and Shareholder Financial
Services, Inc. ("SFSI"), transfer agent
subsidiaries of the Manager; President,
Treasurer and Director of Centennial
Capital Corporation; Vice President and
Treasurer of Main Street Advisers.
Michael A. Carbuto, Vice President Vice President and Portfolio Manager of
Centennial California Tax Exempt Trust,
Centennial New York Tax Exempt Trust
and Centennial Tax Exempt Trust; Vice
President of Centennial.
William Colbourne,
Assistant Vice President Formerly, Director of Alternative
Staffing Resources, and Vice President
of Human Resources, American Cancer
Society.
Lynn Coluccy, Vice President Formerly Vice President / Director of
Internal Audit of the Manager.
O. Leonard Darling,
Executive Vice President Formerly Co-Director of Fixed Income
for State Street Research & Management
Co.
Robert A. Densen,
Senior Vice President None.
Robert Doll, Jr.,
Executive Vice President Vice President and Portfolio Manager of
Oppenheimer Growth Fund, Oppenheimer
Variable Account Funds; Senior Vice
President and Portfolio Manager of
Oppenheimer Strategic Income & Growth
Fund; Vice President of Oppenheimer
Quest Value Fund, Inc., Oppenheimer
Quest Officers Value Fund, Oppenheimer
Quest For Value Funds and Oppenheimer
Quest Global Value Fund, Inc.
John Doney, Vice President Vice President and Portfolio Manager of
Oppenheimer Equity Income Fund.
Andrew J. Donohue,
Executive Vice President
& General Counsel Secretary of the New York-based
Oppenheimer Funds; Vice President of
the Denver-based Oppenheimer Funds;
Executive Vice President, Director and
General Counsel of the Distributor;
President and Director of Centennial;
formerly Senior Vice President and
Associate General Counsel of the
Manager and the Distributor.
Kenneth C. Eich,
Executive Vice President /
Chief Financial Officer Treasurer of Oppenheimer Acquisition
Corporation ("OAC").
George Evans, Vice President Vice President and Portfolio Manager of
Oppenheimer Global Emerging Growth
Fund.
Scott Farrar,
Assistant Vice President Assistant Treasurer of the Oppenheimer
Funds; previously a Fund Controller for
the Manager.
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary of
OppenheimerFunds Distributor, Inc.;
Secretary of HarbourView, Main Street
Advisers, Inc. and Centennial;
Secretary, Vice President and Director
of Centennial Capital Corp.
Ronald H. Fielding,
Senior Vice President Chairman of the Board and Director of
Rochester Fund Distributors, Inc.
("RFD"); President and Director of
Fielding Management Company, Inc.
("FMC"); President and Director of
Rochester Capital Advisors, Inc.
("RCAI"); President and Director of
Rochester Fund Services, Inc. ("RFS");
President and Director of Rochester Tax
Managed Fund, Inc.; Vice President and
Portfolio Manager of Rochester Fund
Municipals and Rochester Portfolio
Series - Limited Term New York
Municipal Fund.
Jon S. Fossel, Chairman of
the Board and Director Director of OAC, the Manager's parent
holding company; President, CEO and a
director of HarbourView; a director of
SSI and SFSI; Director, Trustee, and
Managing General Partner of the Denver-
based Oppenheimer Funds; President and
Chairman of the Board of Main Street
Advisers, Inc.; formerly Chief
Executive Officer of the Manager.
Robert G. Galli, Vice Chairman Trustee of the New York-based
Oppenheimer Funds; Vice President and
Counsel of OAC; formerly he held the
following positions: a director of the
Distributor, Vice President and a
director of HarbourView and Centennial,
a director of SFSI and SSI, an officer
of other Oppenheimer Funds and
Executive Vice President & General
Counsel of the Manager and the
Distributor.
Linda Gardner,
Assistant Vice President None.
Ginger Gonzalez, Vice President Formerly 1st Vice President / Director
of Creative Services for Shearson
Lehman Brothers.
Mildred Gottlieb,
Assistant Vice President Formerly served as a Strategy
Consultant for the Private Client
Division of Merrill Lynch.
Dorothy Grunwager,
Assistant Vice President None.
Caryn Halbrecht, Vice President Vice President and Portfolio Manager of
Oppenheimer Insured Tax-Exempt Fund and
Oppenheimer Intermediate Tax Exempt
Fund; an officer of other Oppenheimer
Funds; formerly Vice President of Fixed
Income Portfolio Management at Bankers
Trust.
Barbara Hennigar, President and
Chief Executive Officer of
OppenheimerFunds Services, a
division of the Manager President and Director of SFSI.
Alan Hoden, Vice President None.
Merryl Hoffman, Vice President None.
Scott T. Huebl,
Assistant Vice President None.
Jane Ingalls,
Assistant Vice President Formerly a Senior Associate with
Robinson, Lake/Sawyer Miller.
Bennett Inkeles,
Assistant Vice President Formerly employed by Doremus & Company,
an advertising agency.
Frank Jennings, Vice President Portfolio Manager of Oppenheimer Global
Growth & Income Fund. Formerly a
Managing Director of Global Equities at
Paine Webber's Mitchell Hutchins
division.
Stephen Jobe, Vice President None.
Heidi Kagan,
Assistant Vice President None.
Avram Kornberg, Vice President Formerly a Vice President with Bankers
Trust.
Paul LaRocco,
Assistant Vice President Portfolio Manager of Oppenheimer
Variable Account Funds and Oppenheimer
Variable Account Funds; Associate
Portfolio Manager of Oppenheimer
Discovery Fund. Formerly a Securities
Analyst for Columbus Circle Investors.
Mitchell J. Lindauer,
Vice President None.
Loretta McCarthy,
Senior Vice President None.
Bridget Macaskill, President,
Chief Executive Officer
and Director President, Director and Trustee of
Oppenheimer Funds; President and a
Director of OAC, HarbourView and
Oppenheimer Partnership Holdings, Inc.;
Director of Main Street Advisers, Inc.;
and Chairman of SSI.
Sally Marzouk, Vice President None.
Marilyn Miller, Vice President Formerly a Director of marketing for
TransAmerica Fund Management Company.
Robert J. Milnamow, Vice President Vice President and Portfolio Manager of
Oppenheimer Main Street Funds, Inc.
Formerly a Portfolio Manager with
Phoenix Securities Group.
Denis R. Molleur, Vice President None.
Kenneth Nadler, Vice President None.
David Negri, Vice President Vice President and Portfolio Manager of
Oppenheimer Variable Account Funds,
Oppenheimer Asset Allocation Fund,
Oppenheimer Strategic Income Fund,
Oppenheimer Strategic Income & Growth
Fund; an officer of other Oppenheimer
Funds.
Barbara Niederbrach,
Assistant Vice President None.
Stuart Novek, Vice President Formerly a Director Account Supervisor
for J. Walter Thompson.
Robert A. Nowaczyk, Vice President None.
Robert E. Patterson,
Senior Vice President Vice President and Portfolio Manager of
Oppenheimer Main Street Funds, Inc.,
Oppenheimer Multi-State Tax-Exempt
Trust, Oppenheimer Tax-Exempt Fund,
Oppenheimer California Tax-Exempt Fund,
Oppenheimer New York Tax-Exempt Fund
and Oppenheimer Tax-Free Bond Fund;
Vice President of The New York Tax-
Exempt Income Fund, Inc.; Vice
President of Oppenheimer Multi-Sector
Income Trust.
Tilghman G. Pitts III,
Executive Vice President
and Director Chairman and Director of the
Distributor.
Jane Putnam, Vice President Associate Portfolio Manager of
Oppenheimer Growth Fund; Vice President
and Portfolio Manager of Oppenheimer
Target Fund and Oppenheimer Variable
Account Funds. Formerly Senior
Investment Officer and Portfolio
Manager with Chemical Bank.
Russell Read, Vice President Formerly an International Finance
Consultant for Dow Chemical.
Thomas Reedy, Vice President Vice President of Oppenheimer Multi-
Sector Income Trust and Oppenheimer
Multi-Government Trust; an officer of
other Oppenheimer Funds; formerly a
Securities Analyst for the Manager.
David Robertson, Vice President None.
Adam Rochlin,
Assistant Vice President Formerly a Product Manager for
Metropolitan Life Insurance Company.
Michael S. Rosen, Vice President Vice President of RFS; President and
Director of RFD; Vice President and
Director of FMC; Vice President and
director of RCAI; General Partner of
RCA; Vice President and Director of
Rochester Tax Managed Fund Inc.; Vice
President and Portfolio Manager of
Rochester Fund Series - The Bond Fund
For Growth.
David Rosenberg, Vice President Vice President and Portfolio Manager of
Oppenheimer Limited-Term Government
Fund, Oppenheimer U.S. Government Trust
and Oppenheimer Integrity Funds.
Formerly Vice President and Senior
Portfolio Manager for Delaware
Investment Advisors.
Richard H. Rubinstein,
Vice President Vice President and Portfolio Manager of
Oppenheimer Asset Allocation Fund,
Oppenheimer Fund and Oppenheimer
Variable Account Funds; an officer of
other Oppenheimer Funds; formerly Vice
President and Portfolio
Manager/Security Analyst for
Oppenheimer Capital Corp., an
investment adviser.
Lawrence Rudnick, Vice President Formerly Vice President of Dollar Dry
Dock Bank.
James Ruff,
Executive Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Diane Sobin, Vice President Vice President and Portfolio Manager of
Oppenheimer Gold & Special Minerals
Fund, Oppenheimer Total Return Fund,
Inc. Oppenheimer Main Street Funds,
Inc. and Oppenheimer Variable Account
Funds; formerly a Vice President and
Senior Portfolio Manager for Dean
Witter InterCapital, Inc.
Nancy Sperte,
Senior Vice President
None.
Donald W. Spiro,
Chairman Emeritus and Director President and Trustee of the New York-
based Oppenheimer Funds; formerly
Chairman of the Manager and the
Distributor.
Arthur Steinmetz,
Senior Vice President Vice President and Portfolio Manager of
Oppenheimer Strategic Income Fund,
Oppenheimer Strategic Income & Growth
Fund; an officer of other Oppenheimer
Funds.
Ralph Stellmacher,
Senior Vice President Vice President and Portfolio Manager of
Oppenheimer Champion Income Fund and
Oppenheimer High Yield Fund; an officer
of other Oppenheimer Funds.
John Stoma, Vice President Formerly Vice President of Pension
Marketing with Manulife Financial.
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee, Director or
Managing Partner of the Denver-based
Oppenheimer Funds; President and a
Director
of Centennial; formerly President and
Director of OAMC, and Chairman of the
Board of SSI.
James Tobin, Vice President None.
Jay Tracey, Vice President Vice President of the Manager; Vice
President and Portfolio Manager of
Oppenheimer Discovery Fund Oppenheimer
Global Emerging Growth Fund and
Oppenheimer Enterprise Fund. Formerly
Managing Director of Buckingham Capital
Management.
Gary Tyc, Vice President,
Assistant Secretary and
Assistant Treasurer Assistant Treasurer of the Distributor
and SFSI.
Jeffrey Van Giesen, Vice President Formerly employed by Kidder Peabody
Asset Management.
Ashwin Vasan, Vice President Vice President and Portfolio Manager of
Oppenheimer Multi-Sector Income Trust,
Oppenheimer Multi-Government Trust and
Oppenheimer International Bond Fund; an
officer of other Oppenheimer Funds.
Valerie Victorson, Vice President None.
Dorothy Warmack, Vice President Vice President and Portfolio Manager of
Daily Cash Accumulation Fund, Inc.,
Oppenheimer Cash Reserves, Centennial
America Fund, L.P., Centennial
Government Trust and Centennial Money
Market Trust; Vice President of
Centennial.
Christine Wells, Vice President None.
William L. Wilby,
Senior Vice President Vice President and Portfolio Manager of
Oppenheimer Variable Account Funds,
Oppenheimer Global Fund and Oppenheimer
Global Growth & Income Fund; Vice
President of HarbourView; an officer of
other Oppenheimer Funds.
Susan Wilson-Perez,
Vice President None.
Carol Wolf, Vice President Vice President and Portfolio Manager of
Oppenheimer Money Market Fund, Inc.,
Centennial America Fund, L.P.,
Centennial Government Trust, Centennial
Money Market Trust and Daily Cash
Accumulation Fund, Inc.; Vice President
of Oppenheimer Multi-Sector Income
Trust; Vice President of Centennial.
Robert G. Zack,
Senior Vice President and
Assistant Secretary Associate General Counsel of the
Manager; Assistant Secretary of the
Oppenheimer Funds; Assistant Secretary
of SSI, SFSI; an officer of other
Oppenheimer Funds.
Eva A. Zeff,
Assistant Vice President An officer of certain Oppenheimer
Funds; formerly a Securities Analyst
for the Manager.
Arthur J. Zimmer, Vice President Vice President and Portfolio Manager of
Oppenheimer Variable Account Funds,
Centennial America Fund, L.P.,
Centennial Government Trust, Centennial
Money Market Trust and Daily Cash
Accumulation Fund, Inc.; Vice President
of Oppenheimer Multi-Sector Income
Trust; Vice President of Centennial; an
officer of other Oppenheimer Funds.
</TABLE>
The Oppenheimer Funds include the New York-based Oppenheimer Funds
and the Denver-based Oppenheimer Funds set forth below:
New York-based Oppenheimer Funds
- --------------------------------
Oppenheimer Asset Allocation Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Government Trust
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Tax-Exempt Trust
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest for Value Funds
Oppenheimer Target Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer U.S. Government Trust
Denver-based Oppenheimer Funds
- ------------------------------
Oppenheimer Cash Reserves
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Funds Trust
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Tax-Exempt Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Rochester-based Funds
- ---------------------
Rochester Fund Municipals
Rochester Fund Series - The Bond Fund For Growth
Rochester Portfolio Series - Limited Term New York Municipal Fund
The address of OppenheimerFunds, Inc., the New York-based
Oppenheimer Funds, OppenheimerFunds Distributor, Inc., HarbourView
Asset Management Corp., Oppenheimer Partnership Holdings, Inc., and
Oppenheimer Acquisition Corp. is Two World Trade Center, New York,
New York 10048-0203.
The address of the Denver-based Oppenheimer Funds, Shareholder
Financial Services, Inc., Shareholder Services, Inc.,
OppenheimerFunds Services, Centennial Asset Management Corporation,
Centennial Capital Corp., and Main Street Advisers, Inc. is 3410
South Galena Street, Denver, Colorado 80231.
The address of the Rochester-based funds is 350 Linden Oaks,
Rochester, New York 14625-2807.
<TABLE>
<CAPTION>
Name & Current Position with Other Business and Connections
OpCap Advisors During the Past Two Years
- ---------------------------- ------------------------------
<S> <C>
Robert J. Bluestone, Director
of Fixed Income Management Managing Director of Oppenheimer
Capital; Director of Oppenheimer
Capital Trust Company.
Eugene D. Brody, Director of
Options and Futures Management Managing Director of Oppenheimer
Capital.
Thomas E. Duggan,
General Counsel & Secretary Managing Director & General Counsel of
Oppenheimer Capital; Assistant
Secretary of Oppenheimer Financial
Corp.
Linda S. Ferrante,
Portfolio Manager Senior Vice President of Oppenheimer
Capital.
Bernard H. Garil, President Senior Vice President of Oppenheimer
Capital and Oppenheimer & Co., Inc;
Director of Oppenheimer Capital Trust
Company.
John Giusio, Portfolio Manager Vice President of Oppenheimer Capital.
Richard J. Glasebrook, II,
Portfolio Manager Managing Director of Oppenheimer
Capital.
Colin Glinsman, Portfolio Manager Senior Vice President of Oppenheimer
Capital.
Louis Goldstein,
Assistant Portfolio Manager Senior Vice President of Oppenheimer
Capital.
Matthew Greenwald,
Portfolio Manager Vice President of Oppenheimer Capital.
Vikki Y. Hanges,
Portfolio Manager Vice President of Oppenheimer Capital.
Jenny Beth Jones,
Portfolio Manager Senior Vice President of Oppenheimer
Capital.
Joseph M. LaMotta, Chairman President of Oppenheimer Capital;
Director & Executive Vice President of
Oppenheimer Financial Corp. and
Oppenheimer Group, Inc.; General
Partner of Oppenheimer & Co., L.P.;
Director of Oppenheimer Capital Trust
Company; Director and President of
Oppenheimer Capital Limited.
George A. Long,
Director of Research Managing Director of Oppenheimer
Capital.
Elisa A. Mazen, Portfolio Manager Vice President of Oppenheimer Capital
International Division.
Timothy McCormack,
Portfolio Manager Vice President of Oppenheimer Capital;
formerly Assistant Vice President of
Oppenheimer Capital.
Susan Murphy, President,
Quest Cash Mgmt. Services President of Quest Cash Management
Services and Oppenheimer Capital Trust
Company; Senior Vice President of
Oppenheimer Capital.
Eileen Rominger,
Portfolio Manager Managing Director of Oppenheimer
Capital.
Sheldon M. Siegel, Treasurer
and Chief Financial Officer Managing Director/Treasurer/Chief
Financial Officer of Oppenheimer
Capital; Director of Oppenheimer
Capital Trust Company; Treasurer and
Chief Financial Officer of Oppenheimer
Capital Limited.
Bruce E. Ventimiglia,
Chief Operating Officer General Partner of Saratoga Capital
Management; Senior Vice President/Agent
of OCC Distributors.
Jeffrey Whittington,
Portfolio Manager Senior Vice President of Oppenheimer
Capital.
</TABLE>
The address of OpCap Advisors is 200 Liberty Street, New York,
New York 10281.
For information as to the business, profession, vocation or
employment of a substantial nature of the officers and trustees of
Oppenheimer Capital, Oppenheimer Capital Trust Company, Oppenheimer
Capital Financial Corp., Oppenheimer Group, Inc., Oppenheimer &
Co., L.P. and Oppenheimer Capital Limited, reference is made to
Form ADV filed by OpCap Advisors, under the Investment Advisers Act
of 1940, which are incorporated herein by reference.
Item 29. Principal Underwriter
- -------- ---------------------
(a) OppenheimerFunds Distributor, Inc. is the Distributor of
Registrant's shares. It is also the Distributor of each of the
other registered open-end investment companies for which
OppenheimerFunds, Inc. is the investment adviser, as described in
Part A and B of this Registration Statement and listed in Item
28(b) above.
(b) The directors and officers of the Registrant's principal
underwriter are:
<TABLE>
<CAPTION>
Positions and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- -------------
<S> <C> <C>
Christopher Blunt Vice President None
6 Baker Avenue
Westport, CT 06880
George Clarence Bowen+ Vice President & Treasurer Vice President and
Treasurer of the
NY-based
Oppenheimer funds
/ Vice President,
Secretary and
Treasurer of the
Denver-based
Oppenheimer funds
Julie Bowers Vice President None
21 Dreamwold Road
Scituate, MA 02066
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Mary Ann Bruce* Senior Vice President - None
Financial Institution Div.
Robert Coli Vice President None
12 Whitetail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce DeLeon Ave.
Decatur, GA 30030
Bill Coughlin Vice President None
1400 Laurel Avenue
Apt. W710
Minneapolis, MN 55403
Mary Crooks+ Vice President None
Paul Delli-Bovi Vice President None
750 West Broadway
Apt. 5M
Long Beach, NY 11561
Andrew John Donohue* Executive Vice Secretary of
President & Director the New York-
based Oppenheimer
funds / Vice
President of the
Denver-based
Oppenheimer funds
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
Katherine P. Feld* Vice President & Secretary None
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding++ Vice President None
Reed F. Finley Vice President - None
1657 Graefield Financial Institution Div.
Birmingham, MI 48009
Wendy Fishler* Vice President - None
Financial Institution Div.
Wayne Flanagan Vice President - None
36 West Hill Road Financial Institution Div.
Brookline, NH 03033
Ronald R. Foster Senior Vice President - None
11339 Avant Lane Eastern Division Manager
Cincinnati, OH 45249
Patricia Gadecki Vice President None
6026 First Ave. South,
Apt. 10
St. Petersburg, FL 33707
Luiggino Galleto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President - None
5506 Bryn Mawr Financial Institution Div.
Dallas, TX 75209
Ralph Grant* Vice President/National None
Sales Manager - Financial
Institution Div.
Sharon Hamilton Vice President None
720 N. Juanita Ave. - #1
Redondo Beach, CA 90277
Carla Jiminez Vice President None
609 Chimney Bluff Drive
Mt. Pleasant, SC 29464
Mark D. Johnson Vice President None
7512 Cromwell Dr. Apt 1
Clayton, MO 63105
Michael Keogh* Vice President None
Richard Klein Vice President None
4011 Queen Avenue South
Minneapolis, MN 55410
Ilene Kutno* Assistant Vice President None
Wayne A. LeBlang Senior Vice President - None
23 Fox Trail Director Eastern Div.
Lincolnshire, IL 60069
Dawn Lind Vice President - None
7 Maize Court Financial Institution Div.
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
Laura Mulhall* Senior Vice President - None
Director of Key Accounts
Charles Murray Vice President None
50 Deerwood Drive
Littleton, CO 80127
Joseph Norton Vice President None
1550 Bryant Street
San Francisco, CA 94103
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Randall Payne Vice President - None
1307 Wandering Way Dr. Financial Institution Div.
Charlotte, NC 28226
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice President None
19 Spinnaker Way
Portsmouth, NH 03801
Tilghman G. Pitts, III* Chairman & Director None
Elaine Puleo* Vice President - None
Financial Institution Div.
Minnie Ra Vice President - None
109 Peach Street Financial Institution Div.
Avenel, NJ 07001
Ian Robertson Vice President None
4204 Summit Way
Marietta, GA 30066
Robert Romano Vice President None
1512 Fallingbrook Drive
Fishers, IN 46038
Michael S. Rosen++ Vice President None
James Ruff* President None
Timothy Schoeffler Vice President None
3118 N. Military Road
Arlington, VA 22207
Mark Schon Vice President None
10483 E. Corrine Dr.
Scottsdale, AZ 85259
Michael Sciortino Vice President None
785 Beau Chene Dr.
Mandeville, LA 70448
James A. Shaw Vice President - None
5155 West Fair Place Financial Institution Div.
Littleton, CO 80123
Robert Shore Vice President - None
26 Baroness Lane Financial Institution Div.
Laguna Niguel, CA 92677
Peggy Spilker Vice President - None
2017 N. Cleveland, #2 Financial Institution Div.
Chicago, IL 60614
Michael Stenger Vice President None
C/O America Building
30 East Central Pkwy
Suite 1008
Cincinnati, OH 45202
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
David G. Thomas Vice President - None
111 South Joliet Circle Financial Institution Div.
#304
Aurora, CO 80112
Philip St. John Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Gary Paul Tyc+ Assistant Treasurer None
Mark Stephen Vandehey+ Vice President None
Gregory K. Wilson Vice President None
2 Side Hill Road
Westport, CT 06880
* Two World Trade Center, New York, NY 10048-0203
+ 3410 South Galena St., Denver, CO 80231
++ 350 Linden Oaks, Rochester, NY 14625-2807
</TABLE>
(c) Not applicable.
Item 30. Location of Accounts and Records
- -------- --------------------------------
The accounts, books and other documents required to be
maintained by Registrant pursuant to Section 31(a) of the
Investment Company Act of 1940 and rules promulgated thereunder are
in the possession of both Oppenheimer Management Corporation at its
offices at 3410 South Galena Street, Denver, Colorado 80231 and
MassMutual at its offices at 1295 State Street, Springfield,
Massachusetts 01111.
Item 31. Management Services
- ------- -------------------
Not Applicable.
Item 32. Undertakings
- ------- ------------
(a) Registrant hereby undertakes to assist shareholder
communication in accordance with the provisions of Section 16 of
the Investment Company Act of 1940 and to call a meeting of
shareholders for the purpose of voting upon the question of removal
of a Trustee or Trustees when requested in writing to do so by the
holders of at least 10% of the Registrant's outstanding shares of
beneficial interest.
(b) Not applicable.
(c) Registrant hereby undertakes to file a post-effective
amendment containing financial statements for any series portfolio
of Registrant, which need not be certified, within four to six
months from the effective date of the registration statement with
respect to such portfolio under the Securities Act of 1933.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or
the Investment Company Act of 1940, the Registrant certifies that
it meets all the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities
Act of 1933 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized,
in the City of New York and State of New York on the 9th day of
February, 1996.
OPPENHEIMER QUEST FOR VALUE FUNDS
By: /s/ Bridget A. Macaskill
-----------------------------------
Bridget A. Macaskill
Chairman of the Board and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Bridget A Macaskill Chairman of the Board, February 9, 1996
- ----------------------- President (Principal
Bridget A. Macaskill Executive Officer) and
Trustee
/s/ George C. Bowen Treasurer (Principal February 9, 1996
- ----------------------- Financial and Accounting
Officer)
/s/ Paul Y. Clinton Trustee February 9, 1996
- -----------------------
Paul Y. Clinton
/s/ Thomas W. Courtney Trustee February 9, 1996
- -----------------------
Thomas W. Courtney
/s/ Lacy B. Herrmann Trustee February 9, 1996
- -----------------------
Lacy B. Herrmann
/s/ George Loft Trustee February 9, 1996
- -----------------------
George Loft
</TABLE>
<PAGE>
OPPENHEIMER QUEST FOR VALUE FUNDS
Registration No. 33-15489
Post-Effective Amendment No. 36
Index to Exhibits
Exhibit
Number Description
- ------- -----------
24(b)(1) Declaration of Trust
24(b)(2) By-Laws
24(b)(5)(a) Investment Advisory Agreement
24(b)(5)(b)(1) Subadvisory Agreement with respect to Small Cap
Value Fund
24(b)(5)(b)(2) Subadvisory Agreement with respect to Growth &
Income Value Fund
24(b)(5)(b)(3) Subadvisory Agreement with respect to Opportunity
Value Fund
24(b)(5)(b)(4) Subadvisory Agreement with respect to Officers
Value Fund
24(b)(6) General Distributor's Agreement
24(b)(8) Custody Agreement
24(b)(11) Consent of Independent Accountants
24(b)(15)(a)(1) Amended and Restated Distribution and Service
Plan and Agreement with respect to Class A Shares
of the Growth & Income Value Fund
24(b)(15)(a)(2) Amended and Restated Distribution and Service
Plan and Agreement with respect to Class A Shares
of the Opportunity Value Fund
24(b)(15)(a)(3) Amended and Restated Distribution and Service
Plan and Agreement with respect to Class A Shares
of the Small Cap Value Fund
24(b)(15)(a)(4) Amended and Restated Distribution and Service
Plan and Agreement with respect to Class A Shares
of the Officers Value Fund
24(b)(15)(b)(1) Amended and Restated Distribution and Service
Plan and Agreement with respect to Class B Shares
of the Growth & Income Value Fund
24(b)(15)(b)(2) Amended and Restated Distribution and Service
Plan and Agreement with respect to Class B Shares
of the Opportunity Value Fund
24(b)(15)(b)(3) Amended and Restated Distribution and Service
Plan and Agreement with respect to Class B Shares
of the Small Cap Value Fund
24(b)(15)(b)(4) Amended and Restated Distribution and Service
Plan and Agreement with respect to Class B Shares
of the Officers Value Fund
24(b)(15)(c)(1) Amended and Restated Distribution and Service
Plan and Agreement with respect to Class C Shares
of the Growth & Income Value Fund
24(b)(15)(c)(2) Amended and Restated Distribution and Service
Plan and Agreement with respect to Class C Shares
of the Opportunity Value Fund
24(b)(15)(c)(3) Amended and Restated Distribution and Service
Plan and Agreement with respect to Class C Shares
of the Small Cap Value Fund
24(b)(15)(c)(4) Amended and Restated Distribution and Service
Plan and Agreement with respect to Class C Shares
of the Officers Value Fund
24(b)(16)(1) Performance Computation Schedule for Oppenheimer
Quest Growth & Income Value Fund
24(b)(16)(2) Performance Computation Schedule for Oppenheimer
Quest Opportunity Value Fund
24(b)(16)(3) Performance Computation Schedule for Oppenheimer
Quest Small Cap Value Fund
24(b)(16)(4) Performance Computation Schedule for Oppenheimer
Quest Officers Value Fund
24(b)(17)(1) Financial Data Schedule for Oppenheimer Quest
Growth & Income Value Fund, Class A
24(b)(17)(2) Financial Data Schedule for Oppenheimer Quest
Growth & Income Value Fund, Class B
24(b)(17)(3) Financial Data Schedule for Oppenheimer Quest
Growth & Income Value Fund, Class C
24(b)(17)(4) Financial Data Schedule for Oppenheimer Quest
Opportunity Value Fund, Class A
24(b)(17)(5) Financial Data Schedule for Oppenheimer Quest
Opportunity Value Fund, Class B
24(b)(17)(6) Financial Data Schedule for Oppenheimer Quest
Opportunity Value Fund, Class C
24(b)(17)(7) Financial Data Schedule for Oppenheimer Quest
Small Cap Value Fund, Class A
24(b)(17)(8) Financial Data Schedule for Oppenheimer Quest
Small Cap Value Fund, Class B
24(b)(17)(9) Financial Data Schedule for Oppenheimer Quest
Small Cap Value Fund, Class C
24(b)(17)(10) Financial Data Schedule for Oppenheimer Quest
Officers Value Fund, Class A
DECLARATION OF TRUST
OF
QUEST FOR VALUE U.S. GOVERNMENT INCOME TRUST
THE DECLARATION OF TRUST of QUEST FOR VALUE U.S. GOVERNMENT
INCOME TRUST is made the 13th day of March, 1987 by the parties
signatory hereto, as trustees (such persons, so long as they shall
continue in office in accordance with the terms of this Declaration
of Trust, and all other persons who at the time in question have
been duly elected or appointed as trustees in accordance with the
provisions of this Declaration of Trust and are then in office,
being hereinafter called the "Trustees").
WITNESSETH:
WHEREAS, the Trustees desire to form a trust fund under the
laws of Massachusetts for the investment and reinvestment of funds
contributed thereto; and
WHEREAS, it is proposed that the beneficial interest in the
trust assets be divided into transferable shares of beneficial
interest as hereinafter provided;
NOW, THEREFORE, the Trustees hereby declare that they will
hold in trust all money and property contributed to the trust fund
to manage and dispose of the same for the benefit of the holders
from time to time of the shares of beneficial interest issued
hereunder and subject to the provisions hereof, to wit:
ARTICLE I
Name and Definitions
1.1. Name. The name of the trust created hereby (the
"Trust") shall be "Quest For Value U.S. Government Income Trust,"
and so far as may be practicable the Trustees shall conduct the
Trust's activities, execute all documents and sue or be sued under
that name, which name (and the word "Trust" wherever hereinafter
used) shall refer to the Trustees as trustees, and not
individually, and shall not refer to the officers, agents,
employees or shareholders of the Trust. However, should the
Trustees determine that the use of such name is not advisable, they
may select such other name for the Trust as they deem proper and
the Trust may hold its property and conduct its activities under
such other name. Any name change shall become effective upon the
execution by a majority of the then Trustees of an instrument
setting forth the new name. Any such instrument shall have the
status of an amendment to this Declaration.
1.2. Definitions. As used in this Declaration, the following
terms shall have the following meanings:
The terms "Affiliated Person," "Assignment," "Commission,"
"Interested Person" and "Principal Underwriter" shall have the
meanings given them in the 1940 Act, as amended from time to time.
"Declaration" shall mean this Declaration of Trust as amended
from time to time. References in this Declaration to
"Declaration," "hereof," "herein" and "hereunder" shall be deemed
to refer to the Declaration rather than the article or section in
which such words appear.
"Fundamental Policies" shall mean the investment objectives,
policies and restrictions set forth in the Prospectus or Statement
of Additional Information of the Trust and designated therein as
policies or restrictions which may be changed only upon a vote of
Shareholders of the Trust.
"Majority Shareholder Vote" means the vote of the holders of:
(i) a majority of Shares represented in person or by proxy and
entitled to vote at a meeting of Shareholders at which a quorum, as
determined in accordance with the By-Laws, is present and (ii) a
majority of Shares issued and outstanding and entitled to vote when
action is taken by written consent of Shareholders. For these
purposes, however, the term "majority" shall mean a "majority of
the outstanding voting securities," as the phrase is defined in the
1940 Act, when any action is required by the 1940 Act by such
majority as so defined.
"Person" shall mean and include individuals, corporations,
partnerships, trusts, associations, joint ventures and other
entities, whether or not legal entities, and governments and
agencies and political subdivisions thereof.
"Prospectus" and "Statement of Additional Information" shall
mean the currently effective Prospectus and Statement of Additional
Information of the Trust under the Securities Act of 1993, as
amended.
"Series" means one of the separately managed components of the
Trust as set forth in Section 6.1 hereof or as may be established
and designated from time to time by the Trustees pursuant to that
section.
"Shares" shall mean the equal proportionate transferable units
of interest into which the beneficial interest in the Trust shall
be divided from time to time and includes fractions of Shares as
well as whole shares.
"Shareholders" shall mean as of any particular time all
holders of record of outstanding Shares at such time.
"Trustees" shall mean the signatories to this Declaration of
Trust, so long as they shall continue in office in accordance with
the terms hereof, and all other persons who at the time in question
have been duly elected or appointed and have qualified as trustees
in accordance with the provisions hereof and are then in office,
and reference in this Declaration of Trust to a Trustee or Trustees
shall refer to such person or persons in their capacity as trustees
hereunder.
"Trust Property" shall mean as of any particular time any and
all property, real or personal, tangible or intangible, which at
such time is owned or held by or for the account of the Trust or
the Trustees.
The "1940 Act" refers to the Investment Company Act of 1940
and the rules and regulations promulgated thereunder, as amended
from time to time.
ARTICLE II
Trustees
2.1. Number of Trustees. The number of Trustees shall be
such number as shall be fixed from time to time by a written
instrument signed by a majority of the Trustees, provided, however,
that the number of Trustees shall in no event be less than three
nor more than seven.
2.2. Election, Term. Each Trustee named herein, or elected
or appointed hereafter, shall (except in the event of resignation,
removal or vacancy) hold office until a successor has been elected
or appointed and has qualified to serve as Trustee. Trustees shall
have terms of unlimited duration, subject to the resignation and
removal provisions of Section 2.3 hereof. Except as herein
provided and subject to Section 16(a) of the 1940 Act, Trustees
need not be elected by Shareholders, and the Trustees may elect and
appoint their own successors and may, pursuant to Section 2.4
hereof, appoint Trustees to fill vacancies. The Trustees may adopt
By-Laws not inconsistent with this Declaration or any provision of
law to provide for election of Trustees by Shareholders at such
time or times as the Trustees shall determine to be necessary or
advisable. Except for the Trustees named herein, an individual may
not commence to serve as Trustee except if appointed pursuant to a
written instrument signed by a majority of the Trustees then in
office or unless elected by Shareholders, and any such election or
appointment shall not become effective until the individual
appointed or elected shall have accepted such election or
appointment and agreed in writing to be bound by the terms of this
Declaration of Trust. A Trustee shall be an individual at least 21
years of age who is not under a legal disability.
2.3. Resignation and Removal. Any Trustee may resign his
trust (without need for prior or subsequent accounting) by an
instrument in writing signed by him and delivered to the other
Trustees and such resignation shall be effective upon such
delivery, or at a later date according to the terms of the
instrument. Any of the Trustees may be removed (provided the
aggregate number of Trustees after such removal shall not be less
than the number required by Section 2.1 hereof) with cause, by
action of two-thirds of the remaining Trustees or by the action of
the Shareholders of record of not less than two-thirds of the
Shares outstanding. For purposes of determining the circumstances
and procedures under which such removal by the Shareholders may
take place, the provisions of Section 16(c) of the 1940 Act shall
be applicable to the same extent as if the Trust were subject to
the provisions of that Section. Upon the resignation or removal of
a Trustee, or his otherwise ceasing to be a Trustee, he shall
execute and deliver such documents as the remaining Trustees shall
require for the purpose of conveying to the Trust or the remaining
Trustees any Trust Property held in the name of the resigning or
removed Trustee. Upon the incapacity or death of any Trustee, his
legal representative shall execute and deliver on his behalf such
documents as the remaining Trustees shall require as provided in
the preceding sentence.
2.4. Vacancies. The term of office of a Trustee shall
terminate and a vacancy shall occur in the event of the death,
resignation, bankruptcy, adjudicated incompetence or other
incapacity to perform the duties of the office, or removal, of a
Trustee. No such vancancy shall operate to annul this Declaration
of Trust or to revoke any existing agency created pursuant to the
terms of this Declaration of Trust. In the case of a vacancy
caused by reason of an increase in the number of Trustees, subject
to the provisions of Section 16(a) of the 1940 Act, the remaining
Trustees shall fill such vacancy by the appointment of such other
person as they, in their discretion, shall see fit. An appointment
of a Trustee may be made in anticipation of a vacancy to occur at
a later date by reason of retirement, resignation or increase in
the number of Trustees. Whenever a vacancy in the number of
Trustees shall occur, until such vacancy is filled as provided in
this Section 2.4, the Trustees in office, regardless of their
number, shall have all the powers granted to the Trustees and shall
discharge all the duties imposed upon the Trustees by the
Declaration. A written instrument certifying the existence of such
vacancy signed by a majority of the Trustees shall be conclusive
evidence of the existence of such vacancy.
2.5. Meetings. Meetings of the Trustees shall be held from
time to time upon the call of the Chairman, if any, the President,
the Secretary or any two Trustees of the Trust. Regular meetings
of the Trustees may be held without call or notice at a time and
place fixed by the By-Laws or by resolution of the Trustees.
Notice of any other meeting shall be mailed or otherwise given not
less than 48 hours before the meeting but may be waived in writing
by any Trustee either before or after such meeting. The attendance
of a Trustee at a meeting shall constitute a waiver of notice of
such meeting except where a Trustee attends a meeting for the
express purpose of objecting to the transaction of any business on
the ground that the meeting has not been lawfully called or
convened. The Trustees may act with or without a meeting. A
quorum for all meetings of the Trustees shall be a majority of the
Trustees. Unless provided otherwise in this Declaration of Trust
or by applicable law, any action of the Trustees may be taken at a
meeting by vote of a majority of the Trustees present (a quorum
being present) or without a meeting by written consents of all of
the Trustees.
Any committee of the Trustees, including an executive
committee, if any, may act with or without a meeting. A quorum for
all meetings of any such committee shall be a majority of the
members thereof. Unless provided otherwise in this Declaration,
any action of any such committee may be taken at a meeting by vote
of a majority of the members present (a quorum being present) or
without a meeting by written consent of a majority of the members.
With respect to actions of the Trustees and any committee of
the Trustees, Trustees who are Interested Persons of the Trust
within the meaning of Section 1.2 hereof or otherwise interested in
any action to be taken may be counted for quorum purposes under
this Section and shall be entitled to vote to the extent permitted
by the 1940 Act.
All or any one or more Trustees may participate in a meeting
of the Trustees or any committee thereof by means of a conference
telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other and
participation in a meeting pursuant to such communications systems
shall constitute presence in person at such meeting.
2.6. Officers. The Trustees shall annually elect a
President, a Secretary and a Treasurer and may elect a Chairman.
The Trustees may elect or appoint or authorize the Chairman, if
any, or President to appoint such other officers or agents with
such power as the Trustees may deem to be advisable. The Chairman
and President shall be and the Secretary and Treasurer may, but
need not, be a Trustee.
2.7. By-Laws. The Trustees may adopt and from time to time
amend or repeal the By-Laws for the conduct of the business of the
Trust.
2.8. Delegation of Power to Other Trustees. Any Trustee may,
by power of attorney, delegate his power for a period not exceeding
six months at any one time to any other Trustee or Trustees;
provided that in no case shall less than two Trustees personally
exercise the powers granted to the Trustees under the Declaration
except as herein otherwise expressly provided.
ARTICLE III
Powers of Trustees
3.1. General. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust
to the same extent as if the Trustees were the sole owners of the
Trust Property and business in their own right, but with such
powers of delegation as may be permitted by this Declaration. The
Trustees may perform such acts as in their sole discretion are
proper for conducting the business of the Trust. The enumeration
of any specific power herein shall not be construed as limiting the
aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
3.2. Investments. The Trustees shall have power, subject to
the Fundamental Policies, to:
(a) conduct, operate and carry on the business of an
investment company;
(b) subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer,
exchange, distribute or otherwise deal in or dispose of
securities and other investments and assets of whatever
kind, or retain Trust assets in cash and from time to
time change the investments of the assets of the Trust,
and exercise any and all rights, powers and privileges of
ownership or interest in respect of any and all such
investments and assets of every kind and description,
including, without limitation, the right to consent and
otherwise act with respect thereto, with power to
designate one or more persons, firms, associations or
corporations to exercise any of said rights, powers and
privileges in respect of any of said investments and
assets.
The Trustees shall not be limited to investing in obligations
maturing before the possible termination of the Trust, nor shall
the Trustees be limited by any law limiting the investments which
may be made by fiduciaries.
3.3. Legal Title. Legal title to all Trust Property shall be
vested in the Trustees as joint tenants, except that the Trustees
shall have power to cause legal title to any Trust Property to be
held by or in the name of one or more of the Trustees, or in the
name of the Trust, or in the name of any other Person as nominee,
on such terms as the Trustees may determine, provided that the
interest of the Trust therein is appropriately protected.
The right, title and interest of the Trustees in the Trust
Property shall vest automatically in each person who may hereafter
become a Trustee. Upon the resignation, removal or death of a
Trustee he shall automatically cease to have any right, title or
interest in any of the Trust Property, and the right, title and
interest of such Trustee in the Trust Property shall vest
automatically in the remaining Trustees. Such vesting and
cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered.
3.4. Issuance and Repurchase of Securities. The Trustees
shall have the power to issue, sell, repurchase, redeem, retire,
cancel, acquire, hold, resell, reissue, dispose of, transfer, and
otherwise deal in, Shares, including shares in fractional
denominations, and, subject to the more detailed provisions set
forth in Article VIII and IX, to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of Shares any
funds or property of the Trust whether capital or surplus or
otherwise, to the full extent now or hereafter permitted by the
laws of the Commonwealth of Massachusetts governing business
corporations.
3.5. Borrow Money; Lend Assets. Subject to the Fundamental
Policies, the Trustees shall have power to borrow money or
otherwise obtain credit and to secure the same by mortgaging,
pledging or otherwise subjecting as security the assets of the
Trust, including the lending of portfolio securities, and to
endorse, guarantee or undertake the performance of any obligation,
contract or engagement of any other Person and to lend Trust
assets.
3.6. Delegation; Committees. The Trustees shall have power,
consistent with their continuing exclusive authority over the
management of the Trust and the Trust Property, to delegate from
time to time to such of their number or to officers, employees or
agents of the Trust the doing of such things and the execution of
such instruments either in the name of the Trust or names of the
Trustees or otherwise as the Trustees may deem expedient, to the
same extent as such delegation is permitted to directors of a
Massachusetts business corporation and is permitted by the 1940
Act.
3.7. Collection and Payment. The Trustees shall have power
to collect all property due to the Trust; and to pay all claims,
including taxes, against the Trust Property; to prosecute, defend,
compromise or abandon any claims relating to the Trust Property; to
foreclose any security interest securing any obligations, by virtue
of which any property is owed to the Trust; and to enter into
releases, agreements and other instruments.
3.8. Expenses. The Trustees shall have power to incur and
pay any expenses which in the opinion of the Trustees are necessary
or incidental to carry out any of the purposes of this Declaration
of Trust, and to pay reasonable compensation from the funds of the
Trust to themselves as Trustees. The Trustees shall fix the
compensation of all officers, employees and Trustees. The Trustees
may pay themselves such compensation for special services,
including legal, underwriting, syndicating and brokerage services,
as they in good faith may deem reasonable and reimbursement for
expenses reasonably incurred by themselves on behalf of the Trust.
3.9. Miscellaneous Powers. The Trustees shall have the power
to: (a) employ or contract with such Persons as the Trustees may
deem desirable for the transaction of the business of the Trust and
terminate such employees or contractual relationships as they
consider appropriate; (b) enter into joint ventures, partnershps
and any other combination or associations; (c) remove Trustees or
fill vacancies in or add to their number, elect and remove such
officers and appoint and terminate such agents or employees as they
consider appropriate, and appoint from their own number, and power
and authority of the Trustees as the Trustees may determine; (d)
purchase, and pay for out of Trust Property, insurance policies
insuring the Shareholders, Trustees, officers, employees, agents,
investment advisers, distributors, selected dealers or independent
contractors of the Trust against all claims arising by reason of
holding any such position or by reasons of any action taken or
omitted by any such Person in such capacity, whether or not
constituting negligence, or whether or not the Trust would have the
power to indemnify such Person against such liability; (e)
establish pension, profit-sharing, share purchase and other
retirement, incentive and benefit plans for any Trustees, officers,
employees and agents of the Trust; (f) make donations, irrespective
of benefit to the Trust, for charitable, religious, educational,
scientific, civic or similar purposes; (g) to the extent permitted
by law, indemnify any Pension with whom the Trust has dealings,
including the investment adviser, distributor, transfer agent and
selected dealers, to such extent as the Trustees shall determine;
(h) guarantee indebtedness or contractual obligations of others;
(i) determine and change the fiscal year of the Trust and the
method in which its accounts shall be kept; (j) adopt a seal for
the Trust, but the absence of such seal shall not impair the
validity of any instrument executed on behalf of the Trust; and (k)
call for meetings of Shareholders as may be necessary or
appropriate.
3.10. Further Powers. The Trustees shall have power to
conduct the business of the trust and carry on its operations in
any and all of its branches and maintain offices both within and
without the Commonwealth of Massachusetts, in any and all states of
the United States of America, in the District of Columbia, and in
any and all commonwealths, territories, dependencies, colonies,
possessions, agencies or instrumentalities of the United States of
America and of foreign governments, and to do all such other things
and execute all such instruments as they deem necessary, proper or
desirable in order to promote the interests of the Trust although
such things are not herein specifically mentioned. Any
determination as to what is in the interests of the Trust made by
the Trustees in good faith shall be conclusive. In construing the
provisions of this Declaration, the presumption shall be in favor
of a grant of power to the Trustees. The Trustees will not be
required to obtain any court order to deal with the Trust Property.
3.11. Principal Transactions. Except in transactions
permitted by the 1940 Act or any rule or regulation thereunder, or
any order or exemption issued by the Commission, or effected to
implement the provisions of any agreement to which the Trust is a
party, the Trustees shall not knowingly, on behalf of the Trust,
buy any securities (other than Shares) from or sell any securities
(other than Shares) to, or lend any assets of the Trust to, any
Trustee or officer of the Trust or any firm of which any such
Trustee or officer is a member acting as principal, or have any
such dealings with any investment adviser, distributor or transfer
agent or with any Affiliated Person of such Person; but the Trust
may employ any such Person, or firm or company in which such Person
is an Interested Person, as broker, legal counsel, registrar,
transfer agent, dividend disbursing agent or custodian upon
customary terms.
3.12. Litigation. The Trustees shall have the power to
engage in and to prosecute, defend, compromise, abandon, or adjust,
by arbitration or otherwise, any actions, suits, proceedings,
disputes, claims and demands relating to the Trust, and out of the
assets of the Trust to pay or to satisfy any debts, claims or
expenses incurred in connection therewith, including those of
litigation, and such power shall include without limitation the
power of the Trustees or any appropriate committee thereof, in the
exercise of their or its good faith business judgment, to dismiss
any action, suit, proceeding, dispute, claim or demand, derivative
or otherwise, brought by any person, including a Shareholder in its
own name or the name of the Trust, whether or not the Trust or any
of the Trustees may be named individually therein or the subject
matter arises by reason of business for or on behalf of the Trust.
ARTICLE IV
Management and Distribution Arrangements
4.1. Management Arrangements. Subject to approval by a
Majority Shareholder Vote, the Trustees may in their discretion
from time to time enter into advisory, administration or management
contracts whereby the other party to such contract shall undertake
to furnish such advisory, administrative, management, accounting,
legal, statistical and research facilities and services,
promotional or marketing activities, and such other facilities and
services, if any, as the Trustees shall from time to time consider
desirable and all upon such terms and conditions as the Trustees
may in their discretion determine. Notwithstanding any provisions
of this Declaration of Trust, the Trustees may authorize any
adviser, administrator or manager (subject to such general or
specific instructions as the Trustees may from time to time adopt)
to effect purchases, sales, loans or exchanges of portfolio
securities of the Trust on behalf of the Trustees or may authorize
any office, employee or Trustee to effect such purchases, sales,
loans or exchanges pursuant to recommendations of any such adviser,
administrator or manager (all without further action by the
Trustees). Any such purchases, sales, loans and exchanges shall be
deemed to have been authorized by all of the Trustees. The
Trustees may, in their sole discretion, call a meeting of
Shareholders in order to submit to a vote of Shareholders at such
meeting the approval or continuance of any such investment
advisory, management or other contract. If the Shareholders of any
one or more of the Series of the Trust should fail to approve any
such investment advisory or management contract, the Investment
Adviser may nonetheless serve as Investment Adviser with respect to
any Series whose Shareholders approved such contract.
4.2. Administrative Services. The Trustees may in their
discretion from time to time contract for administrative personnel
and services whereby the other party shall agree to provide to the
Trustees or the Trust administrative personnel and services to
operate the Trust on a daily or other basis on such terms and
conditions as the Trustees may in their discretion determine. Such
services may be provided by one or more persons or entities.
4.3. Distribution Arrangements. The Trustees may in their
discretion from time to time enter into a contract, providing for
the sale of the Shares of the Trust to net the Trust not less than
the par value per share, whereby the Trust may either agree to sell
the Shares to the other party to the contact or appoint such other
party its sales agent for such Shares. Such contract may also
provide for the repurchase or sale of Shares by such other party as
principal or as agent of the Trust and may provide that such other
party may enter into selected dealer agreements with registered
securities dealers to further the purpose of the distribution or
repurchase of the Shares. The contract shall be on such terms and
conditions as the Trustees may in their discretion determine not
inconsistent with the provisions of this Article IV or the By-Laws.
4.4. Parties to Contract. Any contract of the character
described in Sections 4.1, 4.2 or 4.3 of this Article IV, or in
Article VI or in Article VII hereof, may be entered into with any
corporation, firm, trust or association, although one or more of
the Trustees or officers of the Trust may be an officer, director,
Trustee, shareholder, employee or member of such other party to the
Contract, and no such contract shall be invalidated or rendered
voidable by reason of the existence of any such relationship, nor
shall any person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust
under or by reason of said contract or accountable for any profit
realized directly or indirectly therefrom, provided that the
contract when entered into was reasonable and fair and not
inconsistent with the provisions of this Article IV or the By-Laws.
The same person (including a firm, corporation, trust or
association) may be the other party to contracts entered into
pursuant to Sections 4.1, 4.2 or 4.3 above or Article VI or VII,
and any individual may be financially interested or otherwise
affiliated with Persons who are parties to any or all of the
contracts mentioned in this Section 4.4.
4.5. Provisions and Amendments. Any contract entered into
pursuant to Sections 4.1, 4.2 or 4.3 of this Article IV shall be
consistent with and subject to all applicable requirements of the
1940 Act with respect to its adoption, continuance, termination and
the method of authorization and approval of such contract or
renewal thereof, and no amendment to any contract entered into
pursuant to such sections shall be effective unless entered into in
accordance with applicable provisions of the 1940 Act.
ARTICLE V
Limitation of Liability of Shareholders,
Trustees and Others
5.1. No Personal Liability of Shareholders, Trustees, etc.
No Shareholder, as such, shall be subject to any personal liability
whatsoever to any Person in connection with Trust Property or the
acts, obligations or affairs of the Trust. No Trustee, officer,
employee or agent of the Trust shall be subject to any personal
liability whatsoever to any Person, other than the Trust or its
Shareholders, in connection with Trust Property or the affairs of
the Trust, and all such Persons shall look solely to the Trust
Property for satisfaction of claims of any nature arising in
connection with the affairs of the Trust. If any Shareholder,
Trustee, officer, employee or agent, as such, of the Trust, is made
a party to any suit or proceeding to enforce any such liability, he
shall not on account thereof be held to any personal liability.
The Trust shall indemnify and hold each Shareholder harmless from
and against all claims and liabilities to which such Shareholder
may become subject by reason of his being or having been a
Shareholder, and shall reimburse such Shareholder for all legal and
other expenses reasonably incurred by him in connection with any
such claim or liability; provided that Shareholders of a particular
Series who are subject to claims or liabilities solely by reason of
their status as Shareholders of that Series shall be limited to the
assets of that Series for recovery of any loss and related
expenses. The rights accruing to a Shareholder under this Section
5.1 shall not exclude any other right to which such Shareholder may
be lawfully entitled, nor shall anything herein contained restrict
the right of the Trust to indemnify or reimburse a Shareholder in
any appropriate situation even though not specifically provided
herein.
5.2. Non-Liability of Trustees, etc. No Trustee, officer,
employee or agent of the Trust shall be liable to the Trust, its
Shareholders or to any Shareholder, Trustee, officer, employee or
agent thereof for any action or failure to act (including without
limitation the failure to compel in any way any former or acting
Trustee to redress any breach of trust) except for his own bad
faith, willful misfeasance, gross negligence or reckless disregard
of his duties.
5.3. Indemnification. The Trustees shall provide for
indemnification by the Trust of any person who is, or has been a
Trustee, officer, employee or agent of the Trust against all
liability and against all expenses reasonably incurred or paid by
him in connection with any claim, action, suit or proceeding in
which he becomes involved as a party or otherwise by virtue of his
being or having been a Trustee, officer, employee or agent and
against amounts paid or incurred by him in the settlement hereof,
in such manner as the Trustees may provide from time to time in the
By-Laws.
The words "claim," "action," "suit" or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal
or other, including appeals), actual or threatened; and the words
"liability" and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement,
fines, penalties and other liabilities.
5.4. No Bond Required of Trustees. No Trustee, as such,
shall be obligated to give any bond or surety or other security for
the performance of any of his duties hereunder.
5.5. No Duty of Investigation; Notice in Trust, Instruments,
etc. No purchaser, lender, transfer agent or other person dealing
with the Trustees or any officer, employee or agent of the Trust
shall be bound to make any inquiry concerning the validity of any
transaction purporting to be made by the Trustees or by said
officer, employee or agent or be liable for the application of
money or property paid, loaned or delivered to or on the order of
the Trustees or of said officer, employee or agent. Every
obligation, contract, instrument, certificate, Share, other
security of the Trust or undertaking, and every other act or thing
whatsoever executed in connection with the Trust shall be
conclusively taken to have been executed or done by the executors
thereof only in their capacity as Trustees under this Declaration
of Trust or in their capacity as officers, employees or agents of
the Trust. Every written obligation, contract, instrument,
certificate, Share, other security of the Trust or undertaking made
or issued by the Trustees or by any officers, employees or agents
of the Trust, in their capacity as such, shall contain an
appropriate recital to the effect that the writing is executed or
made by them not individually, but as Trustees under the
Declaration that the Shareholders, Trustees, officers, employees
and agents of the Trust shall not personally be bound by or liable
thereunder, nor shall resort be had to their private property for
the satisfaction of any obligation or claim thereunder but only to
the Trust Estate or, in the case of any such obligation which
relates only to a specific Series, only to the property of such
Series, and appropriate references shall be made therein to the
Declaration of Trust, and may contain any further recital which
they may deem appropriate, but the omission of such recital shall
not operate to impose personal liability on any of the Trustees,
Shareholders, officers, employees or agents of the Trust. The
Trustees may maintain insurance for the protection of the Trust
Property, its Shareholders, officers, employees and agents in such
amount as the Trustees shall deem adequate to cover possible tort
liability, and such other insurance as the Trustees in their sole
judgment shall deem advisable.
5.6. Reliance on Experts, etc. Each Trustee and officer or
employee of the Trust shall, in the performance of his duties, be
fully and completely justified and protected with regard to any act
or any failure to act resulting from reliance in good faith upon
the books of account or other records of the Trust, upon an opinion
of counsel, or upon reports made to the Trust by any of its
officers or employees or by any investment adviser, distributor,
transfer agent, selected dealers, accountants, appraisers or other
experts or consultants selected with reasonable care by the
Trustees, officers or employees of the Trust, regardless of whether
such counsel or expert may also be a Trustee.
ARTICLE VI
Shares of Beneficial Interest
6.1. Beneficial Interest. The interest of the beneficiaries
hereunder shall be divided into transferable shares of beneficial
interest, with par value $.01 per share. The number of such shares
of beneficial interest authorized hereunder is unlimited. The
Trustees may initially issue whole and fractional shares of a
single class, each of which shall represent an equal proportionate
share in the Trust with each other Share. As provided by the
provisions of Section 6.9 hereof, the Trustees may authorize the
creation of series of shares (the proceeds of which may be invested
in separate, independently managed portfolios) and additional
classes of shares within any series. All Shares issued hereunder
including, without limitation, Shares issued in connection with a
dividend in Shares or a split of Shares, shall be fully paid and
nonassessable.
6.2. Rights of Shareholders. The ownership of the Trust
Property of every description and the right to conduct any business
hereinbefore described are vested exclusively in the Trustees, and
the Shareholders shall have no interest therein other than the
beneficial interest conferred by their Shares, and they shall have
no right to call for any partition or division of any property,
profits, rights or interests of the Trust nor can they be called
upon to share or assume any losses of the Trust or suffer any
assessment of any kind by virtue of their ownership of Shares. The
Shares shall be personal property giving only the rights in this
Declaration specifically set forth. The Shares shall not entitle
the holder to preference, preemptive, appraisal, conversion or
exchange rights (except for rights of appraisal specified in
Section 11.4 and as the Trustees may determine with respect to any
series or class of Shares).
6.3. Trust Only. It is the intention of the Trustees to
create only the relationship of Trustee and beneficiary between the
Trustees and each Shareholder from time to time. It is not the
intention of the Trustees to create a general partnership, limited
partnership, joint stock association, corporation, bailment or any
form of legal relationship other than a trust. Nothing in this
Declaration of Trust shall be construed to make the Shareholders,
either by themselves or with the Trustees, partners or members of
a joint stock association.
6.4. Issuance of Shares. The Trustees, in their discretion,
may from time to time without a vote of the Shareholders issue
Shares, in addition to the then issued and outstanding Shares and
Shares held in the treasury, to such party or parties and for such
amount not less than par value and type of consideration, including
cash or property, at such time or times, and on such terms as the
Trustees may deem best, and may in such manner acquire other assets
(including the acquisition of assets subject to, and in connection
with the assumption of, liabilities) and businesses. In connection
with any issuance of Shares, the Trustees may issue fractional
Shares. The Trustees may from time to time divide or combine the
Shares into a greater or lesser number without thereby changing the
proportionate beneficial interests in the Trust.
6.5. Register of Shares. A register shall be kept at the
Trust or a transfer agent duly appointed by the Trustees under the
direction of the Trustees which shall contain the names and
addresses of the Shareholders and the number of Shares held by them
respectively and a record of all transfers thereof. Such register
shall be conclusive as to who are the holders of the Shares and who
shall be entitled to receive dividends or distributions or
otherwise to exercise or enjoy the rights of Shareholders. No
Shareholder shall be entitled to receive payment of any dividend or
distribution, nor to have notice given to him as herein provided,
until he has given his address to a transfer agent or such other
officer or agent of the Trustees as shall keep the said register
for entry thereon. It is not required that certificates be issued
for the Shares; however, the Trustees, in their discretion, may
authorize the issuance of share certificates and promulgate
appropriate rules and regulations as to their use.
6.6. Transfer Agent and Registrar. The Trustee shall have
power to employ a transfer agent or transfer agents, and a
registrar or registrars. The transfer agent or transfer agents may
keep the said register and record therein the original issues and
transfers, if any, of the said Shares. Any such transfer agent and
registrars shall perform the duties usually performed by transfer
agents and registrars of certificates of stock in a corporation,
except as modified by the Trustees.
6.7. Transfer of Shares. Shares shall be transferable on the
records of the Trust only by the record holder thereof or by his
agent thereto duly authorized in writing, upon delivery to the
Trustees or a transfer agent of the Trust of a duly executed
instrument of transfer, together with such evidence of the
genuineness of each such execution and authorization and of other
matters as may reasonably be required. Upon such delivery the
transfer shall be recorded on the register of the Trust. Until
such record is made, the Shareholder of record shall be deemed to
be the holder of such Shares for all purposes hereof and neither
the Trustees nor any transfer agent or registrar nor any officer,
employee or agent of the Trust shall be affected by any notice of
the proposed transfer.
Any person becoming entitled to any Shares in consequence of
the death, bankruptcy, or incompetence of any Shareholder, or
otherwise by operation of law, shall be recorded on the register of
Shares as the holder of such Shares upon production of the proper
evidence thereof to the Trustees or a transfer agent of the Trust,
but until such record is made, the Shareholder of record shall be
deemed to be the holder of such Shares for all purposes hereof and
neither the Trustees nor any transfer agent or registrar nor any
officer or agent of the Trust shall be affected by any notice of
such death, bankruptcy or incompetence, or other operation of law.
6.8. Treasury Shares. Shares held in the treasury shall,
until reissued, not confer any voting rights on the Trustees, nor
shall such Shares be entitled to any dividends or other
distributions declared with respect to the Shares.
6.9. Series Designation. The Trustees, in their discretion,
may authorize the division of Shares into two or more series or two
or more classes, and the different series or classes shall be
established and designated, and the variations in the relative
rights and preferences as between the different series or classes
shall be fixed and determined, by the Trustees; provided, that all
Shares shall be identical except that there may be variations so
fixed and determined between different series or classes as to
investment objective, purchase price, right of redemption, special
and relative rights as to dividends and on liquidation and
conversion rights, and the several series or classes shall have
separate voting rights, as set forth in Section 10.1 of this
Declaration. All references to Shares in this Declaration shall be
deemed to be shares of any or all series and classes as the context
may require.
If the Trustees shall divide the Shares of the Trust into two
or more series or two or more classes, the following provisions
shall be applicable:
(a) The number of authorized Shares and the number of Shares
of each series or of each class that may be issued shall
be unlimited. The Trustees may classify or reclassify
any unissued Shares or any Shares previously issued and
reacquired of any series or class into one or more series
or one or more classes that may be established and
designated from time to time. The Trustees may hold as
treasury shares (of the same or some other series or
class), reissue for such consideration and on such terms
as they may determine, or cancel any Shares of any series
or any class reacquired by the Trust at their discretion
from time to time.
(b) The power of the Trustees to invest and reinvest the
Trust Property shall be governed by Section 3.2 of this
Declaration with respect to any one or more series which
represents the interests in the assets of the Trust
immediately prior to the establishment of two or more
series and the power of the Trustees to invest and
reinvest assets applicable to any other series shall be
the same, except as otherwise set forth in the instrument
of the Trustees establishing such series which is
hereinafter described.
(c) All consideration received by the Trust for the issue or
sale of Shares of a particular series or class, together
with all assets in which such consideration is invested
or reinvested, all income, earnings, profits and proceeds
thereof, including any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds
in whatever form the same may be, shall irrevocably
belong to that series or class for all purposes, subject
only to the rights of creditors and except as may
otherwise be required by applicable tax laws, and shall
be so recorded upon the books of account of the Trust.
In the event that there are any assets, income, earnings,
profits and proceeds thereof, funds, or payments which
are not readily identifiable as belonging to any
particular series or Class, the Trustees shall allocate
them among any one or more of the series or classes
established and designated from time to time in such
manner and on such basis as they, in their sole
discretion, deem fair and equitable. Each such
allocation by the Trustees shall be conclusive and
binding upon the Shareholders of all series or classes
for all purposes.
(d) The assets belonging to each particular series shall be
charged with the liabilities of the Trust in respect of
that series and all expenses, costs, charges and reserves
attributable to that series. All expenses and
liabilities incurred or arising in connection with a
particular Series, or in connection with the management
thereof, shall be payable solely out of the assets of
that Series and creditors of a particular Series shall be
entitled to look solely to the property of such Series
for satisfaction of their claims. Any general
liabilities, expenses, costs, charges or reserves of the
Trust which are not readily identifiable as belonging to
any particular series shall be allocated and charged by
the Trustees to and among any one or more of the series
established and designated from time to time in such
manner and on such basis as the Trustees in their sole
discretion deem fair and equitable. Each allocation of
liabilities, expenses, costs, charges and reserves by the
Trustees shall be conclusive and binding upon the holders
of all series for all purposes. The Trustees shall have
full discretion, to the extent not inconsistent with the
1940 Act, to determine which items are capital; and each
such determination and allocation shall be conclusive and
binding upon the Shareholders.
(e) The power of the Trustees to pay dividends and make
distributions shall be governed by Section 9.2 of this
Declaration with respect to any one or more series or
classes which represents the interests in the assets of
the Trust immediately prior to the establishment of two
or more series or classes. With respect to any other
series or class, dividends and distributions on Shares of
a particular series or class may be paid with such
frequency as the Trustees may determine, which may be
daily or otherwise, pursuant to a standing resolution or
resolutions adopted only once or with such frequency as
the Trustees may determine, to the holders of Shares of
that series or class, from such of the income and capital
gains, accrued or realized, from the assets belonging to
that series or class, as the Trustees may determine,
after providing for actual and accrued liabilities
belonging to that series or class. All dividends and
distributions on Shares of a particular series or class
shall be distributed pro rata to the holders of that
series or class in proportion to the number of Shares of
that series or class held by such holders at the date and
time of record established for the payment of such
dividends or distributions.
(f) Subject to the requirements of the 1940 Act, particularly
Section 18(f) and Rule 18f-2 thereunder, the Trustees
shall have the power to determine the designations,
preferences, privileges, limitations and rights of each
class and series of Shares.
(g) Subject to compliance with the requirements of the 1940
Act, the Trustees shall have the authority to provide
that the holders of Shares of any series or class shall
have the right to convert or exchange said Shares into
Shares of one or more series of Shares in accordance with
such requirements and procedures as may be established by
the Trustees.
(h) The establishment and designation of any series or class
of Shares shall be effective upon the execution by a
majority of the then Trustees of an instrument setting
forth such establishment and designation and the relative
rights and preferences of such series or class, or as
otherwise provided in such instrument. At any time that
there are no Shares outstanding of any particular series
or class previously established and designated, the
Trustees may by an instrument executed by a majority of
their number abolish that series or class and the
establishment and designation thereof. Each instrument
referred to in this paragraph shall have the status of an
amendment to this Declaration.
(i) In the event of the liquidation of a particular series,
the Shareholders of that series which has been
established and designated and which is being liquidated
shall be entitled to receive, when and as declared by the
Trustees, the excess of the assets belonging to that
series over the liabilities belonging to that series.
The holders of Shares of any series shall not be entitled
hereby to any distribution upon liquidation of any other
series. The assets so distributable to the Shareholders
of any series shall be distributed among such
Shareholders in proportion to the number of Shares of
that series held by them and recorded on the books of the
Trust. The liquidation of any particular series in which
there are Shares then outstanding may be authorized by an
instrument in writing, without a meeting, signed by a
majority of the Trustees then in office, subject to the
approval of a majority of the outstanding voting
securities of that series, as that phrase is defined in
the 1940 Act.
6.10. Notices. Any and all notices to which any Shareholder
hereunder may be entitled and any and all communications shall be
deemed duly served or given if mailed, postage prepaid, addressed
to any Shareholder of record at his last known address as recorded
on the register of the Trust.
ARTICLE VII
Custodian
7.1. Appointment and Duties. The Trustees shall at all times
employ a custodian or custodians, meeting the qualifications for
custodians contained in the 1940 Act, as custodian with authority
as its agent, but subject to such restrictions, limitations and
other requirements, if any, as may be contained in the By-Laws of
the Trust and the 1940 Act, for purposes of maintaining custody of
the Trust's securities and similar investments.
7.2. Central Depository System. Subject to applicable rules,
regulations and orders, the Trustees may direct the custodian to
acquire and hold securities in the book-entry system for United
States government securities or to deposit all or any part of the
securities and similar investments owned by the Trust in a system
for the central handling of securities pursuant to which all
securities of any particular class or series of any issuer
deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical
delivery of such securities.
ARTICLE VIII
Redemptions
8.1. Redemptions. All outstanding Shares may be redeemed at
the option of the holders thereof, upon and subject to the terms
and conditions provided in this Article VIII. The Trust shall,
upon application of any Shareholder or pursuant to authorization
from any Shareholder, redeem or repurchase from such Shareholder
for cash or in kind outstanding Shares for an amount per share
determined by the application of a formula adopted for such purpose
by resolution of the Trustees (which formula shall be consistent
with applicable provisions of the 1940 Act); provided that (a) such
amount per Share shall not exceed the cash equivalent of the
proportionate interest of each Share in the assets of the Trust at
the time of the purchase or redemption and (b) if so authorized by
the Trustees, the Trust may, at any time and from time to time,
charge fees for effecting such redemption, at such rates as the
Trustees may establish, as and to the extent permitted under the
1940 Act, and may, at any time and from time to time, pursuant to
such Act or an order thereunder, suspend such right of redemption.
The procedures for effecting redemption shall be as set forth in
the Prospectus and the Statement of Additional Information, as
amended from time to time.
8.2. Redemption of Shares; Disclosure of Holding. If the
Trustees shall, at any time and in good faith, be of the opinion
that direct or indirect ownership of Shares or other securities of
the Trust has or may become concentrated in any person to an extent
which would disqualify the Trust as a regulated investment company
under the Internal Revenue Code, then the Trustees shall have the
power by lot or other means deemed equitable by them (i) to call
for redemption a number, or principal amount of Shares or other
securities of the Trust sufficient, in the opinion of the Trustees,
to maintain or bring the direct or indirect ownership of Shares or
other securities of the Trust into conformity with the requirements
of such qualification and (ii) to refuse to transfer or issue
Shares or other securities of the Trust to any Person whose
acquisition of the Shares or other securities of the Trust in
question would in the opinion of the Trustees result in such
disqualification. The redemption shall be effected at a redemption
price determined in accordance with Section 8.1.
The holders of Shares or other securities of the Trust shall
upon demand disclose to the Trustees in writing such information
with respect to direct and indirect ownership of Shares or other
securities of the Trust as the Trustees deem necessary to comply
with the provisions of the Internal Revenue Code, or to comply with
the requirements of any other taxing authority.
8.3. Redemptions of Accounts of Less than $500. The Trustees
shall have the power to redeem shares at a redemption price
determined in accordance with Section 8.1 if at any time the total
investment in a Shareholder account does not have a value of at
least $500 (or such lesser amount as the Trustees may determine);
provided, however, that the Trustees may not exercise such power
with respect to Shares if the Prospectus does not describe such
power (and applicable amount). In the event the Trustees determine
to exercise their power to redeem Shares provided in this Section
8.3., shareholders shall be notified that the value of their
account is less than $500 (or such lesser amount as determined
above) and allowed a reasonable period of time to make an
additional investment before the redemption is effected.
ARTICLE IX
Determination of Net Asset Value,
Net Income and Distributions
9.1. Net Asset Value. The net asset value of each
outstanding Share of the Trust shall be determined in such manner
and at such time or times on such days as the Trustees may
determine, in accordance with applicable provisions of the 1940
Act, as described from time to time in the Trust's currently
effective Prospectus and Statement of Additional Information. The
power and duty to make the daily calculations may be delegated by
the Trustees to the adviser, administrator, manager, custodian,
transfer agent or such other person as the Trustees may determine.
The Trustees may suspend the daily determination of net asset value
to the extent permitted by the 1940 Act.
9.2. Distributions to Shareholders. The Trustees shall from
time to time distribute ratably among the Shareholders such
proportion of the net profits, including net income, surplus
(including paid-in surplus), capital or assets held by the Trustees
as they may deem proper. Such distribution shall be made in cash
or Shares, and the Trustees may distribute ratably among the
Shareholders additional Shares issuable hereunder in such manner,
at such times, and on such terms as the Trustees may deem proper.
Such distributions may be among the Shareholders of record at the
time of declaring a distribution or among the Shareholders of
record at such later date as the Trustees shall determine. The
Trustees may always retain from the net profits such amount as they
may deem necessary to pay the debts or expenses of the Trust or to
meet obligations of the Trust, or as they may deem desirable to use
in the conduct of its affairs or to retain for future requirements
or extensions of the business. The Trustees may adopt and offer to
Shareholders such dividend reinvestment plan, cash dividend payout
plans or related plans as the Trustees shall deem appropriate.
Inasmuch as the computation of net income and gains for
federal income tax purposes may vary from the computation thereof
on the books of the Trust, the above provisions shall be
interpreted to give the Trustees the power in their discretion to
distribute for any fiscal year as ordinary dividends and as capital
gains distributions, respectively, additional amounts sufficient to
enable the Trust to avoid or reduce liability for taxes.
ARTICLE X
Shareholders Voting and Reports
10.1. Voting. The Shareholders shall have power to vote only
(i) for the election of Trustees as provided in Article II hereof,
(ii) for the removal of Trustees as provided in Section 2.3 hereof;
(iii) with respect to any investment advisory, management or other
contract as provided in Section 4.1. hereof, (iv) with respect to
termination of the Trust as provided in Section 11.2. hereof, (v)
with respect to any amendment of the Declaration to the extent and
as provided in Section 11.3. hereof, (vi) with respect to any
merger, consolidation or sale of assets as provided in Section
11.4. hereof, (vii) with respect to incorporation of the Trust to
the extent and as provided in Section 11.5. hereof, (viii) to the
same extent as the stockholders of a Massachusetts business
corporation as to whether or not a court action, proceeding or
claim should or should not be brought or maintained derivatively or
as a class action on behalf of the Trust or Shareholders, provided
that Shareholders of a Series are not entitled to vote with respect
to a matter which does not affect that Series, and (ix) with
respect to such additional matters relating to the Trust as may be
required by law, the Declaration, the By-Laws or any registration
statement of the Trust filed with any federal or state regulatory
authority, or as and when the Trustees may consider necessary or
desirable. Each whole Share shall be entitled to one vote as to
any matter on which it is entitled to vote and each fractional
Share shall be entitled to a proportionate fractional vote, except
that Shares held in the treasury of the Trust as of the record
date, as determined in accordance with the By-Laws, shall not be
voted. A Majority Shareholder Vote shall be sufficient to take or
authorize action upon any matter except as otherwise provided
herein. There shall be no cumulative voting in the election of
Trustees. Until Shares are issued, the Trustees may exercise all
rights of Shareholders and may take any action, required by law,
the Declaration or the By-Laws to be taken by Shareholders.
In the event of the establishment of series or classes as
contemplated by Section 6.9, Shareholders of each such series or
class shall, with respect to those matters upon which Shareholders
are entitled to vote, be entitled to vote only on matters affecting
such series or class, and voting shall be by series or class and
require a Majority Shareholder Vote of each series or class that
would be affected by such matter, except that all Shares
(regardless of series or class) shall be voted as a single voting
class, or a Majority Shareholder Vote of each series or class shall
be necessary, where required by applicable law. Except as
otherwise required by law, any action required or permitted to be
taken at any meeting of Shareholders may be taken without a meeting
if Shareholders constituting a Majority Shareholder Vote consent to
the action in writing and such consents are filed with the records
of the Trust. Such consent shall be treated for all purposes as
votes taken at a meeting of Shareholders. The By-Laws may include
further provisions for Shareholders' votes and meetings and related
matters not inconsistent with the Declaration.
10.2 Reports. The Trustees shall transmit to Shareholders
such written financial reports of the operations of the Trust,
including financial statements certified by independent public
accountants, as may be required under applicable law.
ARTICLE XI
Duration, Termination of Trust;
Amendment; Mergers, Etc.
11.1. Duration. Subject to possible termination in
accordance with the provisions of Section 11.2. hereof, the Trust
created hereby shall continue without limitation of time.
11.2. Termination of Trust.
(a) The Trust may be terminated (i) by a Majority Shareholder
Vote at any meeting of Shareholders, (ii) by an
instrument in writing, without a meeting, signed by a
majority of the Trustees and consented to by holders
constituting a Majority Shareholder Vote or (iii) by the
Trustees by written notice to the Shareholders. Upon the
termination of the Trust,
(i) The Trust shall carry on no business except for the
purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs
of the Trust and all of the powers of the Trustees under this
Declaration shall continue until the affairs of the Trust shall
have been wound up, including the power to fulfill or discharge the
contracts of the Trust, collect its assets, sell, convey, assign,
exchange, transfer or otherwise dispose of all or any part of the
remaining Trust Property to one or more persons at public or
private sale for consideration which may consist in whole or in
part of cash, securities or other property of any kind, discharge
or pay its liabilities, and do all other acts appropriate to
liquidate its business; provided that any sale, conveyance,
assignment, exchange, transfer or other disposition of all or
substantially all the Trust Property shall require approval as set
forth in Section 11.4.
(iii) After paying or adequately providing for the
payment of all liabilities, and upon receipt of such releases,
indemnities and refunding agreements, as they deem necessary for
their protection, the Trustees may distribute the remaining Trust
Property, in cash or in kind or partly each, among Shareholders
according to their respective rights.
(b) After termination of the Trust and distribution to
Shareholders as herein provided, a majority of the
Trustees shall execute and lodge among the records of the
Trust an instrument in writing setting forth the fact of
such termination, and the Trustees shall thereupon be
discharged from all further liabilities and duties
hereunder, and the rights and interests of all
Shareholders shall thereupon cease.
11.3. Amendment Procedure.
(a) This Declaration may be amended by vote of the
Shareholders. The Trustees may also amend this
Declaration without the vote or consent of Shareholders
to change the name of the Trust, to supply any omission,
to cure, correct or supplement any ambiguous, defective
or inconsistent provision hereof, or if they deem it
necessary or desirable to conform this Declaration to the
requirements of applicable federal or state laws or
regulations or the requirements of the regulated
investment company provisions of the Internal Revenue
Code, but the Trustees shall not be liable for failing to
do so.
(b) No amendment may be made, under Section 11.3(a) above,
which would change any rights with respect to any Shares
of the Trust by reducing the amount payable thereon upon
liquidation of the Trust or by diminishing or eliminating
any voting rights pertaining thereto, except with the
vote or consent of affected Shareholders. Nothing
contained in this Declaration shall permit the amendment
of this Declaration to impair the exemption from personal
liability of the Shareholders, Trustees, officers,
employees and agents of the Trust or to permit
assessments upon Shareholders.
(c) A certification in recordable form signed by a majority
of the Trustees or by the Secretary or any Assistant
Secretary of the Trust, setting forth an amendment and
reciting that it was duly adopted by the Shareholders or
by the Trustees as aforesaid or a copy of the
Declaration, as amended, in recordable form, and executed
by a majority of the Trustees, shall be conclusive
evidence of such amendment when lodged among the records
of the Trust.
11.4. Merger, Consolidation and Sale of Assets. The Trust
may merge or consolidate with any other corporation, association,
trust or other organization or may sell, lease or exchange all or
substantially all of the Trust Property, including its good will,
upon such terms and conditions and for such consideration when and
as authorized by a Majority Shareholder Vote, and any such merger,
consolidation, sale, lease or exchange shall be deemed for all
purposes to have been accomplished under and pursuant to the
statutes of the Commonwealth of Massachusetts. In respect of any
such merger, consolidation, sale or exchange of assets, and
Shareholder shall be entitled to rights of appraisal of his Shares
to the same extent as a shareholder of a Massachusetts business
corporation in respect of a merger, consolidation, sale or exchange
of assets of a Massachusetts business corporation, and such rights
shall be his exclusive remedy in respect of his dissent from any
such action.
11.5. Incorporation. Upon a Majority Shareholder Vote, the
Trustees may cause to be organized or assist in organizing a
corporation or corporations under the laws of any jurisdiction or
any other trust, partnership, association or other organization to
take over all of the Trust Property or to carry on any business in
which the Trust shall directly or indirectly have any interest, and
to sell, convey and transfer the Trust Property to any such
corporation, trust, association or organization in exchange for
shares or securities thereof or otherwise, and to lend money to,
subscribe for shares or securities of, and enter into any contracts
with any such corporation, trust, partnership, association or
organization, or any corporation, partnership, trust, association
or organization in which the Trust holds or is about to acquire
shares or any other interest. The Trustees may also cause a merger
or consolidation between the Trust or any successor thereto and any
such corporation, trust, partnership, association or other
organization if and to the extent permitted by law. Nothing
contained herein shall be construed as requiring approval of
Shareholders for the Trustees to organize or assist in organizing
one or more corporations, trusts, partnerships, associations or
other organizations and selling, conveying or transferring a
portion of the Trust Property to such organizations or entities.
ARTICLE XII
Miscellaneous
12.1. Filing. This Declaration and all amendments hereto
shall be filed in the office of the Secretary of the Commonwealth
of Massachusetts and in such other places as may be required under
the laws of Massachusetts and may also be filed or recorded in such
other places as the Trustees deem appropriate. Each amendment so
filed shall be accompanied by a certificate signed and acknowledged
by a Trustee stating that such action was duly taken in a manner
provided herein, and unless such amendment or such certificate sets
forth some later time for the effectiveness of such amendment, such
amendment shall be effective upon its filing. A restated
Declaration, containing the original Declaration and all amendments
theretofore made, may be executed from time to time by a majority
of the Trustees and shall, upon filing with the Secretary of the
Commonwealth of Massachusetts, be conclusive evidence of all
amendments contained therein and may thereafter be referred to in
lieu of the original Declaration and the various amendments
thereto.
12.2. Resident Agent. The Trust hereby appoints CT
Corporation System as its resident agent in the Commonwealth of
Massachusetts, whose post office address is 2 Oliver Street,
Boston, Massachusetts 02109.
12.3. Governing Law. This Declaration is executed by the
Trustees and delivered in the Commonwealth of Massachusetts and
with reference to the laws thereof, and the rights of all parties
and the validity and construction of every provision hereof shall
be subject to and construed according to the laws of said State and
reference shall be specifically made to the business corporation
law of the Commonwealth of Massachusetts as to the construction of
matters not specifically covered herein or as to which an ambiguity
exists.
12.4. Counterparts. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to
be an original, and such counterparts, together, shall constitute
one and the same instrument, which shall be sufficiently evidenced
by any such original counterpart.
12.5. Reliance by Third Parties. Any certificate executed by
an individual who, according to the records of the Trust, or of any
recording office in which this Declaration may be recorded, appears
to be a Trustee hereunder, certifying to: (a) the number or
identity of Trustees or Shareholders, (b) the due authorization of
the execution of any instrument or writing, (c) the form of any
vote passed at a meeting of Trustees or Shareholders, (d) the fact
that the number of Trustees or Shareholders present at any meeting
or executing any written instrument satisfies the requirements of
this Declaration, (e) the form of any By-Laws adopted by or the
identity of any officers elected by the Trustees, or (f) the
existence of any fact or facts which in any manner relate to the
affairs of the Trust, shall be conclusive evidence as to the
matters so certified in favor of any person dealing with the
Trustees and their succesors.
12.6. Provisions in Conflict With Law or Regulations.
(a) The provisions of this Declaration are severable, and if
the Trustees shall determine, with the advice of counsel,
that any of such provisions is in conflict with the 1940
Act, the regulated investment company provisions of the
Internal Revenue Code or with other applicable laws and
regulations, the conflicting provision shall be deemed
never to have constituted a part of this Declaration;
provided, however, that such determination shall not
affect any of the remaining provisions of this
Declaration or render invalid or improper any action
taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held
invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall attach only to such
provision in such jurisdiction and shall not in any
manner affect such provision in any other jurisdiction or
any other provision of this Declaration in any
jurisdiction.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused these presents
to be executed as of the day and year first above written.
/s/ Joseph M. LaMotta
-----------------------
Joseph M. LaMotta, as Trustee
Address:
RR#2 Box 177
Pound Ridge, New York 10576
/s/ Paul Y. Clinton
--------------------------------
Paul Y. Clinton, as Trustee
Address:
946 Morris Avenue
Bryn Mawr, Pennsylvania 19010
/s/ Thomas W. Courtny
--------------------------
Thomas W. Courtney, as Trustee
Address:
P.O. Box 580
Sweickly, Pennsylvania 15143
/s/ Lacy B. Herrmann
------------------------
Lacy B. Herrmann
Address:
Suite 4515
200 Park Avenue
New York, New York 10017
/s/ George Loft
-------------------
George Loft
Address:
Herrick Road
Sharon, Connecticut 06069
orgzn\q4serdot.1
<PAGE>
AMENDMENT TO
DECLARATION OF TRUST
OF
QUEST FOR VALUE INVESTMENT TRUST
Thomas E. Duggan, Secretary of Quest For Value Investment
Trust, hereby certifies that the following Amendment was duly
adopted by a majority vote of Trustees at a Special Meeting of the
Board of Trustees on October 19, 1988.
THE DECLARATION OF TRUST of QUEST FOR VALUE INVESTMENT TRUST
(the "Trust"), made on the 13th day of March, 1987 and finally
executed on the 17th day of April, 1987, as amended as of the 11th
day of April, 1988 is hereby amended to change the name of the
Trust.
Section 1.1 of Article I of the Declaration of Trust is hereby
amended by deleting the words "Quest For Value Investment Trust" in
the second line thereof and substituting therefor the words "Quest
For Value Family of Funds".
IN WITNESS WHEREOF, the undersigned has caused these presents
to be executed as of the ____ day of October, 1988.
/s/ Thomas e. Duggan
-----------------------
Thomas E. Duggan, as Secretary
Address:
Oppenheimer Capital
200 Liberty Street
New York, NY 10281
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 19th day of October, 1988, before me personally
appeared Thomas E. Duggan, to me known to be the person described
in and who executed the foregoing instrument, and acknowledged that
he executed the same.
------------------------------
Notary Public
(SEAL)
orgzn\q4serdot.5
<PAGE>
AMENDMENT
TO
DECLARATION OF TRUST
OF
QUEST FOR VALUE FAMILY OF FUNDS
This amendment to the Declaration of Trust of Quest for Value
Family of Funds (the "Trust") dated March 13, 1987, as amended
April 11, 1988 and October 19, 1988 (the "Declaration") is made
this 12th day of September, 1995.
WHEREAS, Section 11.3(a) of the Declaration provides that the
Declaration may be amended by action of a majority of the Trustees
of the Trust without the vote of shareholders to supply any
omission, to cure, correct or supplement any ambiguous, defective
or inconsistent provision thereof, or if they deem it necessary or
desirable to confirm the Declaration to the requirements of
applicable federal or state laws or regulations;
WHEREAS, the first sentence of the second paragraph of Section
10.1 of the Declaration provides that, with respect to matters on
which shareholders are entitled to vote, shareholders of each
series or class of the Trust shall be entitled to vote only on
matters affecting such series or class, and that voting shall be by
series or class and require a Majority Shareholder Vote (as defined
therein) of each series or class that would be affected by such
matter, except that all shares (regardless of series or class)
shall be voted as a single voting class, or a Majority Shareholder
Vote of each class, shall be necessary, "where required by
applicable law;"
WHEREAS, Section 18(i) of the Investment Company Act of 1940
("1940 Act") provides in substance, that except as otherwise
required by law, every share of voting stock of a registered
investment company shall have equal voting rights with every other
outstanding share of voting stock of that company;
WHEREAS, Rule 18f-2 under the 1940 Act requires shares to be
voted by series as to certain matters which affect the particular
series and exempts the vote on certain other matters that do not
separately affect that series, including the election of Trustees
and ratification of the selection of independent accountants, from
such separate voting requirements;
WHEREAS, the undersigned, being all of the Trustees of the
Trust, have determined that the aforementioned provision of Section
10.1 as to voting by all shares as a single series or class is
ambiguous and desire to amend the Declaration to correct this
provision.
NOW THEREFORE, the undersigned Trustees hereby declare that
the first sentence of the second paragraph of Section 10.1 of the
Declaration be amended by deleting said sentence in its entirety
and inserting the following:
"In the event of the establishment of series of classes
as contemplated by Section 6.9, on each matter submitted to a
vote of Shareholders, all Shares of all series or classes
shall vote as a single class, provided, however, that (1) as
to any matter with respect to which a separate vote of any
series or class is required by the 1940 Act or is required by
attributes applicable to any series or class or is required by
any other law, such requirements as to a separate vote by that
series or class shall apply; (2) to the extent that a matter
referred to in clause (1) above affects more than one class or
series and the interests of each such class or series in the
matter are identical, then, subject to clause (3) below, the
Shares of all such affected classes or series shall vote as a
single class; and (3) as to any matter which does not affect
the interests of a particular series or class, only the
holders of Shares of the one or more affected series or
classes shall be entitled to vote."
IN WITNESS WHEREOF, the undersigned Trustees have caused this
amendment to be executed this 12th day of September, 1995.
/s/ Joseph A. LaMotta /s/ Lacy B. Herrmann
- ----------------------------- ----------------------------
Joseph A. LaMotta, as Trustee Lacy B. Herrmann, as Trustee
and not individually and not individually
/s/ Paul Y. Clinton /s/ George Loft
- ----------------------------- ----------------------------
Paul Y. Clinton, as Trustee George Loft, as Trustee
and not individually and not individually
/s/ Thomas W. Courtney
- ------------------------------
Thomas W. Courtney, as Trustee
and not individually
orgzn\q4serdot.2
<PAGE>
AMENDMENT TO
DECLARATION OF TRUST
OF
QUEST FOR VALUE FAMILY OF FUNDS
THE DECLARATION OF TRUST of QUEST FOR VALUE FAMILY OF FUNDS
(the "Trust"), made on the 13th day of March, 1987 as amended on
April 11, 1988, April 18, 1988, October 19, 1988 and September 12,
1995 is hereby amended to change the name of the Trust.
Section 1.1 of Article I of the Declaration of Trust is hereby
amended by deleting the words "Quest For Value Family of Funds" in
the second line thereof and substituting therefor the words
"Oppenheimer Quest For Value Funds".
IN WITNESS WHEREOF, the undersigned have caused this Amendment
to be executed as of the ____ day of November, 1995.
/s/ Joseph M. LaMotta
--------------------------------
Joseph M. LaMotta, as Trustee
Address: 69 Black Brook Road
Pound Ridge, NY 10576
/s/ Lacy Herrmann
-------------------------------
Lacy Herrmann, as Trustee
Address: 6 Whaling Road
Darien, CT 06820
/s/ Paul Clinton
----------------------------------
Paul Clinton, as Trustee
Address: 946 Morris Avenue
Bryn Mawr, PA 19010
/s/ George Loft
----------------------------------
George Loft, as Trustee
Address: 51 Herrick Road
Sharon, CT 06069
/s/ Thomas Courtney
---------------------------------
Thomas Courtney, as Trustee
Address: 833 Wyndemere Way
Naples, Fla 33999
orgzn\q4serdot.4
<PAGE>
QUEST FOR VALUE FAMILY OF FUNDS
Amendment to Establishment and Designation of Series
of Shares of Beneficial Interest, par value $.01
WHEREAS, Declarations have been filed with the Secretary of
State of Massachusetts and the office of the Clerk, Boston,
Massachusetts on behalf of Quest For Value Family of Funds (the
"Trust") establishing the first through eleventh series of the
Trust as follows:
(i) U.S. Government Income Fund
(ii) Fixed Income Fund
(iii) Opportunity Fund
(iv) Small Capitalization Fund
(v) Tax-Exempt Money Market Fund
(vi) National Tax-Exempt Fund
(vii) California Tax-Exempt Fund
(viii) New York Tax-Exempt Fund
(ix) Investment Quality Income Fund
(x) Growth and Income Fund; and
(xi) Officers Fund
WHEREAS, it is advisable for the Trust to change the name of
the third, fourth, tenth and eleventh series;
NOW THEREFORE, the undersigned, being a majority of the
Trustees of the Trust, acting pursuant to Article VI, Section 6.9
of the Declaration of Trust dated March 13, 1987, as amended,
hereby;
RESOLVE, that the name of the third, fourth, tenth and
eleventh series of the Trust shall be changed to the following:
(iii) Oppenheimer Quest Opportunity Value Fund
(iv) Oppenheimer Quest Small Cap Value Fund
(x) Oppenheimer Quest Growth & Income Value Fund
(xi) Oppenheimer Quest Officers Value Fund
Dated: November 22, 1995
/s/ Joseph M. LaMotta
--------------------------------
Joseph M. LaMotta, as Trustee
Address: 69 Black Brook Road
Pound Ridge, NY 10576
/s/ Lacy Herrmann
--------------------------------
Lacy Herrmann, as Trustee
Address: 6 Whaling Road
Darien, CT 06820
/s/ Paul Clinton
----------------------------------
Paul Clinton, as Trustee
Address: 946 Morris Avenue
Bryn Mawr, PA 19010
/s/ George Loft
----------------------------------
George Loft, as Trustee
Address: 51 Herrick Road
Sharon, CT 06069
/s/ Thomas Courtney
----------------------------------
Thomas Courtney, as Trustee
Address: 833 Wyndemere Way
Naples, Fla 33999
The Declaration of Trust establishing Quest for Value Family
of Funds, dated March 13, 1987, as amended, a copy of which,
together with all amendments thereto (the "Declaration") is on file
in the office of the Secretary of State of The Commonwealth of
Massachusetts, provides that the name "Quest for Value Family of
Funds" refers to the Trustees under the Declaration collectively as
Trustees, but not as individuals or personally; and no Trustee,
shareholder, officer, employee or agent of Quest for Value Family
of Funds shall be held to any personal liability, nor shall resort
be had to their private property for the satisfaction of any
obligation or claim or otherwise in connection with the affairs of
said Trust but the Trust Property only shall be liable.
orgzn\q4serdot.3
BY-LAWS
OF
QUEST FOR VALUE U.S. GOVERNMENT INCOME TRUST
ARTICLE I
Definitions
The terms "Commission," "Declaration," "Majority
Shareholder Vote," "1940 Act," "Shareholders," "Shares," "Trust
Property" and "Trustees" have the respective meanings given them in
the Declaration of Trust of Quest for Value Government Income Trust
(the "Trust") dated March 13, 1987, as amended from time to time.
ARTIC LE II
Offic es
2.1 Principal Office. Until changed by the Trustees,
the principal office of the Trust in the Commonwealth of
Massachusetts shall be in the City of Boston, County of Suffolk.
2.2 Other Offices. In addition to its principal office
in the Commonwealth of Massachusetts, the Trust may have an office
or offices in the State of New York, and at such other places
within and without the Commonwealth as the Trustees may from time
to time designate or the business of the Trust may require.
ARTICLE III
Shareholder's Meetings
3.1 Place of Meetings. Meetings of the Shareholders
shall be held at such place, within or without the Commonwealth of
Massachusetts, as may be designated from time to time by the
Trustees.
3.2 Meetings. Meetings of the Shareholders of the Trust,
as a whole or by series or class, shall be held whenever called by
a majority of the Trustees or the President of the Trust and as a
whole whenever election of a Trustee or Trustees by Shareholders is
required by the provisions of Section 16 of the 1940 Act for that
purpose. Meetings of Shareholders, as a whole or by series or
class, as the case may be, shall also be called by the Secretary
upon the written request, which request shall state the purpose or
purposes of such meeting and the matters proposed to be acted on
thereat, of the holders of Shares entitled to vote not less than
twenty five percent (25%) of all the votes entitled to be cast at
such meeting, provided, however, that pursuant to Section 16(c) of
the 1940 Act, that a meeting requested exclusively for the stated
purpose of removing a Trustee shall be called by the Secretary upon
the written request of the holders of Shares entitled to vote not
less than ten percent (10%) of all the votes entitled to be cast at
such meeting as to the matter be elected on thereat. The Secretary
shall inform such Shareholders of the reasonable estimated cost of
preparing and mailing such notice of the meeting, and upon payment
to the Trust of such costs, the Secretary shall give notice stating
the purpose or purposes of the meeting to all entitled to vote at
such meeting. Except as otherwise required by law, no meeting need
be called upon the request of the holders of Shares entitled to
cast less than a majority of all votes entitled to be cast at such
meeting, to consider any matter which is substantially the same as
a matter voted upon at any meeting of the same Shareholders held
during the preceding twelve months.
3.3 Notice of Meetings; Waiver. Written or printed
notice of every Shareholders' meeting stating the place, date and
purpose or purposes thereof, shall be given by the Secretary not
less than seven (7) nor more than sixty (60) days before such
meeting to each Shareholder entitled to vote at such meeting,
either by mail or by presenting it to him personally, or by leaving
it at his residence or usual place of business. If mailed, such
notice shall be deemed to be given when deposited in the United
States mail, postage prepaid, directed to the Shareholder at his
address as it appears on the records of the Trust. Any such notice
may be waived by any person or persons entitled to such notice, by
a notice signed by such person or persons and filed with the
records of the meeting, whether before or after the holding
thereof, or by actual attendance at the meeting, in person or by
proxy, except where the Shareholder attends a meeting for the
express purpose of objecting to the transaction of business on the
grounds that the meeting has not been lawfully called or convened.
3.4 Quorum and Adjournment of Meetings. Except as
otherwise provided by law, by the Declaration or by these By-Laws,
at all meetings of Shareholders the holders of a majority of the
Shares issued and outstanding and entitled to vote thereat, present
in person or represented by proxy, shall be requisite and shall
constitute a quorum for the transaction of business. In the
absence of a quorum, the Shareholders present or represented by
proxy and entitled to vote thereat shall have power to adjourn the
meeting from time to time. Any adjourned meeting may be held as
adjourned without further notice. At any adjourned meeting at
which a quorum shall be present, any business may be transacted as
if the meeting had been held as originally called.
3.5 Voting Rights, Proxies. At each meeting of
Shareholders, each holder of record of Shares entitled to vote
thereat shall be entitled to one vote in person or by proxy,
executed in writing by the Shareholder or his duly authorized
attorney-in-fact, for each Share of beneficial interest of the
Trust and for the fractional portion of one vote for each
fractional Share entitled to vote so registered in his name on the
records of the Trust on the date fixed as the record date for the
determination of Shareholders entitled to vote at such meeting, if
executed after the final adjournment of such a meeting. At all
meetings of Shareholders, unless the voting is conducted by
inspectors, all questions relating to the qualification of voters
and the validity of proxies and the acceptance or rejection of
votes shall be decided by the chairman of the meeting. Pursuant to
a resolution of a majority of the Trustees, proxies may be
solicited in the name of one or more Trustees or Officers of the
Trust.
3.6 Vote Required. Except as otherwise provided by law,
by the Declaration or by these By-Laws, at each meeting of
Shareholders at which a quorum is present, all matters shall be
decided by Majority Shareholder Vote.
3.7 Inspectors of Election. In advance of any meeting
of Shareholders, the Trustees may appoint Inspectors of Election to
act at the meeting or any adjournment thereof. If Inspectors of
Election are not so appointed, the chairman of any meeting of
Shareholders may, and on the request of any Shareholder or his
proxy shall, appoint Inspectors of Election of the meeting. In
case any person appointed as Inspector fails to appear or fails or
refuses to act, the vacancy may be filled by appointment made by
the Trustees in advance of the convening of the meeting or at the
meeting by the person acting as chairman. The Inspectors of
Election shall determine the number of Shares outstanding, the
Shares represented at the meeting, the existence of a quorum, the
authenticity, validity and effect of proxies, shall receive votes,
ballots or consents, shall hear and determine all challenges and
questions in any way arising in connection with the right to vote,
shall count and tabulate all votes or consents, determine the
results, and do such other acts as may be proper to conduct the
election or vote with fairness to all Shareholders. On request of
the chairman of the meeting or of any Shareholder or his proxy, the
Inspectors of Election shall make a report in writing of any
challenge or question or matter determined by them and shall
execute a certificate of any facts found by them.
3.8 Inspection of Books and Records. Shareholders shall
have such rights and procedures of inspection of the books and
records of the Trust as are granted to Shareholders under the
Massachusetts Business Corporation Law.
3.9 Action by Shareholders Without Meeting. Except as
otherwise provided by law, the provisions of these By-Laws relating
to notices and meetings to the contrary notwithstanding, any action
required or permitted to be taken at any meeting of Shareholders
may be taken without a meeting if a majority of the Shareholders
entitled to vote upon the action consent to the action in writing
and such consents are filled with records of the Trust. Such
consent shall be treated for all purposes as a vote taken at a
meeting of Shareholders. No such consent shall be valid for longer
than six months from this date of execution.
ARTICLE IV
Trustees
4.1 Meetings of the Trustees. The Trustee may in their
discretion provide for regular or special meetings of the Trustees
to be held at such time and place as shall be determined from time
to time by the Trustees without further notice.
4.2 Notice of Special Meetings. Written notice of
special meetings of the Trustees, stating the place, date and time
thereof, shall be given to each Trustee personally, by telegram, by
mail or by leaving such notice at his place of business. If
mailed, such notice shall be deemed to be given when deposited in
the United States mail, postage prepaid, directed to the Trustee at
his address as it appears on the records of the Trust.
4.3 Quorum and Adjournment of Meetings. If at any
meeting of the Trustees there be less than a quorum present, the
Trustees present thereat may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a
quorum shall have been obtained.
4.4 Action by Trustees Without Meeting. All written
consents of Trustees evidencing action taken by the Trustees
without a meeting shall set forth such action, shall be signed by
all of the Trustees entitled to vote upon such action and shall be
filed with the minutes of proceedings of the Trustees.
4.5 Expenses and Fees. Each Trustee may be allowed
expenses, if any, for attendance at each regular or special meeting
of the Trustees, and each Trustee shall receive for services
rendered as a Trustee of the Trust such compensation as may be
fixed by the Trustees. Nothing herein contained shall be construed
to preclude any Trustee from serving the Trust in any other
capacity and receiving compensation therefor.
ARTICLE V
Indemnification
5.1 Indemnification of Trustees, Officers, Employees and
Agents.
(a) The Trust shall indemnify any person who was or is
a party or is threatened to be made to any threatened, pending, or
completed investigative (other than an action by or in the right of
the Trust or any of its shareholders) by reason of the fact that he
is or was a Trustee, officer, employee or agent of the Trust. The
indemnification shall be against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement, actually and
reasonably incurred by him in connection with the action, suit or
proceeding, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Trust, and, with respect to any criminal action or proceedings, had
no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests
of the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was
unlawful.
(b) The Trust shall indemnify any person who was or is
a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or on behalf of the Trust or
any of its shareholders to obtain a judgment or decree in its favor
by reason of the fact that he is or was a Trustee, officer,
employee or agent of the Trust. The indemnification shall be
against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection with the defense or
settlement of the action or suit, if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best
interests of the Trust; except that such indemnification shall
preclude payment upon any liability, whether or not there is an
adjudication of liability, arising by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of
duties as described in Sections 17(h) and (i) of the 1940 act.
(c) To the extent that a Trustee, officer, employee or
agent of the Trust has been successful on the merits or otherwise
in defense of any action, suit or proceeding referred to in
subsections (a) or (b) or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses, including
attorneys' fees, actually and reasonably incurred by him in
connection therewith.
(d)(1) Unless a court orders otherwise, any
indemnification under subsections (a) or (b) of this section may be
made by the Trust only as authorized in the specific case after a
determination that indemnification of the Trustee, officer,
employee or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in subsections (a) or
(b).
(2) The determination shall be made:
(i) by the Trustees, by a majority vote of a quorum
which consists of Trustees who were not parties to the action,
suit or proceeding; or
(ii) if the required quorum is not obtainable, or
if a quorum of disinterested Trustees so directs, by
independent legal counsel in a written opinion; or
(iii) by the Shareholders.
(3) Notwithstanding the provision of this Section 5.1,
no person shall be entitled to indemnification for any liability,
whether or not there is an adjudication of liability, arising by
reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of duties as described in Sections 17(h) and (i)
of the 1940 Act ("Disabling Conduct"). A person shall be deemed
not liable by reason of Disabling Conduct if, either:
(i) a final decision on the merits is made by a
court or other body before whom the proceeding was brought
that the person to indemnified ("Indemnitee") was not liable
by reason of Disabling Conduct; or
(ii) in the absence of such a decision, a
reasonable determination, based upon a review of the facts,
that the Indemnitee was not liable by reason of Disabling
Conduct, is made by either-
(A) a majority of a quorum of Trustees who are
neither "interested persons" of the Trust, as defined in
Section 2(a)(19) of the 1940 Act, nor parties to the
action, suit or proceeding; or
(B) an independent legal counsel in a written
opinion.
(e) Expenses, including attorneys' fees, incurred
by a Trustee, officer, employee or agent of the Trust in defending
a civil or criminal action, suit or proceeding may be paid by the
Trust in advance of the final disposition thereof if:
(1) authorized in the specific case by the
Trustees; and
(2) the Trust receives an undertaking by or on
behalf of the Trustee, officer, employee or agent of the Trust to
repay the advance if it is not ultimately determined that such
person is entitled to be indemnified by the Trust; and
(3) either,
(i) such person provides a security for his
undertaking; or
(ii) the Trust is insured against losses by reason
of any lawful advances; or
(iii) a determination, based on a review of readily
available facts, that there is reason to believe that such
person ultimately will be found entitled to indemnification,
is made by either
(A) A majority of a quorum which consists of
Trustees who are neither "interested persons" of the
Trust, as defined in Section 2(a)(19) of the 1940 Act,
nor parties to the action, suit or proceeding; or
(B) an independent legal counsel in a written
opinion.
(f) The indemnification provided by this Section shall
not be deemed exclusive of any other rights to which a person may
be entitled under any by-law, agreement, vote of Shareholders or
disinterested Trustees or otherwise, both as to action in his
official capacity and as to action in another capacity while
holding office, and shall continue as to a person who has ceased to
be a Trustee, officer, employee or agent and insure to the benefit
of the heirs, executors and administrators of such person; provided
that no person may satisfy any right of indemnity or reimbursement
granted herein or to which he may be otherwise entitled except out
of the property of the Trust, and no Shareholder, as such, shall be
personally liable with respect to any claim for indemnity or
reimbursement or otherwise.
(g) The Trust may purchase and maintain insurance on
behalf of any person who is or was a Trustee, officer, employee or
agent of the Trust, against any liability asserted against him and
incurred by him in any such capacity, or arising our of his status
as such. However, in no event will the Trust pay that portion of
insurance premiums, if any, attributable to coverage which would
indemnify any officer or Trustee against liability for Disabling
Conduct.
(h) Nothing contained in this Section shall be construed
to protect any Trustee or officer of the Trust against any
liability to the Trust or to its security holders to which he would
otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of his office.
ARTICLE VI
Committees
6.1 Executive and Other Committees. The Trustees, by
resolution adopted by a majority of the Trustees, may designate an
Executive Committee and/or other committees, each committee to
consist of two (2) or more of the Trustees of the Trust and may
delegate to such committees, in the intervals between meetings of
the Trustees, any or all of the powers of the Trustees in the
management of the business and affairs of the Trust, except those
powers which by law, the Declaration of these By-Laws they are
prohibited from delegating. In the absence of any member of any
such committee, the members thereof present at any meeting, whether
or not they constitute a quorum, may appoint a Trustee to act in
place of such absent member. A the Executive Committee and any
such committee shall fix its own rules or procedures. Each such
committee shall keep a record of its proceedings. All actions of
the Executive Committee shall be reported to the Trustees at the
meeting thereof next succeeding to the taking of such action.
6.2 Advisory Committee. The Trustees may appoint an
advisory committee which shall be composed of persons who do not
serve the Trust in any other capacity and which shall have advisory
functions with respect to the investments of the Trust but which
shall have no power to determine that any security or other
investment shall be purchased, sold or otherwise disposed of by the
Trust. The number of persons constituting any such advisory
committee shall be determined from time to time by the Trustees.
The members of any such advisory committee may receive compensation
for their services and may be allowed such fees and expenses for
the attendance at meetings as the Trustees may from time to time
determine to be appropriate.
6.3 Committee Action Without Meeting. All written
consents of the committee members evidencing action taken by such
committee without a meeting shall set forth such action, shall be
signed by the required number of committee members and shall be
filed with the records of the proceedings of such committee.
ARTICLE VII
Officers
7.1 Executive Officers. In addition to the officers
required or permitted by the Declaration, the Trustees may also
elect one or more Vice Presidents, Assistant Vice Presidents,
Assistant Secretaries and Assistant Treasurers and may elect, or
may delegate to the President the power to appoint, such other
officers and agents as the Trustees shall at any time or from time
to time deem advisable. Two or more offices, except those of
President and Vice President, may be held by the same person, but
no officer shall execute, acknowledge or verify any instrument in
more than one capacity. The executive officers of the Trust shall
be elected annually by the Trustees and each executive officer so
elected shall hold office until his successor is elected and is
qualified.
7.2 Execution of Instruments and Documents and Signing
of Checks and Other Obligations and Transfers. All instruments,
documents and other papers shall be executed in the name and on
behalf of the Trust and all checks, notes, drafts and other
obligations for the payment of money by the Trust shall be signed,
and all transfers of securities standing in the name of the Trust
shall be executed, by the President, any Vice President or the
Treasurer, or by any one or more officers or agents of the Trust as
may be designated by vote of the Trustees.
7.3 Term and Removal and Vacancies. Each Officer of the
Trust shall hold office until his successor is elected and is
qualified. Any officer or agent of the Trust may be removed by the
Trustees whenever, in their judgment, the best interests of the
Trust will be served thereby, but such removal shall be without
prejudice to the contractual rights, if any, of the person so
removed.
7.4 Compensation of Officers. The compensation of
officers and agents of the Trust shall be fixed by the Trustees, or
by the President to the extent provided by the Trustees with
respect to officers appointed by the President.
7.5 Power and Duties. All officers and agents of the
Trust, as between themselves and the Trust, shall have such
authority and perform such duties in the management of the Trust as
may be provided in or pursuant to these By-Laws, or to the extent
not so provided, as may be prescribed by the Trustees; provided,
that no rights of any third party shall be affected or impaired by
any such By-Laws or resolution of the Trustees unless he has
knowledge thereof.
7.6 The Chairman. The Chairman, if any, or in his
absence the President, shall preside at all meetings of the
Shareholders and of the Trustees, shall be a signatory on all
Annual and Semi-Annual Reports as may be sent to Shareholders, and
he shall perform such other duties as the Trustees may from time to
time prescribe.
7.7 The President. The President shall be the chief
executive officer of the Trust, he shall have general and active
management of the business of the Trust, shall see that all orders
and resolutions of the Trustees are carried into effect, and, in
connection therewith, shall be authorized to delegate to one or
more Vice Presidents such of his powers and duties at such times
and in such a manner as he may deem advisable. Subject to the
control of the Trustees and to the control of any committees of the
Trustees, within their respective spheres, as provided by the
Trustees, he shall at all times exercise a general supervision and
direction over the affairs of the Trust. He shall have the power
to employ attorneys and counsel for the Trust and to employ such
subordinate officers, agents, clerks and employees as he may find
necessary to transact the business of the Trust. He shall also
have the power to grant, issue, execute or sign such powers of
attorney, proxies or other documents as may be deemed advisable or
necessary in furtherance of the interests of the Trust. The
President shall have such other powers and duties, as from time to
time may be conferred upon or assigned to him by the Trustees.
7.8 The Vice Presidents. The Vice Presidents shall be
of such numbers and shall have such titles as may be determined
from time to time by the Trustees. The Vice President, or, if
there be more than one, the Vice Presidents in the order of their
seniority as may be determined from time to time by the Trustees or
the President, shall, in the absence or disability of the
President, exercise the powers and perform the duties of the
President; and he or they shall perform such other duties as the
Trustees or the President may from time to time prescribe.
7.9 The Assistant Vice Presidents. The Assistant Vice
President, or, if there be more than one, the Assistant Vice
Presidents, shall perform such duties and have such powers as may
be assigned them from time to time by the Trustees or the
President.
7.10 The Secretary. The Secretary shall attend all
meetings of the Trustees and all meetings of the Shareholders and
record all the proceedings of the meetings of the Shareholders and
of the Trustees in a book to be kept for that purpose, and shall
perform like duties for the standing committees when required. He
shall give, or cause to be given, notice of all meetings of the
Shareholders and special meetings of the Trustees, or the
President, may from time to time prescribe. He shall keep in safe
custody the seal of the Trust and affix or cause the same to be
affixed to any instrument requiring it, and, when so affixed, it
shall be attested by his signature or by the signature of an
Assistant Secretary.
7.11 The Assistant Secretaries. The Assistant Secretary,
or, if there shall be more than one, the Assistant Secretaries, in
the order determined by the Trustees or the President, shall, in
the absence or disability of the Secretary, perform duties and
exercise the powers of the Secretary and shall perform such other
duties and have such other powers as the Trustees, or the
President, may from time to time prescribe.
7.12 The Treasurer. The Treasurer shall be the chief
financial officer of the Trust. He shall keep or cause to be kept
full and accurate accounts or receipts and disbursements in books
belonging to the Trust, and he shall render to the Trustees and the
President whenever any of them require it, an account of his
transactions as Treasurer and of the financial condition of the
Trust; and he shall perform such other duties as the Trustee, or
the President, may from time to time prescribe.
7.13 The Assistant Treasurers. The Assistant Treasurer,
or, if there shall be more than one, the Assistant Treasurers in
the order determined by the Trustees or the President, shall, in
the absence or disability of the Treasurer, perform the duties and
exercise the powers of the Treasurer and shall perform such other
duties and have such other powers as the Trustee, or the President,
may from time to time prescribe.
ARTICLE VIII
Custodian
The custodian of the Trust shall be appointed, among
other things:
(1) to receive and hold the securities owned by the
Trust and deliver the same upon written order;
(2) to receive and receipt for any moneys due to
the Trust and deposit the same in its own banking department
or elsewhere as the Trustees may direct;
(3) to disburse such funds upon orders or vouchers;
all upon such basis of compensation as may be agreed upon between
the Trustees and the custodian. In addition the custodian may be
authorized to keep the books and accounts of the Trust and furnish
clerical and accounting services and to compute the net income of
the Trust and the net asset value of the Trust and its shares. If
so directed by a Majority Shareholder Vote, the custodian shall
deliver and pay over all property of the Trust held by it as
specified in such vote.
The Trustees may also authorize the custodian to employ
one or more sub-custodians from time to time to perform such of the
acts and services of the custodian and upon such terms and
conditions, as may be agreed upon between the custodian and such
sub-custodian and approved by the Trustees.
ARTICLE IX
Miscellaneous
9.1 Location of Books and Records. The books and
records of the Trust may be kept outside the Commonwealth of
Massachusetts at such place or places as the Trustees may from time
to time determine, except as otherwise required by law.
9.2 Record Date. The Trustees may fix in advance a date
as the record date for the purpose of determining Shareholders
entitled to notice of, or to vote at, any meeting of Shareholders,
or Shareholders entitled to receive payment of any dividend or the
allotment of any rights, or in order to make a determination of
Shareholders for any other proper purpose. Such date, in any case
shall be not more than sixty (60) days, and in case of a meeting of
Shareholders not less than then (10) days prior to the date on
which particular action requiring such determination of
Shareholders is to be taken. In lieu of fixing a record date, the
Trustees may provide that the transfer books shall be closed for a
stated period but not to exceed, in any case, twenty (20) days. If
the transfer books are closed for the purpose of determining
Shareholders entitled to notice of a vote at a meeting of
Shareholders, such books shall be closed for at least ten (10) days
immediately preceding such meetings.
9.3 Seal. The Trustees shall adopt a seal, which shall
be in such form and shall have such inscription thereon as the
Trustees may from time to time provide. The seal of the Trust may
be affixed to any document, and the seal and its attestation may be
lithographed, engraved or otherwise printed on any document with
the same force and effect as if it had been imprinted and attested
manually in the same manner and with the same effect as if done by
a Massachusetts business corporation under Massachusetts law.
9.4 Fiscal Year. The fiscal year of the Trust shall end
on such date as the Trustees may by resolution specify, and the
Trustees may be resolution change such date for future fiscal years
at any time and from time to time.
9.5 Order for Payment of Money. All orders or
instructions for the payment of money of the Trust, and all notes
or other evidences of indebtedness issued in the name of the Trust,
shall be signed by such officer or officers or such other person or
persons as the Trustees may from time to time designate, or as may
be specified in or pursuant to the agreement between the Trust and
the bank or trust company appointed as Custodian of the securities
and funds of the Trust.
ARTICLE X
Compliance with Federal and State Regulations
The Trustees are hereby empowered to take such action as
they may deem to be necessary, desirable or appropriate so that the
Trust is or shall be in compliance with any federal or state
statute, rule or regulation with which compliance by the Trust is
required.
ARTICLE XI
Amendments
These By-Laws may be amended, altered, or repealed, or
new By-Laws may be adopted, (a) by a Majority Shareholder Vote, or
(b) by the Trustees; provided, however, that no such amendment ,
adoption or repeal requires, pursuant to law, the Declaration or
these By-Laws, a vote of the Shareholders. The Trustees shall in
no event adopt By-Laws which are in conflict with the Declaration,
and any apparent inconsistency shall be construed in favor of the
related provision in the Declaration.
ARTICLE XII
Declaration of Trust
The Declaration establishing Quest for Value U.S.
Government Income Trust, a copy of which, together with all
amendments hereto, is on file in the office of the Secretary of the
Commonwealth of Massachusetts, provides that the name Quest for
Value U.S. Government Income Trust refers to the Trustees under the
Declaration collectively as Trustees, but not as individuals or
personally; and no Trustee, Shareholder, Officer, employee or agent
of Quest for Value U.S. Government Income Trust shall be held to
any personal liability, nor shall resort be had to their private
property for the satisfaction of any obligation or claim or
otherwise, in connection with the affairs of said Quest for Value
U.S. Government Income Trust, but the Trust Property only shall be
liable.
orgzn\q4serby.law
Exhibit 24(b)(5)(a)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made the 22nd day of November, 1995, by and between
OPPENHEIMER QUEST FOR VALUE FUNDS, a Massachusetts business trust
(hereinafter referred to as the "Company"), and OPPENHEIMER
MANAGEMENT CORPORATION (hereinafter referred to as "OMC").
WHEREAS, the Company is an open-end, diversified management
investment company registered as such with the Securities and
Exchange Commission (the "Commission") pursuant to the Investment
Company Act of 1940 (the "Investment Company Act"), and OMC is an
investment adviser registered as such with the Commission under the
Investment Advisers Act of 1940;
WHEREAS, each of Growth and Income Value Fund, Quest Small Cap
Value Fund, Quest Opportunity Value Fund and Quest Officers Value
Fund is a separately capitalized Series (the "Series") of the
Shares of beneficial interest to be issued by the Company
("Shares") pursuant to the Company's registration statement;
WHEREAS, the Company desires that OMC shall act as its
investment adviser with respect to each Series pursuant to this
Agreement;
NOW, THEREFORE, in consideration of the mutual promises and
covenants hereinafter set forth, it is agreed by and between the
parties, as follows:
1. General Provisions:
The Company hereby employs OMC and OMC hereby undertakes
to act as the investment adviser of the Company in connection with,
and for the benefit of, each Series(including any Series hereafter
created) and to perform for the Company such other duties and
functions in connection with each Series for the period and on such
terms as set forth in this Agreement. OMC shall, in all matters,
give to the Company and its Board of Trustees (the "Trustees") the
benefit of its best judgement, effort, advice and recommendations
and shall, at all times conform to, and use its best efforts to
enable the Company to conform to (i) the provisions of the
Investment Company Act and any rules or regulations thereunder;
(ii) any other applicable provisions of state or Federal law; (iii)
the provisions of the Declaration of Trust and By-Laws of the
Company as amended from time to time; (iv) policies and
determinations of the Trustees; (v) the fundamental policies and
investment restrictions of each Series as reflected in the
registration statement of the Company under the Investment Company
Act or as such policies may, from time to time, be amended and (vi)
the Prospectus and Statement of Additional Information of each
Series in effect from time to time. The appropriate officers and
employees of OMC shall be available upon reasonable notice for
consultation with any of the Trustees and officers of the Company
with respect to any matters dealing with the business and affairs
of the Company including the valuation of portfolio securities of
the Company which are either not registered for public sale or not
traded on any securities market.
2. Investment Management:
(a) OMC shall, subject to the direction and control by
the Trustees, (i) regularly provide investment advise and
recommendations to the Company with respect to the investments and
other investments for each Series; (ii) supervise continuously the
investment program of each Series of the Company and the
composition of its portfolio and determine what securities shall be
purchased or sold by; and(iii) arrange, subject to the provisions
of paragraph 7 hereof, for the purchase of securities and other
investments for each Series of the Company and the sale of
securities and other investments held in the portfolio of each
Series.
(b) Provided that the Company shall not be required to
pay any compensation for services under this Agreement other than
as provided by the terms of the Agreement and subject to the
provisions of paragraph 7 hereof, OMC may obtain investment
information, research or assistance from any other person, firm or
corporation to supplement, update or otherwise improve its
investment management services including entering into sub-advisory
agreements with other affiliated or unaffiliated registered
investment advisors to obtain specialized services.
(c) Provided that nothing herein shall be deemed to
protect OMC from willful misfeasance, bad faith or gross negligence
in the performance of its duties, or reckless disregard of its
obligations and duties under this Agreement, OMC shall not be
liable for any loss sustained by reason of good faith errors or
omissions in connection with any matters to which this Agreement
relates.
(d) Nothing in this Agreement shall prevent OMC or any
entity controlling, controlled by or under common control with OMC
or any officer thereof from acting as investment adviser for any
other person, firm or corporation or in any way limit or restrict
OMC or any of its directors, officers, stockholders or employees
from buying, selling or trading any securities for its or their own
account or for the account of others for whom it or they may be
acting, provided that such activities will not adversely affect or
otherwise impair the performance by OMC of its duties and
obligations under this Agreement.
3. Other Duties of OMC:
OMC shall, at its own expense, provide and supervise the
activities of all administrative and clerical personnel as shall be
required to provide effective corporate administration for the
Company, including the compilation and maintenance of such records
with respect to its operations as may reasonably be required; the
preparation and filing of such reports with respect thereto as
shall be required by the Commission; composition of periodic
reports with respect to operations of each Series of the Company
for its shareholders; composition of proxy materials for meetings
of the Company's shareholders; and the composition of such
registration statements as may be required by Federal and state
securities laws for continuous public sale of Shares of each Series
of the Company. OMC shall, at its own cost and expense, also
provide the Company with adequate office space, facilities and
equipment. OMC shall, at its own expenses, provide such officers
for the Company as the Board of Trustees may request.
4. Allocation of Expenses:
All other costs and expenses of each Series of the
Company not expressly assumed by OMC under this Agreement, or to be
paid by the Distributor of the Shares of each Series of the
Company, shall be paid by the Company on behalf of the appropriate
Series, including, but not limited to: (i) interest, taxes and
governmental fees; (ii) brokerage commissions and other expenses
incurred in acquiring or disposing of the portfolio securities and
other investments of each Series; (iii) insurance premiums for
fidelity and other coverage requisite to its operations; (iv)
compensation and expenses of its Trustees other than those
affiliated with OMC; (v) legal and audit expenses; (vi) custodian
and transfer agent fees and expenses; (vii) expenses incident to
the redemption of its Shares; (viii) expenses incident to the
issuance of its Shares against payment therefor by or on behalf of
the subscribers thereto; (ix) fees and expenses, other than as
hereinabove provided, incident to the registration under Federal
and state securities laws of Shares of the Company and Series for
public sale; (x) expenses of printing and mailing reports, notices
and proxy materials to shareholders of the Company and each Series;
(xi) except as noted above, all other expenses incidental to
holding meetings of the Company's shareholders; and (xii) such
extraordinary non-recurring expenses as may arise, including
litigation, affecting the Company or any Series thereof and any
legal obligation which the Company, or any Series of the Company,
may have to indemnify its officers and Trustees with respect
thereto. Any officers or employees of OMC or any entity
controlling, controlled by, or under common control with OMC who
also serve as officers, Trustees or employees of the Company shall
not receive any compensation from the Company or any Series thereof
for their services.
5. Compensation of OMC:
The Company agrees to pay OMC and OMC agrees to accept as
full compensation for the performance of all functions and duties
on its part to be performed pursuant to the provisions hereof, a
fee computed on the total net asset value of each Series of the
Company as of the close of each business day and payable monthly at
the annual rate for each Series set forth on Schedule A hereto.
6. Use of Name "Oppenheimer" or "Quest For Value":
OMC hereby grants to the Company a royalty-free, non-
exclusive license to use the name "Oppenheimer" or "Quest For
Value" in the name of the Company for the duration of this
Agreement and any extensions or renewals thereof. To the extent
necessary to protect OMC's rights to the name "Oppenheimer" or
"Quest For Value" under applicable law, such license shall allow
OMC to inspect and, subject to control by the Company's Board,
control the nature and quality of services offered by the Company
under such name and may, upon termination of this Agreement, be
terminated by OMC, in which event the Company shall promptly take
whatever action may be necessary to change its name and discontinue
any further use of the name "Oppenheimer" or "Quest For Value" in
the name of the Company or otherwise. The name "Oppenheimer" and
"Quest For Value" may be used or licensed by OMC in connection with
any of its activities, or licensed by OMC to any other party.
7. Portfolio Transactions and Brokerage:
(a) OMC (and any Sub Advisor) is authorized, in
arranging the purchase and sale of the portfolio securities of each
Series of the Company to employ or deal with such members of
securities or commodities exchanges, brokers or dealers
(hereinafter "broker-dealers"), including "affiliated" broker-
dealers (as that term is defined in the Investment Company Act), as
may, in its best judgment, implement the policy of the Company to
obtain, at reasonable expense, the "best execution" (prompt and
reliable execution at the most favorable security price obtainable)
of the portfolio transactions of each Series of the Company as well
as to obtain, consistent with the provisions of subparagraph (c) of
this paragraph 7, the benefit of such investment information or
research as will be of significant assistance to the performance by
OMC of its investment management functions.
(b) OMC (and any Sub Advisor) shall select broker-
dealers to effect the portfolio transactions of each Series of the
Company on the basis of its estimate of their ability to obtain
best execution of particular and related portfolio transactions.
The abilities of a broker-dealer to obtain best execution of
particular portfolio transaction(s) will be judged by OMC (or any
Sub Advisor) on the basis of all relevant factors and
considerations including, insofar as feasible, the execution
capabilities required by the transaction or transactions; the
ability and willingness of the broker-dealer to facilitate the
portfolio transactions of each Series of the Company by
participating therein for its own account; the importance to the
Company of speed, efficiency or confidentiality; the broker-
dealer's apparent familiarity with sources from or to whom
particular securities might be purchased or sold; as well as any
other matters relevant to the selection of a broker-dealer for
particular and related transactions of each Series of the Company.
(c) OMC (and any Sub Advisor) shall have discretion, in
the interest of the Company and each Series, to allocate brokerage
on the portfolio transactions of each Series of the Company to
broker-dealers, other than an affiliated broker-dealers, qualified
to obtain best execution of such transactions who provide brokerage
and/or research services (as such services are defined in Section
28(e)(3) of the Securities Exchange Act of 1934) for each Series of
the Company and/or other accounts for which OMC or its affiliates
(or any Sub Advisor) exercise "investment discretion" (as that term
is defined in Section 3(a)(35) of the Securities Exchange Act of
1934) and to cause the Company or a Series to pay such broker-
dealers a commission for effecting a portfolio transaction for the
Company or a Series that is in excess of the amount of commission
another broker-dealer adequately qualified to effect such
transaction would have charged for effecting that transaction, if
OMC (or any Sub Advisor) determines, in good faith, that such
commission is reasonable in relation to the value of the brokerage
and/or research services provided by such broker-dealer viewed in
terms of either that particular transaction or the overall
responsibilities of OMC or its affiliates (or any Sub Advisor)
with respect to accounts as to which they exercise investment
discretion. In reaching such determination, OMC (or any Sub
Advisor) will not be required to place or attempt to place a
specific dollar value on the brokerage and/or research services
provided or being provided by such broker-dealer. In demonstrating
that such determinations were made in good faith, OMC (and any Sub
Advisor) shall be prepared to show that all commissions were
allocated for purposes contemplated by the Agreement and that the
total commissions paid by the Company and each Series over a
representative period selected by the Company's Trustees were
reasonable in relation to the benefits to the Company and each
Series.
(d) OMC (or any Sub Advisor) shall have no duty or
obligation to seek advance competitive bidding for the most
favorable commission rate applicable to any particular portfolio
transactions or to select any broker-dealer on the basis of its
purported or "posted" commission rate but will, to the best of its
ability, endeavor to be aware of the current level of the charges
of eligible broker-dealers and to minimize the expense incurred by
the Company and each Series for effecting its portfolio
transactions to the extent consistent with the interests and
policies of the Company and each Series as established by the
determinations of the Board of Trustees of the Company and the
provisions of this paragraph 7.
(e) The Company recognizes that an affiliated broker-
dealer: (i) may act as one of the Company's regular brokers for the
Company or a Series thereof so long as it is lawful for it so to
act; (ii) may be a major recipient of brokerage commissions paid by
the Company or a Series thereof; and (iii) may effect portfolio
transactions for the Company or a Series thereof only if the
commissions, fees or other renumeration received or to be received
by it are determined in accordance with procedures contemplated by
any rule, regulation or order adopted under the Investment Company
Act to be within the permissible level of such commissions.
(f) Subject to the foregoing provisions of this
paragraph 7, OMC (and any Sub Advisor) may also consider sales of
Shares of the Company, each Series thereof and the other funds
advised by OMC and its affiliates as a factor in the selection of
broker-dealers for its portfolio transactions.
8. Duration:
This Agreement will take effect on the date first set
forth above. Unless earlier terminated pursuant to paragraph 10
hereof, this Agreement shall remain in effect from year to year,
so long as such continuance shall be approved at least annually by
the Company's Board of Trustees, including the vote of the majority
of the Trustees of the Company who are not parties to this
Agreement or "interested persons" (as defined in the Investment
Company Act) of any such party, cast in person at a meeting called
for the purpose of voting on such approval, or by the holders of a
"majority" (as defined in the Investment Company Act) of the
outstanding voting securities of the Company, or each Series
thereof, and by such a vote of the Company's Board of Trustees.
9. Disclaimer of Shareholder or Trustee Liability:
OMC understands and agrees that the obligations of the
Company under this Agreement are not binding upon any shareholder
or Trustee of the Company personally, but bind only the Company and
the Company's property; OMC represents that it has notice of the
provisions of the Declaration of Trust of the Company disclaiming
shareholder or Trustee liability for acts or obligations of the
Company.
10. Termination.
This Agreement may be terminated (i) by OMC at any time
without penalty upon sixty days' written notice to the Company
(which notice may be waived by the Company); or (ii) by the Company
at any time without penalty upon sixty days' written notice to OMC
(which notice may be waived by OMC) provided that such termination
by the Company shall be directed or approved by the vote of a
majority of all of the Trustees of the Company then in office or by
the vote of the holders of a "majority" of the outstanding voting
securities of the Company (as defined in the Investment Company
Act).
11. Assignment or Amendment:
This Agreement may not be amended, or the rights of OMC
hereunder sold, transferred, pledged or otherwise in any manner
encumbered without the affirmative vote or written consent of the
holders of the "majority" of the outstanding voting securities of
the Company. This Agreement shall automatically and immediately
terminate in the event of its "assignment," as defined in the
Investment Company Act.
12. Definitions:
The terms and provisions of the Agreement shall be
interpreted and defined in a manner consistent with the provisions
and definitions contained in the Investment Company Act.
OPPENHEIMER QUEST FOR VALUE FUNDS
Attest: /s/ Robert G. Zack By: /s/ Bridget A. Macaskill
------------------ ------------------------
Title: President
OPPENHEIMER MANAGEMENT
CORPORATION
Attest: /s/ Katherine P. Feld By: /s/ Andrew J. Donohue
--------------------- -----------------------
Katherine P. Feld Andrew J. Donohue
Secretary Executive Vice President
<PAGE>
<PAGE>
Schedule A
To
Investment Advisory Agreement
Between
Oppenheimer Quest For Value Fu nds
and
Oppenheimer Management Corpora tion
<TABLE>
<CAPTION>
Annual Fee as a Percentage of Daily
Name of Series Total Net Assets
<S> <C>
Growth and Income Value Fund 0.85% of all net assets
Officers Value Fund 1.00% of all net assets
Small Cap Value Fund 1.00 of first $400 million of net assets
0.90% of next $400 million of net assets
0.85% of net assets over $800 million
Opportunity Value Fund 1.00 of first $400 million of net assets
0.90% of next $400 million of net assets
0.85% of net assets of $800 million
</TABLE>
advisory\q4seradv
Exhibit 24(b)(5)(b)(2)
SUBADVISORY AGREEMENT
THIS AGREEMENT is made by and between Oppenheimer Management
Corporation, a Colorado corporation (the "Adviser"), and OpCap
Advisors, a Delaware general partnership (the "Subadviser"), as of
the date set forth below.
RECITAL
WHEREAS, Oppenheimer Quest For Value Funds (the "Company") is
registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end, management investment company;
WHEREAS, the Adviser is registered under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), as an
investment adviser and engages in the business of acting as an
investment adviser;
WHEREAS, the Subadviser is registered under the Advisers Act
as an investment adviser and engages in the business of acting as
an investment adviser;
WHEREAS, the Company's Declaration of Trust authorizes the
Board of Trustees of the Company to classify or reclassify
authorized but unissued shares of the Company into series of shares
representing interests in various investment portfolios;
WHEREAS, pursuant to such authority, the Company has
established the Growth and Income Value Fund (the "Fund");
WHEREAS, the Adviser has entered into an Investment Advisory
Agreement as of the date hereof with the Company (the "Investment
Advisory Agreement"), pursuant to which the Adviser shall act as
investment adviser with respect to the Fund; and
WHEREAS, pursuant to Paragraph 2 of the Investment Advisory
Agreement, the Adviser wishes to retain the Subadviser for purposes
of rendering investment advisory services to the Adviser in
connection with the Fund upon the terms and conditions hereinafter
set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of
which are hereby acknowledged, the parties hereto agree as follows:
I. Appointment and Obligations of the Adviser.
The Adviser hereby appoints the Subadviser to render, to the
Adviser with respect to the Fund, investment research and advisory
services as set forth below in Section II, under the supervision of
the Adviser and subject to the approval and direction of the
Company's Board of Trustees (the "Board"), and the Subadviser
hereby accepts such appointment, all subject to the terms and
conditions contained herein. The Subadviser shall, for all
purposes herein, be deemed
an independent contractor and shall not have, unless otherwise
expressly provided or authorized, any authority to act for or
represent the Company or the Fund in any way or otherwise to serve
as or be deemed an agent of the Company or the Fund.
II. Duties of the Subadviser and the Adviser.
A. Duties of the Subadviser.
The Subadviser shall regularly provide investment advice with
respect to the Fund and shall, subject to the terms of this
Agreement, continuously supervise the investment and reinvestment
of cash, securities and instruments or other property comprising
the assets of the Fund, and in furtherance thereof, the
Subadviser's duties shall include:
1. Obtaining and evaluating pertinent information about
significant developments and economic, statistical and
financial data, domestic, foreign or otherwise, whether
affecting the economy generally or the Fund, and whether
concerning the individual issuers whose securities are
included in the Fund or the activities in which such
issuers engage, or with respect to securities which the
Subadviser considers desirable for inclusion in the
Fund's investment portfolio;
2. Determining which securities shall be purchased,
sold or exchanged by the Fund or otherwise represented in
the Fund's investment portfolio and regularly reporting
thereon to the Adviser and, at the request of the
Adviser, to the Board;
3. Formulating and implementing continuing programs for
the purchases and sales of the securities of such issuers
and regularly reporting thereon to the Adviser and, at
the request of the Adviser, to the Board; and
4. Taking, on behalf of the Fund, all actions that
appear to the Subadviser necessary to carry into effect
such investment program, including the placing of
purchase and sale orders, and making appropriate reports
thereon to the Adviser and the Board.
B. Duties of the Adviser.
The Adviser shall retain responsibility for, among other
things, providing the following advice and services with respect to
the Fund:
1. Without limiting the obligation of the Subadviser
to so comply, the Adviser shall monitor the
investment program maintained by the Subadviser for
the Fund to ensure that the Fund's assets are
invested in compliance with this Agreement and the
Fund's Registration Statement, as currently in
effect from time to time; and
2. The Adviser shall oversee matters relating to Fund
promotion, including, but not limited to, marketing
materials, and the Subadviser's reports to the
Board.
III. Representations, Warranties and Covenants.
A. Representations, Warranties and Covenants of the
Subadviser.
1. Organization. The Subadviser is now, and will
continue to be, a general partnership duly formed and
validly existing under the laws of its jurisdiction of
formation, fully authorized to enter into this Agreement
and carry out its duties and obligations hereunder.
2. Registration. The Subadviser is registered as an
investment adviser with the Securities and Exchange
Commission (the "SEC") under the Advisers Act, and is
registered or licensed as an investment adviser under the
laws of all jurisdictions in which its activities require
it to be so registered or licensed, except where the
failure to be so licensed would not have a material
adverse effect on the Subadviser. The Subadviser shall
maintain such registration or license in effect at all
times during the term of this Agreement.
3. Best Efforts. The Subadviser at all times shall
provide its best judgment and effort to the Adviser and
the Fund in carrying out its obligations hereunder.
4. Other Covenants. The Subadviser further agrees
that:
a. it will use the same skill and care in
providing such services as it uses in
providing services to other accounts for which
it has investment management responsibilities;
b. it will not make loans to any person to
purchase or carry units of beneficial interest
in the Fund or make loans to the Fund;
c. it will report regularly to the Fund and to
the Adviser and will make appropriate persons
available for the purpose of reviewing with
representatives of the Adviser on a regular
basis the management of the Fund, including,
without limitation, review of the general
investment strategy of the Fund, economic
considerations and general conditions
affecting the marketplace;
d. as required by applicable laws and
regulations, it will maintain books and
records with respect to the Fund's securities
transactions and it will furnish to the
Adviser and to the Board such periodic and
special reports as the Adviser or the Board
may reasonably request;
e. it will treat confidentially and as
proprietary information of the Fund all
records and other information relative to the
Fund, and will not use records and information
for any purpose other than performance of its
responsibilities and duties hereunder, except
after prior notification to and approval in
writing by the Fund or when so requested by
the Fund or required by law or regulation;
f. it will, on a continuing basis and at its own
expense, (1) provide the distributor of the
Fund (the "Distributor") with assistance in
the distribution and marketing of the Fund in
such amount and form as the Adviser may
reasonably request from time to time, and (2)
use its best efforts to cause the portfolio
manager or other person who manages or is
responsible for overseeing the management of
the Fund's portfolio (the "Portfolio Manager")
to provide marketing and distribution
assistance to the Distributor, including,
without limitation, conference calls, meetings
and road trips, provided that each Portfolio
Manager shall not be required to devote more
than 10% of his or her time to such marketing
and distribution activities;
g. it will use its reasonable best efforts (i) to
retain the services of the Portfolio Manager
who manages the portfolio of the Fund, from
time to time and (ii) to promptly obtain the
services of a Portfolio Manager acceptable to
the Adviser if the services of the Portfolio
Manager are no longer available to the
Subadviser;
h. it will, from time to time, assure that each
Portfolio Manager is acceptable to the
Adviser;
i. it will obtain the written approval of the
Adviser prior to designating a new Portfolio
Manager; provided, however, that, if the
services of a Portfolio Manager are no longer
available to the Subadviser due to
circumstances beyond the reasonable control of
the Subadviser (e.g., voluntary resignation,
death or disability), the Subadviser may
designate an interim Portfolio Manager who (a)
shall be reasonably acceptable to the Adviser
and (b) shall function for a reasonable period
of time until the Subadviser designates an
acceptable permanent replacement; and
j. it will promptly notify the Adviser of any
impending change in Portfolio Manager,
portfolio management or any other material
matter that may require disclosure to the
Board, shareholders of the Fund or dealers.
B. Representations, Warranties and Covenants of the Adviser.
1. Organization. The Adviser is now, and will continue
to be, duly organized and in good standing under the laws
of its state of incorporation, fully authorized to enter
into this Agreement and carry out its duties and
obligations hereunder.
2. Registration. The Adviser is registered as an
investment adviser with the SEC under the Advisers Act,
and is registered or licensed as an investment adviser
under the laws of all jurisdictions in which its
activities require it to be so registered or licensed.
The Adviser shall maintain such registration or license
in effect at all times during the term of this Agreement.
3. Best Efforts. The Adviser at all times shall
provide its best judgment and effort to the Fund in
carrying out its obligations hereunder.
IV. Compliance with Applicable Requirements.
In carrying out its obligations under this Agreement, the
Subadviser shall at all times conform to:
A. all applicable provisions of the 1940 Act and any rules
and regulations adopted thereunder;
B. the provisions of the registration statement of the
Company, as the same may be amended from time to time,
under the Securities Act of 1933, as amended, and the
1940 Act;
C. the provisions of the Company's Declaration of Trust or
other governing document, as amended from time to time;
D. the provisions of the By-laws of the Company, as amended
from time to time;
E. any other applicable provisions of state or federal law;
and
F. guidelines, investment restrictions, policies, procedures
or instructions adopted or issued by the Company, the
Fund or the Adviser from time to time.
The Adviser shall promptly notify the Subadviser of any
changes or amendments to the provisions of B., C., D. and F. above
when such changes or amendments relate to the obligations of the
Subadviser.
V. Control by the Board.
Any investment program undertaken by the Subadviser pursuant
to this Agreement, as well as any other activities undertaken by
the Subadviser with respect to the Fund, shall at all times be
subject to any directives of the Adviser and the Board.
VI. Books and Records.
The Subadviser agrees that all records which it maintains for
the Fund on behalf of the Adviser are the property of the Fund and
further agrees to surrender promptly to the Fund or to the Adviser
any of such records upon request. The Subadviser further agrees to
preserve for the periods prescribed by applicable laws, rules and
regulations all records required to be maintained by the Subadviser
on behalf of the Adviser under such applicable laws, rules and
regulations, or such longer period as the Adviser may reasonably
request from time to time.
VII. Broker-Dealer Relationships.
A. Portfolio Trades.
The Subadviser, at its own expense, and to the extent
appropriate, in consultation with the Adviser, shall place all
orders for the purchase and sale of portfolio securities for the
Fund with brokers or dealers selected by the Subadviser, which may
include, to the extent permitted by the Adviser and the Fund,
brokers or dealers affiliated with the Subadviser. The Subadviser
shall use its best efforts to seek to execute portfolio
transactions at prices that are advantageous to the Fund and at
commission rates that are reasonable in relation to the benefits
received.
B. Selection of Broker-Dealers.
With respect to the execution of particular transactions,
the Subadviser may, to the extent permitted by the Adviser and the
Fund, select brokers or dealers who also provide brokerage and
research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934, as amended) to the Fund and/or
the other accounts over which the Subadviser or its affiliates
exercise investment discretion. The Subadviser is authorized to
pay a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for the
Fund that is in excess of the amount of commission another broker
or dealer would have charged for effecting that transaction if the
Subadviser determines in good faith that such amount of commission
is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular
transaction or the overall responsibilities that the Subadviser and
its affiliates have with respect to accounts over which they
exercise investment discretion. The Adviser, Subadviser and the
Board shall periodically review the commissions paid by the Fund to
determine, among other things, if the commissions paid over
representative periods of time were reasonable in relation to the
benefits received.
C. Soft Dollar Arrangements.
The Subadviser may enter into "soft dollar" arrangements
through the agency of third parties on behalf of the Adviser. Soft
dollar arrangements for services may be entered into in order to
facilitate an improvement in performance in respect of the
Subadviser's service to the Adviser with respect to the Fund. The
Subadviser makes no direct payments but instead undertakes to place
business with broker-dealers who in turn pay third parties who
provide these services. Soft dollar transactions will be conducted
on an arm's-length basis, and the Subadviser will secure best
execution for the Adviser. Any arrangements involving soft dollars
and/or brokerage services shall be effected in compliance with
Section 28(e) of the Securities Exchange Act of 1934, as amended,
and the policies that the Adviser and the Board may adopt from time
to time. The Subadviser agrees to provide reports to the Adviser
as necessary for purposes of providing information on these
arrangements to the Board.
VIII. Compensation.
A. Amount of Compensation. The Adviser shall pay the
Subadviser, as compensation for services rendered
hereunder, from its own assets, an annual fee, payable
monthly, equal to 40% of the investment advisory fee
collected by the Adviser from the Fund, based on the
total net assets of the Fund existing as of the date
hereof (the "base amount"), plus 30% of the advisory fee
collected by the Adviser, based on the total net assets
of the Fund that exceed the base amount (the "marginal
amount"), in each case calculated after any waivers,
voluntary or otherwise.
B. Calculation of Compensation. Except as hereinafter set
forth, compensation under this Agreement shall be
calculated and accrued on the same basis as the advisory
fee paid to the Adviser by the Fund. If this Agreement
becomes effective subsequent to the first day of a month
or shall terminate before the last day of a month,
compensation for that part of the month this Agreement is
in effect shall be prorated in a manner consistent with
the calculation of the fees set forth above.
C. Payment of Compensation: Subject to the provisions of
this paragraph, payment of the Subadviser's compensation
for the preceding month shall be made within 15 days
after the end of the preceding month.
D. Reorganization of the Fund. If the Fund is reorganized
with another investment company for which the Subadviser
does not serve as an investment adviser or subadviser,
and the Fund is the surviving entity, the subadvisory fee
payable under this section shall be adjusted in an
appropriate manner as the parties may agree.
IX. Allocation of Expenses.
The Subadviser shall pay the expenses incurred in providing
services in connection with this Agreement, including, but not
limited to, the salaries, employment benefits and other related
costs of those of its personnel engaged in providing investment
advice to the Fund hereunder, including, without limitation, office
space, office equipment, telephone and postage costs and other
expenses. In the event of an "assignment" of this Agreement, other
than an assignment resulting solely by action of the Adviser or an
affiliate thereof, the Subadviser shall be responsible for payment
of all costs and expenses incurred by the Adviser and the Fund
relating thereto, including, but not limited to, reasonable legal,
accounting, printing and mailing costs related to obtaining
approval of Fund shareholders.
X. Non-Exclusivity.
The services of the Subadviser with respect to the Company and
the Fund are not to be deemed to be exclusive, and the Subadviser
shall be free to render investment advisory and administrative or
other services to others (including other investment companies) and
to engage in other activities, subject to the provisions of a
certain Agreement Not to Compete dated as of November 22, 1995
among the Adviser, Oppenheimer Capital, the Subadviser and Quest
For Value Distributors (the "Agreement Not to Compete"). It is
understood and agreed that officers or directors of the Subadviser
may serve as officers or directors of the Adviser or of the Fund;
that officers or directors of the Adviser or of the Company may
serve as officers or directors of the Subadviser to the extent
permitted by law; and that the officers and directors of the
Subadviser are not prohibited from engaging in any other business
activity or from rendering services to any other person, or from
serving as partners, officers, directors or trustees of any other
firm or trust, including other investment advisory companies
(subject to the provisions of the Agreement Not to Compete),
provided it is permitted by applicable law and does not adversely
affect the Company or the Fund.
XI. Term.
This Agreement shall become effective at the close of business
on the date hereof and shall remain in force and effect, subject to
Paragraphs XII.A and XII.B hereof and approval by the Fund's
shareholders, for a period of two years from the date hereof.
XII. Renewal.
Following the expiration of its initial two-year term, the
Agreement shall continue in full force and effect from year to year
for a period of eight years, provided that such continuance is
specifically approved:
A. at least annually (1) by the Board or by the vote of a
majority of the Fund's outstanding voting securities (as
defined in Section 2(a)(42) of the 1940 Act), and (2) by
the affirmative vote of a majority of the Trustees who
are not parties to this Agreement or interested persons
of a party to this Agreement (other than as a Trustee of
the Fund), by votes cast in person at a meeting
specifically called for such purpose; or
B. by such method required by applicable law, rule or
regulation then in effect.
XIII. Termination.
A. Termination by the Company. This Agreement may be
terminated at any time, without the payment of any
penalty, by vote of the Board or by vote of a majority of
the Fund's outstanding voting securities, on sixty (60)
days' written notice. The notice provided for herein may
be waived by the party required to be notified.
B. Assignment. This Agreement shall automatically terminate
in the event of its "assignment," as defined in Section
2 (a) (4) of the 1940 Act. In the event of an assignment
that occurs solely due to the change in control of the
Subadviser (provided that no condition exists that
permits, or, upon the consummation of the assignment,
will permit, the termination of this Agreement by the
Adviser pursuant to Section XIII. D. hereof), the Adviser
and the Subadviser, at the sole expense of the
Subadviser, shall use their reasonable best efforts to
obtain shareholder approval of a successor Subadvisory
Agreement on substantially the same terms as contained in
this Agreement.
C. Payment of Fees After Termination. Notwithstanding the
termination of this Agreement prior to the tenth
anniversary of the date hereof, the Adviser shall
continue to pay to the Subadviser the subadvisory fee for
the term of this Agreement and any renewals thereof
through such tenth anniversary, if: (1) the Adviser or
the Company terminates this Agreement for a reason other
than the reasons set forth in Section XIII.D. hereof,
provided the Investment Advisory Agreement remains in
effect; (2) the Fund reorganizes with another investment
company advised by the Adviser (or an affiliate of the
Adviser) and for which the Subadviser does not serve as
an investment adviser or subadviser and such other
investment company is the surviving entity; or (3) the
Investment Advisory Agreement terminates (i) by reason of
an "assignment;" (ii) because the Adviser is disqualified
from serving as an investment adviser; or (iii) by reason
of a voluntary termination by the Adviser; provided that
the Subadviser does not serve as the investment adviser
or subadviser of the Fund after such termination of the
Investment Advisory Agreement. The amount of the
subadvisory fee paid pursuant to this section shall be
calculated on the basis of the Fund's net assets measured
at the time of such termination or such reorganization.
Notwithstanding anything to the contrary, if the
Subadviser terminates this Agreement or if this Agreement
is terminated by operation of law, due solely to an act
or omission by the Subadviser, Oppenheimer Capital
("OpCap") or their respective partners, subsidiaries,
directors, officers, employees or agents (other than by
reason of an "assignment"of this Agreement), then the
Adviser shall not be liable for any further payments
under this Agreement, provided, however, that if at any
time prior to the end of the term of the Agreement Not to
Compete any event that would have permitted the
termination of this Agreement by the Adviser pursuant to
Section XIII. D. (3) hereof occurs, the Adviser shall be
under no further obligation to pay any subadvisory fees.
D. Termination by the Adviser. The Adviser may terminate
this Agreement without penalty and without the payment of
any fee or penalty, immediately after giving written
notice, upon the occurrence of any of the following
events:
1. The Fund's investment performance of the Fund's
Class A shares compared to the appropriate universe
of Class A shares (or their equivalent), as set
forth on Schedule D-1, as amended from time to
time, ranks in the bottom quartile for two
consecutive calendar years (beginning with the
calendar year 1995) and earns a Morningstar three-
year rating of less than three (3) stars at the
time of such termination; or
2. Any of the Subadviser, OpCap, their respective
partners, subsidiaries, affiliates, directors,
officers, employees or agents engages in an action
or omits to take an action that would cause the
Subadviser or OpCap to be disqualified in any
manner under Section 9(a) of the 1940 Act, if the
SEC were not to grant an exemptive order under
Section 9(c) thereof or that would constitute
grounds for the SEC to deny, revoke or suspend the
registration of the Subadviser as an investment
adviser with the SEC;
3. Any of OpCap, the Subadviser, their respective
partners, subsidiaries, affiliates, directors,
officers, employees or agents causes a material
violation of the Agreement Not to Compete which is
not cured in accordance with the provisions of that
agreement; or
4. The Subadviser breaches the representations
contained in Paragraph III.A.4.i. of this Agreement
or any other material provision of this Agreement,
and any such breach is not cured within a
reasonable period of time after notice thereof from
the Adviser to the Subadviser. However, consistent
with its fiduciary obligations, for a period of
seven months the Adviser will not terminate this
Agreement solely because the Subadviser has failed
to designate an acceptable permanent replacement to
a Portfolio Manager whose services are no longer
available to the Subadviser due to circumstances
beyond the reasonable control of the Subadviser,
provided that the Subadviser uses its reasonable
best efforts to promptly obtain the services of a
Portfolio Manager acceptable to the Adviser and
further provided that the Adviser has not
unreasonably withheld approval of such replacement
Portfolio Manager.
E. Transactions in Progress upon Termination. The Adviser
and Subadviser will cooperate with each other to ensure
that portfolio or other transactions in progress at the
date of termination of this Agreement shall be completed
by the Adviser in accordance with the terms of such
transactions, and to this end the Subadviser shall
provide the Adviser with all necessary information and
documentation to secure the implementation thereof.
XIV. Non-Solicitation.
During the term of this Agreement, the Adviser (and its
affiliates under its control) shall not solicit or knowingly assist
in the solicitation of any Portfolio Manager of the Fund or any
portfolio assistant of the Fund then employed by the Subadviser or
OpCap, provided, however, that the Adviser (or its affiliates) may
solicit or hire any such individual who (A) the Subadviser or OpCap
(or its affiliates) has terminated or (B) has voluntarily
terminated his or her employment with the Subadviser, OpCap (or its
affiliates) without inducement of the Adviser (or its affiliates
under its control) prior to the time of such solicitation.
Advertising in general circulation newspapers or industry
newsletters by the Adviser shall not constitute "inducement" by the
Adviser (or its affiliates under its control).
XV. Liability of the Subadviser.
In the absence of willful misfeasance, bad faith, negligence
or reckless disregard of obligations or duties hereunder on the
part of the Subadviser or any of its officers, directors or
employees, the Subadviser shall not be subject to liability to the
Adviser for any act or omission in the course of, or connected
with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security;
provided, however, that the foregoing shall not be construed to
relieve the Subadviser of any liability it may have arising under
the Agreement Not to Compete or the Acquisition Agreement dated
August 15, 1995, among the Subadviser, the Adviser and certain
affiliates of the Subadviser.
XVI. Notices.
Any notice or other communication required or that may be
given hereunder shall be in writing and shall be delivered
personally, telecopied, sent by certified, registered or express
mail, postage prepaid or sent by national next-day delivery service
and shall be deemed given when so delivered personally or
telecopied, or if mailed, two days after the date of mailing, or if
by next-day delivery service, on the business day following
delivery thereto, as follows or to such other location as any party
notifies any other party:
A. if to the Adviser, to:
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Attention: Andrew J. Donohue
Executive Vice President and General Counsel
Telecopier: 212-321-1159
B. if to the Subadviser, to:
Quest For Value Advisors
c/o Oppenheimer Capital
225 Liberty Street
New York, New York 10281
Attention: Thomas E. Duggan
Secretary and General Counsel
Telecopier: 212-349-4759
XVII. Questions of Interpretation.
This Agreement shall be governed by the laws of the State of
New York applicable to agreements made and to be performed entirely
within the State of New York (without regard to any conflicts of
law principles thereof). Any question of interpretation of any
term or provision of this Agreement having a counterpart in or
otherwise derived from a term or provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act and
to interpretations thereof, if any, by the United States Courts or,
in the absence of any controlling decision of any such court, by
rules, regulations or orders of the SEC issued pursuant to the 1940
Act. In addition, where the effect of a requirement of the 1940
Act reflected in any provision of this Agreement is revised by
rule, regulation or order of the SEC, such provision shall be
deemed to incorporate the effect of such rule, regulation or order.
XVIII. Form ADV - Delivery.
The Adviser hereby acknowledges that it has received from the
Subadviser a copy of the Subadviser's Form ADV, Part II as
currently filed, at least 48 hours prior to entering into this
Agreement and that it has read and understood the disclosures set
forth in the Subadviser's Form ADV, Part II.
XIX. Miscellaneous.
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective successors.
XX. Counterparts.
This Agreement may be executed in counterparts, each of which
shall constitute an original and both of which, collectively, shall
constitute one agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in duplicate by their respective officers
as of the 22nd day of November, 1995.
OPPENHEIMER MANAGEMENT CORPORATION
By: /s/ Andrew J. Donohue
--------------------------------------
Name: Andrew J. Donohue
Title: Executive Vice President
ADVISORS
By: OPPENHEIMER FINANCIAL CORP.,
a general partner
By: /s/ Thomas E. Duggan
------------------------------------
Name: Thomas E. Duggan
Title: Assistant Secretary
advisory\257subad
The universe of funds to which Class A shares of funds
subadvised by OpCap Advisors will be compared to so that it can be
determined in which quartile the performance ranks shall consist of
those funds with the same Lipper investment objective being offered
as the only class of shares of such fund or, in the case where
there is more than one class of shares being offered, with a front-
end load (typically referred to as Class A shares).
The present Lipper investment objective categories for the
funds are:
<TABLE>
<CAPTION>
Fund Lipper Category
<S> <C>
Oppenheimer Quest Value Fund, Inc. CA - Capital Appreciation
Oppenheimer Quest Global Value Fund, Inc. GL - Global
Oppenheimer Quest Opportunity Value Fund FX - Flexible Portfolio
Oppenheimer Quest Small Cap Value Fund SG - Small Company Growth
Oppenheimer Quest Growth & Income Value Fund GI - Growth & Income
Oppenheimer Quest Officers Value Fund To Be Determined
</TABLE>
advisory\257subad
Exhibit 24(b)(5)(b)(3)
SUBADVISORY AGREEMENT
THIS AGREEMENT is made by and between Oppenheimer Management
Corporation, a Colorado corporation (the "Adviser"), and OpCap
Advisors, a Delaware general partnership (the "Subadviser"), as of
the date set forth below.
RECITAL
WHEREAS, Oppenheimer Quest For Value Funds (the "Company") is
registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end, management investment company;
WHEREAS, the Adviser is registered under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), as an
investment adviser and engages in the business of acting as an
investment adviser;
WHEREAS, the Subadviser is registered under the Advisers Act
as an investment adviser and engages in the business of acting as
an investment adviser;
WHEREAS, the Company's Declaration of Trust authorizes the
Board of Trustees of the Company to classify or reclassify
authorized but unissued shares of the Company into series of shares
representing interests in various investment portfolios;
WHEREAS, pursuant to such authority, the Company has
established the Opportunity Value Fund (the "Fund");
WHEREAS, the Adviser has entered into an Investment Advisory
Agreement as of the date hereof with the Company (the "Investment
Advisory Agreement"), pursuant to which the Adviser shall act as
investment adviser with respect to the Fund; and
WHEREAS, pursuant to Paragraph 2 of the Investment Advisory
Agreement, the Adviser wishes to retain the Subadviser for purposes
of rendering investment advisory services to the Adviser in
connection with the Fund upon the terms and conditions hereinafter
set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of
which are hereby acknowledged, the parties hereto agree as follows:
I. Appointment and Obligations of the Adviser.
The Adviser hereby appoints the Subadviser to render, to the
Adviser with respect to the Fund, investment research and advisory
services as set forth below in Section II, under the supervision of
the Adviser and subject to the approval and direction of the
Company's Board of Trustees (the "Board"), and the Subadviser
hereby accepts such appointment, all subject to the terms and
conditions contained herein. The Subadviser shall, for all
purposes herein, be deemed an independent contractor and shall not
have, unless otherwise expressly provided or authorized,
any authority to act for or represent the Company or the Fund in
any way or otherwise to serve as or be deemed an agent of the
Company or the Fund.
II. Duties of the Subadviser and the Adviser.
A. Duties of the Subadviser.
The Subadviser shall regularly provide investment advice with
respect to the Fund and shall, subject to the terms of this
Agreement, continuously supervise the investment and reinvestment
of cash, securities and instruments or other property comprising
the assets of the Fund, and in furtherance thereof, the
Subadviser's duties shall include:
1. Obtaining and evaluating pertinent information about
significant developments and economic, statistical and
financial data, domestic, foreign or otherwise, whether
affecting the economy generally or the Fund, and whether
concerning the individual issuers whose securities are
included in the Fund or the activities in which such
issuers engage, or with respect to securities which the
Subadviser considers desirable for inclusion in the
Fund's investment portfolio;
2. Determining which securities shall be purchased,
sold or exchanged by the Fund or otherwise represented in
the Fund's investment portfolio and regularly reporting
thereon to the Adviser and, at the request of the
Adviser, to the Board;
3. Formulating and implementing continuing programs for
the purchases and sales of the securities of such issuers
and regularly reporting thereon to the Adviser and, at
the request of the Adviser, to the Board; and
4. Taking, on behalf of the Fund, all actions that
appear to the Subadviser necessary to carry into effect
such investment program, including the placing of
purchase and sale orders, and making appropriate reports
thereon to the Adviser and the Board.
B. Duties of the Adviser.
The Adviser shall retain responsibility for, among other
things, providing the following advice and services with respect to
the Fund:
1. Without limiting the obligation of the Subadviser
to so comply, the Adviser shall monitor the
investment program maintained by the Subadviser for
the Fund to ensure that the Fund's assets are
invested in compliance with this Agreement and the
Fund's Registration Statement, as currently in
effect from time to time; and
2. The Adviser shall oversee matters relating to Fund
promotion, including, but not limited to, marketing
materials and the Subadviser's reports to the
Board.
III. Representations, Warranties and Covenants.
A. Representations, Warranties and Covenants of the
Subadviser.
1. Organization. The Subadviser is now, and will
continue to be, a general partnership duly formed and
validly existing under the laws of its jurisdiction of
formation, fully authorized to enter into this Agreement
and carry out its duties and obligations hereunder.
2. Registration. The Subadviser is registered as an
investment adviser with the Securities and Exchange
Commission (the "SEC") under the Advisers Act, and is
registered or licensed as an investment adviser under the
laws of all jurisdictions in which its activities require
it to be so registered or licensed, except where the
failure to be so licensed would not have a material
adverse effect on the Subadviser. The Subadviser shall
maintain such registration or license in effect at all
times during the term of this Agreement.
3. Best Efforts. The Subadviser at all times shall
provide its best judgment and effort to the Adviser and
the Fund in carrying out its obligations hereunder.
4. Other Covenants. The Subadviser further agrees
that:
a. it will use the same skill and care in
providing such services as it uses in
providing services to other accounts for which
it has investment management responsibilities;
b. it will not make loans to any person to
purchase or carry units of beneficial interest
in the Fund or make loans to the Fund;
c. it will report regularly to the Fund and to
the Adviser and will make appropriate persons
available for the purpose of reviewing with
representatives of the Adviser on a regular
basis the management of the Fund, including,
without limitation, review of the general
investment strategy of the Fund, economic
considerations and general conditions
affecting the marketplace;
d. as required by applicable laws and
regulations, it will maintain books and
records with respect to the Fund's securities
transactions and it will furnish to the
Adviser and to the Board such periodic and
special reports as the Adviser or the Board
may reasonably request;
e. it will treat confidentially and as
proprietary information of the Fund all
records and other information relative to the
Fund, and will not use records and information
for any purpose other than performance of its
responsibilities and duties hereunder, except
after prior notification to and approval in
writing by the Fund or when so requested by
the Fund or required by law or regulation;
f. it will, on a continuing basis and at its own
expense, (1) provide the distributor of the
Fund (the "Distributor") with assistance in
the distribution and marketing of the Fund in
such amount and form as the Adviser may
reasonably request from time to time, and (2)
use its best efforts to cause the portfolio
manager or other person who manages or is
responsible for overseeing the management of
the Fund's portfolio (the "Portfolio Manager")
to provide marketing and distribution
assistance to the Distributor, including,
without limitation, conference calls, meetings
and road trips, provided that each Portfolio
Manager shall not be required to devote more
than 10% of his or her time to such marketing
and distribution activities;
g. it will use its reasonable best efforts (i) to
retain the services of the Portfolio Manager
who manages the portfolio of the Fund, from
time to time and (ii) to promptly obtain the
services of a Portfolio Manager acceptable to
the Adviser if the services of the Portfolio
Manager are no longer available to the
Subadviser;
h. it will, from time to time, assure that each
Portfolio Manager is acceptable to the
Adviser;
i. it will obtain the written approval of the
Adviser prior to designating a new Portfolio
Manager; provided, however, that, if the
services of a Portfolio Manager are no longer
available to the Subadviser due to
circumstances beyond the reasonable control of
the Subadviser (e.g., voluntary resignation,
death or disability), the Subadviser may
designate an interim Portfolio Manager who (a)
shall be reasonably acceptable to the Adviser
and (b) shall function for a reasonable period
of time until the Subadviser designates an
acceptable permanent replacement; and
j. it will promptly notify the Adviser of any
impending change in Portfolio Manager,
portfolio management or any other material
matter that may require disclosure to the
Board, shareholders of the Fund or dealers.
B. Representations, Warranties and Covenants of the Adviser.
1. Organization. The Adviser is now, and will continue
to be, duly organized and in good standing under the laws
of its state of incorporation, fully authorized to enter
into this Agreement and carry out its duties and
obligations hereunder.
2. Registration. The Adviser is registered as an
investment adviser with the SEC under the Advisers Act,
and is registered or licensed as an investment adviser
under the laws of all jurisdictions in which its
activities require it to be so registered or licensed.
The Adviser shall maintain such registration or license
in effect at all times during the term of this Agreement.
3. Best Efforts. The Adviser at all times shall
provide its best judgment and effort to the Fund in
carrying out its obligations hereunder. For a period of
five years from the date hereof, and subject to the
Adviser's fiduciary obligations to the Fund and its
shareholders, the Adviser will not recommend to the Board
that the Fund be reorganized into another Fund unless the
total net assets of the Fund are less than $100 million
at the time of such reorganization.
IV. Compliance with Applicable Requirements.
In carrying out its obligations under this Agreement, the
Subadviser shall at all times conform to:
A. all applicable provisions of the 1940 Act and any rules
and regulations adopted thereunder;
B. the provisions of the registration statement of the
Company, as the same may be amended from time to time,
under the Securities Act of 1933, as amended, and the
1940 Act;
C. the provisions of the Company's Declaration of Trust or
other governing document, as amended from time to time;
D. the provisions of the By-laws of the Company, as amended
from time to time;
E. any other applicable provisions of state or federal law;
and
F. guidelines, investment restrictions, policies, procedures
or instructions adopted or issued by the Company, the
Fund or the Adviser from time to time.
The Adviser shall promptly notify the Subadviser of any
changes or amendments to the provisions of B., C., D. and F. above
when such changes or amendments relate to the obligations of the
Subadviser.
V. Control by the Board.
Any investment program undertaken by the Subadviser pursuant
to this Agreement, as well as any other activities undertaken by
the Subadviser with respect to the Fund, shall at all times be
subject to any directives of the Adviser and the Board.
VI. Books and Records.
The Subadviser agrees that all records which it maintains for
the Fund on behalf of the Adviser are the property of the Fund and
further agrees to surrender promptly to the Fund or to the Adviser
any of such records upon request. The Subadviser further agrees to
preserve for the periods prescribed by applicable laws, rules and
regulations all records required to be maintained by the Subadviser
on behalf of the Adviser under such applicable laws, rules and
regulations, or such longer period as the Adviser may reasonably
request from time to time.
VII. Broker-Dealer Relationships.
A. Portfolio Trades.
The Subadviser, at its own expense, and to the extent
appropriate, in consultation with the Adviser, shall place all
orders for the purchase and sale of portfolio securities for the
Fund with brokers or dealers selected by the Subadviser, which may
include, to the extent permitted by the Adviser and the Fund,
brokers or dealers affiliated with the Subadviser. The Subadviser
shall use its best efforts to seek to execute portfolio
transactions at prices that are advantageous to the Fund and at
commission rates that are reasonable in relation to the benefits
received.
B. Selection of Broker-Dealers.
With respect to the execution of particular transactions,
the Subadviser may, to the extent permitted by the Adviser and the
Fund, select brokers or dealers who also provide brokerage and
research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934, as amended) to the Fund and/or
the other accounts over which the Subadviser or its affiliates
exercise investment discretion. The Subadviser is authorized to
pay a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for the
Fund that is in excess of the amount of commission another broker
or dealer would have charged for effecting that transaction if the
Subadviser determines in good faith that such amount of commission
is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular
transaction or the overall responsibilities that the Subadviser and
its affiliates have with respect to accounts over which they
exercise investment discretion. The Adviser, Subadviser and the
Board shall periodically review the commissions paid by the Fund to
determine, among other things, if the commissions paid over
representative periods of time were reasonable in relation to the
benefits received.
C. Soft Dollar Arrangements.
The Subadviser may enter into "soft dollar" arrangements
through the agency of third parties on behalf of the Adviser. Soft
dollar arrangements for services may be entered into in order to
facilitate an improvement in performance in respect of the
Subadviser's service to the Adviser with respect to the Fund. The
Subadviser makes no direct payments but instead undertakes to place
business with broker-dealers who in turn pay third parties who
provide these services. Soft dollar transactions will be conducted
on an arm's-length basis, and the Subadviser will secure best
execution for the Adviser. Any arrangements involving soft dollars
and/or brokerage services shall be effected in compliance with
Section 28(e) of the Securities Exchange Act of 1934, as amended,
and the policies that the Adviser and the Board may adopt from time
to time. The Subadviser agrees to provide reports to the Adviser
as necessary for purposes of providing information on these
arrangements to the Board.
VIII. Compensation.
A. Amount of Compensation. The Adviser shall pay the
Subadviser, as compensation for services rendered
hereunder, from its own assets, an annual fee, payable
monthly, equal to 40% of the investment advisory fee
collected by the Adviser from the Fund, based on the
total net assets of the Fund existing as of the date
hereof (the "base amount"), plus 30% of the advisory fee
collected by the Adviser, based on the total net assets
of the Fund that exceed the base amount (the "marginal
amount"), in each case calculated after any waivers,
voluntary or otherwise.
B. Calculation of Compensation. Except as hereinafter set
forth, compensation under this Agreement shall be
calculated and accrued on the same basis as the advisory
fee paid to the Adviser by the Fund. If this Agreement
becomes effective subsequent to the first day of a month
or shall terminate before the last day of a month,
compensation for that part of the month this Agreement is
in effect shall be prorated in a manner consistent with
the calculation of the fees set forth above.
C. Payment of Compensation: Subject to the provisions of
this paragraph, payment of the Subadviser's compensation
for the preceding month shall be made within 15 days
after the end of the preceding month.
D. Reorganization of the Fund. If the Fund is reorganized
with another investment company for which the Subadviser
does not serve as an investment adviser or subadviser,
and the Fund is the surviving entity, the subadvisory fee
payable under this section shall be adjusted in an
appropriate manner as the parties may agree.
IX. Allocation of Expenses.
The Subadviser shall pay the expenses incurred in providing
services in connection with this Agreement, including, but not
limited to, the salaries, employment benefits and other related
costs of those of its personnel engaged in providing investment
advice to the Fund hereunder, including, without limitation, office
space, office equipment, telephone and postage costs and other
expenses. In the event of an "assignment" of this Agreement, other
than an assignment resulting solely by action of the Adviser or an
affiliate thereof, the Subadviser shall be responsible for payment
of all costs and expenses incurred by the Adviser and the Fund
relating thereto, including, but not limited to, reasonable legal,
accounting, printing and mailing costs related to obtaining
approval of Fund shareholders.
X. Non-Exclusivity.
The services of the Subadviser with respect to the Company and
the Fund are not to be deemed to be exclusive, and the Subadviser
shall be free to render investment advisory and administrative or
other services to others (including other investment companies) and
to engage in other activities, subject to the provisions of a
certain Agreement Not to Compete dated as of November 22, 1995
among the Adviser, Oppenheimer Capital, the Subadviser and Quest
For Value Distributors (the "Agreement Not to Compete"). It is
understood and agreed that officers or directors of the Subadviser
may serve as officers or directors of the Adviser or of the Fund;
that officers or directors of the Adviser or of the Company may
serve as officers or directors of the Subadviser to the extent
permitted by law; and that the officers and directors of the
Subadviser are not prohibited from engaging in any other business
activity or from rendering services to any other person, or from
serving as partners, officers, directors or trustees of any other
firm or trust, including other investment advisory companies
(subject to the provisions of the Agreement Not to Compete)
provided it is permitted by applicable law and does not adversely
affect the Company or the Fund.
XI. Term.
This Agreement shall become effective at the close of business
on the date hereof and shall remain in force and effect, subject to
Paragraphs XII.A and XII.B hereof and approval by the Fund's
shareholders, for a period of two years from the date hereof.
XII. Renewal.
Following the expiration of its initial two-year term, the
Agreement shall continue in full force and effect from year to year
for a period of eight years, provided that such continuance is
specifically approved:
A. at least annually (1) by the Board or by the vote of a
majority of the Fund's outstanding voting securities (as
defined in Section 2(a)(42) of the 1940 Act), and (2) by
the affirmative vote of a majority of the Trustees who
are not parties to this Agreement or interested persons
of a party to this Agreement (other than as a Trustee of
the Fund), by votes cast in person at a meeting
specifically called for such purpose; or
B. by such method required by applicable law, rule or
regulation then in effect.
XIII. Termination.
A. Termination by the Company. This Agreement may be
terminated at any time, without the payment of any
penalty, by vote of the Board or by vote of a majority of
the Fund's outstanding voting securities, on sixty (60)
days' written notice. The notice provided for herein may
be waived by the party required to be notified.
B. Assignment. This Agreement shall automatically terminate
in the event of its "assignment," as defined in Section
2 (a) (4) of the 1940 Act. In the event of an assignment
that occurs solely due to the change in control of the
Subadviser (provided that no condition exists that
permits, or, upon the consummation of the assignment,
will permit, the termination of this Agreement by the
Adviser pursuant to Section XIII. D. hereof), the Adviser
and the Subadviser, at the sole expense of the
Subadviser, shall use their reasonable best efforts to
obtain shareholder approval of a successor Subadvisory
Agreement on substantially the same terms as contained in
this Agreement.
C. Payment of Fees After Termination. Notwithstanding the
termination of this Agreement prior to the tenth
anniversary of the date hereof, the Adviser shall
continue to pay to the Subadviser the subadvisory fee for
the term of this Agreement and any renewals thereof
through such tenth anniversary, if: (1) the Adviser or
the Company terminates this Agreement for a reason other
than the reasons set forth in Section XIII.D. hereof,
provided the Investment Advisory Agreement remains in
effect; (2) the Fund reorganizes with another investment
company advised by the Adviser (or an affiliate of the
Adviser) and for which the Subadviser does not serve as
an investment adviser or subadviser and such other
investment company is the surviving entity; or (3) the
Investment Advisory Agreement terminates (i) by reason of
an "assignment;" (ii) because the Adviser is disqualified
from serving as an investment adviser; or (iii) by reason
of a voluntary termination by the Adviser; provided that
the Subadviser does not serve as the investment adviser
or subadviser of the Fund after such termination of the
Investment Advisory Agreement. The amount of the
subadvisory fee paid pursuant to this section shall be
calculated on the basis of the Fund's net assets measured
at the time of such termination or such reorganization.
Notwithstanding anything to the contrary, if the
Subadviser terminates this Agreement or if this Agreement
is terminated by operation of law, due solely to an act
or omission by the Subadviser, Oppenheimer Capital
("OpCap") or their respective partners, subsidiaries,
directors, officers, employees or agents (other than by
reason of an "assignment"of this Agreement), then the
Adviser shall not be liable for any further payments
under this Agreement, provided, however, that if at any
time prior to the end of the term of the Agreement Not to
Compete any event that would have permitted the
termination of this Agreement by the Adviser pursuant to
Section XIII. D. (3) hereof occurs, the Adviser shall be
under no further obligation to pay any subadvisory fees.
D. Termination by the Adviser. The Adviser may terminate
this Agreement without penalty and without the payment of
any fee or penalty, immediately after giving written
notice, upon the occurrence of any of the following
events:
1. The Fund's investment performance of the Fund's
Class A shares compared to the appropriate universe
of Class A shares (or their equivalent), as set
forth on Schedule D-1, as amended from time to
time, ranks in the bottom quartile for two
consecutive calendar years (beginning with the
calendar year 1995) and earns a Morningstar three-
year rating of less than three (3) stars at the
time of such termination; or
2. Any of the Subadviser, OpCap, their respective
partners, subsidiaries, affiliates, directors,
officers, employees or agents engages in an action
or omits to take an action that would cause the
Subadviser or OpCap to be disqualified in any
manner under Section 9(a) of the 1940 Act, if the
SEC were not to grant an exemptive order under
Section 9(c) thereof or that would constitute
grounds for the SEC to deny, revoke or suspend the
registration of the Subadviser as an investment
adviser with the SEC;
3. Any of OpCap, the Subadviser, their respective
partners, subsidiaries, affiliates, directors,
officers, employees or agents causes a material
violation of the Agreement Not to Compete which is
not cured in accordance with the provisions of that
agreement; or
4. The Subadviser breaches the representations
contained in Paragraph III.A.4.i. of this Agreement
or any other material provision of this Agreement,
and any such breach is not cured within a
reasonable period of time after notice thereof from
the Adviser to the Subadviser. However, consistent
with its fiduciary obligations, for a period of
seven months the Adviser will not terminate this
Agreement solely because the Subadviser has failed
to designate an acceptable permanent replacement to
a Portfolio Manager whose services are no longer
available to the Subadviser due to circumstances
beyond the reasonable control of the Subadviser,
provided that the Subadviser uses its reasonable
best efforts to promptly obtain the services of a
Portfolio Manager acceptable to the Adviser and
further provided that the Adviser has not
unreasonably withheld approval of such replacement
Portfolio Manager.
E. Transactions in Progress upon Termination. The Adviser
and Subadviser will cooperate with each other to ensure
that portfolio or other transactions in progress at the
date of termination of this Agreement shall be completed
by the Adviser in accordance with the terms of such
transactions, and to this end the Subadviser shall
provide the Adviser with all necessary information and
documentation to secure the implementation thereof.
XIV. Non-Solicitation.
During the term of this Agreement, the Adviser (and its
affiliates under its control) shall not solicit or knowingly assist
in the solicitation of any Portfolio Manager of the Fund or any
portfolio assistant of the Fund then employed by the Subadviser or
OpCap, provided, however, that the Adviser (or its affiliates) may
solicit or hire any such individual who (A) the Subadviser or OpCap
(or its affiliates) has terminated or (B) has voluntarily
terminated his or her employment with the Subadviser, OpCap (or its
affiliates) without inducement of the Adviser (or its affiliates
under its control) prior to the time of such solicitation.
Advertising in general circulation newspapers or industry
newsletters by the Adviser shall not constitute "inducement" by the
Adviser (or its affiliates under its control).
XV. Liability of the Subadviser.
In the absence of willful misfeasance, bad faith, negligence
or reckless disregard of obligations or duties hereunder on the
part of the Subadviser or any of its officers, directors or
employees, the Subadviser shall not be subject to liability to the
Adviser for any act or omission in the course of, or connected
with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security;
provided, however, that the foregoing shall not be construed to
relieve the Subadviser of any liability it may have arising under
the Agreement Not to Compete or the Acquisition Agreement dated
August 15, 1995, among the Subadviser, the Adviser and certain
affiliates of the Subadviser.
XVI. Notices.
Any notice or other communication required or that may be
given hereunder shall be in writing and shall be delivered
personally, telecopied, sent by certified, registered or express
mail, postage prepaid or sent by national next-day delivery service
and shall be deemed given when so delivered personally or
telecopied, or if mailed, two days after the date of mailing, or if
by next-day delivery service, on the business day following
delivery thereto, as follows or to such other location as any party
notifies any other party:
A. if to the Adviser, to:
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Attention: Andrew J. Donohue
Executive Vice President and General Counsel
Telecopier: 212-321-1159
B. if to the Subadviser, to:
Quest For Value Advisors
c/o Oppenheimer Capital
225 Liberty Street
New York, New York 10281
Attention: Thomas E. Duggan
Secretary and General Counsel
Telecopier: 212-349-4759
XVII. Questions of Interpretation.
This Agreement shall be governed by the laws of the State of
New York applicable to agreements made and to be performed entirely
within the State of New York (without regard to any conflicts of
law principles thereof). Any question of interpretation of any
term or provision of this Agreement having a counterpart in or
otherwise derived from a term or provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act and
to interpretations thereof, if any, by the United States Courts or,
in the absence of any controlling decision of any such court, by
rules, regulations or orders of the SEC issued pursuant to the 1940
Act. In addition, where the effect of a requirement of the 1940
Act reflected in any provision of this Agreement is revised by
rule, regulation or order of the SEC, such provision shall be
deemed to incorporate the effect of such rule, regulation or order.
XVIII. Form ADV - Delivery.
The Adviser hereby acknowledges that it has received from the
Subadviser a copy of the Subadviser's Form ADV, Part II as
currently filed, at least 48 hours prior to entering into this
Agreement and that it has read and understood the disclosures set
forth in the Subadviser's Form ADV, Part II.
XIX. Miscellaneous.
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective successors.
XX. Counterparts.
This Agreement may be executed in counterparts, each of which
shall constitute an original and both of which, collectively, shall
constitute one agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in duplicate by their respective officers
as of the 22nd day of November, 1995.
OPPENHEIMER MANAGEMENT CORPORATION
By: /s/ Andrew J. Donohue
---------------------------------
Name: Andrew J. Donohue
Title: Executive Vice President
ADVISORS
By: OPPENHEIMER FINANCIAL CORP.,
a general partner
By: /s/ Thomas E. Duggan
--------------------------------
Name: Thomas E. Duggan
Title: Assistant Secretary
advisory\236subad
<PAGE>
The universe of funds to which Class A shares of funds
subadvised by OpCap Advisors will be compared to so that it can be
determined in which quartile the performance ranks shall consist of
those funds with the same Lipper investment objective being offered
as the only class of shares of such fund or, in the case where
there is more than one class of shares being offered, with a front-
end load (typically referred to as Class A shares).
The present Lipper investment objective categories for the
funds are:
<TABLE>
<CAPTION>
Fund Lipper Category
<S> <C>
Oppenheimer Quest Value Fund, Inc. CA - Capital Appreciation
Oppenheimer Quest Global Value Fund, Inc. GL - Global
Oppenheimer Quest Opportunity Value Fund FX - Flexible Portfolio
Oppenheimer Quest Small Cap Value Fund SG - Small Company Growth
Oppenheimer Quest Growth & Income Value Fund GI - Growth & Income
Oppenheimer Quest Officers Value Fund To Be Determined
</TABLE>
advisory\236subad
Exhibit 24(b)(5)(b)(1)
SUBADVISORY AGREEMENT
THIS AGREEMENT is made by and between Oppenheimer Management
Corporation, a Colorado corporation (the "Adviser"), and OpCap
Advisors, a Delaware general partnership (the "Subadviser"), as of
the date set forth below.
RECITAL
WHEREAS, Oppenheimer Quest For Value Funds (the "Company") is
registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end, management investment company;
WHEREAS, the Adviser is registered under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), as an
investment adviser and engages in the business of acting as an
investment adviser;
WHEREAS, the Subadviser is registered under the Advisers Act
as an investment adviser and engages in the business of acting as
an investment adviser;
WHEREAS, the Company's Declaration of Trust authorizes the
Board of Trustees of the Company to classify or reclassify
authorized but unissued shares of the Company into series of shares
representing interests in various investment portfolios;
WHEREAS, pursuant to such authority, the Company has
established the Small Cap Value Fund (the "Fund");
WHEREAS, the Adviser has entered into an Investment Advisory
Agreement as of the date hereof with the Company (the "Investment
Advisory Agreement"), pursuant to which the Adviser shall act as
investment adviser with respect to the Fund; and
WHEREAS, pursuant to Paragraph 2 of the Investment Advisory
Agreement, the Adviser wishes to retain the Subadviser for purposes
of rendering investment advisory services to the Adviser in
connection with the Fund upon the terms and conditions hereinafter
set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of
which are hereby acknowledged, the parties hereto agree as follows:
I. Appointment and Obligations of the Adviser.
The Adviser hereby appoints the Subadviser to render, to the
Adviser with respect to the Fund, investment research and advisory
services as set forth below in Section II, under the supervision of
the Adviser and subject to the approval and direction of the
Company's Board of Trustees (the "Board"), and the Subadviser
hereby accepts such appointment, all subject to the terms and
conditions contained herein. The Subadviser shall, for all
purposes herein, be deemed
an independent contractor and shall not have, unless otherwise
expressly provided or authorized, any authority to act for or
represent the Company or the Fund in any way or otherwise to serve
as or be deemed an agent of the Company or the Fund.
II. Duties of the Subadviser and the Adviser.
A. Duties of the Subadviser.
The Subadviser shall regularly provide investment advice with
respect to the Fund and shall, subject to the terms of this
Agreement, continuously supervise the investment and reinvestment
of cash, securities and instruments or other property comprising
the assets of the Fund, and in furtherance thereof, the
Subadviser's duties shall include:
1. Obtaining and evaluating pertinent information about
significant developments and economic, statistical and
financial data, domestic, foreign or otherwise, whether
affecting the economy generally or the Fund, and whether
concerning the individual issuers whose securities are
included in the Fund or the activities in which such
issuers engage, or with respect to securities which the
Subadviser considers desirable for inclusion in the
Fund's investment portfolio;
2. Determining which securities shall be purchased,
sold or exchanged by the Fund or otherwise represented in
the Fund's investment portfolio and regularly reporting
thereon to the Adviser and, at the request of the
Adviser, to the Board;
3. Formulating and implementing continuing programs for
the purchases and sales of the securities of such issuers
and regularly reporting thereon to the Adviser and, at
the request of the Adviser, to the Board; and
4. Taking, on behalf of the Fund, all actions that
appear to the Subadviser necessary to carry into effect
such investment program, including the placing of
purchase and sale orders, and making appropriate reports
thereon to the Adviser and the Board.
B. Duties of the Adviser.
The Adviser shall retain responsibility for, among other
things, providing the following advice and services with respect to
the Fund:
1. Without limiting the obligation of the Subadviser
to so comply, the Adviser shall monitor the
investment program maintained by the Subadviser for
the Fund to ensure that the Fund's assets are
invested in compliance with this Agreement and the
Fund's Registration Statement, as currently in
effect from time to time; and
2. The Adviser shall oversee matters relating to Fund
promotion, including, but not limited to, marketing
materials, and the Subadviser's reports to the
Board.
III. Representations, Warranties and Covenants.
A. Representations, Warranties and Covenants of the
Subadviser.
1. Organization. The Subadviser is now, and will
continue to be, a general partnership duly formed and
validly existing under the laws of its jurisdiction of
formation, fully authorized to enter into this Agreement
and carry out its duties and obligations hereunder.
2. Registration. The Subadviser is registered as an
investment adviser with the Securities and Exchange
Commission (the "SEC") under the Advisers Act, and is
registered or licensed as an investment adviser under the
laws of all jurisdictions in which its activities require
it to be so registered or licensed, except where the
failure to be so licensed would not have a material
adverse effect on the Subadviser. The Subadviser shall
maintain such registration or license in effect at all
times during the term of this Agreement.
3. Best Efforts. The Subadviser at all times shall
provide its best judgment and effort to the Adviser and
the Fund in carrying out its obligations hereunder.
4. Other Covenants. The Subadviser further agrees
that:
a. it will use the same skill and care in
providing such services as it uses in
providing services to other accounts for which
it has investment management responsibilities;
b. it will not make loans to any person to
purchase or carry units of beneficial interest
in the Fund or make loans to the Fund;
c. it will report regularly to the Fund and to
the Adviser and will make appropriate persons
available for the purpose of reviewing with
representatives of the Adviser on a regular
basis the management of the Fund, including,
without limitation, review of the general
investment strategy of the Fund, economic
considerations and general conditions
affecting the marketplace;
d. as required by applicable laws and
regulations, it will maintain books and
records with respect to the Fund's securities
transactions and it will furnish to the
Adviser and to the Board such periodic and
special reports as the Adviser or the Board
may reasonably request;
e. it will treat confidentially and as
proprietary information of the Fund all
records and other information relative to the
Fund, and will not use records and information
for any purpose other than performance of its
responsibilities and duties hereunder, except
after prior notification to and approval in
writing by the Fund or when so requested by
the Fund or required by law or regulation;
f. it will, on a continuing basis and at its own
expense, (1) provide the distributor of the
Fund (the "Distributor") with assistance in
the distribution and marketing of the Fund in
such amount and form as the Adviser may
reasonably request from time to time, and (2)
use its best efforts to cause the portfolio
manager or other person who manages or is
responsible for overseeing the management of
the Fund's portfolio (the "Portfolio Manager")
to provide marketing and distribution
assistance to the Distributor, including,
without limitation, conference calls, meetings
and road trips, provided that each Portfolio
Manager shall not be required to devote more
than 10% of his or her time to such marketing
and distribution activities;
g. it will use its reasonable best efforts (i) to
retain the services of the Portfolio Manager
who manages the portfolio of the Fund, from
time to time and (ii) to promptly obtain the
services of a Portfolio Manager acceptable to
the Adviser if the services of the Portfolio
Manager are no longer available to the
Subadviser;
h. it will, from time to time, assure that each
Portfolio Manager is acceptable to the
Adviser;
i. it will obtain the written approval of the
Adviser prior to designating a new Portfolio
Manager; provided, however, that, if the
services of a Portfolio Manager are no longer
available to the Subadviser due to
circumstances beyond the reasonable control of
the Subadviser (e.g., voluntary resignation,
death or disability), the Subadviser may
designate an interim Portfolio Manager who (a)
shall be reasonably acceptable to the Adviser
and (b) shall function for a reasonable period
of time until the Subadviser designates an
acceptable permanent replacement; and
j. it will promptly notify the Adviser of any
impending change in Portfolio Manager,
portfolio management or any other material
matter that may require disclosure to the
Board, shareholders of the Fund or dealers.
B. Representations, Warranties and Covenants of the Adviser.
1. Organization. The Adviser is now, and will continue
to be, duly organized and in good standing under the laws
of its state of incorporation, fully authorized to enter
into this Agreement and carry out its duties and
obligations hereunder.
2. Registration. The Adviser is registered as an
investment adviser with the SEC under the Advisers Act,
and is registered or licensed as an investment adviser
under the laws of all jurisdictions in which its
activities require it to be so registered or licensed.
The Adviser shall maintain such registration or license
in effect at all times during the term of this Agreement.
3. Best Efforts. The Adviser at all times shall
provide its best judgment and effort to the Fund in
carrying out its obligations hereunder.
IV. Compliance with Applicable Requirements.
In carrying out its obligations under this Agreement, the
Subadviser shall at all times conform to:
A. all applicable provisions of the 1940 Act and any rules
and regulations adopted thereunder;
B. the provisions of the registration statement of the
Company, as the same may be amended from time to time,
under the Securities Act of 1933, as amended, and the
1940 Act;
C. the provisions of the Company's Declaration of Trust or
other governing document, as amended from time to time;
D. the provisions of the By-laws of the Company, as amended
from time to time;
E. any other applicable provisions of state or federal law;
and
F. guidelines, investment restrictions, policies, procedures
or instructions adopted or issued by the Company, the
Fund or the Adviser from time to time.
The Adviser shall promptly notify the Subadviser of any
changes or amendments to the provisions of B., C., D. and F. above
when such changes or amendments relate to the obligations of the
Subadviser.
V. Control by the Board.
Any investment program undertaken by the Subadviser pursuant
to this Agreement, as well as any other activities undertaken by
the Subadviser with respect to the Fund, shall at all times be
subject to any directives of the Adviser and the Board.
VI. Books and Records.
The Subadviser agrees that all records which it maintains for
the Fund on behalf of the Adviser are the property of the Fund and
further agrees to surrender promptly to the Fund or to the Adviser
any of such records upon request. The Subadviser further agrees to
preserve for the periods prescribed by applicable laws, rules and
regulations all records required to be maintained by the Subadviser
on behalf of the Adviser under such applicable laws, rules and
regulations, or such longer period as the Adviser may reasonably
request from time to time.
VII. Broker-Dealer Relationships.
A. Portfolio Trades.
The Subadviser, at its own expense, and to the extent
appropriate, in consultation with the Adviser, shall place all
orders for the purchase and sale of portfolio securities for the
Fund with brokers or dealers selected by the Subadviser, which may
include, to the extent permitted by the Adviser and the Fund,
brokers or dealers affiliated with the Subadviser. The Subadviser
shall use its best efforts to seek to execute portfolio
transactions at prices that are advantageous to the Fund and at
commission rates that are reasonable in relation to the benefits
received.
B. Selection of Broker-Dealers.
With respect to the execution of particular transactions,
the Subadviser may, to the extent permitted by the Adviser and the
Fund, select brokers or dealers who also provide brokerage and
research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934, as amended) to the Fund and/or
the other accounts over which the Subadviser or its affiliates
exercise investment discretion. The Subadviser is authorized to
pay a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for the
Fund that is in excess of the amount of commission another broker
or dealer would have charged for effecting that transaction if the
Subadviser determines in good faith that such amount of commission
is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular
transaction or the overall responsibilities that the Subadviser and
its affiliates have with respect to accounts over which they
exercise investment discretion. The Adviser, Subadviser and the
Board shall periodically review the commissions paid by the Fund to
determine, among other things, if the commissions paid over
representative periods of time were reasonable in relation to the
benefits received.
C. Soft Dollar Arrangements.
The Subadviser may enter into "soft dollar" arrangements
through the agency of third parties on behalf of the Adviser. Soft
dollar arrangements for services may be entered into in order to
facilitate an improvement in performance in respect of the
Subadviser's service to the Adviser with respect to the Fund. The
Subadviser makes no direct payments but instead undertakes to place
business with broker-dealers who in turn pay third parties who
provide these services. Soft dollar transactions will be conducted
on an arm's-length basis, and the Subadviser will secure best
execution for the Adviser. Any arrangements involving soft dollars
and/or brokerage services shall be effected in compliance with
Section 28(e) of the Securities Exchange Act of 1934, as amended,
and the policies that the Adviser and the Board may adopt from time
to time. The Subadviser agrees to provide reports to the Adviser
as necessary for purposes of providing information on these
arrangements to the Board.
VIII. Compensation.
A. Amount of Compensation. The Adviser shall pay the
Subadviser, as compensation for services rendered
hereunder, from its own assets, an annual fee, payable
monthly, equal to 40% of the investment advisory fee
collected by the Adviser from the Fund, based on the
total net assets of the Fund existing as of the date
hereof (the "base amount"), plus 30% of the advisory fee
collected by the Adviser, based on the total net assets
of the Fund that exceed the base amount (the "marginal
amount"), in each case calculated after any waivers,
voluntary or otherwise.
B. Calculation of Compensation. Except as hereinafter set
forth, compensation under this Agreement shall be
calculated and accrued on the same basis as the advisory
fee paid to the Adviser by the Fund. If this Agreement
becomes effective subsequent to the first day of a month
or shall terminate before the last day of a month,
compensation for that part of the month this Agreement is
in effect shall be prorated in a manner consistent with
the calculation of the fees set forth above.
C. Payment of Compensation: Subject to the provisions of
this paragraph, payment of the Subadviser's compensation
for the preceding month shall be made within 15 days
after the end of the preceding month.
D. Reorganization of the Fund. If the Fund is reorganized
with another investment company for which the Subadviser
does not serve as an investment adviser or subadviser,
and the Fund is the surviving entity, the subadvisory fee
payable under this section shall be adjusted in an
appropriate manner as the parties may agree.
IX. Allocation of Expenses.
The Subadviser shall pay the expenses incurred in providing
services in connection with this Agreement, including, but not
limited to, the salaries, employment benefits and other related
costs of those of its personnel engaged in providing investment
advice to the Fund hereunder, including, without limitation, office
space, office equipment, telephone and postage costs and other
expenses. In the event of an "assignment" of this Agreement, other
than an assignment resulting solely by action of the Adviser or an
affiliate thereof, the Subadviser shall be responsible for payment
of all costs and expenses incurred by the Adviser and the Fund
relating thereto, including, but not limited to, reasonable legal,
accounting, printing and mailing costs related to obtaining
approval of Fund shareholders.
X. Non-Exclusivity.
The services of the Subadviser with respect to the Company and
the Fund are not to be deemed to be exclusive, and the Subadviser
shall be free to render investment advisory and administrative or
other services to others (including other investment companies) and
to engage in other activities, subject to the provisions of a
certain Agreement Not to Compete dated as of November 22, 1995
among the Adviser, Oppenheimer Capital, the Subadviser and Quest
For Value Distributors (the "Agreement Not to Compete"). It is
understood and agreed that officers or directors of the Subadviser
may serve as officers or directors of the Adviser or of the Fund;
that officers or directors of the Adviser or of the Company may
serve as officers or directors of the Subadviser to the extent
permitted by law; and that the officers and directors of the
Subadviser are not prohibited from engaging in any other business
activity or from rendering services to any other person, or from
serving as partners, officers, directors or trustees of any other
firm or trust, including other investment advisory companies
(subject to the provisions of the Agreement Not to Compete),
provided it is permitted by applicable law and does not adversely
affect the Company or the Fund.
XI. Term.
This Agreement shall become effective at the close of business
on the date hereof and shall remain in force and effect, subject to
Paragraphs XII.A and XII.B hereof and approval by the Fund's
shareholders, for a period of two years from the date hereof.
XII. Renewal.
Following the expiration of its initial two-year term, the
Agreement shall continue in full force and effect from year to year
for a period of eight years, provided that such continuance is
specifically approved:
A. at least annually (1) by the Board or by the vote of a
majority of the Fund's outstanding voting securities (as
defined in Section 2(a)(42) of the 1940 Act), and (2) by
the affirmative vote of a majority of the Trustees who
are not parties to this Agreement or interested persons
of a party to this Agreement (other than as a Trustee of
the Fund), by votes cast in person at a meeting
specifically called for such purpose; or
B. by such method required by applicable law, rule or
regulation then in effect.
XIII. Termination.
A. Termination by the Company. This Agreement may be
terminated at any time, without the payment of any
penalty, by vote of the Board or by vote of a majority of
the Fund's outstanding voting securities, on sixty (60)
days' written notice. The notice provided for herein may
be waived by the party required to be notified.
B. Assignment. This Agreement shall automatically terminate
in the event of its "assignment," as defined in Section
2 (a) (4) of the 1940 Act. In the event of an assignment
that occurs solely due to the change in control of the
Subadviser (provided that no condition exists that
permits, or, upon the consummation of the assignment,
will permit, the termination of this Agreement by the
Adviser pursuant to Section XIII. D. hereof), the Adviser
and the Subadviser, at the sole expense of the
Subadviser, shall use their reasonable best efforts to
obtain shareholder approval of a successor Subadvisory
Agreement on substantially the same terms as contained in
this Agreement.
C. Payment of Fees After Termination. Notwithstanding the
termination of this Agreement prior to the tenth
anniversary of the date hereof, the Adviser shall
continue to pay to the Subadviser the subadvisory fee for
the term of this Agreement and any renewals thereof
through such tenth anniversary, if: (1) the Adviser or
the Company terminates this Agreement for a reason other
than the reasons set forth in Section XIII.D. hereof,
provided the Investment Advisory Agreement remains in
effect; (2) the Fund reorganizes with another investment
company advised by the Adviser (or an affiliate of the
Adviser) and for which the Subadviser does not serve as
an investment adviser or subadviser and such other
investment company is the surviving entity; or (3) the
Investment Advisory Agreement terminates (i) by reason of
an "assignment;" (ii) because the Adviser is disqualified
from serving as an investment adviser; or (iii) by reason
of a voluntary termination by the Adviser; provided that
the Subadviser does not serve as the investment adviser
or subadviser of the Fund after such termination of the
Investment Advisory Agreement. The amount of the
subadvisory fee paid pursuant to this section shall be
calculated on the basis of the Fund's net assets measured
at the time of such termination or such reorganization.
Notwithstanding anything to the contrary, if the
Subadviser terminates this Agreement or if this Agreement
is terminated by operation of law, due solely to an act
or omission by the Subadviser, Oppenheimer Capital
("OpCap") or their respective partners, subsidiaries,
directors, officers, employees or agents (other than by
reason of an "assignment"of this Agreement), then the
Adviser shall not be liable for any further payments
under this Agreement, provided, however, that if at any
time prior to the end of the term of the Agreement Not to
Compete any event that would have permitted the
termination of this Agreement by the Adviser pursuant to
Section XIII. D. (3) hereof occurs, the Adviser shall be
under no further obligation to pay any subadvisory fees.
D. Termination by the Adviser. The Adviser may terminate
this Agreement without penalty and without the payment of
any fee or penalty, immediately after giving written
notice, upon the occurrence of any of the following
events:
1. The Fund's investment performance of the Fund's
Class A shares compared to the appropriate universe
of Class A shares (or their equivalent), as set
forth on Schedule D-1, as amended from time to
time, ranks in the bottom quartile for two
consecutive calendar years (beginning with the
calendar year 1995) and earns a Morningstar three-
year rating of less than three (3) stars at the
time of such termination; or
2. Any of the Subadviser, OpCap, their respective
partners, subsidiaries, affiliates, directors,
officers, employees or agents engages in an action
or omits to take an action that would cause the
Subadviser or OpCap to be disqualified in any
manner under Section 9(a) of the 1940 Act, if the
SEC were not to grant an exemptive order under
Section 9(c) thereof or that would constitute
grounds for the SEC to deny, revoke or suspend the
registration of the Subadviser as an investment
adviser with the SEC;
3. Any of OpCap, the Subadviser, their respective
partners, subsidiaries, affiliates, directors,
officers, employees or agents causes a material
violation of the Agreement Not to Compete which is
not cured in accordance with the provisions of that
agreement; or
4. The Subadviser breaches the representations
contained in Paragraph III.A.4.i. of this Agreement
or any other material provision of this Agreement,
and any such breach is not cured within a
reasonable period of time after notice thereof from
the Adviser to the Subadviser. However, consistent
with its fiduciary obligations, for a period of
seven months the Adviser will not terminate this
Agreement solely because the Subadviser has failed
to designate an acceptable permanent replacement to
a Portfolio Manager whose services are no longer
available to the Subadviser due to circumstances
beyond the reasonable control of the Subadviser,
provided that the Subadviser uses its reasonable
best efforts to promptly obtain the services of a
Portfolio Manager acceptable to the Adviser and
further provided that the Adviser has not
unreasonably withheld approval of such replacement
Portfolio Manager.
E. Transactions in Progress upon Termination. The Adviser
and Subadviser will cooperate with each other to ensure
that portfolio or other transactions in progress at the
date of termination of this Agreement shall be completed
by the Adviser in accordance with the terms of such
transactions, and to this end the Subadviser shall
provide the Adviser with all necessary information and
documentation to secure the implementation thereof.
XIV. Non-Solicitation.
During the term of this Agreement, the Adviser (and its
affiliates under its control) shall not solicit or knowingly assist
in the solicitation of any Portfolio Manager of the Fund or any
portfolio assistant of the Fund then employed by the Subadviser or
OpCap, provided, however, that the Adviser (or its affiliates) may
solicit or hire any such individual who (A) the Subadviser or OpCap
(or its affiliates) has terminated or (B) has voluntarily
terminated his or her employment with the Subadviser, OpCap (or its
affiliates) without inducement of the Adviser (or its affiliates
under its control) prior to the time of such solicitation.
Advertising in general circulation newspapers or industry
newsletters by the Adviser shall not constitute "inducement" by the
Adviser (or its affiliates under its control).
XV. Liability of the Subadviser.
In the absence of willful misfeasance, bad faith, negligence
or reckless disregard of obligations or duties hereunder on the
part of the Subadviser or any of its officers, directors or
employees, the Subadviser shall not be subject to liability to the
Adviser for any act or omission in the course of, or connected
with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security;
provided, however, that the foregoing shall not be construed to
relieve the Subadviser of any liability it may have arising under
the Agreement Not to Compete or the Acquisition Agreement dated
August 15, 1995, among the Subadviser, the Adviser and certain
affiliates of the Subadviser.
XVI. Notices.
Any notice or other communication required or that may be
given hereunder shall be in writing and shall be delivered
personally, telecopied, sent by certified, registered or express
mail, postage prepaid or sent by national next-day delivery service
and shall be deemed given when so delivered personally or
telecopied, or if mailed, two days after the date of mailing, or if
by next-day delivery service, on the business day following
delivery thereto, as follows or to such other location as any party
notifies any other party:
A. if to the Adviser, to:
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Attention: Andrew J. Donohue
Executive Vice President and General Counsel
Telecopier: 212-321-1159
B. if to the Subadviser, to:
Quest For Value Advisors
c/o Oppenheimer Capital
225 Liberty Street
New York, New York 10281
Attention: Thomas E. Duggan
Secretary and General Counsel
Telecopier: 212-349-4759
XVII. Questions of Interpretation.
This Agreement shall be governed by the laws of the State of
New York applicable to agreements made and to be performed entirely
within the State of New York (without regard to any conflicts of
law principles thereof). Any question of interpretation of any
term or provision of this Agreement having a counterpart in or
otherwise derived from a term or provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act and
to interpretations thereof, if any, by the United States Courts or,
in the absence of any controlling decision of any such court, by
rules, regulations or orders of the SEC issued pursuant to the 1940
Act. In addition, where the effect of a requirement of the 1940
Act reflected in any provision of this Agreement is revised by
rule, regulation or order of the SEC, such provision shall be
deemed to incorporate the effect of such rule, regulation or order.
XVIII. Form ADV - Delivery.
The Adviser hereby acknowledges that it has received from the
Subadviser a copy of the Subadviser's Form ADV, Part II as
currently filed, at least 48 hours prior to entering into this
Agreement and that it has read and understood the disclosures set
forth in the Subadviser's Form ADV, Part II.
XIX. Miscellaneous.
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective successors.
XX. Counterparts.
This Agreement may be executed in counterparts, each of which
shall constitute an original and both of which, collectively, shall
constitute one agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in duplicate by their respective officers
as of the 22nd day of November, 1995.
OPPENHEIMER MANAGEMENT CORPORATION
By: /s/ Andrew J. Donohue
-----------------------------------
Name: Andrew J. Donohue
Title: Executive Vice President
ADVISORS
By: OPPENHEIMER FINANCIAL CORP.,
a general partner
By: /s/ Thomas E. Duggan
-----------------------------------
Name: Thomas E. Duggan
Title: Assistant Secretary
advisory\251subad
<PAGE>
The universe of funds to which Class A shares of funds
subadvised by OpCap Advisors will be compared to so that it can be
determined in which quartile the performance ranks shall consist of
those funds with the same Lipper investment objective being offered
as the only class of shares of such fund or, in the case where
there is more than one class of shares being offered, with a front-
end load (typically referred to as Class A shares).
The present Lipper investment objective categories for the
funds are:
<TABLE>
<CAPTION>
Fund Lipper Category
<S> <C>
Oppenheimer Quest Value Fund, Inc. CA - Capital Appreciation
Oppenheimer Quest Global Value Fund, Inc. GL - Global
Oppenheimer Quest Opportunity Value Fund FX - Flexible Portfolio
Oppenheimer Quest Small Cap Value Fund SG - Small Company Growth
Oppenheimer Quest Growth & Income Value Fund GI - Growth & Income
Oppenheimer Quest Officers Value Fund To Be Determined
</TABLE>
advisory\251subad
Exhibit 24(b)(5)(b)(4)
SUBADVISORY AGREEMENT
THIS AGREEMENT is made by and between Oppenheimer Management
Corporation, a Colorado corporation (the "Adviser"), and OpCap
Advisors, a Delaware general partnership (the "Subadviser"), as of
the date set forth below.
RECITAL
WHEREAS, Oppenheimer Quest For Value Funds (the "Company")
is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end, management investment company;
WHEREAS, the Adviser is registered under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), as an
investment adviser and engages in the business of acting as an
investment adviser;
WHEREAS, the Subadviser is registered under the Advisers Act
as an investment adviser and engages in the business of acting as
an investment adviser;
WHEREAS, the Company's Declaration of Trust authorizes the
Board of Trustees of the Company to classify or reclassify
authorized but unissued shares of the Company into series of shares
representing interests in various investment portfolios;
WHEREAS, pursuant to such authority, the Company has
established the Officers Value Fund (the "Fund");
WHEREAS, the Adviser has entered into an Investment Advisory
Agreement as of the date hereof with the Company (the "Investment
Advisory Agreement"), pursuant to which the Adviser shall act as
investment adviser with respect to the Fund; and
WHEREAS, pursuant to Paragraph 2 of the Investment Advisory
Agreement, the Adviser wishes to retain the Subadviser for purposes
of rendering investment advisory services to the Adviser in
connection with the Fund upon the terms and conditions hereinafter
set forth;
NOW THEREFORE, in consideration of the mutual covenants
herein contained and other good and valuable consideration, the
receipt of which are hereby acknowledged, the parties hereto agree
as follows:
I. Appointment and Obligations of the Adviser.
The Adviser hereby appoints the Subadviser to render, to the
Adviser with respect to the Fund, investment research and advisory
services as set forth below in Section II, under the supervision of
the Adviser and subject to the approval and direction of the
Company's Board of Trustees (the "Board"), and the Subadviser
hereby accepts such appointment, all subject to the terms and
conditions contained herein. The Subadviser shall, for all
purposes herein, be deemed an independent contractor and shall not
have, unless otherwise expressly provided or authorized, any
authority to act for or represent the Company or the Fund in any
way or otherwise to serve as or be deemed an agent of the Company
or the Fund.
II. Duties of the Subadviser and the Adviser.
A Duties of the Subadviser.
The Subadviser shall regularly provide investment advice with
respect to the Fund and shall, subject to the terms of this
Agreement, continuously supervise the investment and reinvestment
of cash, securities and instruments or other property comprising
the assets of the Fund, and in furtherance thereof, the
Subadviser's duties shall include:
1. Obtaining and evaluating pertinent information about
significant developments and economic, statistical and
financial data, domestic, foreign or otherwise, whether
affecting the economy generally or the Fund, and whether
concerning the individual issuers whose securities are
included in the Fund or the activities in which such
issuers engage, or with respect to securities which the
Subadviser considers desirable for inclusion in the
Fund's investment portfolio;
2. Determining which securities shall be purchased, sold
or exchanged by the Fund or otherwise represented in the
Fund's investment portfolio and regularly reporting
thereon to the Adviser and, at the request of the
Adviser, to the Board;
3. Formulating and implementing continuing programs for
the purchases and sales of the securities of such issuers
and regularly reporting thereon to the Adviser and, at
the request of the Adviser, to the Board; and
4.Taking, on behalf of the Fund, all actions that appear
to the Subadviser necessary to carry into effect such
investment program, including the placing of purchase and
sale orders, and making appropriate reports thereon to
the Adviser and the Board.
B. Duties of the Adviser.
The Adviser shall retain responsibility for, among other
things, providing the following advice and services with respect to
the Fund:
1. Without limiting the obligation of the Subadviser to
so comply, the Adviser shall monitor the investment
program maintained by the Subadviser for the Fund to
ensure that the Fund's assets are invested in
compliance with this Agreement and the Fund's
Registration Statement, as currently in effect from
time to time; and
2. The Adviser shall oversee matters relating to Fund
promotion, including, but not limited to, marketing
materials, and the Subadviser's reports to the Board.
III. Representations, Warranties and Covenants.
A. Representations, Warranties and Covenants of the
Subadviser.
1. Organization. The Subadviser is now, and will
continue to be, a general partnership duly formed and
validly existing under the laws of its jurisdiction of
formation, fully authorized to enter into this Agreement
and carry out its duties and obligations hereunder.
2. Registration. The Subadviser is registered as an
investment adviser with the Securities and Exchange
Commission (the "SEC") under the Advisers Act, and is
registered or licensed as an investment adviser under the
laws of all jurisdictions in which its activities require
it to be so registered or licensed, except where the
failure to be so licensed would not have a material
adverse effect on the Subadviser. The Subadviser shall
maintain such registration or license in effect at all
times during the term of this Agreement.
3. Best Efforts. The Subadviser at all times shall
provide its best judgment and effort to the Adviser and
the Fund in carrying out its obligations hereunder.
4. Other Covenants. The Subadviser further agrees that:
a. it will use the same skill and care in providing
such services as it uses in providing services to
other accounts for which it has investment
management responsibilities;
b. it will not make loans to any person to purchase or
carry units of beneficial interest in the Fund or
make loans to the Fund;
c. it will report regularly to the Fund and to the
Adviser and will make appropriate persons available
for the purpose of reviewing with representatives
of the Adviser on a regular basis the management of
the Fund, including, without limitation, review of
the general investment strategy of the Fund,
economic considerations and general conditions
affecting the marketplace;
d. as required by applicable laws and regulations, it
will maintain books and records with respect to the
Fund's securities transactions and it will furnish
to the Adviser and to the Board such periodic and
special reports as the Adviser or the Board may
reasonably request;
e. it will treat confidentially and as proprietary
information of the Fund all records and other
information relative to the Fund, and will not use
records and information for any purpose other than
performance of its responsibilities and duties
hereunder, except after prior notification to and
approval in writing by the Fund or when so
requested by the Fund or required by law or
regulation;
f. it will, on a continuing basis and at its own
expense, (1) provide the distributor of the Fund
(the "Distributor") with assistance in the
distribution and marketing of the Fund in such
amount and form as the Adviser may reasonably
request from time to time, and (2) use its best
efforts to cause the portfolio manager or other
person who manages or is responsible for overseeing
the management of the Fund's portfolio (the
"Portfolio Manager") to provide marketing and
distribution assistance to the Distributor,
including, without limitation, conference calls,
meetings and road trips, provided that each
Portfolio Manager shall not be required to devote
more than 10% of his or her time to such marketing
and distribution activities;
g. it will use its reasonable best efforts (i) to
retain the services of the Portfolio Manager who
manages the portfolio of the Fund, from time to
time and (ii) to promptly obtain the services of a
Portfolio Manager acceptable to the Adviser if the
services of the Portfolio Manager are no longer
available to the Subadviser;
h. it will, from time to time, assure that each
Portfolio Manager is acceptable to the Adviser;
i. it will obtain the written approval of the Adviser
prior to designating a new Portfolio Manager;
provided, however, that, if the services of a
Portfolio Manager are no longer available to the
Subadviser due to circumstances beyond the
reasonable control of the Subadviser (e.g.,
voluntary resignation, death or disability), the
Subadviser may designate an interim Portfolio
Manager who (a) shall be reasonably acceptable to
the Adviser and (b) shall function for a reasonable
period of time until the Subadviser designates an
acceptable permanent replacement; and
j. it will promptly notify the Adviser of any
impending change in Portfolio Manager, portfolio
management or any other material matter that may
require disclosure to the Board, shareholders of
the Fund or dealers.
B. Representations, Warranties and Covenants of the Adviser.
1. Organization. The Adviser is now, and will continue
to be, duly organized and in good standing under the laws
of its state of incorporation, fully authorized to enter
into this Agreement and carry out its duties and
obligations hereunder.
2. Registration. The Adviser is registered as an
investment adviser with the SEC under the Advisers Act,
and is registered or licensed as an investment adviser
under the laws of all jurisdictions in which its
activities require it to be so registered or licensed.
The Adviser shall maintain such registration or license
in effect at all times during the term of this Agreement.
3. Best Efforts. The Adviser at all times shall provide
its best judgment and effort to the Fund in carrying out
its obligations hereunder.
IV. Compliance with Applicable Requirements.
In carrying out its obligations under this Agreement, the
Subadviser shall at all times conform to:
A. all applicable provisions of the 1940 Act and any rules
and regulations adopted thereunder;
B. the provisions of the registration statement of the
Company, as the same may be amended from time to time,
under the Securities Act of 1933, as amended, and the
1940 Act;
C. the provisions of the Company's Declaration of Trust or
other governing document, as amended from time to time;
D. the provisions of the By-laws of the Company, as amended
from time to time;
E. any other applicable provisions of state or federal law;
and
F. guidelines, investment restrictions, policies, procedures
or instructions adopted or issued by the Company, the
Fund or the Adviser from time to time.
The Adviser shall promptly notify the Subadviser of any
changes or amendments to the provisions of B., C., D. and F. above
when such changes or amendments relate to the obligations of the
Subadviser.
V. Control by the Board.
Any investment program undertaken by the Subadviser pursuant
to this Agreement, as well as any other activities undertaken by
the Subadviser with respect to the Fund, shall at all times be
subject to any directives of the Adviser and the Board.
VI. Books and Records.
The Subadviser agrees that all records which it maintains for
the Fund on behalf of the Adviser are the property of the Fund and
further agrees to surrender promptly to the Fund or to the Adviser
any of such records upon request. The Subadviser further agrees to
preserve for the periods prescribed by applicable laws, rules and
regulations all records required to be maintained by the Subadviser
on behalf of the Adviser under such applicable laws, rules and
regulations, or such longer period as the Adviser may reasonably
request from time to time.
VII. Broker-Dealer Relationships.
A. Portfolio Trades.
The Subadviser, at its own expense, and to the extent
appropriate, in consultation with the Adviser, shall place all
orders for the purchase and sale of portfolio securities for the
Fund with brokers or dealers selected by the Subadviser, which may
include, to the extent permitted by the Adviser and the Fund,
brokers or dealers affiliated with the Subadviser. The Subadviser
shall use its best efforts to seek to execute portfolio
transactions at prices that are advantageous to the Fund and at
commission rates that are reasonable in relation to the benefits
received.
B. Selection of Broker-Dealers.
With respect to the execution of particular transactions,
the Subadviser may, to the extent permitted by the Adviser and the
Fund, select brokers or dealers who also provide brokerage and
research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934, as amended) to the Fund and/or
the other accounts over which the Subadviser or its affiliates
exercise investment discretion. The Subadviser is authorized to
pay a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for the
Fund that is in excess of the amount of commission another broker
or dealer would have charged for effecting that transaction if the
Subadviser determines in good faith that such amount of commission
is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular
transaction or the overall responsibilities that the Subadviser and
its affiliates have with respect to accounts over which they
exercise investment discretion. The Adviser, Subadviser and the
Board shall periodically review the commissions paid by the Fund to
determine, among other things, if the commissions paid over
representative periods of time were reasonable in relation to the
benefits received.
C. Soft Dollar Arrangements.
The Subadviser may enter into "soft dollar" arrangements
through the agency of third parties on behalf of the Adviser. Soft
dollar arrangements for services may be entered into in order to
facilitate an improvement in performance in respect of the
Subadviser's service to the Adviser with respect to the Fund. The
Subadviser makes no direct payments but instead undertakes to place
business with broker-dealers who in turn pay third parties who
provide these services. Soft dollar transactions will be conducted
on an arm's-length basis, and the Subadviser will secure best
execution for the Adviser. Any arrangements involving soft dollars
and/or brokerage services shall be effected in compliance with
Section 28(e) of the Securities Exchange Act of 1934, as amended,
and the policies that the Adviser and the Board may adopt from time
to time. The Subadviser agrees to provide reports to the Adviser
as necessary for purposes of providing information on these
arrangements to the Board.
VIII. Compensation.
A. Amount of Compensation. The Adviser shall pay the
Subadviser, as compensation for services rendered
hereunder, from its own assets, an annual fee, payable
monthly, equal to 40% of the investment advisory fee
collected by the Adviser from the Fund, based on the
total net assets of the Fund existing as of the date
hereof (the "base amount"), plus 30% of the advisory fee
collected by the Adviser, based on the total net assets
of the Fund that exceed the base amount (the "marginal
amount"), in each case calculated after any waivers,
voluntary or otherwise.
B. Calculation of Compensation. Except as hereinafter set
forth, compensation under this Agreement shall be
calculated and accrued on the same basis as the advisory
fee paid to the Adviser by the Fund. If this Agreement
becomes effective subsequent to the first day of a month
or shall terminate before the last day of a month,
compensation for that part of the month this Agreement is
in effect shall be prorated in a manner consistent with
the calculation of the fees set forth above.
C. Payment of Compensation: Subject to the provisions of
this paragraph, payment of the Subadviser's compensation
for the preceding month shall be made within 15 days
after the end of the preceding month.
D. Reorganization of the Fund. If the Fund is reorganized
with another investment company for which the Subadviser
does not serve as an investment adviser or subadviser,
and the Fund is the surviving entity, the subadvisory fee
payable under this section shall be adjusted in an
appropriate manner as the parties may agree.
IX. Allocation of Expenses.
The Subadviser shall pay the expenses incurred in providing
services in connection with this Agreement, including, but not
limited to, the salaries, employment benefits and other related
costs of those of its personnel engaged in providing investment
advice to the Fund hereunder, including, without limitation, office
space, office equipment, telephone and postage costs and other
expenses. In the event of an "assignment" of this Agreement, other
than an assignment resulting solely by action of the Adviser or an
affiliate thereof, the Subadviser shall be responsible for payment
of all costs and expenses incurred by the Adviser and the Fund
relating thereto, including, but not limited to, reasonable legal,
accounting, printing and mailing costs related to obtaining
approval of Fund shareholders.
X. Non-Exclusivity.
The services of the Subadviser with respect to the Company
and the Fund are not to be deemed to be exclusive, and the
Subadviser shall be free to render investment advisory and
administrative or other services to others (including other
investment companies) and to engage in other activities, subject to
the provisions of a certain Agreement Not to Compete dated as of
November 22, 1995 among the Adviser, Oppenheimer Capital, the
Subadviser and Quest For Value Distributors (the "Agreement Not to
Compete"). It is understood and agreed that officers or directors
of the Subadviser may serve as officers or directors of the Adviser
or of the Fund; that officers or directors of the Adviser or of the
Company may serve as officers or directors of the Subadviser to the
extent permitted by law; and that the officers and directors of the
Subadviser are not prohibited from engaging in any other business
activity or from rendering services to any other person, or from
serving as partners, officers, directors or trustees of any other
firm or trust, including other investment advisory companies
(subject to the provisions of the Agreement Not to Compete),
provided it is permitted by applicable law and does not adversely
affect the Company or the Fund.
XI. Term.
This Agreement shall become effective at the close of
business on the date hereof and shall remain in force and effect,
subject to Paragraphs XII.A and XII.B hereof and approval by the
Fund's shareholders, for a period of two years from the date
hereof.
XII. Renewal.
Following the expiration of its initial two-year term, the
Agreement shall continue in full force and effect from year to year
for a period of eight years, provided that such continuance is
specifically approved:
A. at least annually (1) by the Board or by the vote of a
majority of the Fund's outstanding voting securities (as
defined in Section 2(a)(42) of the 1940 Act), and (2) by
the affirmative vote of a majority of the Trustees who
are not parties to this Agreement or interested persons
of a party to this Agreement (other than as a Trustee of
the Fund), by votes cast in person at a meeting
specifically called for such purpose; or
B. by such method required by applicable law, rule or
regulation then in effect.
XIII. Termination.
A. Termination by the Company. This Agreement may be
terminated at any time, without the payment of any
penalty, by vote of the Board or by vote of a majority of
the Fund's outstanding voting securities, on sixty (60)
days' written notice. The notice provided for herein may
be waived by the party required to be notified.
B. Assignment. This Agreement shall automatically terminate
in the event of its "assignment," as defined in Section
2 (a) (4) of the 1940 Act. In the event of an assignment
that occurs solely due to the change in control of the
Subadviser (provided that no condition exists that
permits, or, upon the consummation of the assignment,
will permit, the termination of this Agreement by the
Adviser pursuant to Section XIII. D. hereof), the Adviser
and the Subadviser, at the sole expense of the
Subadviser, shall use their reasonable best efforts to
obtain shareholder approval of a successor Subadvisory
Agreement on substantially the same terms as contained in
this Agreement.
C. Payment of Fees After Termination. Notwithstanding the
termination of this Agreement prior to the tenth
anniversary of the date hereof, the Adviser shall
continue to pay to the Subadviser the subadvisory fee for
the term of this Agreement and any renewals thereof
through such tenth anniversary, if: (1) the Adviser or
the Company terminates this Agreement for a reason other
than the reasons set forth in Section XIII.D. hereof,
provided the Investment Advisory Agreement remains in
effect; (2) the Fund reorganizes with another investment
company advised by the Adviser (or an affiliate of the
Adviser) and for which the Subadviser does not serve as
an investment adviser or subadviser and such other
investment company is the surviving entity; or (3) the
Investment Advisory Agreement terminates (i) by reason of
an "assignment;" (ii) because the Adviser is disqualified
from serving as an investment adviser; or (iii) by reason
of a voluntary termination by the Adviser; provided that
the Subadviser does not serve as the investment adviser
or subadviser of the Fund after such termination of the
Investment Advisory Agreement. The amount of the
subadvisory fee paid pursuant to this section shall be
calculated on the basis of the Fund's net assets measured
at the time of such termination or such reorganization.
Notwithstanding anything to the contrary, if the
Subadviser terminates this Agreement or if this Agreement
is terminated by operation of law, due solely to an act
or omission by the Subadviser, Oppenheimer Capital
("OpCap") or their respective partners, subsidiaries,
directors, officers, employees or agents (other than by
reason of an "assignment"of this Agreement), then the
Adviser shall not be liable for any further payments
under this Agreement, provided, however, that if at any
time prior to the end of the term of the Agreement Not to
Compete any event that would have permitted the
termination of this Agreement by the Adviser pursuant to
Section XIII. D. (3) hereof occurs, the Adviser shall be
under no further obligation to pay any subadvisory fees.
D. Termination by the Adviser. The Adviser may terminate
this Agreement without penalty and without the payment of
any fee or penalty, immediately after giving written
notice, upon the occurrence of any of the following
events:
1. The Fund's investment performance of the Fund's Class
A shares compared to the appropriate universe of Class
A shares (or their equivalent), as set forth on
Schedule D-1, as amended from time to time, ranks in
the bottom quartile for two consecutive calendar years
(beginning with the calendar year 1995) and earns a
Morningstar three-year rating of less than three (3)
stars at the time of such termination; or
2. Any of the Subadviser, OpCap, their respective
partners, subsidiaries, affiliates, directors,
officers, employees or agents engages in an action or
omits to take an action that would cause the
Subadviser or OpCap to be disqualified in any manner
under Section 9(a) of the 1940 Act, if the SEC were
not to grant an exemptive order under Section 9(c)
thereof or that would constitute grounds for the SEC
to deny, revoke or suspend the registration of the
Subadviser as an investment adviser with the SEC;
3. Any of OpCap, the Subadviser, their respective
partners, subsidiaries, affiliates, directors,
officers, employees or agents causes a material
violation of the Agreement Not to Compete which is not
cured in accordance with the provisions of that
agreement; or
4. The Subadviser breaches the representations contained
in Paragraph III.A.4.i. of this Agreement or any other
material provision of this Agreement, and any such
breach is not cured within a reasonable period of time
after notice thereof from the Adviser to the
Subadviser. However, consistent with its fiduciary
obligations, for a period of seven months the Adviser
will not terminate this Agreement solely because the
Subadviser has failed to designate an acceptable
permanent replacement to a Portfolio Manager whose
services are no longer available to the Subadviser due
to circumstances beyond the reasonable control of the
Subadviser, provided that the Subadviser uses its
reasonable best efforts to promptly obtain the
services of a Portfolio Manager acceptable to the
Adviser and further provided that the Adviser has not
unreasonably withheld approval of such replacement
Portfolio Manager.
E. Transactions in Progress upon Termination. The Adviser
and Subadviser will cooperate with each other to ensure
that portfolio or other transactions in progress at the
date of termination of this Agreement shall be completed
by the Adviser in accordance with the terms of such
transactions, and to this end the Subadviser shall
provide the Adviser with all necessary information and
documentation to secure the implementation thereof.
XIV. Non-Solicitation.
During the term of this Agreement, the Adviser (and its
affiliates under its control) shall not solicit or knowingly assist
in the solicitation of any Portfolio Manager of the Fund or any
portfolio assistant of the Fund then employed by the Subadviser or
OpCap, provided, however, that the Adviser (or its affiliates) may
solicit or hire any such individual who (A) the Subadviser or OpCap
(or its affiliates) has terminated or (B) has voluntarily
terminated his or her employment with the Subadviser, OpCap (or its
affiliates) without inducement of the Adviser (or its affiliates
under its control) prior to the time of such solicitation.
Advertising in general circulation newspapers or industry
newsletters by the Adviser shall not constitute "inducement" by the
Adviser (or its affiliates under its control).
XV. Liability of the Subadviser.
In the absence of willful misfeasance, bad faith, negligence
or reckless disregard of obligations or duties hereunder on the
part of the Subadviser or any of its officers, directors or
employees, the Subadviser shall not be subject to liability to the
Adviser for any act or omission in the course of, or connected
with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security;
provided, however, that the foregoing shall not be construed to
relieve the Subadviser of any liability it may have arising under
the Agreement Not to Compete or the Acquisition Agreement dated
August 15, 1995, among the Subadviser, the Adviser and certain
affiliates of the Subadviser.
XVI. Notices.
Any notice or other communication required or that may be
given hereunder shall be in writing and shall be delivered
personally, telecopied, sent by certified, registered or express
mail, postage prepaid or sent by national next-day delivery service
and shall be deemed given when so delivered personally or
telecopied, or if mailed, two days after the date of mailing, or if
by next-day delivery service, on the business day following
delivery thereto, as follows or to such other location as any party
notifies any other party:
A. if to the Adviser, to:
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Attention: Andrew J. Donohue
Executive Vice President and General Counsel
Telecopier: 212-321-1159
B. if to the Subadviser, to:
Quest For Value Advisors
c/o Oppenheimer Capital
225 Liberty Street
New York, New York 10281
Attention: Thomas E. Duggan
Secretary and General Counsel
Telecopier: 212-349-4759
XVII. Questions of Interpretation.
This Agreement shall be governed by the laws of the State of
New York applicable to agreements made and to be performed entirely
within the State of New York (without regard to any conflicts of
law principles thereof). Any question of interpretation of any
term or provision of this Agreement having a counterpart in or
otherwise derived from a term or provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act and
to interpretations thereof, if any, by the United States Courts or,
in the absence of any controlling decision of any such court, by
rules, regulations or orders of the SEC issued pursuant to the 1940
Act. In addition, where the effect of a requirement of the 1940
Act reflected in any provision of this Agreement is revised by
rule, regulation or order of the SEC, such provision shall be
deemed to incorporate the effect of such rule, regulation or order.
XVIII. Form ADV - Delivery.
The Adviser hereby acknowledges that it has received from the
Subadviser a copy of the Subadviser's Form ADV, Part II as
currently filed, at least 48 hours prior to entering into this
Agreement and that it has read and understood the disclosures set
forth in the Subadviser's Form ADV, Part II.
XIX. Miscellaneous.
The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective successors.
XX. Counterparts.
This Agreement may be executed in counterparts, each of which
shall constitute an original and both of which, collectively, shall
constitute one agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in duplicate by their respective officers
as of the 22nd day of November, 1995.
OPPENHEIMER MANAGEMENT CORPORATION
By: /s/ Andrew J. Donohue
--------------------------------
Name: Andrew J. Donohue
Title: Executive Vice President
ADVISORS
By: OPPENHEIMER FINANCIAL CORP.,
a general partner
By: /s/ Thomas E. Duggan
------------------------------------
Name: Thomas E. Duggan
Title: Assistant Secretary
advisory\229subad
<PAGE>
<PAGE>
The universe of funds to which Class A shares of funds
subadvised by OpCap Advisors will be compared to so that it can be
determined in which quartile the performance ranks shall consist of
those funds with the same Lipper investment objective being offered
as the only class of shares of such fund or, in the case where
there is more than one class of shares being offered, with a front-
end load (typically referred to as Class A shares).
The present Lipper investment objective categories for the
funds are:
<TABLE>
<CAPTION>
Fund Lipper Category
<S> <C>
Oppenheimer Quest Value Fund, Inc. CA - Capital Appreciation
Oppenheimer Quest Global Value Fund, Inc. GL - Global
Oppenheimer Quest Opportunity Value Fund FX - Flexible Portfolio
Oppenheimer Quest Small Cap Value Fund SG - Small Company Growth
Oppenheimer Quest Growth & Income Value Fund GI - Growth & Income
Oppenheimer Quest Officers Value Fund To Be Determined
</TABLE>
advisory\229subad
Exhibit 24(b)(6)
GENERAL DISTRIBUTOR'S AGREEMENT
BETWEEN
OPPENHEIMER QUEST FOR VALUE FUNDS
AND
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
Date: November 22, 1995
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
Two World Trade Center, Suite 3400
New York, NY 10048-0203
Dear Sirs:
OPPENHEIMER QUEST FOR VALUE FUNDS, a Massachusetts business
trust (the "Fund"), is registered as an investment company under
the Investment Company Act of 1940 (the "1940 Act"), consisting of
one or more series ("Series") and an indefinite number of one or
more classes of its shares of beneficial interest for each Series
("Shares") have been registered under the Securities Act of 1933
(the "1933 Act") to be offered for sale to the public in a
continuous public offering in accordance with the terms and
conditions set forth in the Prospectus and Statement of Additional
Information ("SAI") included in the Fund's Registration Statement
as it may be amended from time to time (the "current Prospectus
and/or SAI").
In this connection, the Fund desires that your firm (the
"General Distributor") act in a principal capacity as General
Distributor for the sale and distribution of Shares which have been
registered as described above and of any additional Shares which
may become registered during the term of this Agreement. You have
advised the Fund that you are willing to act as such General
Distributor, and it is accordingly agreed by and between us as
follows:
1. Appointment of the Distributor. The Fund hereby appoints
you as the sole General Distributor, pursuant to the aforesaid
continuous public offering of its Shares, and the Fund further
agrees from and after the date of this Agreement, that it will not,
without your consent, sell or agree to sell any Shares otherwise
than through you, except (a) the Fund may itself sell Shares
without sales charge as an investment to the officers, trustees or
directors and bona fide present and former full-time employees of
the Fund, the Fund's Investment Adviser and affiliates thereof, and
to other investors who are identified in the current Prospectus
and/or SAI as having the privilege to buy Shares at net asset
value; (b) the Fund may issue Shares in connection with a merger,
consolidation or acquisition of assets on such basis as may be
authorized or permitted under the 1940 Act; (c) the Fund may issue
Shares for the reinvestment of dividends and other distributions of
the Fund or of any other Fund if permitted by the current
Prospectus and/or SAI; and (d) the Fund may issue Shares as
underlying securities of a unit investment trust if such unit
investment trust has elected to use Shares as an underlying
investment; provided that in no event as to any of the foregoing
exceptions shall Shares be issued and sold at less than the then-
existing net asset value.
2. Sale of Shares. You hereby accept such appointment and
agree to use your best efforts to sell Shares, provided, however,
that when requested by the Fund at any time because of market or
other economic considerations or abnormal circumstances of any
kind, or when agreed to by mutual consent of the Fund and the
General Distributor, you will suspend such efforts. The Fund may
also withdraw the offering of Shares at any time when required by
the provisions of any statute, order, rule or regulation of any
governmental body having jurisdiction. It is understood that you
do not undertake to sell all or any specific number of Shares.
3. Sales Charge. Shares shall be sold by you at net asset
value plus a front-end sales charge not in excess of 8.5% of the
offering price, but which front-end sales charge shall be
proportionately reduced or eliminated for larger sales and under
other circumstances, in each case on the basis set forth in the
Fund's current Prospectus and/or SAI. The redemption proceeds of
shares offered and sold at net asset value with or without a front-
end sales charge may be subject to a contingent deferred sales
charge ("CDSC") under the circumstances described in the current
Prospectus and/or SAI. You may reallow such portion of the front-
end sales charge to dealers or cause payment (which may exceed the
front-end sales charge, if any) of commissions to brokers through
which sales are made, as you may determine, and you may pay such
amounts to dealers and brokers on sales of shares from your own
resources (such dealers and brokers shall collectively include all
domestic or foreign institutions eligible to offer and sell the
Shares), and in the event the Fund has more than one Series or
class of Shares outstanding, then you may impose a front-end sales
charge and/or a CDSC on Shares of one Series or one class that is
different from the charges imposed on Shares of the Fund's other
Series or class(es), in each case as set forth in the current
Prospectus and/or SAI, provided the front-end sales charge and CDSC
to the ultimate purchaser do not exceed the respective levels set
forth for such category of purchaser in the Fund's current
Prospectus and/or SAI.
4. Purchase of Shares.
(a) As General Distributor, you shall have the right to
accept or reject orders for the purchase of Shares
at your discretion. Any consideration which you
may receive in connection with a rejected purchase
order will be returned promptly.
(b) You agree promptly to issue or to cause the duly
appointed transfer or shareholder servicing agent
of the Fund to issue as your agent confirmations of
all accepted purchase orders and to transmit a copy
of such confirmations to the Fund. The net asset
value of all Shares which are the subject of such
confirmations, computed in accordance with the
applicable rules under the 1940 Act, shall be a
liability of the General Distributor to the Fund to
be paid promptly after receipt of payment from the
originating dealer or broker (or investor, in the
case of direct purchases) and not later than eleven
business days after such confirmation even if you
have not actually received payment from the
originating dealer or broker or investor. In no
event shall the General Distributor make payment to
the Fund later than permitted by applicable rules
of the National Association of Securities Dealers,
Inc.
(c) If the originating dealer or broker shall fail to
make timely settlement of its purchase order in
accordance with applicable rules of the National
Association of Securities Dealers, Inc., or if a
direct purchaser shall fail to make good payment
for shares in a timely manner, you shall have the
right to cancel such purchase order and, at your
account and risk, to hold responsible the
originating dealer or broker, or investor. You
agree promptly to reimburse the Fund for losses
suffered by it that are attributable to any such
cancellation, or to errors on your part in relation
to the effective date of accepted purchase orders,
limited to the amount that such losses exceed
contemporaneous gains realized by the Fund for
either of such reasons with respect to other
purchase orders.
(d) In the case of a canceled purchase for the account
of a directly purchasing shareholder, the Fund
agrees that if such investor fails to make you
whole for any loss you pay to the Fund on such
canceled purchase order, the Fund will reimburse
you for such loss to the extent of the aggregate
redemption proceeds of any other shares of the Fund
owned by such investor, on your demand that the
Fund exercise its right to claim such redemption
proceeds. The Fund shall register or cause to be
registered all Shares sold to you pursuant to the
provisions hereof in such names and amounts as you
may request from time to time and the Fund shall
issue or cause to be issued certificates evidencing
such Shares for delivery to you or pursuant to your
direction if and to the extent that the shareholder
account in question contemplates the issuance of
such certificates. All Shares when so issued and
paid for, shall be fully paid and non-assessable by
the Fund (which shall not prevent the imposition of
any CDSC that may apply) to the extent set forth in
the current Prospectus and/or SAI.
5. Repurchase of Shares.
(a) In connection with the repurchase of Shares, you
are appointed and shall act as Agent of the Fund.
You are authorized, for so long as you act as
General Distributor of the Fund, to repurchase,
from authorized dealers, certificated or
uncertificated shares of the Fund ("Shares") on the
basis of orders received from each dealer
("authorized dealer") with which you have a dealer
agreement for the sale of Shares and permitting
resales of Shares to you, provided that such
authorized dealer, at the time of placing such
resale order, shall represent (i) if such Shares
are represented by certificate(s), that
certificate(s) for the Shares to be repurchased
have been delivered to it by the registered owner
with a request for the redemption of such Shares
executed in the manner and with the signature
guarantee required by the then-currently effective
Prospectus of the Fund, or (ii) if such Shares are
uncertificated, that the registered owner(s) has
delivered to the dealer a request for the
redemption of such Shares executed in the manner
and with the signature guarantee required by the
then-currently effective Prospectus of the Fund.
(b) You shall (a) have the right in your discretion to
accept or reject orders for the repurchase of
Shares; (b) promptly transmit confirmations of all
accepted repurchase orders; and (c) transmit a copy
of such confirmation to the Fund, or, if so
directed, to any duly appointed transfer or
shareholder servicing agent of the Fund. In your
discretion, you may accept repurchase requests made
by a financially responsible dealer which provides
you with indemnification in form satisfactory to
you in consideration of your acceptance of such
dealer's request in lieu of the written redemption
request of the owner of the account; you agree that
the Fund shall be a third party beneficiary of such
indemnification.
(c) Upon receipt by the Fund or its duly appointed
transfer or shareholder servicing agent of any
certificate(s) (if any has been issued) for
repurchased Shares and a written redemption request
of the registered owner(s) of such Shares executed
in the manner and bearing the signature guarantee
required by the then-currently effective Prospectus
or SAI of the Fund, the Fund will pay or cause its
duly appointed transfer or shareholder servicing
agent promptly to pay to the originating authorized
dealer the redemption price of the repurchased
Shares (other than repurchased Shares subject to
the provisions of part (d) of Section 5 of this
Agreement) next determined after your receipt of
the dealer's repurchase order.
(d) Notwithstanding the provisions of part (c) of
Section 5 of this Agreement, repurchase orders
received from an authorized dealer after the
determination of the Fund's redemption price on a
regular business day will receive that day's
redemption price if the request to the dealer by
its customer to arrange such repurchase prior to
the determination of the Fund's redemption price
that day complies with the requirements governing
such requests as stated in the current Prospectus
and/or SAI of the Fund.
(e) You will make every reasonable effort and take all
reasonably available measures to assure the
accurate performance of all services to be
performed by you hereunder within the requirements
of any statute, rule or regulation pertaining to
the redemption of shares of a regulated investment
company and any requirements set forth in the then-
current Prospectus and/or SAI of the Fund. You
shall correct any error or omission made by you in
the performance of your duties hereunder of which
you shall have received notice in writing and any
necessary substantiating data; and you shall hold
the Fund harmless from the effect of any errors or
omissions which might cause an over- or under-
redemption of the Fund's Shares and/or an excess or
non-payment of dividends, capital gains
distributions, or other distributions.
(f) In the event an authorized dealer initiating a
repurchase order shall fail to make delivery or
otherwise settle such order in accordance with the
rules of the National Association of Securities
Dealers, Inc., you shall have the right to cancel
such repurchase order and, at your account and
risk, to hold responsible the originating dealer.
In the event that any cancellation of a Share
repurchase order or any error in the timing of the
acceptance of a Share repurchase order shall result
in a gain or loss to the Fund, you agree promptly
to reimburse the Fund for any amount by which any
loss shall exceed then-existing gains so arising.
6. 1933 Act Registration. The Fund has delivered to you a
copy of its current Prospectus and SAI. The Fund agrees that it
will use its best efforts to continue the effectiveness of the
Registration Statement under the 1933 Act. The Fund further agrees
to prepare and file any amendments to its Registration Statement as
may be necessary and any supplemental data in order to comply with
the 1933 Act. The Fund will furnish you at your expense with a
reasonable number of copies of the Prospectus and SAI and any
amendments thereto for use in connection with the sale of Shares.
7. 1940 Act Registration. The Fund has already registered
under the 1940 Act as an investment company, and it will use its
best efforts to maintain such registration and to comply with the
requirements of the 1940 Act.
8. State Blue Sky Qualification. At your request, the Fund
will take such steps and pay such fees and expenses as may be
necessary and feasible to qualify Shares for sale in states,
territories or dependencies of the United States, the District of
Columbia, the Commonwealth of Puerto Rico and in foreign countries,
in accordance with the laws thereof, and to renew or extend any
such qualification; provided, however, that the Fund shall not be
required to qualify shares or to maintain the qualification of
shares in any jurisdiction where it shall deem such qualification
disadvantageous to the Fund.
9. Duties of Distributor. You agree that:
(a) Neither you nor any of your officers will take any
long or short position in the Shares, but this
provision shall not prevent you or your officers
from acquiring Shares for investment purposes only;
and
(b) You shall furnish to the Fund any pertinent
information required to be inserted with respect to
you as General Distributor within the purview of
the Securities Act of 1933 in any reports or
registrations required to be filed with any
governmental authority; and
(c) You will not make any representations inconsistent
with the information contained in the current
Prospectus and/or SAI; and
(d) You shall maintain such records as may be
reasonably required for the Fund or its transfer or
shareholder servicing agent to respond to
shareholder requests or complaints, and to permit
the Fund to maintain proper accounting records, and
you shall make such records available to the Fund
and its transfer agent or shareholder servicing
agent upon request; and
(e) In performing under this Agreement, you shall
comply with all requirements of the Fund's current
Prospectus and/or SAI and all applicable laws,
rules and regulations with respect to the purchase,
sale and distribution of Shares.
10. Allocation of Costs. The Fund shall pay the cost of
composition and printing of sufficient copies of its Prospectus and
SAI as shall be required for periodic distribution to its
shareholders and the expense of registering Shares for sale under
federal securities laws. You shall pay the expenses normally
attributable to the sale of Shares, other than as paid under the
Fund's distribution plans under Rule 12b-1 of the 1940 Act,
including the cost of printing and mailing of the Prospectus (other
than those furnished to existing shareholders) and any sales
literature used by you in the public sale of the Shares.
11. Duration. This Agreement shall take effect on the date
first written above, and shall supersede any and all prior General
Distributor's Agreements by and among the Fund and you. Unless
earlier terminated pursuant to paragraph 12 hereof, this Agreement
shall remain in effect until September 30, 1997. This Agreement
shall continue in effect from year to year thereafter, provided
that such continuance shall be specifically approved at least
annually: (a) by the Fund's Board of Trustees or by vote of a
majority of the voting securities of the Fund; and (b) by the vote
of a majority of the Trustees, who are not parties to this
Agreement or "interested persons" (as defined in the 1940 Act) of
any such person, cast in person at a meeting called for the purpose
of voting on such approval.
12. Termination. This Agreement may be terminated (a) by the
General Distributor at any time without penalty by giving sixty
days' written notice (which notice may be waived by the Fund); (b)
by the Fund at any time without penalty upon sixty days' written
notice to the General Distributor (which notice may be waived by
the General Distributor); or (c) by mutual consent of the Fund and
the General Distributor, provided that such termination by the Fund
pursuant to part (b) of this Section 12 shall be directed or
approved by the Board of Trustees of the Fund or by the vote of the
holders of a "majority" of the outstanding voting securities of the
Fund. In the event this Agreement is terminated, the General
Distributor shall be entitled to be paid the CDSC under paragraph
3 hereof on the redemption proceeds of Shares sold prior to the
effective date of such termination.
13. Assignment. This Agreement may not be amended or changed
except in writing and shall be binding upon and shall enure to the
benefit of the parties hereto and their respective successors;
however, this Agreement shall not be assigned by either party and
shall automatically terminate upon assignment.
14. Disclaimer of Shareholder Liability. The General
Distributor understands and agrees that the obligations of the Fund
under this Agreement are not binding upon any Trustee or
shareholder of the Fund personally, but bind only the Fund and the
Fund's property; the General Distributor represents that it has
notice of the provisions of the Declaration of Trust of the Fund
disclaiming Trustee and shareholder liability for acts or
obligations of the Fund.
15. Section Headings. The heading of each section is for
descriptive purposes only, and such headings are not to be
construed or interpreted as part of this Agreement.
If the foregoing is in accordance with your understanding, so
indicate by signing in the space provided below.
OPPENHEIMER QUEST FOR VALUE FUNDS
By: /s/ Bridget A. Macaskill
-----------------------------
Accepted
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: /s/ Andrew J. Donohue
--------------------------------
Andrew J. Donohue
Executive Vice President
ofmi\q4sergen.dis
Exhibit 24(b)(8)
CUSTODIAN CONTRACT
Between
QUEST FOR VALUE FAMILY OF FUNDS
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <S>
1. Employment of Custodian and Property to be Held By It 1
2. Duties of the Custodian with Respect to Property of the
Fund Held by the Custodian 2
2.1 Holding Securities 2
2.2 Delivery of Securities 3
2.3 Registration of Securities 8
2.4 Bank Accounts 9
2.5 Payments for Shares 10
2.6 Availability of Federal Funds 10
2.7 Collection of Income 10
2.8 Payment of Fund Monies 11
2.9 Liability for Payment in Advance of Receipt
of Securities Purchased 14
2.10 Payments for Repurchases or Redemptions of
Shares of the Fund 15
2.11 Appointment of Agents 15
2.12 Deposit of Fund Assets in Securities System 16
2.12A Fund Assets Held in the Custodian's Direct
Paper System 19
2.13 Segregated Account 21
2.14 Ownership Certificates for Tax Purposes 22
2.15 Proxies 22
2.16 Communications Relating to Portfolio Securities 23
2.17 Proper Instructions 23
2.18 Actions Permitted Without Express Authority 24
2.19 Evidence of Authority 25
3. Duties of Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net Income 26
4. Records 26
5. Opinion of Fund's Independent Accountants 27
6. Reports to Fund by Independent Public Accountants 27
7. Compensation of Custodian 28
8. Responsibility of Custodian 28
9. Effective Period, Termination and Amendment 30
10. Successor Custodian 31
11. Interpretive and Additional Provisions 33
12. Additional Funds 33
13. Massachusetts Law to Apply 34
14. Prior Contracts 34
</TABLE>
<PAGE>
CUSTODIAN CONTRACT
This Contract between Quest For Value Family of Funds, a
business trust organized and existing under the laws of
Massachusetts, having its principal place of business at 200
Liberty Street, New York, New York 10281, hereinafter called the
"Fund," and State Street Bank and Trust Company, a Massachusetts
trust company, having its principal place of business at 225
Franklin Street, Boston, Massachusetts 02110, hereinafter called
the "Custodian,"
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate
series, with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in four
series, the Asset Allocation Portfolio, U.S. Government High Income
Portfolio, Fixed Income Portfolio, and Small Capitalization
Portfolio (such series together with all other series subsequently
established by the Fund and made subject to this Contract in
accordance with paragraph 12, being herein referred to as the
"Portfolio(s)");
NOW THEREFOR, in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as
follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of
the assets of the Portfolios of the Fund pursuant to the provisions
of the Declaration of Trust. The Fund on behalf of the
Portfolio(s) agrees to deliver to the Custodian all securities and
cash of the Portfolios, and all payments of income, payments of
principal or capital distributions received by it with respect to
all securities owned by the Portfolio(s) from time to time, and the
cash consideration received by it for such new or treasury shares
of beneficial interest of the Fund representing interests in the
Portfolios, ("Shares") as may be issued or sold from time to time.
The Custodian shall not be responsible for any property of a
Portfolio or received by the Portfolio and not delivered to the
Custodian.
Upon receipt of "Proper Instructions" (within the meaning of
Section 2.17), the Custodian shall on behalf of the applicable
Portfolio(s) from time to time employ one or more sub-custodians,
but only in accordance with an applicable vote by the Board of
Trustees of the Fund on behalf of the applicable Portfolio(s), and
provided that the Custodian shall have no more or less
responsibility or liability to the Fund on account of any actions
or omissions of any sub-custodian so employed than any such sub-
custodian has to the Custodian.
2. Duties of the Custodian with Respect to Property of the Fund
Held By the Custodian
2.1 Holding Securities. The Custodian shall hold and physically
segregate for the account of each Portfolio including all
domestic securities owned by the Fund, other than (a)
securities which are maintained pursuant to Section 2.12 in
a clearing agency which acts as a securities depository or
in a book-entry system authorized by the U.S. Department of
the Treasury, collectively referred to herein as "Securities
System" and (b) commercial paper of an issuer for which
State Street Bank and Trust Company acts as issuing and
paying agent ("Direct Paper") which is deposited and/or
maintained in the Direct Paper System of the Custodian
pursuant to Section 2.12A.
2.2 Delivery of Securities. The Custodian shall release and
deliver securities owned by a Portfolio held by the
Custodian or in a Securities System account of the Custodian
or in the Custodian's Direct Paper book entry system account
("Direct Paper System Account") only upon receipt of Proper
Instructions from the Fund on behalf of the applicable
Portfolio, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the
Portfolio and receipt of payment therefor;
2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities
entered into by the Portfolio;
3) In the case of a sale effected through a Securities
System, in accordance with the provisions of Section
2.12 hereof;
4) To the depository agent in connection with tender or
other similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such
securities are called, redeemed, retired or otherwise
become payable; provided that, in any such case, the
cash or other consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for transfer
into the name of the Portfolio or into the name of
any nominee or nominees of the Custodian or into the
name or nominee name of any agent appointed pursuant
to Section 2.11 or into the name or nominee name of
any sub-custodian appointed pursuant to Article 1; or
for exchange for a different number of bonds,
certificates or other evidence representing the same
aggregate face amount or number of units; provided
that, in any such case, the new securities are to be
delivered to the Custodian;
7) Upon the sale of such securities for the account of
the Portfolio, to the broker or its clearing agent,
against a receipt, for examination in accordance with
"street delivery" custom; provided that in any such
case, the Custodian shall have no responsibility or
liability for any loss arising from the delivery of
such securities prior to receiving payment for such
securities except as may arise from the Custodian's
own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization,
reorganization or readjustment of the securities of
the issuer of such securities, or pursuant to
provisions for conversion contained in such
securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities
and cash, if any, are to be delivered to the
Custodian;
9) In the case of warrants, rights or similar
securities, the surrender thereof in the exercise of
such warrants, rights or similar securities or the
surrender of interim receipts or temporary securities
for definitive securities; provided that, in any such
case, the new securities and cash, if any, are to be
delivered to the Custodian;
10) For delivery in connection with any loans of
securities made by the Portfolio, but only against
receipt of adequate collateral as agreed upon from
time to time by the Custodian and the Fund on behalf
of the Portfolio, which may be in the form of cash or
obligations issued by the United States government,
its agencies or instrumentalities, except that in
connection with any loans for which collateral is to
be credited to the Custodian's account in the book-
entry system authorized by the U.S. Department of the
Treasury, the Custodian will not be held liable or
responsible for the delivery of securities owned by
the Portfolio prior to the receipt of such
collateral;
11) For delivery as security in connection with any
borrowings by the Fund on behalf of the Portfolio
requiring a pledge of assets by the Fund on behalf of
the Portfolio, but only against receipt of amounts
borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio,
the Custodian and a broker-dealer registered under
the Securities Exchange Act of 1934 (the "Exchange
Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to
compliance with the rules of The Options Clearing
Corporation and of any registered national securities
exchange, or of any similar organization or
organizations, regarding escrow or other arrangements
in connection with transactions by the Portfolio of
the Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio,
the Custodian, and a Futures Commission Merchant
registered under the Commodity Exchange Act, relating
to compliance with the rules of the Commodity Futures
Trading Commission and/or any Contract Market, or any
similar organization or organizations, regarding
account deposits in connection with transactions by
the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such
Transfer Agent or to the holders of shares in
connection with distributions in kind, as may be
described from time to time in the currently
effective prospectus and statement of additional
information of the Fund, related to the Portfolio
("Prospectus"), in satisfaction of requests by
holders of Shares for repurchase or redemption; and
15) For any other proper corporate purpose, but only upon
receipt of, in addition to Proper Instructions from
the Fund on behalf of the applicable Portfolio, a
certified copy of a resolution of the Board of
Trustees or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or
an Assistant Secretary, specifying the securities of
the Portfolio to be delivered, setting forth the
purpose for which such delivery is to be made,
declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom
delivery of such securities shall be made.
2.3 Registration of Securities. Securities held by the
Custodian (other than bearer securities) shall be registered
in the name of the Portfolio or in the name of any nominee
of the Fund on behalf of the Portfolio or of any nominee of
the Custodian which nominee shall be assigned exclusively to
the Portfolio, unless the Fund has authorized in writing the
appointment of a nominee to be used in common with other
registered investment companies having the same investment
adviser as the Portfolio, or in the name or nominee name of
any agent appointed pursuant to Section 2.11 or in the name
or nominee name of any sub-custodian appointed pursuant to
Article 1. All securities accepted by the Custodian on
behalf of the Portfolio under the terms of this Contract
shall be in "street name" or other good delivery form. If,
however, the Fund directs the Custodian to maintain
securities in "street name" or other good delivery form.
If, however, the Fund directs the Custodian to maintain
securities in "street name," the Custodian shall utilize its
best efforts only to timely collect income due the Fund on
such securities and to notify the Fund on a best efforts
basis only of relevant corporate actions including, without
limitation, pendency of calls, maturities, tender or
exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a
separate bank account or accounts in the name of each
Portfolio of the Fund, subject only to draft or order by the
Custodian acting pursuant to the terms of this Contract, and
shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the
account of the Portfolio, other than cash maintained by the
Portfolio in a bank account established and used in
accordance with Rule 17f-3 under the Investment Company Act
of 1940. Funds held by the Custodian for the Portfolio may
be deposited by it to its credit as Custodian in the Banking
Department of the Custodian or in such other banks or trust
companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust
company shall be qualified to act as a custodian under the
Investment Company Act of 1940 and that each such bank or
trust company and the funds to be deposited with each such
bank or trust company shall on behalf of each applicable
Portfolio be approved by vote of a majority of the Board of
Trustees of the Fund. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be
withdrawable by the Custodian only in that capacity.
2.5 Payments for Shares. The Custodian shall receive from the
distributor for the Shares or from the Transfer Agent of the
Fund and deposit into the account of the appropriate
Portfolio such payments as are received for Shares of that
Portfolio issued or sold from time to time by the Fund. The
Custodian will provide timely notification to the Fund on
behalf of each such Portfolio and Transfer Agent of any
receipt by it of payments for Shares of such Portfolio.
2.6 Availability of Federal Funds. Upon mutual agreement
between the Fund on behalf of each applicable Portfolio and
the Custodian, the Custodian shall, upon the receipt of
Proper Instructions from the Fund on behalf of a Portfolio,
make federal funds available to such Portfolio as of
specified times agreed upon from time to time by the Fund
and the Custodian in the amount of checks received in
payment for Shares of such Portfolio which are deposited
into the Portfolio's account.
2.7 Collection of Income. Subject to the provisions of Section
2.3, the Custodian shall collect on a timely basis all
income and other payments with respect to registered
securities held hereunder to which the each Portfolio shall
be entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all
income and other payments with respect to bearer securities
if, on the date of payment by the issuer, such securities
are held by the Custodian or its agent thereof and shall
credit such income, as collected, to such Portfolio's
custodian account. Without limiting the generality of the
foregoing, the Custodian shall detach and present for
payment all coupons and other income items requiring
presentation as and when they become due and shall collect
interest when due on securities held hereunder. Income due
each Portfolio on securities loaned pursuant to the
provisions of Section 2.2 (10) shall be the responsibility
of the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than to
provide the Fund with such information or data as may be
necessary to assist the Fund in arranging for the timely
delivery to the Custodian of the income to which the
Portfolio is properly entitled.
2.8 Payment of Fund Monies. Upon receipt of Proper Instructions
from the Fund on behalf of the applicable Portfolio, which
may be continuing instructions when deemed appropriate by
the parties, the Custodian shall pay out monies of a
Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options,
futures contracts or options on futures contracts for
the account of the Portfolio but only (a) against the
delivery of such securities or evidence of title to
such options, futures contracts or options on futures
contracts, to the Custodian (or any bank, banking
firm or trust company doing business in the United
States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as
a custodian and has been designated by the Custodian
as its agent for this purpose) registered in the name
of the Portfolio or in the name of a nominee of the
Custodian referred to in Section 2.3 hereof or in
proper form for transfer; (b) in the case of a
purchase effected through a Securities System, in
accordance with the conditions set forth in Section
2.12 hereof; (c) in the case of a purchase involving
the Direct Paper System, in accordance with the
conditions set forth in Section 2.12A; (d) in the
case of repurchase agreements entered into between
the Fund on behalf of the Portfolio and the
Custodian, or another bank, or a broker-dealer which
is a member of the NASD, (i) against delivery of the
securities either in certificate form or through an
entry crediting the Custodian's account at the
Federal Reserve Bank with such securities or (ii)
against delivery of the receipt evidencing purchase
by the Portfolio of securities owned by the Custodian
along with written evidence of the agreement by the
Custodian to repurchase such securities from the
Portfolio or (e) for transfer to a time deposit
account of the Fund in any bank, whether domestic or
foreign; such transfer may be effected prior to
receipt of a confirmation from a broker and/or the
applicable bank pursuant to Proper Instructions from
the Fund as defined in Section 2.17;
2) In connection with conversion, exchange or surrender
of securities owned by the Portfolio as set forth in
Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by
the Portfolio as set forth in Section 2.10 hereof;
4) For the payment of any expense or liability incurred
by the Portfolio, including but not limited to the
following payments for the account of the Portfolio:
interest, taxes, management, accounting, transfer
agent and legal fees, and operating expenses of the
Fund whether or not such expenses are to be in whole
or part capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares of the
Portfolio declared pursuant to the governing
documents of the Fund;
6) For payment of the amount of dividends received in
respect of securities sold short;
7) For any other proper purpose, but only upon receipt
of, in addition to Proper Instructions from the
Fund on behalf of the Portfolio, a certified copy of
a resolution of the Board of Trustees or of the
Executive Committee of the Fund signed by an officer
of the Fund and certified by its Secretary or an
Assistant Secretary, specifying the amount of such
payment, setting forth the purpose for which such
payment is to be made, declaring such purpose to be
a proper purpose, and naming the person or persons to
whom such payment is to be made.
2.9 Liability for Payment in Advance of Receipt of Securities
Purchased. Except as specifically stated otherwise in this
Contract, in any and every case where payment for purchase
of securities for the account of the Portfolio is made by
the Custodian in advance of receipt of the securities
purchased in the absence of specific written instructions
from the Fund on behalf of the Portfolio to so pay in
advance, the Custodian shall be absolutely liable to the
Fund for such securities to the same extent as if the
securities had been received by the Custodian.
2.10 Payments for Repurchase or Redemptions of Shares of the
Fund. From such funds as may be available for the purpose
but subject to the limitations of the Declaration of Trust
and any applicable votes of the Board of Trustees of the
Fund pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available
for payment to holders of Shares who have delivered to the
Transfer Agent a request for redemption or repurchase of
their Shares. In connection with the redemption or
repurchase of Shares of a Portfolio, the Custodian is
authorized upon receipt of instructions from the Transfer
Agent to wire funds to or through a commercial bank
designated by the redeeming shareholders. In connection
with the redemption or repurchase of Shares of the Fund, the
Custodian shall honor checks drawn on the Custodian by a
holder of Shares, which checks have been furnished by the
Fund to the holder of Shares, when presented to the
Custodian in accordance with such procedures and controls as
are mutually agreed upon from time to time between the Fund
and the Custodian.
2.11 Appointment of Agents. The Custodian may at any time or
times in its discretion appoint (and may at any time remove)
any other bank or trust company which is itself qualified
under the Investment Company Act of 1940, as amended, to act
as a custodian, as its agent to carry out such of the
provisions of this Article 2 as the Custodian may from time
to time direct; provided, however, that the appointment of
any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.
2.12 Deposit of Securities in Securities Systems. The Custodian
may deposit and/or maintain securities owned by a Portfolio
in a clearing agency registered with the Securities and
Exchange Commission under Section 17A of the Securities
Exchange Act of 1934, which acts as a securities depository,
or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies,
collectively referred to herein as "Securities System" in
accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations, if
any, and subject to the following provisions:
1) The Custodian may keep securities of the Portfolio in
a Securities System provided that such securities are
represented in an account ("Account") of the
Custodian in the Securities System which shall not
include any assets of the Custodian other than assets
held as a fiduciary, custodian or otherwise for
customers;
2) The records of the Custodian with respect to
securities of the Portfolio which are maintained in
a Securities System shall identify by book-entry
those securities belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for
the account of the Portfolio upon (i) receipt of
advice from the Securities System that such
securities have been transferred to the Account, and
(ii) the making of an entry on the records of the
Custodian to reflect such payment and transfer for
the account of the Portfolio. The Custodian shall
transfer securities sold for the account of the
Portfolio upon (i) receipt of advice from the
Securities System that payment for such securities
has been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of
the Portfolio. Copies of all advices from the
Securities System of transfers of domestic securities
for the account of the Portfolio shall identify the
Portfolio, be maintained for the Portfolio by the
Custodian and be provided to the Fund at its request.
Upon request, the Custodian shall furnish the Fund on
behalf of the Portfolio confirmation of each transfer
to or from the account of the Portfolio in the form
of a written advice or notice and shall furnish to
the Fund on behalf of the Portfolio copies of daily
transaction sheets reflecting each day's transactions
in the Securities System for the account of the
Portfolio.
4) The Custodian shall provide the Fund for the
Portfolio with any report obtained by the Custodian
on the Securities System's accounting system,
internal accounting control and procedures for
safeguarding securities deposited in the Securities
System;
5) The Custodian shall have received from the Fund on
behalf of the Portfolio the initial or annual
certificate, as the case may be, required by Article
9 hereof;
6) Anything to the contrary in this Contract
notwithstanding, the Custodian shall be liable to the
Fund for the benefit of the Portfolio for any loss or
damage to the Portfolio resulting from use of the
Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of
its agents or of any of its or their employees or
from failure of the Custodian or any such agent to
enforce effectively such rights as it may have
against the Securities System; at the election of the
Fund, it shall be entitled to be subrogated to the
rights of the Custodian with respect to any claim
against the Securities System or any other person
which the Custodian may have as a consequence of any
such loss or damage if and to the extent that the
Portfolio has not been made whole for any such loss
or damage.
2.12A Fund Assets Held in the Custodian's Direct Paper System.
The Custodian may deposit and/or maintain securities owned
by a Portfolio in the Direct Paper System of the Custodian
subject to the following provisions:
1) No transaction relating to securities in the Direct
Paper System will be effected in the absence of
Proper Instructions from the Fund on behalf of the
Portfolio;
2) The Custodian may keep securities of the Portfolio in
the Direct Paper System only if such securities are
represented in an account ("Account") of the
Custodian in the Direct Paper System which shall not
include any assets of the Custodian other than assets
held as a fiduciary, custodian or otherwise for
customers;
3) The records of the Custodian with respect to
securities of the Portfolio which are maintained in
the Direct Paper System shall identify by book-entry
those securities belonging to the Portfolio;
4) The Custodian shall pay for securities purchased for
the account of the Portfolio upon the making of an
entry on the records of the Custodian to reflect such
payment and transfer of securities to the account of
the Portfolio. The Custodian shall transfer
securities sold for the account of the Portfolio upon
the making of an entry on the records of the
Custodian to reflect such transfer and receipt of
payment for the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from
the account of the Portfolio, in the form of a
written advice or notice, of Direct Paper on the next
business day following such transfer and shall
furnish to the Fund on behalf of the Portfolio copies
of daily transaction sheets reflecting each day's
transactions in the Securities System for the account
of the Portfolio;
6) The Custodian shall provide the Fund on behalf of the
Portfolio with any report on its system of internal
accounting control as the Fund may reasonably request
from time to time;
2.13 Segregated Account. The Custodian shall upon receipt of
Proper Instructions from the Fund on behalf of each
applicable Portfolio establish and maintain a segregated
account or accounts for and on behalf of each such
Portfolio, into which account or accounts may be transferred
cash and/or securities, including securities maintained in
an account by the Custodian pursuant to Section 2.12 hereof,
(i) in accordance with the provisions of any agreement among
the Fund on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Exchange Act and a member
of the NASD (or any futures commission merchant registered
under the Commodity Exchange Act), relating to compliance
with the rules of The Options Clearing Corporation and of
any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered
contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in
connection with transactions by the Portfolio, (ii) for
purposes of segregating cash or government securities in
connection with options purchased, sold or written by the
Portfolio or commodity futures contracts or options thereon
purchased or sold by the Portfolio, (iii) for the purposes
of compliance by the Portfolio with the procedures required
by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies and
(iv) for other proper corporate purposes, but only, in the
case of clause (iv), upon receipt of, in addition to Proper
Instructions from the Fund on behalf of the applicable
Portfolio, a certified copy of a resolution of the Board of
Trustees or of the Executive Committee signed by an officer
of the Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such
segregated account and declaring such purposes to be proper
corporate purposes.
2.14 Ownership Certificates for Tax Purposes. The Custodian
shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in
connection with receipt of income or other payments with
respect to securities of each Portfolio held by it and in
connection with transfers of such securities.
2.15 Proxies. The Custodian shall, with respect to the
securities held hereunder, cause to be promptly executed by
the registered holder of such securities, if the securities
are registered otherwise than in the name of the Portfolio
or a nominee of the Portfolio, all proxies, without
indication of the manner in which such proxies are to be
voted, and shall promptly deliver to the Portfolio such
proxies, all proxy soliciting materials and all notices
relating to such securities.
2.16 Communications Relating to Fund Portfolio Securities.
Subject to the provisions of Section 2.3, the Custodian
shall transmit promptly to the Fund for each Portfolio all
written information (including, without limitation, pendency
of calls and maturities of domestic securities and
expirations of rights in connection therewith and notices of
exercise of call and put options written by the Fund on
behalf of the Portfolio and the maturity of futures
contracts purchased or sold by the Portfolio) received by
the Custodian from issuers of the securities being held for
the Portfolio. With respect to tender or exchange offers,
the Custodian shall transmit promptly to the Portfolio all
written information received by the Custodian from issuers
of the domestic securities whose tender or exchange is
sought and from the party (or his agents) making the tender
or exchange offer. If the Portfolio desires to take action
with respect to any tender offer, exchange offer or any
other similar transaction, the Portfolio shall notify the
Custodian at least three business days prior to the date on
which the Custodian is to take such action.
2.17 Proper Instructions. Proper instructions as used herein
throughout this Article 2 means a writing signed or
initialled by one or more person or persons as the Board of
Trustees shall have from time to time authorized. Each such
writing shall set forth the specific transaction or type of
transaction involved, including a specific statement of the
purpose for which such action is requested. Oral
instructions will be considered Proper Instructions if the
Custodian reasonably believes them to have been given by a
person authorized to give such instructions with respect to
the transaction involved. The Fund shall cause all oral
instructions to be confirmed in writing. Upon receipt of a
certificate of the Secretary or an Assistant Secretary as to
the authorization by the Board of Trustees of the Fund
accompanied by a detailed description of procedures approved
by the Board of Trustees, Proper Instructions may include
communications effected directly between electro-mechanical
or electronic devices provided that the Board of Trustees
and the Custodian are satisfied that such procedures afford
adequate safeguards for the Portfolio's assets. For
purposes of this Section, Proper Instructions shall include
instructions received by the Custodian pursuant to any
three-party agreement which requires a segregated asset
account in accordance with Section 2.13.
2.18 Actions Permitted without Express Authority. The Custodian
may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses
of handling securities or other similar items
relating to its duties under this Contract, provided
that all such payments shall be accounted for to the
Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities
in definitive form;
3) endorse for collection, in the name of the
Portfolio, checks, drafts and other negotiable
instruments; and
4) in general, attend to all non-discretionary details
in connection with the sale, exchange, substitution,
purchase, transfer and other dealings with the
securities and property of the Portfolio except as
otherwise directed by the Board of Trustees of the
Fund.
2.19 Evidence of Authority. The Custodian shall be protected in
acting upon any instructions, notice, request, consent,
certificate or other instrument or paper believed by it to
be genuine and to have been property executed by or on
behalf of the Fund. The Custodian may receive and accept a
certified copy of a vote of the Board of Trustees of the
Fund as conclusive evidence (a) of the authority of any
person to act in accordance with such vote or (b) of any
determination or of any action by the Board of Trustees
pursuant to the Declaration of Trust as described in such
vote, and such vote may be considered as in full force and
effect until receipt by the Custodian of written notice to
the contrary.
3. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income.
The Custodian shall cooperate with any supply necessary
information to the entity or entities appointed by the Board of
Trustees of the Fund to keep the books of account of each Portfolio
and/or compute the net asset value per share of the outstanding
shares of each Portfolio or, if directed in writing to do so by the
Fund on behalf of the Portfolio, shall itself keep such books of
account and/or compute such net asset value per share. If so
directed, the Custodian shall also calculate daily the net income
of the Portfolio as described in the Fund's currently effective
prospectus and shall advise the Fund and the Transfer Agent daily
of the total amounts of such net income and, if instructed in
writing by an officer of the Fund to do so, shall advise the
Transfer Agent periodically of the division of such net income
among its various components. The calculations of the net asset
value per share and the daily income of each Portfolio shall be
made at the time or times described from time to time in the Fund's
currently effective prospectus related to such Portfolio.
4. Records.
The Custodian shall with respect to each Portfolio create
and maintain all records relating to its activities and obligations
under this Contract in such manner as will meet the obligations of
the Fund under the Investment Company Act of 1940, with particular
attention to Section 31 thereof and Rules 31a-1 and 31a-2
thereunder, applicable federal and state tax laws and any other law
or administrative rules or procedures which may be applicable to
the Fund. All such records shall be the property of the Fund and
shall at all times during the regular business hours of the
Custodian be open for inspection by duly authorized officers,
employees or agents of the Fund and employees and agents of the
Securities and Exchange Commission. The Custodian shall, at the
Fund's request, supply the Fund with a tabulation of securities
owned by each Portfolio and held by the Custodian and shall, when
requested to do so by the Fund and for such compensation as shall
be agreed upon between the Fund and the Custodian, include
certificate numbers in such tabulations.
5. Opinion of Fund's Independent Accountant.
The Custodian shall take all reasonable action, as the Fund
on behalf of each applicable Portfolio may from time to time
request, to obtain from year to year favorable opinions from the
Fund's independent accountants with respect to its activities
hereunder in connection with the preparation of the Fund's Form N-
1A, and Form N-SAR or other annual reports to the Securities and
Exchange Commission and with respect to any other requirements of
such Commission.
6. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, on behalf of each of
the Portfolios at such times as the Fund may reasonably require,
with reports by independent public accountants on the accounting
system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts,
including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under
this Contract; such reports shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Fund to
provide reasonable assurance that any material inadequacies would
be disclosed by such examination, and, if there are no such
inadequacies, the reports shall so state.
7. Compensation of Custodian.
The Custodian shall be entitled to reasonable compensation
for its services and expenses as Custodian, as agreed upon from
time to time between the Fund on behalf of the applicable Portfolio
and the Custodian.
8. Responsibility of Custodian.
So long as and to the extent that it is in the exercise of
reasonable care, the Custodian shall not be responsible for the
title, validity or genuineness of any property or evidence of title
thereto received by it or delivered by it pursuant to this Contract
and shall be held harmless in acting upon any notice, request,
consent, certificate or other instrument reasonably believed by it
to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the
terms of a three-party futures or options agreement. The Custodian
shall be held to the exercise of reasonable care in carrying out
the provisions of this Contract, but shall be kept indemnified by
and shall be without liability to the Fund for any action taken or
omitted by it in good faith without negligence. It shall be
entitled to rely on and may act upon advice of counsel (who may be
counsel for the Fund) on all matters, and shall be without
liability for any action reasonably taken or omitted pursuant to
such advice. Notwithstanding the foregoing, the responsibility of
the Custodian with respect to redemptions effected by check shall
be in accordance with a separate Agreement entered into between the
Custodian and the Fund.
If the Fund on behalf of the Portfolio requires the
Custodian to take any action with respect to securities, which
action involves the payment of money or which action may, in the
opinion of the Custodian, result in the Custodian or its nominee
assigned to the Fund or the Portfolio being liable for the payment
of money or incurring liability of some other form, the Fund on
behalf of the Portfolio, as a prerequisite to requiring the
Custodian to take such action, shall provide indemnity to the
Custodian in an amount and form satisfactory to it.
If the Fund requires the Custodian to advance cash or
securities for any purpose of the benefit of a Portfolio or in the
event that the Custodian or its nominee shall incur or be assessed
any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as
may arise from its or its nominee's own negligent action, negligent
failure to act or willful misconduct, any property at any time held
for the account of the applicable Portfolio shall be security
therefor and should the Fund fail to repay the Custodian promptly,
the Custodian shall be entitled to utilize available cash and to
dispose of the Portfolio's assets to the extent necessary to obtain
reimbursement.
9. Effective Period, Termination and Amendment.
This Contract shall become effective as of its execution,
shall continue in full force and effect until terminated as
hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by either
party by an instrument in writing delivered or mailed, postage
prepaid to the other party, such termination to take effect not
sooner than thirty (30) days after the date of such delivery or
mailing; provided, however that the Custodian shall not with
respect to a Portfolio act under Section 2.12 hereof in the absence
of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Trustees of the Fund has
approved the initial use of a particular Securities System and the
receipt of an annual certificate of the Secretary or an Assistant
Secretary that the Board of Trustees has reviewed the use by such
Portfolio of such Securities System, as required in each case by
Rule 17f-4 under the Investment Company Act of 1940, as amended and
that the Custodian shall not act under Section 2.12A hereof in the
absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Trustees has approved the
initial use of the Direct Paper System by such Portfolio and the
receipt of an annual certificate of the Secretary or an Assistant
Secretary that the Board of Trustees has reviewed the use by such
Portfolio of the Direct Paper System; provided further, however,
that the Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or
any provision of the Declaration of Trust, and further provided,
that the Fund may at any time by action of its Board of Trustees
(i) substitute another bank or trust company for the Custodian by
giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment
of a conservator or receive for the Custodian by the Comptroller of
the Currency or upon the happening of a like event at the direction
of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Fund on behalf of each
applicable Portfolio shall pay to the Custodian such compensation
as may be due as of the date of such termination and shall likewise
reimburse the Custodian for its costs, expenses and disbursements.
10. Successor Custodian.
If a successor custodian for the Fund, or one or more of the
Portfolios shall be appointed by the Board of Trustees of the Fund,
the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the
form for transfer, all securities of each applicable Portfolio then
held by it hereunder and shall transfer to an account of the
successor custodian all of the securities of each such Portfolio
held in a Securities System.
If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified copy
of a vote of the Board of Trustees of the Fund, deliver at the
office of the Custodian and transfer such securities, funds and
other properties in accordance with such vote.
In the event that no written order designating a successor
custodian or certified copy of a vote of the Board of Trustees
shall have been delivered to the Custodian on or before the date
when such termination shall become effective, then the Custodian
shall have the right to deliver to a bank or trust company, which
is a "bank" as defined in the Investment Company Act of 1940, doing
business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its
last published report, of not less than $25,000,000, all
securities, funds and other properties held by the Custodian on
behalf of each applicable Portfolio and all instruments held by the
Custodian relative thereto and all other property held by it under
this Contract on behalf of each applicable Portfolio and to
transfer to an account of such successor custodian all of the
securities of each such Portfolio held in any Securities System,
Thereafter, such bank or trust company shall be the successor of
the Custodian under this Contract.
In the event that securities, funds and other properties
remain in the possession of the Custodian after the date of
termination hereof owing to failure of the Fund to procure the
certified copy of the vote referred to or of the Board of Trustees
to appoint a successor custodian, the Custodian shall be entitled
to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other
properties and the provisions of this Contract relating to the
duties and obligations of the Custodian shall remain in full force
and effect.
11. Interpretive and Additional Provisions.
In connection with the operation of this Contract, the
Custodian and the Fund on behalf of each of the Portfolios, may
from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint
opinion be consistent with the general tenor of this Contract. Any
such interpretive or additional provisions shall be in writing
signed by both parties and shall be annexed hereto, provided that
no such interpretive or additional provisions shall contravene any
applicable federal or state regulations or any provision of the
Declaration of Trust of the Fund. No interpretive or additional
provisions made as provided in the preceding sentence shall be
deemed to be an amendment of this Contract.
12. Additional Funds
In the event that the Fund establishes one or more series of
Shares in addition to the Asset Allocation Portfolio, U.S.
Government High Income Portfolio, Fixed Income Portfolio, and Small
Capitalization Portfolio with respect to which it desires to have
the Custodian render services as custodian under the terms hereof,
it shall so notify the Custodian in writing, and if the Custodian
agrees in writing to provide such services, such series of Shares
shall become a Portfolio hereunder.
13. Massachusetts Law to Apply.
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of the Commonwealth
of Massachusetts.
14. Prior Contracts.
This Contract supersedes and terminates, as of the date
hereof, all prior contracts between the Fund on behalf of each of
the Portfolios and the Custodian relating to the custody of the
Fund's assets.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed as
of the 19th day of October 1989.
ATTEST QUEST FOR VALUE FAMILY OF FUNDS
/s/ Maria Camacho By: /s/ Thomas E. Duggan
- ----------------- ------------------------
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ C. Megas By: /s/ Robert F.
- --------------------- ----------------------------
Assistant Secretary Vice President
custody\q4ser.cus
Exhibit 24(b)(11)
Consent of Independent Accountants
We hereby consent to the use in the Statements of Additional
Information constituting parts of this Post-Effective Amendment No.
36 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated December 20, 1995, relating to the
financial statements and financial highlights of Opportunity Fund,
(now Oppenheimer Quest Opportunity Value Fund), Small
Capitalization Fund, (now the Oppenheimer Quest Small Cap Value
Fund) and Growth and Income Fund (now Oppenheimer Quest Growth &
Income Value Fund), three portfolios of Quest for Value Family of
Funds (now Oppenheimer Quest for Value Funds), which appears in
such Statements of Additional Information, and to the incorporation
by reference of our report into the Prospectuses which constitute
parts of this Registration Statement. We also consent to the
references to us under the headings "Financial Highlights" in the
Prospectuses and under the heading "Independent Accountants" in
such Statements of Additional Information.
/s/ Price Waterhouse LLP
- --------------------------
PRICE WATERHOUSE LLP
New York, New York
February 5, 1996
prosp\q4ser.con
<PAGE>
Independent Auditors' Consent
To the Shareholders and Board of Directors of Oppenheimer Quest
Officers Value Fund (formerly, Officers Fund of Quest for Value
Family of Funds):
We consent to the use of our report dated December 20, 1995
included herein and to the references to our Firm under the
headings "Financial Highlights" in the Prospectus and "Independent
Accountants" in the Statement of Additional Information.
KPMG PEAT MARWICK LLP
/s/ KPMG Peat Marwick LLP
New York, New York
February 8, 1996
prosp\q4ser.con
Exhibit 24(b)(15)(a)(1)
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST FOR VALUE FUNDS
FOR CLASS A SHARES OF
GROWTH & INCOME VALUE FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND
AGREEMENT (the "Plan") dated the 22nd day of November, 1995, by
and between OPPENHEIMER QUEST FOR VALUE FUNDS (the "Trust") for the
account of its GROWTH & INCOME VALUE FUND (the "Fund") and
OPPENHEIMER FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution
plan for Class A shares of the Fund (the "Shares"), contemplated by
Rule 12b-1 (the "Rule") under the Investment Company Act of 1940
(the "1940 Act"), pursuant to which the Fund will compensate the
Distributor for its services incurred in connection with the
distribution of Shares, and the personal service and maintenance of
shareholder accounts that hold Shares ("Accounts"). The Fund may
act as distributor of securities of which it is the issuer,
pursuant to the Rule, according to the terms of this Plan. The
Distributor is authorized under the Plan to pay "Recipients," as
hereinafter defined, for rendering (1) distribution assistance in
connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are
intended to have certain rights as third-party beneficiaries under
this Plan. The terms and provisions of this Plan shall be
interpreted and defined in a manner consistent with the provisions
and definitions contained in (i) the 1940 Act, (ii) the Rule, (iii)
Article III, Section 26, of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., or its successor
(the "NASD Rules of Fair Practice") and (iv) any conditions
pertaining either to distribution-related expenses or to a plan of
distribution, to which the Fund is subject under any order on which
the Fund relies, issued at any time by the Securities and Exchange
Commission.
2. Definitions. As used in this Plan, the following terms
shall have the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
person or entity which: (i) has rendered assistance (whether
direct, administrative or both) in the distribution of Shares or
has provided administrative support services with respect to Shares
held by Customers (defined below) of the Recipient; (ii) shall
furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer
such questions as may arise concerning the sale of Shares; and
(iii) has been selected by the Distributor to receive payments
under the Plan. Notwithstanding the foregoing, a majority of the
Trust's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of this Plan or in any
agreements relating to this Plan (the "Independent Trustees") may
remove any broker, dealer, bank or other person or entity as a
Recipient, whereupon such person's or entity's rights as a third-
party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all
Shares owned beneficially or of record by: (i) such Recipient, or
(ii) such customers, clients and/or accounts as to which such
Recipient is a fiduciary or custodian or co-fiduciary or co-
custodian (collectively, the "Customers"), but in no event shall
any such Shares be deemed owned by more than one Recipient for
purposes of this Plan. In the event that more than one person or
entity would otherwise qualify as Recipients as to the same Shares,
the Recipient which is the dealer of record on the Fund's books as
determined by the Distributor shall be deemed the Recipient as to
such Shares for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative
Support Services.
(a) The Fund will make payments to the Distributor (i) within
forty-five (45) days of the end of each calendar quarter, in the
aggregate amount of 0.0625% (0.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset
value of the Shares computed as of the close of each business day
(the "Service Fee"), plus (ii) within ten (10) days of the end of
each month, in the aggregate 0.01250% (0.15% on an annual basis) of
the average during the calendar quarter of the aggregate net asset
value of the Shares computed as of the close of each business day
(the "Asset-Based Sales Charge"). Such Service Fee payments
received from the Fund will compensate the Distributor and
Recipients for providing administrative support services with
respect to Accounts. Such Asset-Based Sales Charge payments
received from the Fund will compensate the Distributor and
Recipients for providing distribution assistance in connection with
the sale of Shares.
The administrative support services in connection with the
Accounts to be rendered by Recipients may include, but shall not be
limited to, the following: answering routine inquiries concerning
the Fund, assisting in establishing and maintaining accounts or
sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend
payment options available, and providing such other information and
services in connection with the rendering of personal services
and/or the maintenance of Accounts, as the Distributor or the Fund
may reasonably request.
The distribution assistance in connection with the sale of
Shares to be rendered by the Distributor and by Recipients may
include, but shall not be limited to, the following: distributing
sales literature and prospectuses other than those furnished to
current holders of the Fund's Shares ("Shareholders"), and
providing such other information and services in connection with
the distribution of Shares as the Distributor or the Fund may
reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for
payment under the Plan if it has Qualified Holdings of Shares to
entitle it to payments under the Plan. In the event that either
the Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, a Recipient may
not be rendering appropriate distribution assistance in connection
with the sale of Shares or administrative support services for the
Accounts, then the Distributor, at the request of the Board, shall
require the Recipient to provide a written report or other
information to verify that said Recipient is providing appropriate
distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either
may take appropriate steps to terminate the Recipient's status as
such under the Plan, whereupon such Recipient's rights as a third-
party beneficiary hereunder shall terminate.
(b) The Distributor shall make service fee payments to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares, computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than the minimum period (the "Minimum Holding
Period"), if any, to be set from time to time by a majority of the
Independent Trustees.
Alternatively, the Distributor may, at its sole option, make
service fee payments ("Advance Service Fee Payments") to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed (i) 0.25% of the average
during the calendar quarter of the aggregate net asset value of
Shares, computed as of the close of business on the day such Shares
are sold, constituting Qualified Holdings sold by the Recipient
during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (ii) 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than one (1) year, subject to reduction or
chargeback so that the Advance Service Fee Payments do not exceed
the limits on payments to Recipients that are, or may be, imposed
by Article III, Section 26, of the NASD Rules of Fair Practice. In
the event Shares are redeemed less than one year after the date
such Shares were sold, the Recipient is obligated and will repay to
the Distributor on demand a pro rata portion of such Advance
Service Fee Payments, based on the ratio of the time such shares
were held to one (1) year.
The Advance Service Fee Payments described in part (i) of the
preceding sentence may, at the Distributor's sole option, be made
more often than quarterly, and sooner than the end of the calendar
quarter. In addition, the Distributor may make asset-based sales
charge payments to any Recipient quarterly, within forty-five (45)
days of the end of each calendar quarter, at a rate not to exceed
0.0375% (0.15% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares
computed as of the close of each business day, constituting
Qualified Holdings owned beneficially or of record by the Recipient
or its Customers. However, no such service fee or asset-based
sales charge payments (collectively, the "Recipient Payments")
shall be made to any Recipient for any such quarter in which its
Qualified Holdings do not equal or exceed, at the end of such
quarter, the minimum amount ("Minimum Qualified Holdings"), if any,
to be set from time to time by a majority of the Independent
Trustees.
A majority of the Independent Trustees may at any time or from
time to time decrease and thereafter adjust the rate of fees to be
paid to the Distributor or to any Recipient, but not to exceed the
rates set forth above, and/or direct the Distributor to increase or
decrease the Minimum Holding Period or the Minimum Qualified
Holdings. The Distributor shall notify all Recipients of the
Minimum Qualified Holdings or Minimum Holding Period, if any, and
the rates of Recipient Payments hereunder applicable to Recipients,
and shall provide each Recipient with written notice within thirty
(30) days after any change in these provisions. Inclusion of such
provisions or a change in such provisions in a revised current
prospectus shall constitute sufficient notice. The Distributor may
make Plan payments to any "affiliated person" (as defined in the
1940 Act) of the Distributor if such affiliated person qualifies as
a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on
Shares are subject to reduction or elimination of such amounts
under the limits to which the Distributor is, or may become,
subject under Article III, Section 26, of the NASD Rules of Fair
Practice. The distribution assistance and administrative support
services to be rendered by the Distributor in connection with the
Shares may include, but shall not be limited to, the following: (i)
paying sales commissions to any broker, dealer, bank or other
person or entity that sells Shares, and\or paying such persons
Advance Service Fee Payments in advance of, and\or greater than,
the amount provided for in Section 3(b) of this Agreement; (ii)
paying compensation to and expenses of personnel of the Distributor
who support distribution of Shares by Recipients; (iii) obtaining
financing or providing such financing from its own resources, or
from an affiliate, for interest and other borrowing costs of the
Distributor's unreimbursed expenses incurred in rendering
distribution assistance and administrative support services to the
Fund; (iv) paying other direct distribution costs, including
without limitation the costs of sales literature, advertising and
prospectuses (other than those furnished to current Shareholders)
and state "blue sky" registration expenses; and (v) providing any
service rendered by the Distributor that a Recipient may render
pursuant to part (a) of this Section 3. Such services include
distribution assistance and administrative support services
rendered in connection with Shares acquired (i) by purchase, (ii)
in exchange for shares of another investment company for which the
Distributor serves as distributor or sub-distributor, or (iii)
pursuant to a plan of reorganization to which the Fund is a party.
In the event that the Board should have reason to believe that the
Distributor may not be rendering appropriate distribution
assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the
Board, shall provide the Board with a written report or other
information to verify that the Distributor is providing appropriate
services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i)
by Oppenheimer Management Corporation ("OMC") from its own
resources (which may include profits derived from the advisory fee
it receives from the Fund), or (ii) by the Distributor (a
subsidiary of OMC), from its own resources, from Asset-Based Sales
Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this
Plan does not obligate or in any way make the Fund liable to make
any payment whatsoever to any person or entity other than directly
to the Distributor. In no event shall the amounts to be paid to
the Distributor exceed the rate of fees to be paid by the Fund to
the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is
in effect, the selection and nomination of those persons to be
Trustees of the Trust who are not "interested persons" of the Fund
or the Trust ("Disinterested Trustees") shall be committed to the
discretion of such Disinterested Trustees. Nothing herein shall
prevent the Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of
the Trust shall provide at least quarterly a written reports to the
Trust's Board for its review, detailing services rendered in
connection with the distribution of the Shares, the amount of all
payments made and the purpose for which the payments were made.
The reports shall be provided quarterly and shall state whether all
provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan
shall be in writing and shall provide that: (i) such agreement may
be terminated at any time, without payment of any penalty, by a
vote of a majority of the Independent Trustees or by a vote of the
holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities of the Class, on not more than sixty
days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act); (iii) it shall go into
effect when approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of
voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long
as such continuance is specifically approved at least annually by
a vote of the Board and its Independent Trustees cast in person at
a meeting called for the purpose of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment.
This Amended and Restated Plan has been approved by a vote of the
Board and its Independent Trustees cast in person at a meeting
called on June 22, 1995 for the purpose of voting on this Plan, and
shall take effect after approval by Class A shareholders of the
Fund, at which time it shall replace the Fund's Plan and Agreement
of Distribution for the Shares made as of April 28, 1988 as amended
as of December 30, 1988, August 14, 1990, October 18, 1990, August
23, 1991 and September 1, 1993. Unless terminated as hereinafter
provided, it shall continue in effect from year to year from the
date first set forth above or as the Board may otherwise determine
only so long as such continuance is specifically approved at least
annually by a vote of the Board and its Independent Trustees cast
in person at a meeting called for the purpose of voting on such
continuance. This Plan may not be amended to increase materially
the amount of payments to be made without approval of the Class A
Shareholders, in the manner described above, and all material
amendments must be approved by a vote of the Board and of the
Independent Trustees. This Plan may be terminated at any time by
vote of a majority of the Independent Trustees or by the vote of
the holders of a "majority" (as defined in the 1940 Act) of the
Fund's outstanding voting securities of the Class. In the event of
such termination, the Board and its Independent Trustees shall
determine whether the Distributor is entitled to payment from the
Fund of all or a portion of the Service Fee and/or the Asset-Based
Sales Charge in respect of Shares sold prior to the effective date
of such termination.
8. Disclaimer of Shareholder and Trustee Liability. The
Distributor understands that the obligations of the Trust and the
Fund under this Plan are not binding upon any Trustee or
shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of
the provisions of the Declaration of Trust of the Fund disclaiming
shareholder and Trustee liability for acts or obligations of the
Trust and the Fund.
OPPENHEIMER QUEST FOR VALUE FUNDS
On Behalf of GROWTH & INCOME VALUE FUND
By: /s/ Bridget A. Macaskill
-----------------------------------
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: /s/ Andrew J. Donohue
--------------------------------
Andrew J. Donohue
Executive Vice President
ofmi\257.a
Exhibit 24(b)(15)(a(2)
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST FOR VALUE FUNDS
FOR CLASS A SHARES OF
OPPORTUNITY VALUE FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND
AGREEMENT (the "Plan") dated the 22nd day of November, 1995, by
and between OPPENHEIMER QUEST FOR VALUE FUNDS (the "Trust") for the
account of its OPPORTUNITY VALUE FUND (the "Fund") and OPPENHEIMER
FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution
plan for Class A shares of the Fund (the "Shares"), contemplated by
Rule 12b-1 (the "Rule") under the Investment Company Act of 1940
(the "1940 Act"), pursuant to which the Fund will compensate the
Distributor for its services incurred in connection with the
distribution of Shares, and the personal service and maintenance of
shareholder accounts that hold Shares ("Accounts"). The Fund may
act as distributor of securities of which it is the issuer,
pursuant to the Rule, according to the terms of this Plan. The
Distributor is authorized under the Plan to pay "Recipients," as
hereinafter defined, for rendering (1) distribution assistance in
connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are
intended to have certain rights as third-party beneficiaries under
this Plan. The terms and provisions of this Plan shall be
interpreted and defined in a manner consistent with the provisions
and definitions contained in (i) the 1940 Act, (ii) the Rule, (iii)
Article III, Section 26, of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., or its successor
(the "NASD Rules of Fair Practice") and (iv) any conditions
pertaining either to distribution-related expenses or to a plan of
distribution, to which the Fund is subject under any order on which
the Fund relies, issued at any time by the Securities and Exchange
Commission.
2. Definitions. As used in this Plan, the following terms
shall have the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
person or entity which: (i) has rendered assistance (whether
direct, administrative or both) in the distribution of Shares or
has provided administrative support services with respect to Shares
held by Customers (defined below) of the Recipient; (ii) shall
furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer
such questions as may arise concerning the sale of Shares; and
(iii) has been selected by the Distributor to receive payments
under the Plan. Notwithstanding the foregoing, a majority of the
Trust's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of this Plan or in any
agreements relating to this Plan (the "Independent Trustees") may
remove any broker, dealer, bank or other person or entity as a
Recipient, whereupon such person's or entity's rights as a third-
party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all
Shares owned beneficially or of record by: (i) such Recipient, or
(ii) such customers, clients and/or accounts as to which such
Recipient is a fiduciary or custodian or co-fiduciary or co-
custodian (collectively, the "Customers"), but in no event shall
any such Shares be deemed owned by more than one Recipient for
purposes of this Plan. In the event that more than one person or
entity would otherwise qualify as Recipients as to the same Shares,
the Recipient which is the dealer of record on the Fund's books as
determined by the Distributor shall be deemed the Recipient as to
such Shares for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative
Support Services.
(a) The Fund will make payments to the Distributor (i) within
forty-five (45) days of the end of each calendar quarter, in the
aggregate amount of 0.0625% (0.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset
value of the Shares computed as of the close of each business day
(the "Service Fee"), plus (ii) within ten (10) days of the end of
each month, in the aggregate 0.020833% (0.25% on an annual basis)
of the average during the calendar quarter of the aggregate net
asset value of the Shares computed as of the close of each business
day (the "Asset-Based Sales Charge"). Such Service Fee payments
received from the Fund will compensate the Distributor and
Recipients for providing administrative support services with
respect to Accounts. Such Asset-Based Sales Charge payments
received from the Fund will compensate the Distributor and
Recipients for providing distribution assistance in connection with
the sale of Shares.
The administrative support services in connection with the
Accounts to be rendered by Recipients may include, but shall not be
limited to, the following: answering routine inquiries concerning
the Fund, assisting in establishing and maintaining accounts or
sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend
payment options available, and providing such other information and
services in connection with the rendering of personal services
and/or the maintenance of Accounts, as the Distributor or the Fund
may reasonably request.
The distribution assistance in connection with the sale of
Shares to be rendered by the Distributor and by Recipients may
include, but shall not be limited to, the following: distributing
sales literature and prospectuses other than those furnished to
current holders of the Fund's Shares ("Shareholders"), and
providing such other information and services in connection with
the distribution of Shares as the Distributor or the Fund may
reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for
payment under the Plan if it has Qualified Holdings of Shares to
entitle it to payments under the Plan. In the event that either
the Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, a Recipient may
not be rendering appropriate distribution assistance in connection
with the sale of Shares or administrative support services for the
Accounts, then the Distributor, at the request of the Board, shall
require the Recipient to provide a written report or other
information to verify that said Recipient is providing appropriate
distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either
may take appropriate steps to terminate the Recipient's status as
such under the Plan, whereupon such Recipient's rights as a third-
party beneficiary hereunder shall terminate.
(b) The Distributor shall make service fee payments to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares, computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than the minimum period (the "Minimum Holding
Period"), if any, to be set from time to time by a majority of the
Independent Trustees.
Alternatively, the Distributor may, at its sole option, make
service fee payments ("Advance Service Fee Payments") to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed (i) 0.25% of the average
during the calendar quarter of the aggregate net asset value of
Shares, computed as of the close of business on the day such Shares
are sold, constituting Qualified Holdings sold by the Recipient
during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (ii) 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than one (1) year, subject to reduction or
chargeback so that the Advance Service Fee Payments do not exceed
the limits on payments to Recipients that are, or may be, imposed
by Article III, Section 26, of the NASD Rules of Fair Practice. In
the event Shares are redeemed less than one year after the date
such Shares were sold, the Recipient is obligated and will repay to
the Distributor on demand a pro rata portion of such Advance
Service Fee Payments, based on the ratio of the time such shares
were held to one (1) year.
The Advance Service Fee Payments described in part (i) of the
preceding sentence may, at the Distributor's sole option, be made
more often than quarterly, and sooner than the end of the calendar
quarter. In addition, the Distributor may make asset-based sales
charge payments to any Recipient quarterly, within forty-five (45)
days of the end of each calendar quarter, at a rate not to exceed
0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares
computed as of the close of each business day, constituting
Qualified Holdings owned beneficially or of record by the Recipient
or its Customers. However, no such service fee or asset-based
sales charge payments (collectively, the "Recipient Payments")
shall be made to any Recipient for any such quarter in which its
Qualified Holdings do not equal or exceed, at the end of such
quarter, the minimum amount ("Minimum Qualified Holdings"), if any,
to be set from time to time by a majority of the Independent
Trustees.
A majority of the Independent Trustees may at any time or from
time to time decrease and thereafter adjust the rate of fees to be
paid to the Distributor or to any Recipient, but not to exceed the
rates set forth above, and/or direct the Distributor to increase or
decrease the Minimum Holding Period or the Minimum Qualified
Holdings. The Distributor shall notify all Recipients of the
Minimum Qualified Holdings or Minimum Holding Period, if any, and
the rates of Recipient Payments hereunder applicable to Recipients,
and shall provide each Recipient with written notice within thirty
(30) days after any change in these provisions. Inclusion of such
provisions or a change in such provisions in a revised current
prospectus shall constitute sufficient notice. The Distributor may
make Plan payments to any "affiliated person" (as defined in the
1940 Act) of the Distributor if such affiliated person qualifies as
a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on
Shares are subject to reduction or elimination of such amounts
under the limits to which the Distributor is, or may become,
subject under Article III, Section 26, of the NASD Rules of Fair
Practice. The distribution assistance and administrative support
services to be rendered by the Distributor in connection with the
Shares may include, but shall not be limited to, the following: (i)
paying sales commissions to any broker, dealer, bank or other
person or entity that sells Shares, and\or paying such persons
Advance Service Fee Payments in advance of, and\or greater than,
the amount provided for in Section 3(b) of this Agreement; (ii)
paying compensation to and expenses of personnel of the Distributor
who support distribution of Shares by Recipients; (iii) obtaining
financing or providing such financing from its own resources, or
from an affiliate, for interest and other borrowing costs of the
Distributor's unreimbursed expenses incurred in rendering
distribution assistance and administrative support services to the
Fund; (iv) paying other direct distribution costs, including
without limitation the costs of sales literature, advertising and
prospectuses (other than those furnished to current Shareholders)
and state "blue sky" registration expenses; and (v) providing any
service rendered by the Distributor that a Recipient may render
pursuant to part (a) of this Section 3. Such services include
distribution assistance and administrative support services
rendered in connection with Shares acquired (i) by purchase, (ii)
in exchange for shares of another investment company for which the
Distributor serves as distributor or sub-distributor, or (iii)
pursuant to a plan of reorganization to which the Fund is a party.
In the event that the Board should have reason to believe that the
Distributor may not be rendering appropriate distribution
assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the
Board, shall provide the Board with a written report or other
information to verify that the Distributor is providing appropriate
services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i)
by Oppenheimer Management Corporation ("OMC") from its own
resources (which may include profits derived from the advisory fee
it receives from the Fund), or (ii) by the Distributor (a
subsidiary of OMC), from its own resources, from Asset-Based Sales
Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this
Plan does not obligate or in any way make the Fund liable to make
any payment whatsoever to any person or entity other than directly
to the Distributor. In no event shall the amounts to be paid to
the Distributor exceed the rate of fees to be paid by the Fund to
the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is
in effect, the selection and nomination of those persons to be
Trustees of the Trust who are not "interested persons" of the Fund
or the Trust ("Disinterested Trustees") shall be committed to the
discretion of such Disinterested Trustees. Nothing herein shall
prevent the Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of
the Trust shall provide at least quarterly a written reports to the
Trust's Board for its review, detailing services rendered in
connection with the distribution of the Shares, the amount of all
payments made and the purpose for which the payments were made.
The reports shall be provided quarterly and shall state whether all
provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan
shall be in writing and shall provide that: (i) such agreement may
be terminated at any time, without payment of any penalty, by a
vote of a majority of the Independent Trustees or by a vote of the
holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities of the Class, on not more than sixty
days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act); (iii) it shall go into
effect when approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of
voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long
as such continuance is specifically approved at least annually by
a vote of the Board and its Independent Trustees cast in person at
a meeting called for the purpose of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment.
This Amended and Restated Plan has been approved by a vote of the
Board and its Independent Trustees cast in person at a meeting
called on June 22, 1995 for the purpose of voting on this Plan, and
shall take effect after approval by Class A shareholders of the
Fund, at which time it shall replace the Fund's Plan and Agreement
of Distribution for the Shares made as of April 28, 1988 as amended
as of December 30, 1988, August 14, 1990, October 18, 1990, August
23, 1991 and September 1, 1993. Unless terminated as hereinafter
provided, it shall continue in effect from year to year from the
date first set forth above or as the Board may otherwise determine
only so long as such continuance is specifically approved at least
annually by a vote of the Board and its Independent Trustees cast
in person at a meeting called for the purpose of voting on such
continuance. This Plan may not be amended to increase materially
the amount of payments to be made without approval of the Class A
Shareholders, in the manner described above, and all material
amendments must be approved by a vote of the Board and of the
Independent Trustees. This Plan may be terminated at any time by
vote of a majority of the Independent Trustees or by the vote of
the holders of a "majority" (as defined in the 1940 Act) of the
Fund's outstanding voting securities of the Class. In the event of
such termination, the Board and its Independent Trustees shall
determine whether the Distributor is entitled to payment from the
Fund of all or a portion of the Service Fee and/or the Asset-Based
Sales Charge in respect of Shares sold prior to the effective date
of such termination.
8. Disclaimer of Shareholder and Trustee Liability. The
Distributor understands that the obligations of the Trust and the
Fund under this Plan are not binding upon any Trustee or
shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of
the provisions of the Declaration of Trust of the Fund disclaiming
shareholder and Trustee liability for acts or obligations of the
Trust and the Fund.
OPPENHEIMER QUEST FOR VALUE FUNDS
On Behalf of OPPORTUNITY VALUE FUND
By: /s/ Bridget A. Macaskill
--------------------------------
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: /s/ Andrew J. Donohue
--------------------------------
Andrew J. Donohue
Executive Vice President
ofmi\236.a
Exhibit 24(b)(15)(a)(3)
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST FOR VALUE FUNDS
FOR CLASS A SHARES OF
SMALL CAP VALUE FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND
AGREEMENT (the "Plan") dated the 22nd day of November, 1995, by and
between OPPENHEIMER QUEST FOR VALUE FUNDS (the "Trust") for the
account of its SMALL CAP VALUE FUND (the "Fund") and OPPENHEIMER
FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution
plan for Class A shares of the Fund (the "Shares"), contemplated by
Rule 12b-1 (the "Rule") under the Investment Company Act of 1940
(the "1940 Act"), pursuant to which the Fund will compensate the
Distributor for its services incurred in connection with the
distribution of Shares, and the personal service and maintenance of
shareholder accounts that hold Shares ("Accounts"). The Fund may
act as distributor of securities of which it is the issuer,
pursuant to the Rule, according to the terms of this Plan. The
Distributor is authorized under the Plan to pay "Recipients," as
hereinafter defined, for rendering (1) distribution assistance in
connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are
intended to have certain rights as third-party beneficiaries under
this Plan. The terms and provisions of this Plan shall be
interpreted and defined in a manner consistent with the provisions
and definitions contained in (i) the 1940 Act, (ii) the Rule, (iii)
Article III, Section 26, of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., or its successor
(the "NASD Rules of Fair Practice") and (iv) any conditions
pertaining either to distribution-related expenses or to a plan of
distribution, to which the Fund is subject under any order on which
the Fund relies, issued at any time by the Securities and Exchange
Commission.
2. Definitions. As used in this Plan, the following terms
shall have the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
person or entity which: (i) has rendered assistance (whether
direct, administrative or both) in the distribution of Shares or
has provided administrative support services with respect to Shares
held by Customers (defined below) of the Recipient; (ii) shall
furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer
such questions as may arise concerning the sale of Shares; and
(iii) has been selected by the Distributor to receive payments
under the Plan. Notwithstanding the foregoing, a majority of the
Trust's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of this Plan or in any
agreements relating to this Plan (the "Independent Trustees") may
remove any broker, dealer, bank or other person or entity as a
Recipient, whereupon such person's or entity's rights as a third-
party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all
Shares owned beneficially or of record by: (i) such Recipient, or
(ii) such customers, clients and/or accounts as to which such
Recipient is a fiduciary or custodian or co-fiduciary or co-
custodian (collectively, the "Customers"), but in no event shall
any such Shares be deemed owned by more than one Recipient for
purposes of this Plan. In the event that more than one person or
entity would otherwise qualify as Recipients as to the same Shares,
the Recipient which is the dealer of record on the Fund's books as
determined by the Distributor shall be deemed the Recipient as to
such Shares for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative
Support Services.
(a) The Fund will make payments to the Distributor (i) within
forty-five (45) days of the end of each calendar quarter, in the
aggregate amount of 0.0625% (0.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset
value of the Shares computed as of the close of each business day
(the "Service Fee"), plus (ii) within ten (10) days of the end of
each month, in the aggregate 0.020833% (0.25% on an annual basis)
of the average during the calendar quarter of the aggregate net
asset value of the Shares computed as of the close of each business
day (the "Asset-Based Sales Charge"). Such Service Fee payments
received from the Fund will compensate the Distributor and
Recipients for providing administrative support services with
respect to Accounts. Such Asset-Based Sales Charge payments
received from the Fund will compensate the Distributor and
Recipients for providing distribution assistance in connection with
the sale of Shares.
The administrative support services in connection with the
Accounts to be rendered by Recipients may include, but shall not be
limited to, the following: answering routine inquiries concerning
the Fund, assisting in establishing and maintaining accounts or
sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend
payment options available, and providing such other information and
services in connection with the rendering of personal services
and/or the maintenance of Accounts, as the Distributor or the Fund
may reasonably request.
The distribution assistance in connection with the sale of
Shares to be rendered by the Distributor and by Recipients may
include, but shall not be limited to, the following: distributing
sales literature and prospectuses other than those furnished to
current holders of the Fund's Shares ("Shareholders"), and
providing such other information and services in connection with
the distribution of Shares as the Distributor or the Fund may
reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for
payment under the Plan if it has Qualified Holdings of Shares to
entitle it to payments under the Plan. In the event that either
the Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, a Recipient may
not be rendering appropriate distribution assistance in connection
with the sale of Shares or administrative support services for the
Accounts, then the Distributor, at the request of the Board, shall
require the Recipient to provide a written report or other
information to verify that said Recipient is providing appropriate
distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either
may take appropriate steps to terminate the Recipient's status as
such under the Plan, whereupon such Recipient's rights as a third-
party beneficiary hereunder shall terminate.
(b) The Distributor shall make service fee payments to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares, computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than the minimum period (the "Minimum Holding
Period"), if any, to be set from time to time by a majority of the
Independent Trustees.
Alternatively, the Distributor may, at its sole option, make
service fee payments ("Advance Service Fee Payments") to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed (i) 0.25% of the average
during the calendar quarter of the aggregate net asset value of
Shares, computed as of the close of business on the day such Shares
are sold, constituting Qualified Holdings sold by the Recipient
during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (ii) 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than one (1) year, subject to reduction or
chargeback so that the Advance Service Fee Payments do not exceed
the limits on payments to Recipients that are, or may be, imposed
by Article III, Section 26, of the NASD Rules of Fair Practice. In
the event Shares are redeemed less than one year after the date
such Shares were sold, the Recipient is obligated and will repay to
the Distributor on demand a pro rata portion of such Advance
Service Fee Payments, based on the ratio of the time such shares
were held to one (1) year.
The Advance Service Fee Payments described in part (i) of the
preceding sentence may, at the Distributor's sole option, be made
more often than quarterly, and sooner than the end of the calendar
quarter. In addition, the Distributor may make asset-based sales
charge payments to any Recipient quarterly, within forty-five (45)
days of the end of each calendar quarter, at a rate not to exceed
0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares
computed as of the close of each business day, constituting
Qualified Holdings owned beneficially or of record by the Recipient
or its Customers. However, no such service fee or asset-based
sales charge payments (collectively, the "Recipient Payments")
shall be made to any Recipient for any such quarter in which its
Qualified Holdings do not equal or exceed, at the end of such
quarter, the minimum amount ("Minimum Qualified Holdings"), if any,
to be set from time to time by a majority of the Independent
Trustees.
A majority of the Independent Trustees may at any time or from
time to time decrease and thereafter adjust the rate of fees to be
paid to the Distributor or to any Recipient, but not to exceed the
rates set forth above, and/or direct the Distributor to increase or
decrease the Minimum Holding Period or the Minimum Qualified
Holdings. The Distributor shall notify all Recipients of the
Minimum Qualified Holdings or Minimum Holding Period, if any, and
the rates of Recipient Payments hereunder applicable to Recipients,
and shall provide each Recipient with written notice within thirty
(30) days after any change in these provisions. Inclusion of such
provisions or a change in such provisions in a revised current
prospectus shall constitute sufficient notice. The Distributor may
make Plan payments to any "affiliated person" (as defined in the
1940 Act) of the Distributor if such affiliated person qualifies as
a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on
Shares are subject to reduction or elimination of such amounts
under the limits to which the Distributor is, or may become,
subject under Article III, Section 26, of the NASD Rules of Fair
Practice. The distribution assistance and administrative support
services to be rendered by the Distributor in connection with the
Shares may include, but shall not be limited to, the following: (i)
paying sales commissions to any broker, dealer, bank or other
person or entity that sells Shares, and\or paying such persons
Advance Service Fee Payments in advance of, and\or greater than,
the amount provided for in Section 3(b) of this Agreement; (ii)
paying compensation to and expenses of personnel of the Distributor
who support distribution of Shares by Recipients; (iii) obtaining
financing or providing such financing from its own resources, or
from an affiliate, for interest and other borrowing costs of the
Distributor's unreimbursed expenses incurred in rendering
distribution assistance and administrative support services to the
Fund; (iv) paying other direct distribution costs, including
without limitation the costs of sales literature, advertising and
prospectuses (other than those furnished to current Shareholders)
and state "blue sky" registration expenses; and (v) providing any
service rendered by the Distributor that a Recipient may render
pursuant to part (a) of this Section 3. Such services include
distribution assistance and administrative support services
rendered in connection with Shares acquired (i) by purchase, (ii)
in exchange for shares of another investment company for which the
Distributor serves as distributor or sub-distributor, or (iii)
pursuant to a plan of reorganization to which the Fund is a party.
In the event that the Board should have reason to believe that the
Distributor may not be rendering appropriate distribution
assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the
Board, shall provide the Board with a written report or other
information to verify that the Distributor is providing appropriate
services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i)
by Oppenheimer Management Corporation ("OMC") from its own
resources (which may include profits derived from the advisory fee
it receives from the Fund), or (ii) by the Distributor (a
subsidiary of OMC), from its own resources, from Asset-Based Sales
Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this
Plan does not obligate or in any way make the Fund liable to make
any payment whatsoever to any person or entity other than directly
to the Distributor. In no event shall the amounts to be paid to
the Distributor exceed the rate of fees to be paid by the Fund to
the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is
in effect, the selection and nomination of those persons to be
Trustees of the Trust who are not "interested persons" of the Fund
or the Trust ("Disinterested Trustees") shall be committed to the
discretion of such Disinterested Trustees. Nothing herein shall
prevent the Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of
the Trust shall provide at least quarterly a written reports to the
Trust's Board for its review, detailing services rendered in
connection with the distribution of the Shares, the amount of all
payments made and the purpose for which the payments were made.
The reports shall be provided quarterly and shall state whether all
provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan
shall be in writing and shall provide that: (i) such agreement may
be terminated at any time, without payment of any penalty, by a
vote of a majority of the Independent Trustees or by a vote of the
holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities of the Class, on not more than sixty
days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act); (iii) it shall go into
effect when approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of
voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long
as such continuance is specifically approved at least annually by
a vote of the Board and its Independent Trustees cast in person at
a meeting called for the purpose of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment.
This Amended and Restated Plan has been approved by a vote of the
Board and its Independent Trustees cast in person at a meeting
called on June 22, 1995 for the purpose of voting on this Plan, and
shall take effect after approval by Class A shareholders of the
Fund, at which time it shall replace the Fund's Plan and Agreement
of Distribution for the Shares made as of April 28, 1988 as amended
as of December 30, 1988, August 14, 1990, October 18, 1990, August
23, 1991 and September 1, 1993. Unless terminated as hereinafter
provided, it shall continue in effect from year to year from the
date first set forth above or as the Board may otherwise determine
only so long as such continuance is specifically approved at least
annually by a vote of the Board and its Independent Trustees cast
in person at a meeting called for the purpose of voting on such
continuance. This Plan may not be amended to increase materially
the amount of payments to be made without approval of the Class A
Shareholders, in the manner described above, and all material
amendments must be approved by a vote of the Board and of the
Independent Trustees. This Plan may be terminated at any time by
vote of a majority of the Independent Trustees or by the vote of
the holders of a "majority" (as defined in the 1940 Act) of the
Fund's outstanding voting securities of the Class. In the event of
such termination, the Board and its Independent Trustees shall
determine whether the Distributor is entitled to payment from the
Fund of all or a portion of the Service Fee and/or the Asset-Based
Sales Charge in respect of Shares sold prior to the effective date
of such termination.
8. Disclaimer of Shareholder and Trustee Liability. The
Distributor understands that the obligations of the Trust and the
Fund under this Plan are not binding upon any Trustee or
shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of
the provisions of the Declaration of Trust of the Fund disclaiming
shareholder and Trustee liability for acts or obligations of the
Trust and the Fund.
OPPENHEIMER QUEST FOR VALUE FUNDS
On Behalf of SMALL CAP VALUE FUND
By: /s/ Bridget A. Macaskill
-------------------------------
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: /s/ Andrew J. Donohue
-------------------------------
Andrew J. Donohue
Executive Vice President
ofmi\251.a
Exhibit 24(b)(15(a)(4)
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND OPPENHEIMER QUEST FOR VALUE FUNDS
FOR CLASS A SHARES OF
OFFICERS VALUE FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND
AGREEMENT (the "Plan") dated the 22nd day of November, 1995, by and
between OPPENHEIMER QUEST FOR VALUE FUNDS (the "Trust") for the
account of its OFFICERS VALUE FUND (the "Fund") and OPPENHEIMER
FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution
plan for Class A shares of the Fund (the "Shares"), contemplated by
Rule 12b-1 (the "Rule") under the Investment Company Act of 1940
(the "1940 Act"), pursuant to which the Fund will compensate the
Distributor for its services incurred in connection with the
distribution of Shares, and the personal service and maintenance of
shareholder accounts that hold Shares ("Accounts"). The Fund may
act as distributor of securities of which it is the issuer,
pursuant to the Rule, according to the terms of this Plan. The
Distributor is authorized under the Plan to pay "Recipients," as
hereinafter defined, for rendering (1) distribution assistance in
connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are
intended to have certain rights as third-party beneficiaries under
this Plan. The terms and provisions of this Plan shall be
interpreted and defined in a manner consistent with the provisions
and definitions contained in (i) the 1940 Act, (ii) the Rule, (iii)
Article III, Section 26, of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., or its successor
(the "NASD Rules of Fair Practice") and (iv) any conditions
pertaining either to distribution-related expenses or to a plan of
distribution, to which the Fund is subject under any order on which
the Fund relies, issued at any time by the Securities and Exchange
Commission.
2. Definitions. As used in this Plan, the following terms
shall have the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
person or entity which: (i) has rendered assistance (whether
direct, administrative or both) in the distribution of Shares or
has provided administrative support services with respect to Shares
held by Customers (defined below) of the Recipient; (ii) shall
furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer
such questions as may arise concerning the sale of Shares; and
(iii) has been selected by the Distributor to receive payments
under the Plan. Notwithstanding the foregoing, a majority of the
Trust's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of this Plan or in any
agreements relating to this Plan (the "Independent Trustees") may
remove any broker, dealer, bank or other person or entity as a
Recipient, whereupon such person's or entity's rights as a third-
party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all
Shares owned beneficially or of record by: (i) such Recipient, or
(ii) such customers, clients and/or accounts as to which such
Recipient is a fiduciary or custodian or co-fiduciary or co-
custodian (collectively, the "Customers"), but in no event shall
any such Shares be deemed owned by more than one Recipient for
purposes of this Plan. In the event that more than one person or
entity would otherwise qualify as Recipients as to the same Shares,
the Recipient which is the dealer of record on the Fund's books as
determined by the Distributor shall be deemed the Recipient as to
such Shares for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative
Support Services.
(a) The Fund will make payments to the Distributor (i) within
forty-five (45) days of the end of each calendar quarter, in the
aggregate amount of 0.0625% (0.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset
value of the Shares computed as of the close of each business day
(the "Service Fee"), plus (ii) within ten (10) days of the end of
each month, in the aggregate 0.020833% (0.25% on an annual basis)
of the average during the calendar quarter of the aggregate net
asset value of the Shares computed as of the close of each business
day (the "Asset-Based Sales Charge"). Such Service Fee payments
received from the Fund will compensate the Distributor and
Recipients for providing administrative support services with
respect to Accounts. Such Asset-Based Sales Charge payments
received from the Fund will compensate the Distributor and
Recipients for providing distribution assistance in connection with
the sale of Shares.
The administrative support services in connection with the
Accounts to be rendered by Recipients may include, but shall not be
limited to, the following: answering routine inquiries concerning
the Fund, assisting in establishing and maintaining accounts or
sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend
payment options available, and providing such other information and
services in connection with the rendering of personal services
and/or the maintenance of Accounts, as the Distributor or the Fund
may reasonably request.
The distribution assistance in connection with the sale of
Shares to be rendered by the Distributor and by Recipients may
include, but shall not be limited to, the following: distributing
sales literature and prospectuses other than those furnished to
current holders of the Fund's Shares ("Shareholders"), and
providing such other information and services in connection with
the distribution of Shares as the Distributor or the Fund may
reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for
payment under the Plan if it has Qualified Holdings of Shares to
entitle it to payments under the Plan. In the event that either
the Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, a Recipient may
not be rendering appropriate distribution assistance in connection
with the sale of Shares or administrative support services for the
Accounts, then the Distributor, at the request of the Board, shall
require the Recipient to provide a written report or other
information to verify that said Recipient is providing appropriate
distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either
may take appropriate steps to terminate the Recipient's status as
such under the Plan, whereupon such Recipient's rights as a third-
party beneficiary hereunder shall terminate.
(b) The Distributor shall make service fee payments to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares, computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than the minimum period (the "Minimum Holding
Period"), if any, to be set from time to time by a majority of the
Independent Trustees.
Alternatively, the Distributor may, at its sole option, make
service fee payments ("Advance Service Fee Payments") to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed (i) 0.25% of the average
during the calendar quarter of the aggregate net asset value of
Shares, computed as of the close of business on the day such Shares
are sold, constituting Qualified Holdings sold by the Recipient
during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (ii) 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than one (1) year, subject to reduction or
chargeback so that the Advance Service Fee Payments do not exceed
the limits on payments to Recipients that are, or may be, imposed
by Article III, Section 26, of the NASD Rules of Fair Practice. In
the event Shares are redeemed less than one year after the date
such Shares were sold, the Recipient is obligated and will repay to
the Distributor on demand a pro rata portion of such Advance
Service Fee Payments, based on the ratio of the time such shares
were held to one (1) year.
The Advance Service Fee Payments described in part (i) of the
preceding sentence may, at the Distributor's sole option, be made
more often than quarterly, and sooner than the end of the calendar
quarter. In addition, the Distributor may make asset-based sales
charge payments to any Recipient quarterly, within forty-five (45)
days of the end of each calendar quarter, at a rate not to exceed
0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares
computed as of the close of each business day, constituting
Qualified Holdings owned beneficially or of record by the Recipient
or its Customers. However, no such service fee or asset-based
sales charge payments (collectively, the "Recipient Payments")
shall be made to any Recipient for any such quarter in which its
Qualified Holdings do not equal or exceed, at the end of such
quarter, the minimum amount ("Minimum Qualified Holdings"), if any,
to be set from time to time by a majority of the Independent
Trustees.
A majority of the Independent Trustees may at any time or from
time to time decrease and thereafter adjust the rate of fees to be
paid to the Distributor or to any Recipient, but not to exceed the
rates set forth above, and/or direct the Distributor to increase or
decrease the Minimum Holding Period or the Minimum Qualified
Holdings. The Distributor shall notify all Recipients of the
Minimum Qualified Holdings or Minimum Holding Period, if any, and
the rates of Recipient Payments hereunder applicable to Recipients,
and shall provide each Recipient with written notice within thirty
(30) days after any change in these provisions. Inclusion of such
provisions or a change in such provisions in a revised current
prospectus shall constitute sufficient notice. The Distributor may
make Plan payments to any "affiliated person" (as defined in the
1940 Act) of the Distributor if such affiliated person qualifies as
a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on
Shares are subject to reduction or elimination of such amounts
under the limits to which the Distributor is, or may become,
subject under Article III, Section 26, of the NASD Rules of Fair
Practice. The distribution assistance and administrative support
services to be rendered by the Distributor in connection with the
Shares may include, but shall not be limited to, the following: (i)
paying sales commissions to any broker, dealer, bank or other
person or entity that sells Shares, and\or paying such persons
Advance Service Fee Payments in advance of, and\or greater than,
the amount provided for in Section 3(b) of this Agreement; (ii)
paying compensation to and expenses of personnel of the Distributor
who support distribution of Shares by Recipients; (iii) obtaining
financing or providing such financing from its own resources, or
from an affiliate, for interest and other borrowing costs of the
Distributor's unreimbursed expenses incurred in rendering
distribution assistance and administrative support services to the
Fund; (iv) paying other direct distribution costs, including
without limitation the costs of sales literature, advertising and
prospectuses (other than those furnished to current Shareholders)
and state "blue sky" registration expenses; and (v) providing any
service rendered by the Distributor that a Recipient may render
pursuant to part (a) of this Section 3. Such services include
distribution assistance and administrative support services
rendered in connection with Shares acquired (i) by purchase, (ii)
in exchange for shares of another investment company for which the
Distributor serves as distributor or sub-distributor, or (iii)
pursuant to a plan of reorganization to which the Fund is a party.
In the event that the Board should have reason to believe that the
Distributor may not be rendering appropriate distribution
assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the
Board, shall provide the Board with a written report or other
information to verify that the Distributor is providing appropriate
services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i)
by Oppenheimer Management Corporation ("OMC") from its own
resources (which may include profits derived from the advisory fee
it receives from the Fund), or (ii) by the Distributor (a
subsidiary of OMC), from its own resources, from Asset-Based Sales
Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this
Plan does not obligate or in any way make the Fund liable to make
any payment whatsoever to any person or entity other than directly
to the Distributor. In no event shall the amounts to be paid to
the Distributor exceed the rate of fees to be paid by the Fund to
the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is
in effect, the selection and nomination of those persons to be
Trustees of the Trust who are not "interested persons" of the Fund
or the Trust ("Disinterested Trustees") shall be committed to the
discretion of such Disinterested Trustees. Nothing herein shall
prevent the Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of
the Trust shall provide at least quarterly a written reports to the
Trust's Board for its review, detailing services rendered in
connection with the distribution of the Shares, the amount of all
payments made and the purpose for which the payments were made.
The reports shall be provided quarterly and shall state whether all
provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan
shall be in writing and shall provide that: (i) such agreement may
be terminated at any time, without payment of any penalty, by a
vote of a majority of the Independent Trustees or by a vote of the
holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities of the Class, on not more than sixty
days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act); (iii) it shall go into
effect when approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of
voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long
as such continuance is specifically approved at least annually by
a vote of the Board and its Independent Trustees cast in person at
a meeting called for the purpose of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment.
This Amended and Restated Plan has been approved by a vote of the
Board and its Independent Trustees cast in person at a meeting
called on June 22, 1995 for the purpose of voting on this Plan, and
shall take effect after approval by Class A shareholders of the
Fund, at which time it shall replace the Fund's Plan and Agreement
of Distribution for the Shares made as of April 28, 1988 as amended
as of December 30, 1988, August 14, 1990, October 18, 1990, August
23, 1991 and September 1, 1993. Unless terminated as hereinafter
provided, it shall continue in effect from year to year from the
date first set forth above or as the Board may otherwise determine
only so long as such continuance is specifically approved at least
annually by a vote of the Board and its Independent Trustees cast
in person at a meeting called for the purpose of voting on such
continuance. This Plan may not be amended to increase materially
the amount of payments to be made without approval of the Class A
Shareholders, in the manner described above, and all material
amendments must be approved by a vote of the Board and of the
Independent Trustees. This Plan may be terminated at any time by
vote of a majority of the Independent Trustees or by the vote of
the holders of a "majority" (as defined in the 1940 Act) of the
Fund's outstanding voting securities of the Class. In the event of
such termination, the Board and its Independent Trustees shall
determine whether the Distributor is entitled to payment from the
Fund of all or a portion of the Service Fee and/or the Asset-Based
Sales Charge in respect of Shares sold prior to the effective date
of such termination.
8. Disclaimer of Shareholder and Trustee Liability. The
Distributor understands that the obligations of the Trust and the
Fund under this Plan are not binding upon any Trustee or
shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of
the provisions of the Declaration of Trust of the Fund disclaiming
shareholder and Trustee liability for acts or obligations of the
Trust and the Fund.
OPPENHEIMER QUEST FOR VALUE FUNDS
On Behalf of OFFICERS VALUE FUND
By: /s/ Bridget A. Macaskill
------------------------------
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: /s/ Andrew J. Donohue
-------------------------------
Andrew J. Donohue
Executive Vice President
ofmi\229.a
Exhibit 24(b)(15)(b)(1)
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST FOR VALUE FUNDS
FOR CLASS B SHARES OF
GROWTH & INCOME VALUE FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND
AGREEMENT (the "Plan") dated the 22nd day of November, 1995, by and
between OPPENHEIMER QUEST FOR VALUE FUNDS (the "Trust") for the
account of its GROWTH & INCOME FUND (the "Fund") and OPPENHEIMER
FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution
and service plan for Class B shares of the Fund (the "Shares"),
contemplated by Rule 12b-1 (the "Rule") under the Investment
Company Act of 1940 (the "1940 Act"), pursuant to which the Fund
will compensate the Distributor for its services in connection with
the distribution of Shares, and the personal service and
maintenance of shareholder accounts that hold Shares ("Accounts").
The Fund may act as distributor of securities of which it is the
issuer, pursuant to the Rule, according to the terms of this Plan.
The Distributor is authorized under the Plan to pay "Recipients,"
as hereinafter defined, for rendering (1) distribution assistance
in connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are
intended to have certain rights as third-party beneficiaries under
this Plan. The terms and provisions of this Plan shall be
interpreted and defined in a manner consistent with the provisions
and definitions contained in (i) the 1940 Act, (ii) the Rule, (iii)
Article III, Section 26, of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., or its successor
(the "NASD Rules of Fair Practice") and (iv) any conditions
pertaining either to distribution-related expenses or to a plan of
distribution, to which the Fund is subject under any order on which
the Fund relies, issued at any time by the Securities and Exchange
Commission.
2. Definitions. As used in this Plan, the following terms
shall have the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
person or entity which: (i) has rendered assistance (whether
direct, administrative or both) in the distribution of Shares or
has provided administrative support services with respect to Shares
held by Customers (defined below) of the Recipient; (ii) shall
furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer
such questions as may arise concerning the sale of Shares; and
(iii) has been selected by the Distributor to receive payments
under the Plan. Notwithstanding the foregoing, a majority of the
Trust's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of this Plan or in any
agreements relating to this Plan (the "Independent Trustees") may
remove any broker, dealer, bank or other person or entity as a
Recipient, whereupon such person's or entity's rights as a third-
party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all
Shares owned beneficially or of record by: (i) such Recipient, or
(ii) such customers, clients and/or accounts as to which such
Recipient is a fiduciary or custodian or co-fiduciary or co-
custodian (collectively, the "Customers"), but in no event shall
any such Shares be deemed owned by more than one Recipient for
purposes of this Plan. In the event that more than one person or
entity would otherwise qualify as Recipients as to the same Shares,
the Recipient which is the dealer of record on the Fund's books as
determined by the Distributor shall be deemed the Recipient as to
such Shares for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative
Support Services.
(a) The Fund will make payments to the Distributor, (i)
within forty-five (45) days of the end of each calendar quarter, in
the aggregate amount of 0.0625% (0.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset
value of the Shares computed as of the close of each business day
(the "Service Fee"), plus (ii) within ten (10) days of the end of
each month, in the aggregate amount of 0.0625% (0.75% on an annual
basis) of the average during the month of the aggregate net asset
value of Shares computed as of the close of each business day (the
"Asset-Based Sales Charge") outstanding for six years or less (the
"Maximum Holding Period"). Such Service Fee payments received from
the Fund will compensate the Distributor and Recipients for
providing administrative support services with respect to Accounts.
Such Asset-Based Sales Charge payments received from the Fund will
compensate the Distributor and Recipients for providing
distribution assistance in connection with the sales of Shares.
The administrative support services in connection with the
Accounts to be rendered by Recipients may include, but shall not be
limited to, the following: answering routine inquiries concerning
the Fund, assisting in the establishment and maintenance of
accounts or sub-accounts in the Fund and processing Share
redemption transactions, making the Fund's investment plans and
dividend payment options available, and providing such other
information and services in connection with the rendering of
personal services and/or the maintenance of Accounts, as the
Distributor or the Fund may reasonably request.
The distribution assistance in connection with the sale of
Shares to be rendered by the Distributor and Recipients may
include, but shall not be limited to, the following: distributing
sales literature and prospectuses other than those furnished to
current holders of the Fund's Shares ("Shareholders"), and
providing such other information and services in connection with
the distribution of Shares as the Distributor or the Fund may
reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for
payment under the Plan if it has Qualified Holdings of Shares to
entitle it to payments under the Plan. In the event that either
the Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, a Recipient may
not be rendering appropriate distribution assistance in connection
with the sale of Shares or administrative support services for
Accounts, then the Distributor, at the request of the Board, shall
require the Recipient to provide a written report or other
information to verify that said Recipient is providing appropriate
distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either
may take appropriate steps to terminate the Recipient's status as
such under the Plan, whereupon such Recipient's rights as a third-
party beneficiary hereunder shall terminate.
(b) The Distributor shall make service fee payments to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than the minimum period (the "Minimum Holding
Period"), if any, to be set from time to time by a majority of the
Independent Trustees.
Alternatively, the Distributor may, at its sole option, make
service fee payments ("Advance Service Fee Payments") to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed (i) 0.25% of the average
during the calendar quarter of the aggregate net asset value of
Shares, computed as of the close of business on the day such Shares
are sold, constituting Qualified Holdings sold by the Recipient
during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (ii) 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than one (1) year, subject to reduction or
chargeback so that the Advance Service Fee Payments do not exceed
the limits on payments to Recipients that are, or may be, imposed
by Article III, Section 26, of the NASD Rules of Fair Practice. In
the event Shares are redeemed less than one year after the date
such Shares were sold, the Recipient is obligated and will repay to
the Distributor on demand a pro rata portion of such Advance
Service Fee Payments, based on the ratio of the time such shares
were held to one (1) year.
The Advance Service Fee Payments described in part (i) of this
paragraph (b) may, at the Distributor's sole option, be made more
often than quarterly, and sooner than the end of the calendar
quarter. However, no such payments shall be made to any Recipient
for any such quarter in which its Qualified Holdings do not equal
or exceed, at the end of such quarter, the minimum amount ("Minimum
Qualified Holdings"), if any, to be set from time to time by a
majority of the Independent Trustees.
A majority of the Independent Trustees may at any time or from
time to time decrease and thereafter adjust the rate of fees to be
paid to the Distributor or to any Recipient, but not to exceed the
rate set forth above, and/or direct the Distributor to increase or
decrease the Maximum Holding Period, the Minimum Holding Period or
the Minimum Qualified Holdings. The Distributor shall notify all
Recipients of the Minimum Qualified Holdings, Maximum Holding
Period and Minimum Holding Period, if any, and the rate of payments
hereunder applicable to Recipients, and shall provide each
Recipient with written notice within thirty (30) days after any
change in these provisions. Inclusion of such provisions or a
change in such provisions in a revised current prospectus shall
constitute sufficient notice. The Distributor may make Plan
payments to any "affiliated person" (as defined in the 1940 Act) of
the Distributor if such affiliated person qualifies as a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on
Shares are subject to reduction or elimination of such amounts
under the limits to which the Distributor is, or may become,
subject under Article III, Section 26, of the NASD Rules of Fair
Practice. The distribution assistance and administrative support
services to be rendered by the Distributor in connection with the
Shares may include, but shall not be limited to, the following: (i)
paying sales commissions to any broker, dealer, bank or other
person or entity that sells Shares, and\or paying such persons
Advance Service Fee Payments in advance of, and\or greater than,
the amount provided for in Section 3(b) of this Agreement; (ii)
paying compensation to and expenses of personnel of the Distributor
who support distribution of Shares by Recipients; (iii) obtaining
financing or providing such financing from its own resources, or
from an affiliate, for interest and other borrowing costs on the
Distributor's unreimbursed expenses incurred in rendering
distribution assistance and administrative support services to the
Fund; (iv) paying other direct distribution costs, including
without limitation the costs of sales literature, advertising and
prospectuses (other than those furnished to current Shareholders)
and state "blue sky" registration expenses; and (v) providing any
service rendered by the Distributor that a Recipient may render
pursuant to part (a) of this Section 3. Such services include
distribution assistance and administrative support services
rendered in connection with Shares acquired (i) by purchase, (ii)
in exchange for shares of another investment company for which the
Distributor serves as distributor or sub-distributor, or (iii)
pursuant to a plan of reorganization to which the Fund is a party.
In the event that the Board should have reason to believe that the
Distributor may not be rendering appropriate distribution
assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the
Board, shall provide the Board with a written report or other
information to verify that the Distributor is providing appropriate
services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i)
by Oppenheimer Management Corporation ("OMC") from its own
resources (which may include profits derived from the advisory fee
it receives from the Fund), or (ii) by the Distributor (a
subsidiary of OMC), from its own resources, from Asset-Based Sales
Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this
Plan does not obligate or in any way make the Fund liable to make
any payment whatsoever to any person or entity other than directly
to the Distributor. In no event shall the amounts to be paid to
the Distributor exceed the rate of fees to be paid by the Fund to
the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is in
effect, the selection and nomination of those persons to be
Trustees of the Trust who are not "interested persons" of the Fund
or the Trust ("Disinterested Trustees") shall be committed to the
discretion of such Disinterested Trustees. Nothing herein shall
prevent the Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the
Trust shall provide written reports to the Trust's Board for its
review, detailing services rendered in connection with the
distribution of the Shares, the amount of all payments made and the
purpose for which the payments were made. The reports shall be
provided quarterly, and shall state whether all provisions of
Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall
be in writing and shall provide that: (i) such agreement may be
terminated at any time, without payment of any penalty, by a vote
of a majority of the Independent Trustees or by a vote of the
holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities of the Class, on not more than sixty
days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act); (iii) it shall go into
effect when approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of
voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long
as such continuance is specifically approved at least annually by
a vote of the Board and its Independent Trustees cast in person at
a meeting called for the purpose of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This
Amended and Restated Plan has been approved by a vote of the Board
and its Independent Trustees cast in person at a meeting called on
June 22, 1995, for the purpose of voting on this Plan, and shall
take effect after approval by Class B shareholders of the Fund, at
which time it shall replace the Fund's Amended and Restated
Distribution Plan adopted as of December 23, 1994 and the Amended
and Restated Distribution Agreement for the Shares dated December
23, 1994. Unless terminated as hereinafter provided, it shall
continue in effect from year to year thereafter or as the Board may
otherwise determine only so long as such continuance is
specifically approved at least annually by a vote of the Board and
its Independent Trustees cast in person at a meeting called for the
purpose of voting on such continuance. This Plan may not be
amended to increase materially the amount of payments to be made
without approval of the Class B Shareholders, in the manner
described above, and all material amendments must be approved by a
vote of the Board and of the Independent Trustees. This Plan may
be terminated at any time by vote of a majority of the Independent
Trustees or by the vote of the holders of a "majority" (as defined
in the 1940 Act) of the Fund's outstanding voting securities of the
Class. In the event of such termination, the Board and its
Independent Trustees shall determine whether the Distributor shall
be entitled to payment from the Fund of all or a portion of the
Service Fee and/or the Asset-Based Sales Charge in respect of
Shares sold prior to the effective date of such termination.
8. Disclaimer of Shareholder Liability. The Distributor
understands that the obligations of the Trust and the Fund under
this Plan are not binding upon any Trustee or shareholder of the
Fund personally, but bind only the Fund and the Fund's property.
The Distributor represents that it has notice of the provisions of
the Declaration of Trust of the Trust disclaiming shareholder and
Trustee liability for acts or obligations of the Trust and the
Fund.
OPPENHEIMER QUEST FOR VALUE FUNDS
ON BEHALF OF GROWTH & INCOME VALUE FUND
By: /s/ Bridget A. Macaskill
-----------------------------------
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: /s/ Andrew J. Donohue
--------------------------------
Andrew J. Donohue
Executive Vice President
ofmi\257.b
Exhibit 24(15)(b)(2)
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST FOR VALUE FUNDS
FOR CLASS B SHARES OF
OPPORTUNITY VALUE FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND
AGREEMENT (the "Plan") dated the 22nd day of November, 1995, by and
between OPPENHEIMER QUEST FOR VALUE FUNDS (the "Trust") for the
account of its OPPORTUNITY VALUE FUND (the "Fund") and OPPENHEIMER
FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution
and service plan for Class B shares of the Fund (the "Shares"),
contemplated by Rule 12b-1 (the "Rule") under the Investment
Company Act of 1940 (the "1940 Act"), pursuant to which the Fund
will compensate the Distributor for its services in connection with
the distribution of Shares, and the personal service and
maintenance of shareholder accounts that hold Shares ("Accounts").
The Fund may act as distributor of securities of which it is the
issuer, pursuant to the Rule, according to the terms of this Plan.
The Distributor is authorized under the Plan to pay "Recipients,"
as hereinafter defined, for rendering (1) distribution assistance
in connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are
intended to have certain rights as third-party beneficiaries under
this Plan. The terms and provisions of this Plan shall be
interpreted and defined in a manner consistent with the provisions
and definitions contained in (i) the 1940 Act, (ii) the Rule, (iii)
Article III, Section 26, of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., or its successor
(the "NASD Rules of Fair Practice") and (iv) any conditions
pertaining either to distribution-related expenses or to a plan of
distribution, to which the Fund is subject under any order on which
the Fund relies, issued at any time by the Securities and Exchange
Commission.
2. Definitions. As used in this Plan, the following terms
shall have the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
person or entity which: (i) has rendered assistance (whether
direct, administrative or both) in the distribution of Shares or
has provided administrative support services with respect to Shares
held by Customers (defined below) of the Recipient; (ii) shall
furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer
such questions as may arise concerning the sale of Shares; and
(iii) has been selected by the Distributor to receive payments
under the Plan. Notwithstanding the foregoing, a majority of the
Trust's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of this Plan or in any
agreements relating to this Plan (the "Independent Trustees") may
remove any broker, dealer, bank or other person or entity as a
Recipient, whereupon such person's or entity's rights as a third-
party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all
Shares owned beneficially or of record by: (i) such Recipient, or
(ii) such customers, clients and/or accounts as to which such
Recipient is a fiduciary or custodian or co-fiduciary or co-
custodian (collectively, the "Customers"), but in no event shall
any such Shares be deemed owned by more than one Recipient for
purposes of this Plan. In the event that more than one person or
entity would otherwise qualify as Recipients as to the same Shares,
the Recipient which is the dealer of record on the Fund's books as
determined by the Distributor shall be deemed the Recipient as to
such Shares for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative
Support Services.
(a) The Fund will make payments to the Distributor, (i)
within forty-five (45) days of the end of each calendar quarter, in
the aggregate amount of 0.0625% (0.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset
value of the Shares computed as of the close of each business day
(the "Service Fee"), plus (ii) within ten (10) days of the end of
each month, in the aggregate amount of 0.0625% (0.75% on an annual
basis) of the average during the month of the aggregate net asset
value of Shares computed as of the close of each business day (the
"Asset-Based Sales Charge") outstanding for six years or less (the
"Maximum Holding Period"). Such Service Fee payments received from
the Fund will compensate the Distributor and Recipients for
providing administrative support services with respect to Accounts.
Such Asset-Based Sales Charge payments received from the Fund will
compensate the Distributor and Recipients for providing
distribution assistance in connection with the sales of Shares.
The administrative support services in connection with the
Accounts to be rendered by Recipients may include, but shall not be
limited to, the following: answering routine inquiries concerning
the Fund, assisting in the establishment and maintenance of
accounts or sub-accounts in the Fund and processing Share
redemption transactions, making the Fund's investment plans and
dividend payment options available, and providing such other
information and services in connection with the rendering of
personal services and/or the maintenance of Accounts, as the
Distributor or the Fund may reasonably request.
The distribution assistance in connection with the sale of
Shares to be rendered by the Distributor and Recipients may
include, but shall not be limited to, the following: distributing
sales literature and prospectuses other than those furnished to
current holders of the Fund's Shares ("Shareholders"), and
providing such other information and services in connection with
the distribution of Shares as the Distributor or the Fund may
reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for
payment under the Plan if it has Qualified Holdings of Shares to
entitle it to payments under the Plan. In the event that either
the Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, a Recipient may
not be rendering appropriate distribution assistance in connection
with the sale of Shares or administrative support services for
Accounts, then the Distributor, at the request of the Board, shall
require the Recipient to provide a written report or other
information to verify that said Recipient is providing appropriate
distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either
may take appropriate steps to terminate the Recipient's status as
such under the Plan, whereupon such Recipient's rights as a third-
party beneficiary hereunder shall terminate.
(b) The Distributor shall make service fee payments to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than the minimum period (the "Minimum Holding
Period"), if any, to be set from time to time by a majority of the
Independent Trustees.
Alternatively, the Distributor may, at its sole option, make
service fee payments ("Advance Service Fee Payments") to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed (i) 0.25% of the average
during the calendar quarter of the aggregate net asset value of
Shares, computed as of the close of business on the day such Shares
are sold, constituting Qualified Holdings sold by the Recipient
during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (ii) 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than one (1) year, subject to reduction or
chargeback so that the Advance Service Fee Payments do not exceed
the limits on payments to Recipients that are, or may be, imposed
by Article III, Section 26, of the NASD Rules of Fair Practice. In
the event Shares are redeemed less than one year after the date
such Shares were sold, the Recipient is obligated and will repay to
the Distributor on demand a pro rata portion of such Advance
Service Fee Payments, based on the ratio of the time such shares
were held to one (1) year.
The Advance Service Fee Payments described in part (i) of this
paragraph (b) may, at the Distributor's sole option, be made more
often than quarterly, and sooner than the end of the calendar
quarter. However, no such payments shall be made to any Recipient
for any such quarter in which its Qualified Holdings do not equal
or exceed, at the end of such quarter, the minimum amount ("Minimum
Qualified Holdings"), if any, to be set from time to time by a
majority of the Independent Trustees.
A majority of the Independent Trustees may at any time or from
time to time decrease and thereafter adjust the rate of fees to be
paid to the Distributor or to any Recipient, but not to exceed the
rate set forth above, and/or direct the Distributor to increase or
decrease the Maximum Holding Period, the Minimum Holding Period or
the Minimum Qualified Holdings. The Distributor shall notify all
Recipients of the Minimum Qualified Holdings, Maximum Holding
Period and Minimum Holding Period, if any, and the rate of payments
hereunder applicable to Recipients, and shall provide each
Recipient with written notice within thirty (30) days after any
change in these provisions. Inclusion of such provisions or a
change in such provisions in a revised current prospectus shall
constitute sufficient notice. The Distributor may make Plan
payments to any "affiliated person" (as defined in the 1940 Act) of
the Distributor if such affiliated person qualifies as a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on
Shares are subject to reduction or elimination of such amounts
under the limits to which the Distributor is, or may become,
subject under Article III, Section 26, of the NASD Rules of Fair
Practice. The distribution assistance and administrative support
services to be rendered by the Distributor in connection with the
Shares may include, but shall not be limited to, the following: (i)
paying sales commissions to any broker, dealer, bank or other
person or entity that sells Shares, and\or paying such persons
Advance Service Fee Payments in advance of, and\or greater than,
the amount provided for in Section 3(b) of this Agreement; (ii)
paying compensation to and expenses of personnel of the Distributor
who support distribution of Shares by Recipients; (iii) obtaining
financing or providing such financing from its own resources, or
from an affiliate, for interest and other borrowing costs on the
Distributor's unreimbursed expenses incurred in rendering
distribution assistance and administrative support services to the
Fund; (iv) paying other direct distribution costs, including
without limitation the costs of sales literature, advertising and
prospectuses (other than those furnished to current Shareholders)
and state "blue sky" registration expenses; and (v) providing any
service rendered by the Distributor that a Recipient may render
pursuant to part (a) of this Section 3. Such services include
distribution assistance and administrative support services
rendered in connection with Shares acquired (i) by purchase, (ii)
in exchange for shares of another investment company for which the
Distributor serves as distributor or sub-distributor, or (iii)
pursuant to a plan of reorganization to which the Fund is a party.
In the event that the Board should have reason to believe that the
Distributor may not be rendering appropriate distribution
assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the
Board, shall provide the Board with a written report or other
information to verify that the Distributor is providing appropriate
services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i)
by Oppenheimer Management Corporation ("OMC") from its own
resources (which may include profits derived from the advisory fee
it receives from the Fund), or (ii) by the Distributor (a
subsidiary of OMC), from its own resources, from Asset-Based Sales
Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this
Plan does not obligate or in any way make the Fund liable to make
any payment whatsoever to any person or entity other than directly
to the Distributor. In no event shall the amounts to be paid to
the Distributor exceed the rate of fees to be paid by the Fund to
the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is in
effect, the selection and nomination of those persons to be
Trustees of the Trust who are not "interested persons" of the Fund
or the Trust ("Disinterested Trustees") shall be committed to the
discretion of such Disinterested Trustees. Nothing herein shall
prevent the Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the
Trust shall provide written reports to the Trust's Board for its
review, detailing services rendered in connection with the
distribution of the Shares, the amount of all payments made and the
purpose for which the payments were made. The reports shall be
provided quarterly, and shall state whether all provisions of
Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall
be in writing and shall provide that: (i) such agreement may be
terminated at any time, without payment of any penalty, by a vote
of a majority of the Independent Trustees or by a vote of the
holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities of the Class, on not more than sixty
days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act); (iii) it shall go into
effect when approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of
voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long
as such continuance is specifically approved at least annually by
a vote of the Board and its Independent Trustees cast in person at
a meeting called for the purpose of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This
Amended and Restated Plan has been approved by a vote of the Board
and its Independent Trustees cast in person at a meeting called on
June 22, 1995, for the purpose of voting on this Plan, and shall
take effect after approval by Class B shareholders of the Fund, at
which time it shall replace the Fund's Amended and Restated
Distribution Plan adopted as of December 23, 1994 and the Amended
and Restated Distribution for the Shares dated December 23, 1994.
Unless terminated as hereinafter provided, it shall continue in
effect from year to year thereafter or as the Board may otherwise
determine only so long as such continuance is specifically approved
at least annually by a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of
voting on such continuance. This Plan may not be amended to
increase materially the amount of payments to be made without
approval of the Class B Shareholders, in the manner described
above, and all material amendments must be approved by a vote of
the Board and of the Independent Trustees. This Plan may be
terminated at any time by vote of a majority of the Independent
Trustees or by the vote of the holders of a "majority" (as defined
in the 1940 Act) of the Fund's outstanding voting securities of the
Class. In the event of such termination, the Board and its
Independent Trustees shall determine whether the Distributor shall
be entitled to payment from the Fund of all or a portion of the
Service Fee and/or the Asset-Based Sales Charge in respect of
Shares sold prior to the effective date of such termination.
8. Disclaimer of Shareholder Liability. The Distributor
understands that the obligations of the Trust and the Fund under
this Plan are not binding upon any Trustee or shareholder of the
Fund personally, but bind only the Fund and the Fund's property.
The Distributor represents that it has notice of the provisions of
the Declaration of Trust of the Trust disclaiming shareholder and
Trustee liability for acts or obligations of the Trust and the
Fund.
OPPENHEIMER QUEST FOR VALUE FUNDS
ON BEHALF OF OPPORTUNITY VALUE FUND
By: /s/ Bridget A. Macaskill
-------------------------------
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: /s/ Andrew J. Donohue
--------------------------------
Andrew J. Donohue
Executive Vice President
ofmi\236.b
Exhibit 24(b)(15)(b)(3)
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST FOR VALUE FUNDS
FOR CLASS B SHARES OF
SMALL CAP VALUE FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND
AGREEMENT (the "Plan") dated the 22nd day of November, 1995, by and
between OPPENHEIMER QUEST FOR VALUE FUNDS (the "Trust") for the
account of its SMALL CAP VALUE FUND (the "Fund") and OPPENHEIMER
FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution
and service plan for Class B shares of the Fund (the "Shares"),
contemplated by Rule 12b-1 (the "Rule") under the Investment
Company Act of 1940 (the "1940 Act"), pursuant to which the Fund
will compensate the Distributor for its services in connection with
the distribution of Shares, and the personal service and
maintenance of shareholder accounts that hold Shares ("Accounts").
The Fund may act as distributor of securities of which it is the
issuer, pursuant to the Rule, according to the terms of this Plan.
The Distributor is authorized under the Plan to pay "Recipients,"
as hereinafter defined, for rendering (1) distribution assistance
in connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are
intended to have certain rights as third-party beneficiaries under
this Plan. The terms and provisions of this Plan shall be
interpreted and defined in a manner consistent with the provisions
and definitions contained in (i) the 1940 Act, (ii) the Rule, (iii)
Article III, Section 26, of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., or its successor
(the "NASD Rules of Fair Practice") and (iv) any conditions
pertaining either to distribution-related expenses or to a plan of
distribution, to which the Fund is subject under any order on which
the Fund relies, issued at any time by the Securities and Exchange
Commission.
2. Definitions. As used in this Plan, the following terms
shall have the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
person or entity which: (i) has rendered assistance (whether
direct, administrative or both) in the distribution of Shares or
has provided administrative support services with respect to Shares
held by Customers (defined below) of the Recipient; (ii) shall
furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer
such questions as may arise concerning the sale of Shares; and
(iii) has been selected by the Distributor to receive payments
under the Plan. Notwithstanding the foregoing, a majority of the
Trust's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of this Plan or in any
agreements relating to this Plan (the "Independent Trustees") may
remove any broker, dealer, bank or other person or entity as a
Recipient, whereupon such person's or entity's rights as a third-
party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all
Shares owned beneficially or of record by: (i) such Recipient, or
(ii) such customers, clients and/or accounts as to which such
Recipient is a fiduciary or custodian or co-fiduciary or co-
custodian (collectively, the "Customers"), but in no event shall
any such Shares be deemed owned by more than one Recipient for
purposes of this Plan. In the event that more than one person or
entity would otherwise qualify as Recipients as to the same Shares,
the Recipient which is the dealer of record on the Fund's books as
determined by the Distributor shall be deemed the Recipient as to
such Shares for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative
Support Services.
(a) The Fund will make payments to the Distributor, (i)
within forty-five (45) days of the end of each calendar quarter, in
the aggregate amount of 0.0625% (0.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset
value of the Shares computed as of the close of each business day
(the "Service Fee"), plus (ii) within ten (10) days of the end of
each month, in the aggregate amount of 0.0625% (0.75% on an annual
basis) of the average during the month of the aggregate net asset
value of Shares computed as of the close of each business day (the
"Asset-Based Sales Charge") outstanding for six years or less (the
"Maximum Holding Period"). Such Service Fee payments received from
the Fund will compensate the Distributor and Recipients for
providing administrative support services with respect to Accounts.
Such Asset-Based Sales Charge payments received from the Fund will
compensate the Distributor and Recipients for providing
distribution assistance in connection with the sales of Shares.
The administrative support services in connection with the
Accounts to be rendered by Recipients may include, but shall not be
limited to, the following: answering routine inquiries concerning
the Fund, assisting in the establishment and maintenance of
accounts or sub-accounts in the Fund and processing Share
redemption transactions, making the Fund's investment plans and
dividend payment options available, and providing such other
information and services in connection with the rendering of
personal services and/or the maintenance of Accounts, as the
Distributor or the Fund may reasonably request.
The distribution assistance in connection with the sale of
Shares to be rendered by the Distributor and Recipients may
include, but shall not be limited to, the following: distributing
sales literature and prospectuses other than those furnished to
current holders of the Fund's Shares ("Shareholders"), and
providing such other information and services in connection with
the distribution of Shares as the Distributor or the Fund may
reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for
payment under the Plan if it has Qualified Holdings of Shares to
entitle it to payments under the Plan. In the event that either
the Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, a Recipient may
not be rendering appropriate distribution assistance in connection
with the sale of Shares or administrative support services for
Accounts, then the Distributor, at the request of the Board, shall
require the Recipient to provide a written report or other
information to verify that said Recipient is providing appropriate
distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either
may take appropriate steps to terminate the Recipient's status as
such under the Plan, whereupon such Recipient's rights as a third-
party beneficiary hereunder shall terminate.
(b) The Distributor shall make service fee payments to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than the minimum period (the "Minimum Holding
Period"), if any, to be set from time to time by a majority of the
Independent Trustees.
Alternatively, the Distributor may, at its sole option, make
service fee payments ("Advance Service Fee Payments") to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed (i) 0.25% of the average
during the calendar quarter of the aggregate net asset value of
Shares, computed as of the close of business on the day such Shares
are sold, constituting Qualified Holdings sold by the Recipient
during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (ii) 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than one (1) year, subject to reduction or
chargeback so that the Advance Service Fee Payments do not exceed
the limits on payments to Recipients that are, or may be, imposed
by Article III, Section 26, of the NASD Rules of Fair Practice. In
the event Shares are redeemed less than one year after the date
such Shares were sold, the Recipient is obligated and will repay to
the Distributor on demand a pro rata portion of such Advance
Service Fee Payments, based on the ratio of the time such shares
were held to one (1) year.
The Advance Service Fee Payments described in part (i) of this
paragraph (b) may, at the Distributor's sole option, be made more
often than quarterly, and sooner than the end of the calendar
quarter. However, no such payments shall be made to any Recipient
for any such quarter in which its Qualified Holdings do not equal
or exceed, at the end of such quarter, the minimum amount ("Minimum
Qualified Holdings"), if any, to be set from time to time by a
majority of the Independent Trustees.
A majority of the Independent Trustees may at any time or from
time to time decrease and thereafter adjust the rate of fees to be
paid to the Distributor or to any Recipient, but not to exceed the
rate set forth above, and/or direct the Distributor to increase or
decrease the Maximum Holding Period, the Minimum Holding Period or
the Minimum Qualified Holdings. The Distributor shall notify all
Recipients of the Minimum Qualified Holdings, Maximum Holding
Period and Minimum Holding Period, if any, and the rate of payments
hereunder applicable to Recipients, and shall provide each
Recipient with written notice within thirty (30) days after any
change in these provisions. Inclusion of such provisions or a
change in such provisions in a revised current prospectus shall
constitute sufficient notice. The Distributor may make Plan
payments to any "affiliated person" (as defined in the 1940 Act) of
the Distributor if such affiliated person qualifies as a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on
Shares are subject to reduction or elimination of such amounts
under the limits to which the Distributor is, or may become,
subject under Article III, Section 26, of the NASD Rules of Fair
Practice. The distribution assistance and administrative support
services to be rendered by the Distributor in connection with the
Shares may include, but shall not be limited to, the following: (i)
paying sales commissions to any broker, dealer, bank or other
person or entity that sells Shares, and\or paying such persons
Advance Service Fee Payments in advance of, and\or greater than,
the amount provided for in Section 3(b) of this Agreement; (ii)
paying compensation to and expenses of personnel of the Distributor
who support distribution of Shares by Recipients; (iii) obtaining
financing or providing such financing from its own resources, or
from an affiliate, for interest and other borrowing costs on the
Distributor's unreimbursed expenses incurred in rendering
distribution assistance and administrative support services to the
Fund; (iv) paying other direct distribution costs, including
without limitation the costs of sales literature, advertising and
prospectuses (other than those furnished to current Shareholders)
and state "blue sky" registration expenses; and (v) providing any
service rendered by the Distributor that a Recipient may render
pursuant to part (a) of this Section 3. Such services include
distribution assistance and administrative support services
rendered in connection with Shares acquired (i) by purchase, (ii)
in exchange for shares of another investment company for which the
Distributor serves as distributor or sub-distributor, or (iii)
pursuant to a plan of reorganization to which the Fund is a party.
In the event that the Board should have reason to believe that the
Distributor may not be rendering appropriate distribution
assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the
Board, shall provide the Board with a written report or other
information to verify that the Distributor is providing appropriate
services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i)
by Oppenheimer Management Corporation ("OMC") from its own
resources (which may include profits derived from the advisory fee
it receives from the Fund), or (ii) by the Distributor (a
subsidiary of OMC), from its own resources, from Asset-Based Sales
Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this
Plan does not obligate or in any way make the Fund liable to make
any payment whatsoever to any person or entity other than directly
to the Distributor. In no event shall the amounts to be paid to
the Distributor exceed the rate of fees to be paid by the Fund to
the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is in
effect, the selection and nomination of those persons to be
Trustees of the Trust who are not "interested persons" of the Fund
or the Trust ("Disinterested Trustees") shall be committed to the
discretion of such Disinterested Trustees. Nothing herein shall
prevent the Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the
Trust shall provide written reports to the Trust's Board for its
review, detailing services rendered in connection with the
distribution of the Shares, the amount of all payments made and the
purpose for which the payments were made. The reports shall be
provided quarterly, and shall state whether all provisions of
Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall
be in writing and shall provide that: (i) such agreement may be
terminated at any time, without payment of any penalty, by a vote
of a majority of the Independent Trustees or by a vote of the
holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities of the Class, on not more than sixty
days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act); (iii) it shall go into
effect when approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of
voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long
as such continuance is specifically approved at least annually by
a vote of the Board and its Independent Trustees cast in person at
a meeting called for the purpose of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This
Amended and Restated Plan has been approved by a vote of the Board
and its Independent Trustees cast in person at a meeting called on
June 22, 1995, for the purpose of voting on this Plan, and shall
take effect after approval by Class B shareholders of the Fund, at
which time it shall replace the Fund's Amended and Restated
Distribution Plan adopted as of December 23, 1994 and the Amended
and Restated Distribution Agreement for the Shares dated December
23, 1994. Unless terminated as hereinafter provided, it shall
continue in effect from year to year thereafter or as the Board may
otherwise determine only so long as such continuance is
specifically approved at least annually by a vote of the Board and
its Independent Trustees cast in person at a meeting called for the
purpose of voting on such continuance. This Plan may not be
amended to increase materially the amount of payments to be made
without approval of the Class B Shareholders, in the manner
described above, and all material amendments must be approved by a
vote of the Board and of the Independent Trustees. This Plan may
be terminated at any time by vote of a majority of the Independent
Trustees or by the vote of the holders of a "majority" (as defined
in the 1940 Act) of the Fund's outstanding voting securities of the
Class. In the event of such termination, the Board and its
Independent Trustees shall determine whether the Distributor shall
be entitled to payment from the Fund of all or a portion of the
Service Fee and/or the Asset-Based Sales Charge in respect of
Shares sold prior to the effective date of such termination.
8. Disclaimer of Shareholder Liability. The Distributor
understands that the obligations of the Trust and the Fund under
this Plan are not binding upon any Trustee or shareholder of the
Fund personally, but bind only the Fund and the Fund's property.
The Distributor represents that it has notice of the provisions of
the Declaration of Trust of the Trust disclaiming shareholder and
Trustee liability for acts or obligations of the Trust and the
Fund.
OPPENHEIMER QUEST FOR VALUE FUNDS
ON BEHALF OF SMALL CAP VALUE FUND
By: /s/ Bridget A. Macaskill
-----------------------------
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: /s/ Andrew J. Donohue
-------------------------------
Andrew J. Donohue
Executive Vice President
ofmi\251.b
Exhibit 14(15)(b)(4)
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST FOR VALUE FUNDS
FOR CLASS B SHARES OF
OFFICERS VALUE FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND
AGREEMENT (the "Plan") dated the 22nd day of November, 1995, by and
between OPPENHEIMER QUEST FOR VALUE FUNDS (the "Trust") for the
account of its OFFICERS VALUE FUND (the "Fund") and OPPENHEIMER
FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution
and service plan for Class B shares of the Fund (the "Shares"),
contemplated by Rule 12b-1 (the "Rule") under the Investment
Company Act of 1940 (the "1940 Act"), pursuant to which the Fund
will compensate the Distributor for its services in connection with
the distribution of Shares, and the personal service and
maintenance of shareholder accounts that hold Shares ("Accounts").
The Fund may act as distributor of securities of which it is the
issuer, pursuant to the Rule, according to the terms of this Plan.
The Distributor is authorized under the Plan to pay "Recipients,"
as hereinafter defined, for rendering (1) distribution assistance
in connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are
intended to have certain rights as third-party beneficiaries under
this Plan. The terms and provisions of this Plan shall be
interpreted and defined in a manner consistent with the provisions
and definitions contained in (i) the 1940 Act, (ii) the Rule, (iii)
Article III, Section 26, of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., or its successor
(the "NASD Rules of Fair Practice") and (iv) any conditions
pertaining either to distribution-related expenses or to a plan of
distribution, to which the Fund is subject under any order on which
the Fund relies, issued at any time by the Securities and Exchange
Commission.
2. Definitions. As used in this Plan, the following terms
shall have the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
person or entity which: (i) has rendered assistance (whether
direct, administrative or both) in the distribution of Shares or
has provided administrative support services with respect to Shares
held by Customers (defined below) of the Recipient; (ii) shall
furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer
such questions as may arise concerning the sale of Shares; and
(iii) has been selected by the Distributor to receive payments
under the Plan. Notwithstanding the foregoing, a majority of the
Trust's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of this Plan or in any
agreements relating to this Plan (the "Independent Trustees") may
remove any broker, dealer, bank or other person or entity as a
Recipient, whereupon such person's or entity's rights as a third-
party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all
Shares owned beneficially or of record by: (i) such Recipient, or
(ii) such customers, clients and/or accounts as to which such
Recipient is a fiduciary or custodian or co-fiduciary or co-
custodian (collectively, the "Customers"), but in no event shall
any such Shares be deemed owned by more than one Recipient for
purposes of this Plan. In the event that more than one person or
entity would otherwise qualify as Recipients as to the same Shares,
the Recipient which is the dealer of record on the Fund's books as
determined by the Distributor shall be deemed the Recipient as to
such Shares for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative
Support Services.
(a) The Fund will make payments to the Distributor, (i)
within forty-five (45) days of the end of each calendar quarter, in
the aggregate amount of 0.0625% (0.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset
value of the Shares computed as of the close of each business day
(the "Service Fee"), plus (ii) within ten (10) days of the end of
each month, in the aggregate amount of 0.0625% (0.75% on an annual
basis) of the average during the month of the aggregate net asset
value of Shares computed as of the close of each business day (the
"Asset-Based Sales Charge") outstanding for six years or less (the
"Maximum Holding Period"). Such Service Fee payments received from
the Fund will compensate the Distributor and Recipients for
providing administrative support services with respect to Accounts.
Such Asset-Based Sales Charge payments received from the Fund will
compensate the Distributor and Recipients for providing
distribution assistance in connection with the sales of Shares.
The administrative support services in connection with the
Accounts to be rendered by Recipients may include, but shall not be
limited to, the following: answering routine inquiries concerning
the Fund, assisting in the establishment and maintenance of
accounts or sub-accounts in the Fund and processing Share
redemption transactions, making the Fund's investment plans and
dividend payment options available, and providing such other
information and services in connection with the rendering of
personal services and/or the maintenance of Accounts, as the
Distributor or the Fund may reasonably request.
The distribution assistance in connection with the sale of
Shares to be rendered by the Distributor and Recipients may
include, but shall not be limited to, the following: distributing
sales literature and prospectuses other than those furnished to
current holders of the Fund's Shares ("Shareholders"), and
providing such other information and services in connection with
the distribution of Shares as the Distributor or the Fund may
reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for
payment under the Plan if it has Qualified Holdings of Shares to
entitle it to payments under the Plan. In the event that either
the Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, a Recipient may
not be rendering appropriate distribution assistance in connection
with the sale of Shares or administrative support services for
Accounts, then the Distributor, at the request of the Board, shall
require the Recipient to provide a written report or other
information to verify that said Recipient is providing appropriate
distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either
may take appropriate steps to terminate the Recipient's status as
such under the Plan, whereupon such Recipient's rights as a third-
party beneficiary hereunder shall terminate.
(b) The Distributor shall make service fee payments to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than the minimum period (the "Minimum Holding
Period"), if any, to be set from time to time by a majority of the
Independent Trustees.
Alternatively, the Distributor may, at its sole option, make
service fee payments ("Advance Service Fee Payments") to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed (i) 0.25% of the average
during the calendar quarter of the aggregate net asset value of
Shares, computed as of the close of business on the day such Shares
are sold, constituting Qualified Holdings sold by the Recipient
during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (ii) 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than one (1) year, subject to reduction or
chargeback so that the Advance Service Fee Payments do not exceed
the limits on payments to Recipients that are, or may be, imposed
by Article III, Section 26, of the NASD Rules of Fair Practice. In
the event Shares are redeemed less than one year after the date
such Shares were sold, the Recipient is obligated and will repay to
the Distributor on demand a pro rata portion of such Advance
Service Fee Payments, based on the ratio of the time such shares
were held to one (1) year.
The Advance Service Fee Payments described in part (i) of this
paragraph (b) may, at the Distributor's sole option, be made more
often than quarterly, and sooner than the end of the calendar
quarter. However, no such payments shall be made to any Recipient
for any such quarter in which its Qualified Holdings do not equal
or exceed, at the end of such quarter, the minimum amount ("Minimum
Qualified Holdings"), if any, to be set from time to time by a
majority of the Independent Trustees.
A majority of the Independent Trustees may at any time or from
time to time decrease and thereafter adjust the rate of fees to be
paid to the Distributor or to any Recipient, but not to exceed the
rate set forth above, and/or direct the Distributor to increase or
decrease the Maximum Holding Period, the Minimum Holding Period or
the Minimum Qualified Holdings. The Distributor shall notify all
Recipients of the Minimum Qualified Holdings, Maximum Holding
Period and Minimum Holding Period, if any, and the rate of payments
hereunder applicable to Recipients, and shall provide each
Recipient with written notice within thirty (30) days after any
change in these provisions. Inclusion of such provisions or a
change in such provisions in a revised current prospectus shall
constitute sufficient notice. The Distributor may make Plan
payments to any "affiliated person" (as defined in the 1940 Act) of
the Distributor if such affiliated person qualifies as a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on
Shares are subject to reduction or elimination of such amounts
under the limits to which the Distributor is, or may become,
subject under Article III, Section 26, of the NASD Rules of Fair
Practice. The distribution assistance and administrative support
services to be rendered by the Distributor in connection with the
Shares may include, but shall not be limited to, the following: (i)
paying sales commissions to any broker, dealer, bank or other
person or entity that sells Shares, and\or paying such persons
Advance Service Fee Payments in advance of, and\or greater than,
the amount provided for in Section 3(b) of this Agreement; (ii)
paying compensation to and expenses of personnel of the Distributor
who support distribution of Shares by Recipients; (iii) obtaining
financing or providing such financing from its own resources, or
from an affiliate, for interest and other borrowing costs on the
Distributor's unreimbursed expenses incurred in rendering
distribution assistance and administrative support services to the
Fund; (iv) paying other direct distribution costs, including
without limitation the costs of sales literature, advertising and
prospectuses (other than those furnished to current Shareholders)
and state "blue sky" registration expenses; and (v) providing any
service rendered by the Distributor that a Recipient may render
pursuant to part (a) of this Section 3. Such services include
distribution assistance and administrative support services
rendered in connection with Shares acquired (i) by purchase, (ii)
in exchange for shares of another investment company for which the
Distributor serves as distributor or sub-distributor, or (iii)
pursuant to a plan of reorganization to which the Fund is a party.
In the event that the Board should have reason to believe that the
Distributor may not be rendering appropriate distribution
assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the
Board, shall provide the Board with a written report or other
information to verify that the Distributor is providing appropriate
services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i)
by Oppenheimer Management Corporation ("OMC") from its own
resources (which may include profits derived from the advisory fee
it receives from the Fund), or (ii) by the Distributor (a
subsidiary of OMC), from its own resources, from Asset-Based Sales
Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this
Plan does not obligate or in any way make the Fund liable to make
any payment whatsoever to any person or entity other than directly
to the Distributor. In no event shall the amounts to be paid to
the Distributor exceed the rate of fees to be paid by the Fund to
the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is in
effect, the selection and nomination of those persons to be
Trustees of the Trust who are not "interested persons" of the Fund
or the Trust ("Disinterested Trustees") shall be committed to the
discretion of such Disinterested Trustees. Nothing herein shall
prevent the Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the
Trust shall provide written reports to the Trust's Board for its
review, detailing services rendered in connection with the
distribution of the Shares, the amount of all payments made and the
purpose for which the payments were made. The reports shall be
provided quarterly, and shall state whether all provisions of
Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall
be in writing and shall provide that: (i) such agreement may be
terminated at any time, without payment of any penalty, by a vote
of a majority of the Independent Trustees or by a vote of the
holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities of the Class, on not more than sixty
days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act); (iii) it shall go into
effect when approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of
voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long
as such continuance is specifically approved at least annually by
a vote of the Board and its Independent Trustees cast in person at
a meeting called for the purpose of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This
Amended and Restated Plan has been approved by a vote of the Board
and its Independent Trustees cast in person at a meeting called on
June 22, 1995, for the purpose of voting on this Plan, and shall
take effect after approval by Class B shareholders of the Fund, at
which time it shall replace the Fund's Amended and Restated
Distribution Plan adopted as of December 23, 1994 and the Amended
and Restated Distribution Agreement for the Shares dated December
23, 1994. Unless terminated as hereinafter provided, it shall
continue in effect from year to year thereafter or as the Board may
otherwise determine only so long as such continuance is
specifically approved at least annually by a vote of the Board and
its Independent Trustees cast in person at a meeting called for the
purpose of voting on such continuance. This Plan may not be
amended to increase materially the amount of payments to be made
without approval of the Class B Shareholders, in the manner
described above, and all material amendments must be approved by a
vote of the Board and of the Independent Trustees. This Plan may
be terminated at any time by vote of a majority of the Independent
Trustees or by the vote of the holders of a "majority" (as defined
in the 1940 Act) of the Fund's outstanding voting securities of the
Class. In the event of such termination, the Board and its
Independent Trustees shall determine whether the Distributor shall
be entitled to payment from the Fund of all or a portion of the
Service Fee and/or the Asset-Based Sales Charge in respect of
Shares sold prior to the effective date of such termination.
8. Disclaimer of Shareholder Liability. The Distributor
understands that the obligations of the Trust and the Fund under
this Plan are not binding upon any Trustee or shareholder of the
Fund personally, but bind only the Fund and the Fund's property.
The Distributor represents that it has notice of the provisions of
the Declaration of Trust of the Trust disclaiming shareholder and
Trustee liability for acts or obligations of the Trust and the
Fund.
OPPENHEIMER QUEST FOR VALUE FUNDS
ON BEHALF OF OFFICERS VALUE FUND
By: /s/ Bridget A. Macaskill
-----------------------------
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: /s/ Andrew J. Donohue
-------------------------------
Andrew J. Donohue
Executive Vice President
ofmi\229.b
Exhibit 24(b)(15(c)(1)
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST FOR VALUE FUNDS
FOR CLASS C SHARES OF
GROWTH & INCOME VALUE FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND
AGREEMENT (the "Plan") dated the 22nd day of November, 1995, by and
between OPPENHEIMER QUEST FOR VALUE FUNDS (the "Trust") for the
account of its GROWTH & INCOME VALUE FUND (the "Fund") and
OPPENHEIMER FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution
plan for Class C shares of the Fund (the "Shares"), contemplated by
Rule 12b-1 (the "Rule") under the Investment Company Act of 1940
(the "1940 Act"), pursuant to which the Fund will compensate the
Distributor for its services incurred in connection with the
distribution of Shares, and the personal service and maintenance of
shareholder accounts that hold Shares ("Accounts"). The Fund may
act as distributor of securities of which it is the issuer,
pursuant to the Rule, according to the terms of this Plan. The
Distributor is authorized under the Plan to pay "Recipients," as
hereinafter defined, for rendering (1) distribution assistance in
connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are
intended to have certain rights as third-party beneficiaries under
this Plan. The terms and provisions of this Plan shall be
interpreted and defined in a manner consistent with the provisions
and definitions contained in (i) the 1940 Act, (ii) the Rule, (iii)
Article III, Section 26, of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., or its successor
(the "NASD Rules of Fair Practice") and (iv) any conditions
pertaining either to distribution-related expenses or to a plan of
distribution, to which the Fund is subject under any order on which
the Fund relies, issued at any time by the Securities and Exchange
Commission.
2. Definitions. As used in this Plan, the following terms
shall have the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
person or entity which: (i) has rendered assistance (whether
direct, administrative or both) in the distribution of Shares or
has provided administrative support services with respect to Shares
held by Customers (defined below) of the Recipient; (ii) shall
furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer
such questions as may arise concerning the sale of Shares; and
(iii) has been selected by the Distributor to receive payments
under the Plan. Notwithstanding the foregoing, a majority of the
Trust's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of this Plan or in any
agreements relating to this Plan (the "Independent Trustees") may
remove any broker, dealer, bank or other person or entity as a
Recipient, whereupon such person's or entity's rights as a third-
party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all
Shares owned beneficially or of record by: (i) such Recipient, or
(ii) such customers, clients and/or accounts as to which such
Recipient is a fiduciary or custodian or co-fiduciary or co-
custodian (collectively, the "Customers"), but in no event shall
any such Shares be deemed owned by more than one Recipient for
purposes of this Plan. In the event that more than one person or
entity would otherwise qualify as Recipients as to the same Shares,
the Recipient which is the dealer of record on the Fund's books as
determined by the Distributor shall be deemed the Recipient as to
such Shares for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative
Support Services.
(a) The Fund will make payments to the Distributor, within
forty-five (45) days of the end of each calendar quarter, in the
aggregate amount (i) of 0.0625% (0.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset
value of the Shares computed as of the close of each business day
(the "Service Fee"), plus (ii) 0.1875% (0.75% on an annual basis)
of the average during the calendar quarter of the aggregate net
asset value of the Shares computed as of the close of each business
day (the "Asset-Based Sales Charge"). Such Service Fee payments
received from the Fund will compensate the Distributor and
Recipients for providing administrative support services with
respect to Accounts. Such Asset-Based Sales Charge payments
received from the Fund will compensate the Distributor and
Recipients for providing distribution assistance in connection with
the sale of Shares.
The administrative support services in connection with the
Accounts to be rendered by Recipients may include, but shall not be
limited to, the following: answering routine inquiries concerning
the Fund, assisting in establishing and maintaining accounts or
sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend
payment options available, and providing such other information and
services in connection with the rendering of personal services
and/or the maintenance of Accounts, as the Distributor or the Fund
may reasonably request.
The distribution assistance in connection with the sale of
Shares to be rendered by the Distributor and by Recipients may
include, but shall not be limited to, the following: distributing
sales literature and prospectuses other than those furnished to
current holders of the Fund's Shares ("Shareholders"), and
providing such other information and services in connection with
the distribution of Shares as the Distributor or the Fund may
reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for
payment under the Plan if it has Qualified Holdings of Shares to
entitle it to payments under the Plan. In the event that either
the Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, a Recipient may
not be rendering appropriate distribution assistance in connection
with the sale of Shares or administrative support services for the
Accounts, then the Distributor, at the request of the Board, shall
require the Recipient to provide a written report or other
information to verify that said Recipient is providing appropriate
distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either
may take appropriate steps to terminate the Recipient's status as
such under the Plan, whereupon such Recipient's rights as a third-
party beneficiary hereunder shall terminate.
(b) The Distributor shall make service fee payments to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares, computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than the minimum period (the "Minimum Holding
Period"), if any, to be set from time to time by a majority of the
Independent Trustees.
Alternatively, the Distributor may, at its sole option, make
service fee payments ("Advance Service Fee Payments") to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed (i) 0.25% of the average
during the calendar quarter of the aggregate net asset value of
Shares, computed as of the close of business on the day such Shares
are sold, constituting Qualified Holdings sold by the Recipient
during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (ii) 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than one (1) year, subject to reduction or
chargeback so that the Advance Service Fee Payments do not exceed
the limits on payments to Recipients that are, or may be, imposed
by Article III, Section 26, of the NASD Rules of Fair Practice. In
the event Shares are redeemed less than one year after the date
such Shares were sold, the Recipient is obligated and will repay to
the Distributor on demand a pro rata portion of such Advance
Service Fee Payments, based on the ratio of the time such shares
were held to one (1) year.
The Advance Service Fee Payments described in part (i) of the
preceding sentence may, at the Distributor's sole option, be made
more often than quarterly, and sooner than the end of the calendar
quarter. In addition, the Distributor shall make asset-based sales
charge payments to any Recipient quarterly, within forty-five (45)
days of the end of each calendar quarter, at a rate not to exceed
0.1875% (0.75% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares
computed as of the close of each business day, constituting
Qualified Holdings owned beneficially or of record by the Recipient
or its Customers for a period of more than one (1) year. However,
no such service fee or asset-based sales charge payments
(collectively, the "Recipient Payments") shall be made to any
Recipient for any such quarter in which its Qualified Holdings do
not equal or exceed, at the end of such quarter, the minimum amount
("Minimum Qualified Holdings"), if any, to be set from time to time
by a majority of the Independent Trustees.
A majority of the Independent Trustees may at any time or from
time to time decrease and thereafter adjust the rate of fees to be
paid to the Distributor or to any Recipient, but not to exceed the
rates set forth above, and/or direct the Distributor to increase or
decrease the Minimum Holding Period or the Minimum Qualified
Holdings. The Distributor shall notify all Recipients of the
Minimum Qualified Holdings or Minimum Holding Period, if any, and
the rates of Recipient Payments hereunder applicable to Recipients,
and shall provide each Recipient with written notice within thirty
(30) days after any change in these provisions. Inclusion of such
provisions or a change in such provisions in a revised current
prospectus shall constitute sufficient notice. The Distributor may
make Plan payments to any "affiliated person" (as defined in the
1940 Act) of the Distributor if such affiliated person qualifies as
a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on
Shares are subject to reduction or elimination of such amounts
under the limits to which the Distributor is, or may become,
subject under Article III, Section 26, of the NASD Rules of Fair
Practice. The distribution assistance and administrative support
services to be rendered by the Distributor in connection with the
Shares may include, but shall not be limited to, the following: (i)
paying sales commissions to any broker, dealer, bank or other
person or entity that sells Shares, and\or paying such persons
Advance Service Fee Payments in advance of, and\or greater than,
the amount provided for in Section 3(b) of this Agreement; (ii)
paying compensation to and expenses of personnel of the Distributor
who support distribution of Shares by Recipients; (iii) obtaining
financing or providing such financing from its own resources, or
from an affiliate, for interest and other borrowing costs of the
Distributor's unreimbursed expenses incurred in rendering
distribution assistance and administrative support services to the
Fund; (iv) paying other direct distribution costs, including
without limitation the costs of sales literature, advertising and
prospectuses (other than those furnished to current Shareholders)
and state "blue sky" registration expenses; and (v) providing any
service rendered by the Distributor that a Recipient may render
pursuant to part (a) of this Section 3. Such services include
distribution assistance and administrative support services
rendered in connection with Shares acquired (i) by purchase, (ii)
in exchange for shares of another investment company for which the
Distributor serves as distributor or sub-distributor, or (iii)
pursuant to a plan of reorganization to which the Fund is a party.
In the event that the Board should have reason to believe that the
Distributor may not be rendering appropriate distribution
assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the
Board, shall provide the Board with a written report or other
information to verify that the Distributor is providing appropriate
services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i)
by Oppenheimer Management Corporation ("OMC") from its own
resources (which may include profits derived from the advisory fee
it receives from the Fund), or (ii) by the Distributor (a
subsidiary of OMC), from its own resources, from Asset-Based Sales
Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this
Plan does not obligate or in any way make the Fund liable to make
any payment whatsoever to any person or entity other than directly
to the Distributor. In no event shall the amounts to be paid to
the Distributor exceed the rate of fees to be paid by the Fund to
the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is
in effect, the selection and nomination of those persons to be
Trustees of the Trust who are not "interested persons" of the Fund
or the Trust ("Disinterested Trustees") shall be committed to the
discretion of such Disinterested Trustees. Nothing herein shall
prevent the Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of
the Trust shall provide at least quarterly a written reports to the
Trust's Board for its review, detailing services rendered in
connection with the distribution of the Shares, the amount of all
payments made and the purpose for which the payments were made.
The reports shall be provided quarterly and shall state whether all
provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan
shall be in writing and shall provide that: (i) such agreement may
be terminated at any time, without payment of any penalty, by a
vote of a majority of the Independent Trustees or by a vote of the
holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities of the Class, on not more than sixty
days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act); (iii) it shall go into
effect when approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of
voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long
as such continuance is specifically approved at least annually by
a vote of the Board and its Independent Trustees cast in person at
a meeting called for the purpose of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment.
This Amended and Restated Plan has been approved by a vote of the
Board and its Independent Trustees cast in person at a meeting
called on June 22, 1995 for the purpose of voting on this Plan, and
shall take effect after approval by Class C shareholders of the
Fund, at which time it shall replace the Fund's Plan and Agreement
of Distribution for the Shares made as of September 1, 1993, and
as amended February 1, 1995. Unless terminated as hereinafter
provided, it shall continue in effect from year to year from the
date first set forth above or as the Board may otherwise determine
only so long as such continuance is specifically approved at least
annually by a vote of the Board and its Independent Trustees cast
in person at a meeting called for the purpose of voting on such
continuance. This Plan may not be amended to increase materially
the amount of payments to be made without approval of the Class C
Shareholders, in the manner described above, and all material
amendments must be approved by a vote of the Board and of the
Independent Trustees. This Plan may be terminated at any time by
vote of a majority of the Independent Trustees or by the vote of
the holders of a "majority" (as defined in the 1940 Act) of the
Fund's outstanding voting securities of the Class. In the event of
such termination, the Board and its Independent Trustees shall
determine whether the Distributor is entitled to payment from the
Fund of all or a portion of the Service Fee and/or the Asset-Based
Sales Charge in respect of Shares sold prior to the effective date
of such termination.
8. Disclaimer of Shareholder and Trustee Liability. The
Distributor understands that the obligations of the Trust and the
Fund under this Plan are not binding upon any Trustee or
shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of
the provisions of the Declaration of Trust of the Fund disclaiming
shareholder and Trustee liability for acts or obligations of the
Trust and the Fund.
OPPENHEIMER QUEST FOR VALUE FUNDS
On Behalf of GROWTH & INCOME VALUE FUND
By: /s/ Bridget A. Macaskill
-----------------------------------
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: /s/ Andrew J. Donohue
----------------------------------
Andrew J. Donohue
Executive Vice President
ofmi\257.c
Exhibit 24(b)(15)(c)(2)
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST FOR VALUE FUNDS
FOR CLASS C SHARES OF
OPPORTUNITY VALUE FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND
AGREEMENT (the "Plan") dated the 22nd day of November, 1995, by
and between OPPENHEIMER QUEST FOR VALUE FUNDS (the "Trust") for the
account of its OPPORTUNITY VALUE FUND (the "Fund") and OPPENHEIMER
FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution
plan for Class C shares of the Fund (the "Shares"), contemplated by
Rule 12b-1 (the "Rule") under the Investment Company Act of 1940
(the "1940 Act"), pursuant to which the Fund will compensate the
Distributor for its services incurred in connection with the
distribution of Shares, and the personal service and maintenance of
shareholder accounts that hold Shares ("Accounts"). The Fund may
act as distributor of securities of which it is the issuer,
pursuant to the Rule, according to the terms of this Plan. The
Distributor is authorized under the Plan to pay "Recipients," as
hereinafter defined, for rendering (1) distribution assistance in
connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are
intended to have certain rights as third-party beneficiaries under
this Plan. The terms and provisions of this Plan shall be
interpreted and defined in a manner consistent with the provisions
and definitions contained in (i) the 1940 Act, (ii) the Rule, (iii)
Article III, Section 26, of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., or its successor
(the "NASD Rules of Fair Practice") and (iv) any conditions
pertaining either to distribution-related expenses or to a plan of
distribution, to which the Fund is subject under any order on which
the Fund relies, issued at any time by the Securities and Exchange
Commission.
2. Definitions. As used in this Plan, the following terms
shall have the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
person or entity which: (i) has rendered assistance (whether
direct, administrative or both) in the distribution of Shares or
has provided administrative support services with respect to Shares
held by Customers (defined below) of the Recipient; (ii) shall
furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer
such questions as may arise concerning the sale of Shares; and
(iii) has been selected by the Distributor to receive payments
under the Plan. Notwithstanding the foregoing, a majority of the
Trust's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of this Plan or in any
agreements relating to this Plan (the "Independent Trustees") may
remove any broker, dealer, bank or other person or entity as a
Recipient, whereupon such person's or entity's rights as a third-
party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all
Shares owned beneficially or of record by: (i) such Recipient, or
(ii) such customers, clients and/or accounts as to which such
Recipient is a fiduciary or custodian or co-fiduciary or co-
custodian (collectively, the "Customers"), but in no event shall
any such Shares be deemed owned by more than one Recipient for
purposes of this Plan. In the event that more than one person or
entity would otherwise qualify as Recipients as to the same Shares,
the Recipient which is the dealer of record on the Fund's books as
determined by the Distributor shall be deemed the Recipient as to
such Shares for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative
Support Services.
(a) The Fund will make payments to the Distributor, within
forty-five (45) days of the end of each calendar quarter, in the
aggregate amount (i) of 0.0625% (0.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset
value of the Shares computed as of the close of each business day
(the "Service Fee"), plus (ii) 0.1875% (0.75% on an annual basis)
of the average during the calendar quarter of the aggregate net
asset value of the Shares computed as of the close of each business
day (the "Asset-Based Sales Charge"). Such Service Fee payments
received from the Fund will compensate the Distributor and
Recipients for providing administrative support services with
respect to Accounts. Such Asset-Based Sales Charge payments
received from the Fund will compensate the Distributor and
Recipients for providing distribution assistance in connection with
the sale of Shares.
The administrative support services in connection with the
Accounts to be rendered by Recipients may include, but shall not be
limited to, the following: answering routine inquiries concerning
the Fund, assisting in establishing and maintaining accounts or
sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend
payment options available, and providing such other information and
services in connection with the rendering of personal services
and/or the maintenance of Accounts, as the Distributor or the Fund
may reasonably request.
The distribution assistance in connection with the sale of
Shares to be rendered by the Distributor and by Recipients may
include, but shall not be limited to, the following: distributing
sales literature and prospectuses other than those furnished to
current holders of the Fund's Shares ("Shareholders"), and
providing such other information and services in connection with
the distribution of Shares as the Distributor or the Fund may
reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for
payment under the Plan if it has Qualified Holdings of Shares to
entitle it to payments under the Plan. In the event that either
the Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, a Recipient may
not be rendering appropriate distribution assistance in connection
with the sale of Shares or administrative support services for the
Accounts, then the Distributor, at the request of the Board, shall
require the Recipient to provide a written report or other
information to verify that said Recipient is providing appropriate
distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either
may take appropriate steps to terminate the Recipient's status as
such under the Plan, whereupon such Recipient's rights as a third-
party beneficiary hereunder shall terminate.
(b) The Distributor shall make service fee payments to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares, computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than the minimum period (the "Minimum Holding
Period"), if any, to be set from time to time by a majority of the
Independent Trustees.
Alternatively, the Distributor may, at its sole option, make
service fee payments ("Advance Service Fee Payments") to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed (i) 0.25% of the average
during the calendar quarter of the aggregate net asset value of
Shares, computed as of the close of business on the day such Shares
are sold, constituting Qualified Holdings sold by the Recipient
during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (ii) 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than one (1) year, subject to reduction or
chargeback so that the Advance Service Fee Payments do not exceed
the limits on payments to Recipients that are, or may be, imposed
by Article III, Section 26, of the NASD Rules of Fair Practice. In
the event Shares are redeemed less than one year after the date
such Shares were sold, the Recipient is obligated and will repay to
the Distributor on demand a pro rata portion of such Advance
Service Fee Payments, based on the ratio of the time such shares
were held to one (1) year.
The Advance Service Fee Payments described in part (i) of the
preceding sentence may, at the Distributor's sole option, be made
more often than quarterly, and sooner than the end of the calendar
quarter. In addition, the Distributor shall make asset-based sales
charge payments to any Recipient quarterly, within forty-five (45)
days of the end of each calendar quarter, at a rate not to exceed
0.1875% (0.75% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares
computed as of the close of each business day, constituting
Qualified Holdings owned beneficially or of record by the Recipient
or its Customers for a period of more than one (1) year. However,
no such service fee or asset-based sales charge payments
(collectively, the "Recipient Payments") shall be made to any
Recipient for any such quarter in which its Qualified Holdings do
not equal or exceed, at the end of such quarter, the minimum amount
("Minimum Qualified Holdings"), if any, to be set from time to time
by a majority of the Independent Trustees.
A majority of the Independent Trustees may at any time or from
time to time decrease and thereafter adjust the rate of fees to be
paid to the Distributor or to any Recipient, but not to exceed the
rates set forth above, and/or direct the Distributor to increase or
decrease the Minimum Holding Period or the Minimum Qualified
Holdings. The Distributor shall notify all Recipients of the
Minimum Qualified Holdings or Minimum Holding Period, if any, and
the rates of Recipient Payments hereunder applicable to Recipients,
and shall provide each Recipient with written notice within thirty
(30) days after any change in these provisions. Inclusion of such
provisions or a change in such provisions in a revised current
prospectus shall constitute sufficient notice. The Distributor may
make Plan payments to any "affiliated person" (as defined in the
1940 Act) of the Distributor if such affiliated person qualifies as
a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on
Shares are subject to reduction or elimination of such amounts
under the limits to which the Distributor is, or may become,
subject under Article III, Section 26, of the NASD Rules of Fair
Practice. The distribution assistance and administrative support
services to be rendered by the Distributor in connection with the
Shares may include, but shall not be limited to, the following: (i)
paying sales commissions to any broker, dealer, bank or other
person or entity that sells Shares, and\or paying such persons
Advance Service Fee Payments in advance of, and\or greater than,
the amount provided for in Section 3(b) of this Agreement; (ii)
paying compensation to and expenses of personnel of the Distributor
who support distribution of Shares by Recipients; (iii) obtaining
financing or providing such financing from its own resources, or
from an affiliate, for interest and other borrowing costs of the
Distributor's unreimbursed expenses incurred in rendering
distribution assistance and administrative support services to the
Fund; (iv) paying other direct distribution costs, including
without limitation the costs of sales literature, advertising and
prospectuses (other than those furnished to current Shareholders)
and state "blue sky" registration expenses; and (v) providing any
service rendered by the Distributor that a Recipient may render
pursuant to part (a) of this Section 3. Such services include
distribution assistance and administrative support services
rendered in connection with Shares acquired (i) by purchase, (ii)
in exchange for shares of another investment company for which the
Distributor serves as distributor or sub-distributor, or (iii)
pursuant to a plan of reorganization to which the Fund is a party.
In the event that the Board should have reason to believe that the
Distributor may not be rendering appropriate distribution
assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the
Board, shall provide the Board with a written report or other
information to verify that the Distributor is providing appropriate
services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i)
by Oppenheimer Management Corporation ("OMC") from its own
resources (which may include profits derived from the advisory fee
it receives from the Fund), or (ii) by the Distributor (a
subsidiary of OMC), from its own resources, from Asset-Based Sales
Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this
Plan does not obligate or in any way make the Fund liable to make
any payment whatsoever to any person or entity other than directly
to the Distributor. In no event shall the amounts to be paid to
the Distributor exceed the rate of fees to be paid by the Fund to
the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is
in effect, the selection and nomination of those persons to be
Trustees of the Trust who are not "interested persons" of the Fund
or the Trust ("Disinterested Trustees") shall be committed to the
discretion of such Disinterested Trustees. Nothing herein shall
prevent the Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of
the Trust shall provide at least quarterly a written reports to the
Trust's Board for its review, detailing services rendered in
connection with the distribution of the Shares, the amount of all
payments made and the purpose for which the payments were made.
The reports shall be provided quarterly and shall state whether all
provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan
shall be in writing and shall provide that: (i) such agreement may
be terminated at any time, without payment of any penalty, by a
vote of a majority of the Independent Trustees or by a vote of the
holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities of the Class, on not more than sixty
days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act); (iii) it shall go into
effect when approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of
voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long
as such continuance is specifically approved at least annually by
a vote of the Board and its Independent Trustees cast in person at
a meeting called for the purpose of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment.
This Amended and Restated Plan has been approved by a vote of the
Board and its Independent Trustees cast in person at a meeting
called on June 22, 1995 for the purpose of voting on this Plan, and
shall take effect after approval by Class C shareholders of the
Fund, at which time it shall replace the Fund's Plan and Agreement
of Distribution for the Shares made as of September 1, 1993, as
amended February 1, 1995. Unless terminated as hereinafter
provided, it shall continue in effect from year to year from the
date first set forth above or as the Board may otherwise determine
only so long as such continuance is specifically approved at least
annually by a vote of the Board and its Independent Trustees cast
in person at a meeting called for the purpose of voting on such
continuance. This Plan may not be amended to increase materially
the amount of payments to be made without approval of the Class C
Shareholders, in the manner described above, and all material
amendments must be approved by a vote of the Board and of the
Independent Trustees. This Plan may be terminated at any time by
vote of a majority of the Independent Trustees or by the vote of
the holders of a "majority" (as defined in the 1940 Act) of the
Fund's outstanding voting securities of the Class. In the event of
such termination, the Board and its Independent Trustees shall
determine whether the Distributor is entitled to payment from the
Fund of all or a portion of the Service Fee and/or the Asset-Based
Sales Charge in respect of Shares sold prior to the effective date
of such termination.
8. Disclaimer of Shareholder and Trustee Liability. The
Distributor understands that the obligations of the Trust and the
Fund under this Plan are not binding upon any Trustee or
shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of
the provisions of the Declaration of Trust of the Fund disclaiming
shareholder and Trustee liability for acts or obligations of the
Trust and the Fund.
OPPENHEIMER QUEST FOR VALUE FUNDS
On Behalf of OPPORTUNITY VALUE FUND
By: /s/ Bridget A. Macaskill
--------------------------------
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: /s/ Andrew J. Dohonue
--------------------------------
Andrew J. Donohue
Executive Vice President
ofmi\236.c
Exhibit 24(b)(15)(c)(3)
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST FOR VALUE FUNDS
FOR CLASS C SHARES OF SMALL CAP VALUE FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND
AGREEMENT (the "Plan") dated the 22nd day of November, 1995, by and
between OPPENHEIMER QUEST FOR VALUE FUNDS (the "Trust") for the
account of its SMALL CAP VALUE FUND (the "Fund") and OPPENHEIMER
FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution
plan for Class C shares of the Fund (the "Shares"), contemplated by
Rule 12b-1 (the "Rule") under the Investment Company Act of 1940
(the "1940 Act"), pursuant to which the Fund will compensate the
Distributor for its services incurred in connection with the
distribution of Shares, and the personal service and maintenance of
shareholder accounts that hold Shares ("Accounts"). The Fund may
act as distributor of securities of which it is the issuer,
pursuant to the Rule, according to the terms of this Plan. The
Distributor is authorized under the Plan to pay "Recipients," as
hereinafter defined, for rendering (1) distribution assistance in
connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are
intended to have certain rights as third-party beneficiaries under
this Plan. The terms and provisions of this Plan shall be
interpreted and defined in a manner consistent with the provisions
and definitions contained in (i) the 1940 Act, (ii) the Rule, (iii)
Article III, Section 26, of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., or its successor
(the "NASD Rules of Fair Practice") and (iv) any conditions
pertaining either to distribution-related expenses or to a plan of
distribution, to which the Fund is subject under any order on which
the Fund relies, issued at any time by the Securities and Exchange
Commission.
2. Definitions. As used in this Plan, the following terms
shall have the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
person or entity which: (i) has rendered assistance (whether
direct, administrative or both) in the distribution of Shares or
has provided administrative support services with respect to Shares
held by Customers (defined below) of the Recipient; (ii) shall
furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer
such questions as may arise concerning the sale of Shares; and
(iii) has been selected by the Distributor to receive payments
under the Plan. Notwithstanding the foregoing, a majority of the
Trust's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of this Plan or in any
agreements relating to this Plan (the "Independent Trustees") may
remove any broker, dealer, bank or other person or entity as a
Recipient, whereupon such person's or entity's rights as a third-
party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all
Shares owned beneficially or of record by: (i) such Recipient, or
(ii) such customers, clients and/or accounts as to which such
Recipient is a fiduciary or custodian or co-fiduciary or co-
custodian (collectively, the "Customers"), but in no event shall
any such Shares be deemed owned by more than one Recipient for
purposes of this Plan. In the event that more than one person or
entity would otherwise qualify as Recipients as to the same Shares,
the Recipient which is the dealer of record on the Fund's books as
determined by the Distributor shall be deemed the Recipient as to
such Shares for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative
Support Services.
(a) The Fund will make payments to the Distributor, within
forty-five (45) days of the end of each calendar quarter, in the
aggregate amount (i) of 0.0625% (0.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset
value of the Shares computed as of the close of each business day
(the "Service Fee"), plus (ii) 0.1875% (0.75% on an annual basis)
of the average during the calendar quarter of the aggregate net
asset value of the Shares computed as of the close of each business
day (the "Asset-Based Sales Charge"). Such Service Fee payments
received from the Fund will compensate the Distributor and
Recipients for providing administrative support services with
respect to Accounts. Such Asset-Based Sales Charge payments
received from the Fund will compensate the Distributor and
Recipients for providing distribution assistance in connection with
the sale of Shares.
The administrative support services in connection with the
Accounts to be rendered by Recipients may include, but shall not be
limited to, the following: answering routine inquiries concerning
the Fund, assisting in establishing and maintaining accounts or
sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend
payment options available, and providing such other information and
services in connection with the rendering of personal services
and/or the maintenance of Accounts, as the Distributor or the Fund
may reasonably request.
The distribution assistance in connection with the sale of
Shares to be rendered by the Distributor and by Recipients may
include, but shall not be limited to, the following: distributing
sales literature and prospectuses other than those furnished to
current holders of the Fund's Shares ("Shareholders"), and
providing such other information and services in connection with
the distribution of Shares as the Distributor or the Fund may
reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for
payment under the Plan if it has Qualified Holdings of Shares to
entitle it to payments under the Plan. In the event that either
the Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, a Recipient may
not be rendering appropriate distribution assistance in connection
with the sale of Shares or administrative support services for the
Accounts, then the Distributor, at the request of the Board, shall
require the Recipient to provide a written report or other
information to verify that said Recipient is providing appropriate
distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either
may take appropriate steps to terminate the Recipient's status as
such under the Plan, whereupon such Recipient's rights as a third-
party beneficiary hereunder shall terminate.
(b) The Distributor shall make service fee payments to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares, computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than the minimum period (the "Minimum Holding
Period"), if any, to be set from time to time by a majority of the
Independent Trustees.
Alternatively, the Distributor may, at its sole option, make
service fee payments ("Advance Service Fee Payments") to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed (i) 0.25% of the average
during the calendar quarter of the aggregate net asset value of
Shares, computed as of the close of business on the day such Shares
are sold, constituting Qualified Holdings sold by the Recipient
during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (ii) 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than one (1) year, subject to reduction or
chargeback so that the Advance Service Fee Payments do not exceed
the limits on payments to Recipients that are, or may be, imposed
by Article III, Section 26, of the NASD Rules of Fair Practice. In
the event Shares are redeemed less than one year after the date
such Shares were sold, the Recipient is obligated and will repay to
the Distributor on demand a pro rata portion of such Advance
Service Fee Payments, based on the ratio of the time such shares
were held to one (1) year.
The Advance Service Fee Payments described in part (i) of the
preceding sentence may, at the Distributor's sole option, be made
more often than quarterly, and sooner than the end of the calendar
quarter. In addition, the Distributor shall make asset-based sales
charge payments to any Recipient quarterly, within forty-five (45)
days of the end of each calendar quarter, at a rate not to exceed
0.1875% (0.75% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares
computed as of the close of each business day, constituting
Qualified Holdings owned beneficially or of record by the Recipient
or its Customers for a period of more than one (1) year. However,
no such service fee or asset-based sales charge payments
(collectively, the "Recipient Payments") shall be made to any
Recipient for any such quarter in which its Qualified Holdings do
not equal or exceed, at the end of such quarter, the minimum amount
("Minimum Qualified Holdings"), if any, to be set from time to time
by a majority of the Independent Trustees.
A majority of the Independent Trustees may at any time or from
time to time decrease and thereafter adjust the rate of fees to be
paid to the Distributor or to any Recipient, but not to exceed the
rates set forth above, and/or direct the Distributor to increase or
decrease the Minimum Holding Period or the Minimum Qualified
Holdings. The Distributor shall notify all Recipients of the
Minimum Qualified Holdings or Minimum Holding Period, if any, and
the rates of Recipient Payments hereunder applicable to Recipients,
and shall provide each Recipient with written notice within thirty
(30) days after any change in these provisions. Inclusion of such
provisions or a change in such provisions in a revised current
prospectus shall constitute sufficient notice. The Distributor may
make Plan payments to any "affiliated person" (as defined in the
1940 Act) of the Distributor if such affiliated person qualifies as
a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on
Shares are subject to reduction or elimination of such amounts
under the limits to which the Distributor is, or may become,
subject under Article III, Section 26, of the NASD Rules of Fair
Practice. The distribution assistance and administrative support
services to be rendered by the Distributor in connection with the
Shares may include, but shall not be limited to, the following: (i)
paying sales commissions to any broker, dealer, bank or other
person or entity that sells Shares, and\or paying such persons
Advance Service Fee Payments in advance of, and\or greater than,
the amount provided for in Section 3(b) of this Agreement; (ii)
paying compensation to and expenses of personnel of the Distributor
who support distribution of Shares by Recipients; (iii) obtaining
financing or providing such financing from its own resources, or
from an affiliate, for interest and other borrowing costs of the
Distributor's unreimbursed expenses incurred in rendering
distribution assistance and administrative support services to the
Fund; (iv) paying other direct distribution costs, including
without limitation the costs of sales literature, advertising and
prospectuses (other than those furnished to current Shareholders)
and state "blue sky" registration expenses; and (v) providing any
service rendered by the Distributor that a Recipient may render
pursuant to part (a) of this Section 3. Such services include
distribution assistance and administrative support services
rendered in connection with Shares acquired (i) by purchase, (ii)
in exchange for shares of another investment company for which the
Distributor serves as distributor or sub-distributor, or (iii)
pursuant to a plan of reorganization to which the Fund is a party.
In the event that the Board should have reason to believe that the
Distributor may not be rendering appropriate distribution
assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the
Board, shall provide the Board with a written report or other
information to verify that the Distributor is providing appropriate
services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i)
by Oppenheimer Management Corporation ("OMC") from its own
resources (which may include profits derived from the advisory fee
it receives from the Fund), or (ii) by the Distributor (a
subsidiary of OMC), from its own resources, from Asset-Based Sales
Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this
Plan does not obligate or in any way make the Fund liable to make
any payment whatsoever to any person or entity other than directly
to the Distributor. In no event shall the amounts to be paid to
the Distributor exceed the rate of fees to be paid by the Fund to
the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is
in effect, the selection and nomination of those persons to be
Trustees of the Trust who are not "interested persons" of the Fund
or the Trust ("Disinterested Trustees") shall be committed to the
discretion of such Disinterested Trustees. Nothing herein shall
prevent the Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of
the Trust shall provide at least quarterly a written reports to the
Trust's Board for its review, detailing services rendered in
connection with the distribution of the Shares, the amount of all
payments made and the purpose for which the payments were made.
The reports shall be provided quarterly and shall state whether all
provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan
shall be in writing and shall provide that: (i) such agreement may
be terminated at any time, without payment of any penalty, by a
vote of a majority of the Independent Trustees or by a vote of the
holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities of the Class, on not more than sixty
days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act); (iii) it shall go into
effect when approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of
voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long
as such continuance is specifically approved at least annually by
a vote of the Board and its Independent Trustees cast in person at
a meeting called for the purpose of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment.
This Plan Amended and Restated Plan has been approved by a vote of
the Board and its Independent Trustees cast in person at a meeting
called on June 22, 1995 for the purpose of voting on this Plan, and
shall take effect after approval by Class C shareholders of the
Fund, at which time it shall replace the Fund's Plan and Agreement
of Distribution for the Shares made as of September 1, 1993, as
amended February 1, 1995. Unless terminated as hereinafter
provided, it shall continue in effect from year to year from the
date first set forth above or as the Board may otherwise determine
only so long as such continuance is specifically approved at least
annually by a vote of the Board and its Independent Trustees cast
in person at a meeting called for the purpose of voting on such
continuance. This Plan may not be amended to increase materially
the amount of payments to be made without approval of the Class C
Shareholders, in the manner described above, and all material
amendments must be approved by a vote of the Board and of the
Independent Trustees. This Plan may be terminated at any time by
vote of a majority of the Independent Trustees or by the vote of
the holders of a "majority" (as defined in the 1940 Act) of the
Fund's outstanding voting securities of the Class. In the event of
such termination, the Board and its Independent Trustees shall
determine whether the Distributor is entitled to payment from the
Fund of all or a portion of the Service Fee and/or the Asset-Based
Sales Charge in respect of Shares sold prior to the effective date
of such termination.
8. Disclaimer of Shareholder and Trustee Liability. The
Distributor understands that the obligations of the Trust and the
Fund under this Plan are not binding upon any Trustee or
shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of
the provisions of the Declaration of Trust of the Fund disclaiming
shareholder and Trustee liability for acts or obligations of the
Trust and the Fund.
OPPENHEIMER QUEST FOR VALUE FUNDS
On Behalf of SMALL CAP VALUE FUND
By: /s/ Bridget A. Macaskill
-------------------------------
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: /s/ Andrew J. Donohue
-------------------------------
Andrew J. Donohue
Executive Vice President
ofmi\251.c
Exhibit 24(b)(15)(c)(4)
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
WITH
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND OPPENHEIMER QUEST FOR VALUE FUNDS
FOR CLASS C SHARES OF
OFFICERS VALUE FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND
AGREEMENT (the "Plan") dated the 22nd day of November, 1995, by and
between OPPENHEIMER QUEST FOR VALUE FUNDS (the "Trust") for the
account of its OFFICERS VALUE FUND (the "Fund") and OPPENHEIMER
FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution
plan for Class C shares of the Fund (the "Shares"), contemplated by
Rule 12b-1 (the "Rule") under the Investment Company Act of 1940
(the "1940 Act"), pursuant to which the Fund will compensate the
Distributor for its services incurred in connection with the
distribution of Shares, and the personal service and maintenance of
shareholder accounts that hold Shares ("Accounts"). The Fund may
act as distributor of securities of which it is the issuer,
pursuant to the Rule, according to the terms of this Plan. The
Distributor is authorized under the Plan to pay "Recipients," as
hereinafter defined, for rendering (1) distribution assistance in
connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are
intended to have certain rights as third-party beneficiaries under
this Plan. The terms and provisions of this Plan shall be
interpreted and defined in a manner consistent with the provisions
and definitions contained in (i) the 1940 Act, (ii) the Rule, (iii)
Article III, Section 26, of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., or its successor
(the "NASD Rules of Fair Practice") and (iv) any conditions
pertaining either to distribution-related expenses or to a plan of
distribution, to which the Fund is subject under any order on which
the Fund relies, issued at any time by the Securities and Exchange
Commission.
2. Definitions. As used in this Plan, the following terms
shall have the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
person or entity which: (i) has rendered assistance (whether
direct, administrative or both) in the distribution of Shares or
has provided administrative support services with respect to Shares
held by Customers (defined below) of the Recipient; (ii) shall
furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer
such questions as may arise concerning the sale of Shares; and
(iii) has been selected by the Distributor to receive payments
under the Plan. Notwithstanding the foregoing, a majority of the
Trust's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of this Plan or in any
agreements relating to this Plan (the "Independent Trustees") may
remove any broker, dealer, bank or other person or entity as a
Recipient, whereupon such person's or entity's rights as a third-
party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all
Shares owned beneficially or of record by: (i) such Recipient, or
(ii) such customers, clients and/or accounts as to which such
Recipient is a fiduciary or custodian or co-fiduciary or co-
custodian (collectively, the "Customers"), but in no event shall
any such Shares be deemed owned by more than one Recipient for
purposes of this Plan. In the event that more than one person or
entity would otherwise qualify as Recipients as to the same Shares,
the Recipient which is the dealer of record on the Fund's books as
determined by the Distributor shall be deemed the Recipient as to
such Shares for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative
Support Services.
(a) The Fund will make payments to the Distributor, within
forty-five (45) days of the end of each calendar quarter, in the
aggregate amount (i) of 0.0625% (0.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset
value of the Shares computed as of the close of each business day
(the "Service Fee"), plus (ii) 0.1875% (0.75% on an annual basis)
of the average during the calendar quarter of the aggregate net
asset value of the Shares computed as of the close of each business
day (the "Asset-Based Sales Charge"). Such Service Fee payments
received from the Fund will compensate the Distributor and
Recipients for providing administrative support services with
respect to Accounts. Such Asset-Based Sales Charge payments
received from the Fund will compensate the Distributor and
Recipients for providing distribution assistance in connection with
the sale of Shares.
The administrative support services in connection with the
Accounts to be rendered by Recipients may include, but shall not be
limited to, the following: answering routine inquiries concerning
the Fund, assisting in establishing and maintaining accounts or
sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend
payment options available, and providing such other information and
services in connection with the rendering of personal services
and/or the maintenance of Accounts, as the Distributor or the Fund
may reasonably request.
The distribution assistance in connection with the sale of
Shares to be rendered by the Distributor and by Recipients may
include, but shall not be limited to, the following: distributing
sales literature and prospectuses other than those furnished to
current holders of the Fund's Shares ("Shareholders"), and
providing such other information and services in connection with
the distribution of Shares as the Distributor or the Fund may
reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for
payment under the Plan if it has Qualified Holdings of Shares to
entitle it to payments under the Plan. In the event that either
the Distributor or the Board should have reason to believe that,
notwithstanding the level of Qualified Holdings, a Recipient may
not be rendering appropriate distribution assistance in connection
with the sale of Shares or administrative support services for the
Accounts, then the Distributor, at the request of the Board, shall
require the Recipient to provide a written report or other
information to verify that said Recipient is providing appropriate
distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either
may take appropriate steps to terminate the Recipient's status as
such under the Plan, whereupon such Recipient's rights as a third-
party beneficiary hereunder shall terminate.
(b) The Distributor shall make service fee payments to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares, computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than the minimum period (the "Minimum Holding
Period"), if any, to be set from time to time by a majority of the
Independent Trustees.
Alternatively, the Distributor may, at its sole option, make
service fee payments ("Advance Service Fee Payments") to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed (i) 0.25% of the average
during the calendar quarter of the aggregate net asset value of
Shares, computed as of the close of business on the day such Shares
are sold, constituting Qualified Holdings sold by the Recipient
during that quarter and owned beneficially or of record by the
Recipient or by its Customers, plus (ii) 0.0625% (0.25% on an
annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares computed as of the close of
each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for
a period of more than one (1) year, subject to reduction or
chargeback so that the Advance Service Fee Payments do not exceed
the limits on payments to Recipients that are, or may be, imposed
by Article III, Section 26, of the NASD Rules of Fair Practice. In
the event Shares are redeemed less than one year after the date
such Shares were sold, the Recipient is obligated and will repay to
the Distributor on demand a pro rata portion of such Advance
Service Fee Payments, based on the ratio of the time such shares
were held to one (1) year.
The Advance Service Fee Payments described in part (i) of the
preceding sentence may, at the Distributor's sole option, be made
more often than quarterly, and sooner than the end of the calendar
quarter. In addition, the Distributor shall make asset-based sales
charge payments to any Recipient quarterly, within forty-five (45)
days of the end of each calendar quarter, at a rate not to exceed
0.1875% (0.75% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares
computed as of the close of each business day, constituting
Qualified Holdings owned beneficially or of record by the Recipient
or its Customers for a period of more than one (1) year. However,
no such service fee or asset-based sales charge payments
(collectively, the "Recipient Payments") shall be made to any
Recipient for any such quarter in which its Qualified Holdings do
not equal or exceed, at the end of such quarter, the minimum amount
("Minimum Qualified Holdings"), if any, to be set from time to time
by a majority of the Independent Trustees.
A majority of the Independent Trustees may at any time or from
time to time decrease and thereafter adjust the rate of fees to be
paid to the Distributor or to any Recipient, but not to exceed the
rates set forth above, and/or direct the Distributor to increase or
decrease the Minimum Holding Period or the Minimum Qualified
Holdings. The Distributor shall notify all Recipients of the
Minimum Qualified Holdings or Minimum Holding Period, if any, and
the rates of Recipient Payments hereunder applicable to Recipients,
and shall provide each Recipient with written notice within thirty
(30) days after any change in these provisions. Inclusion of such
provisions or a change in such provisions in a revised current
prospectus shall constitute sufficient notice. The Distributor may
make Plan payments to any "affiliated person" (as defined in the
1940 Act) of the Distributor if such affiliated person qualifies as
a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on
Shares are subject to reduction or elimination of such amounts
under the limits to which the Distributor is, or may become,
subject under Article III, Section 26, of the NASD Rules of Fair
Practice. The distribution assistance and administrative support
services to be rendered by the Distributor in connection with the
Shares may include, but shall not be limited to, the following: (i)
paying sales commissions to any broker, dealer, bank or other
person or entity that sells Shares, and\or paying such persons
Advance Service Fee Payments in advance of, and\or greater than,
the amount provided for in Section 3(b) of this Agreement; (ii)
paying compensation to and expenses of personnel of the Distributor
who support distribution of Shares by Recipients; (iii) obtaining
financing or providing such financing from its own resources, or
from an affiliate, for interest and other borrowing costs of the
Distributor's unreimbursed expenses incurred in rendering
distribution assistance and administrative support services to the
Fund; (iv) paying other direct distribution costs, including
without limitation the costs of sales literature, advertising and
prospectuses (other than those furnished to current Shareholders)
and state "blue sky" registration expenses; and (v) providing any
service rendered by the Distributor that a Recipient may render
pursuant to part (a) of this Section 3. Such services include
distribution assistance and administrative support services
rendered in connection with Shares acquired (i) by purchase, (ii)
in exchange for shares of another investment company for which the
Distributor serves as distributor or sub-distributor, or (iii)
pursuant to a plan of reorganization to which the Fund is a party.
In the event that the Board should have reason to believe that the
Distributor may not be rendering appropriate distribution
assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the
Board, shall provide the Board with a written report or other
information to verify that the Distributor is providing appropriate
services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i)
by Oppenheimer Management Corporation ("OMC") from its own
resources (which may include profits derived from the advisory fee
it receives from the Fund), or (ii) by the Distributor (a
subsidiary of OMC), from its own resources, from Asset-Based Sales
Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this
Plan does not obligate or in any way make the Fund liable to make
any payment whatsoever to any person or entity other than directly
to the Distributor. In no event shall the amounts to be paid to
the Distributor exceed the rate of fees to be paid by the Fund to
the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is
in effect, the selection and nomination of those persons to be
Trustees of the Trust who are not "interested persons" of the Fund
or the Trust ("Disinterested Trustees") shall be committed to the
discretion of such Disinterested Trustees. Nothing herein shall
prevent the Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of
the Trust shall provide at least quarterly a written reports to the
Trust's Board for its review, detailing services rendered in
connection with the distribution of the Shares, the amount of all
payments made and the purpose for which the payments were made.
The reports shall be provided quarterly and shall state whether all
provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan
shall be in writing and shall provide that: (i) such agreement may
be terminated at any time, without payment of any penalty, by a
vote of a majority of the Independent Trustees or by a vote of the
holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities of the Class, on not more than sixty
days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act); (iii) it shall go into
effect when approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called for the purpose of
voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long
as such continuance is specifically approved at least annually by
a vote of the Board and its Independent Trustees cast in person at
a meeting called for the purpose of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment.
This Amended and Restated Plan has been approved by a vote of the
Board and its Independent Trustees cast in person at a meeting
called on June 22, 1995 for the purpose of voting on this Plan, and
shall take effect after approval by Class C shareholders of the
Fund, at which time it shall replace the Fund's Plan and Agreement
of Distribution. Unless terminated as hereinafter provided, it
shall continue in effect from year to year from the date first set
forth above or as the Board may otherwise determine only so long as
such continuance is specifically approved at least annually by a
vote of the Board and its Independent Trustees cast in person at a
meeting called for the purpose of voting on such continuance. This
Plan may not be amended to increase materially the amount of
payments to be made without approval of the Class C Shareholders,
in the manner described above, and all material amendments must be
approved by a vote of the Board and of the Independent Trustees.
This Plan may be terminated at any time by vote of a majority of
the Independent Trustees or by the vote of the holders of a
"majority" (as defined in the 1940 Act) of the Fund's outstanding
voting securities of the Class. In the event of such termination,
the Board and its Independent Trustees shall determine whether the
Distributor is entitled to payment from the Fund of all or a
portion of the Service Fee and/or the Asset-Based Sales Charge in
respect of Shares sold prior to the effective date of such
termination.
8. Disclaimer of Shareholder and Trustee Liability. The
Distributor understands that the obligations of the Trust and the
Fund under this Plan are not binding upon any Trustee or
shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of
the provisions of the Declaration of Trust of the Fund disclaiming
shareholder and Trustee liability for acts or obligations of the
Trust and the Fund.
OPPENHEIMER QUEST FOR VALUE FUNDS
On Behalf of OFFICERS VALUE FUND
By: /s/ Bridget A. Macaskill
------------------------------
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: /s/ Andrew J. Donohue
-----------------------------
Andrew J. Donohue
Executive Vice President
ofmi\229.c
Oppenheimer Quest Growth & Income Value Fund
Exhibit 24(b)(16) to Form N-1A
Performance Data Computation Schedule
The Fund's average annual total returns and total returns are calculated
as described below, on the basis of the Fund's distributions, for
the past 10 years which are as follows:
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares
12/30/91 0.0400 0.0000 10.340
03/31/92 0.0600 0.0000 10.280
06/30/92 0.0850 0.0000 10.590
09/30/92 0.0900 0.0000 10.800
12/18/92 0.0600 0.3330 10.680
12/31/92 0.0090 0.0000 10.650
03/31/93 0.0600 0.0000 10.860
06/30/93 0.0650 0.0000 11.010
09/30/93 0.0700 0.0000 11.050
12/13/93 0.0000 1.6991 9.900
12/31/93 0.1113 0.0000 9.870
03/31/94 0.0591 0.0000 9.590
06/30/94 0.0788 0.0000 9.750
09/30/94 0.0701 0.0000 9.980
12/05/94 0.0000 0.4215 9.400
12/30/94 0.0826 0.0000 9.270
03/31/95 0.0998 0.0000 9.910
06/30/95 0.0694 0.0000 10.830
09/29/95 0.0370 0.0000 11.330
Class B Shares
09/30/93 0.0700 0.0000 11.050
12/13/93 0.0000 1.6991 9.880
12/31/93 0.1011 0.0000 9.850
03/31/94 0.0397 0.0000 9.580
06/30/94 0.0657 0.0000 9.740
09/30/94 0.0586 0.0000 9.960
12/05/94 0.0000 0.4215 9.380
12/30/94 0.0706 0.0000 9.250
03/31/95 0.0910 0.0000 9.890
06/30/95 0.0571 0.0000 10.800
09/29/95 0.0236 0.0000 11.300
Class C Shares
09/30/93 0.0700 0.0000 11.050
12/13/93 0.0000 1.6991 9.880
12/31/93 0.0952 0.0000 9.860
03/31/94 0.0429 0.0000 9.590
06/30/94 0.0653 0.0000 9.750
09/30/94 0.0571 0.0000 9.980
12/05/94 0.0000 0.4215 9.380
12/30/94 0.0544 0.0000 9.260
03/31/95 0.0872 0.0000 9.900
06/30/95 0.0501 0.0000 10.810
09/29/95 0.0174 0.0000 11.310
Oppenheimer Quest Growth & Income Value Fund
Page 2
1. Average Annual Total Returns for the Periods Ended 10/31/95:
The formula for calculating average annual total return is as follows:
1 ERV n
--------------- = n (---) - 1 = average annual total return
number of years P
Where: ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Inception
$1,096.62 1 $1,451.60 .2500
(---------) - 1 = 9.66% (---------) - 1 = 9.76%
$1,000 $1,000
Class B Shares
Examples, assuming a maximum contingent deferred sales charge of 5.00%
for the first year and 3.00% for the inception year:
One Year Inception
$1,106.55 1 $1,229.65 .4615
(---------) - 1 = 10.66% (---------) - 1 = 10.01%
$1,000 $1,000
Class C Shares
Examples, assuming a maximum contingent deferred sales charge of 1.00%
for the first year, and 0.00% for the inception year:
One Year Inception
$1,143.77 1 $1,255.14 .4615
(---------) - 1 = 14.38% (---------) - 1 = 11.06%
$1,000 $1,000
Oppenheimer Quest Growth & Income Value Fund
Page 3
1. Average Annual Total Returns for the Periods Ended 10/31/95 (continued):
Examples at NAV:
Class A Shares
One Year Inception
$1,163.53 1 $1,540.12 .2500
(---------) - 1 = 16.35% (---------) - 1 = 11.40%
$1,000 $1,000
Class B Shares
One Year Inception
$1,156.55 1 $1,258.76 .4615
(---------) - 1 = 15.66% (---------) - 1 = 11.21%
$1,000 $1,000
Class C Shares
One Year Inception
$1,153.76 1 $1,255.14 .4615
(---------) - 1 = 5.38% (---------) - 1 = 11.06%
$1,000 $1,000
2. Cumulative Total Returns for the Periods Ended 10/31/95:
The formula for calculating cumulative total return is as follows:
(ERV - P) / P = Cumulative Total Return
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Inception
$1,096.62 - $1,000 $1,451.60 - $1,000
------------------ = 9.66% ------------------ = 45.16%
$1,000 $1,000
Class B Shares
Examples, assuming a maximum contingent deferred sales charge of 5.00%
for the first year and 3.00% for the inception year:
One Year Inception
$1,106.55 - $1,000 $1,229.65 - $1,000
------------------ = 10.66% ------------------ = 22.97%
$1,000 $1,000
Oppenheimer Quest Growth & Income Value Fund
Page 4
2. Cumulative Total Returns for the Periods Ended 10/31/95 (Continued):
Class C Shares
Examples, assuming a maximum contingent deferred sales charge of 1.00%
for the first year, and 0.00% for the inception year:
One Year Inception
$1,143.77 - $1,000 $1,255.14 - $1,000
------------------ = 14.38% ------------------ = 25.51%
$1,000 $1,000
Examples at NAV:
Class A Shares
One Year Inception
$1,163.53 - $1,000 $1,540.12 - $1,000
------------------ = 16.35% ------------------ = 54.01%
$1,000 $1,000
Class B Shares
One Year Inception
$1,156.55 - $1,000 $1,258.76 - $1,000
------------------ = 15.66% ------------------ = 25.88%
$1,000 $1,000
Class C Shares
One Year Inception
$1,153.76 - $1,000 $1,255.14 - $1,000
------------------ = 15.38% ------------------ = 25.51%
$1,000 $1,000
Oppenheimer Quest Opportunity Value Fund
Exhibit 24(b)(16) to Form N-1A
Performance Data Computation Schedule
The Fund's average annual total returns and total returns are calculated
as described below, on the basis of the Fund's distributions, for the
past 10 years which are as follows:
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares
12/28/89 0.2230 0.2420 11.690
12/28/90 0.2340 0.0260 10.230
12/17/91 0.0000 0.5450 13.940
12/30/91 0.0340 0.0000 14.900
12/18/92 0.0000 0.3170 17.260
12/31/92 0.0690 0.0000 17.270
11/15/93 0.0000 0.2190 18.390
12/31/93 0.3260 0.0000 18.140
12/05/94 0.0000 0.6135 18.360
12/30/94 0.1171 0.0000 18.300
Class B Shares
11/15/93 0.0000 0.2190 18.380
12/31/93 0.3127 0.0000 18.120
12/05/94 0.0000 0.6135 18.250
12/30/94 0.1166 0.0000 18.180
Class C Shares
11/15/93 0.0000 0.2190 18.370
12/31/93 0.3116 0.0000 18.120
12/05/94 0.0000 0.6135 18.240
12/30/94 0.1168 0.0000 18.180
f:\rr\dnvshare\sai\1995\103195\236.sch
Oppenheimer Quest Opportunity Value Fund
Page 2
1. Average Annual Total Returns for the Periods Ended 10/31/95:
The formula for calculating average annual total return is as follows:
1 ERV n
--------------- = n (---) - 1 = average annual total return
number of years P
Where: ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year
$1,224.19 1 $2,783.42 .2
(---------) - 1 = 22.42% (---------) - 1 = 22.72%
$1,000 $1,000
Inception
$2,818.92 .1465
(---------) - 1 = 16.39%
$1,000
Class B Shares
Example assuming a maximum contingent deferred sales charge of 5.00%
for the first year, and 3.00% for the inception year:
One Year Inception
$1,241.92 1 $1,360.92 .4615
(---------) - 1 = 24.19% (---------) - 1 = 15.28%
$1,000 $1,000
Class C Shares
Example assuming a maximum contingent deferred sales charge of 1.00%
for the first year and 0.00% for the inception year:
One Year Inception
$1,281.60 1 $1,389.78 .4615
(---------) - 1 = 28.16% (---------) - 1 = 16.41%
$1,000 $1,000
Oppenheimer Quest Opportunity Value Fund
Page 3
1. Average Annual Total Returns for the Periods Ended 10/31/95 (Continued):
Examples at NAV:
Class A Shares
One Year Five Year
$1,298.87 1 $2,953.26 .2
(---------) - 1 = 29.89% (---------) - 1 = 24.18%
$1,000 $1,000
Inception
$2,990.91 .1465
(---------) - 1 = 17.40%
$1,000
Class B Shares
One Year Inception
$1,291.92 1 $1,390.92 .4615
(---------) - 1 = 29.19% (---------) - 1 = 16.45%
$1,000 $1,000
Class C Shares
One Year Inception
$1,291.59 1 $1,389.78 .4615
(---------) - 1 = 29.16% (---------) - 1 = 16.41%
$1,000 $1,000
Oppenheimer Quest Opportunity Value Fund
Page 4
2. Cumulative Total Returns for the Periods Ended 10/31/95:
The formula for calculating cumulative total return is as follows:
ERV - P
------- = Cumulative Total Return
P
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year
$1,224.19 - $1,000 $2,783.42 - $1,000
------------------ = 22.42% ------------------ = 178.34%
$1,000 $1,000
Inception
$2,818.92 - $1,000
------------------ = 181.89%
$1,000
Class B Shares
Example assuming a maximum contingent deferred sales charge of 5.00%
for the first year, and 3.00% for the inception year:
One Year Inception
$1,241.92 - $1,000 $1,360.92 - $1,000
------------------ = 24.19% ------------------ = 36.92%
$1,000 $1,000
Class C Shares
Example assuming a maximum contingent deferred sales charge of 1.00%
for the first year and 0.00% for the inception year:
One Year Inception
$1,281.60 - $1,000 $1,389.78 - $1,000
------------------ = 28.16% ------------------ = 38.98%
$1,000 $1,000
Oppenheimer Quest Opportunity Value Fund
Page 5
2. Cumulative Total Returns for the Periods Ended 12/31/95 (Continued):
Examples at NAV:
Class A Shares
One Year Five Year
$1,298.87 - $1,000 $2,953.26 - $1,000
------------------ = 29.89% ------------------ = 195.33%
$1,000 $1,000
Inception
$2,990.91 - $1,000
------------------ = 199.09%
$1,000
Class B Shares
One Year Inception
$1,291.92 - $1,000 $1,390.92 - $1,000
------------------ = 29.19% ------------------ = 39.09%
$1,000 $1,000
Class C Shares
One Year Inception
$1,291.59 - $1,000 $1,389.78 - $1,000
------------------ = 29.16% ------------------ = 38.98%
$1,000 $1,000
Oppenheimer Quest Small Capital Value Fund
Exhibit 24(b)(16) to Form N-1A
Performance Data Computation Schedule
The Fund's average annual total returns and total returns are calculated
as described below, on the basis of the Fund's distributions, for the
past 10 years which are as follows:
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares
12/28/89 0.0810 0.0570 10.970
12/28/90 0.0840 0.0000 9.410
12/17/91 0.0000 0.4230 12.660
12/18/92 0.0000 1.1370 15.100
11/15/93 0.0000 1.3310 16.020
12/05/94 0.0000 0.4154 15.640
Class B Shares
11/15/93 0.0000 1.3310 16.000
12/05/94 0.0000 0.4154 15.540
Class C Shares
11/15/93 0.0000 1.3310 16.000
12/05/94 0.0000 0.4154 15.540
1. Average Annual Total Returns for the Periods Ended 10/31/95.
The formula for calculating average annual total return is as follows:
1 ERV n
--------------- = n (---) - 1 = average annual total return
number of years P
Where: ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year
$1,025.60 1 $2,311.01 .2
(---------) - 1 = 2.56% (---------) - 1 = 18.24%
$1,000 $1,000
Inception
$2,059.30 .1465
(---------) - 1 = 11.16%
$1,000
f:\rr\dnvshare\sai\1995\103195\251.sch
Oppenheimer Quest Small Capital Value Fund
Page 2
1. Average Annual Total Returns for the Periods Ended 10/31/95 (Continued):
Class B Shares
Examples, assuming a maximum contingent deferred sales charge of 5.00%
for the first year and 3.00% for the inception year:
One Year Inception
$1,031.73 1 $1,077.11 .4615
(---------) - 1 = 3.17% (---------) - 1 = 3.49%
$1,000 $1,000
Class C Shares
Examples, assuming a maximum contingent deferred sales charge of 1.00%
for the first year, and 0.00% for the inception year:
One Year Inception
$1,072.40 1 $1,106.97 .4615
(---------) - 1 = 7.24% (---------) - 1 = 4.80%
$1,000 $1,000
Examples at NAV:
Class A Shares
One Year Five Year
$1,088.16 1 $2,452.00 .2
(---------) - 1 = 8.82% (---------) - 1 = 19.65%
$1,000 $1,000
Inception
$2,184.92 .1465
(---------) - 1 = 12.13%
$1,000
Class B Shares
One Year Inception
$1,081.73 1 $1,106.97 .4615
(---------) - 1 = 8.17% (---------) - 1 = 4.80%
$1,000 $1,000
Class C Shares
One Year Inception
$1,082.40 1 $1,106.97 .4615
(---------) - 1 = 8.24% (---------) - 1 = 4.80%
$1,000 $1,000
Oppenheimer Quest Small Capital Value Fund
Page 3
2. Cumulative Total Returns for the Periods Ended 10/31/95:
The formula for calculating cumulative total return is as follows:
(ERV - P) / P = Cumulative Total Return
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year
$1,025.60 - $1,000 $2,311.01 - $1,000
------------------ = 2.56% ------------------ = 131.10%
$1,000 $1,000
Inception
$2,059.30 - $1,000
------------------ = 105.93%
$1,000
Class B Shares
Examples, assuming a maximum contingent deferred sales charge of 5.00%
for the first year and 3.00% for the inception year:
One Year Inception
$1,031.73 - $1,000 $1,077.11 - $1,000
------------------ = 3.17% ------------------ = 7.71%
$1,000 $1,000
Class C Shares
Examples, assuming a maximum contingent deferred sales charge of 1.00%
for the first year, and 0.00% for the inception year:
One Year Inception
$1,072.40 - $1,000 $1,106.97 - $1,000
------------------ = 7.24% ------------------ = 10.70%
$1,000 $1,000
Oppenheimer Quest Small Capital Value Fund
Page 5
2. Cumulative Total Returns for the Periods Ended 10/31/95 (Continued):
Examples at NAV:
Class A Shares
One Year Five Year
$1,088.16 - $1,000 $2,452.00 - $1,000
------------------ = 8.82% ------------------ = 145.20%
$1,000 $1,000
Inception
$2,184.92 - $1,000
------------------ = 118.49%
$1,000
Class B Shares
One Year Inception
$1,081.73 - $1,000 $1,106.97 - $1,000
------------------ = 8.17% ------------------ = 10.70%
$1,000 $1,000
Class C Shares
One Year Inception
$1,082.40 - $1,000 $1,106.97- $1,000
------------------ = 8.24% ------------------ = 10.70%
$1,000 $1,000
Oppenheimer Quest Officers Value Fund
Exhibit 24(b)(16) to Form N-1A
Performance Data Computation Schedule
The Fund's average annual total returns and total returns are calculated
as described below, on the basis of the Fund's distributions, for the
past 10 years which are as follows:
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
12/30/94 0.0366 0.0000 10.130
1. Average Annual Total Returns for the Periods Ended 10/31/95:
The formula for calculating average annual total return is as follows:
1 ERV n
--------------- = n (---) - 1 = average annual total return
number of years P
Where: ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Examples, assuming a maximum sales charge of 0.00%:
Inception
$1,234.44 1.0198
(---------) - 1 = 23.96%
$1,000
Examples at NAV:
Inception
$1,234.44 1.0198
(---------) - 1 = 23.96%
$1,000
Oppenheimer Quest Officers Value Fund
Page 2
2. Cumulative Total Returns for the Periods Ended 10/31/95:
The formula for calculating cumulative total return is as follows:
(ERV - P) / P = Cumulative Total Return
Examples, assuming a maximum sales charge of 0.00%:
Inception
$1,234.44 - $1,000
------------------ = 23.44%
$1,000
Examples at NAV:
Inception
$1,234.44- $1,000
------------------ = 23.44%
$1,000
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