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. 40 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 /X/
Amendment No. 42 /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) 323-0200
- -------------------------------------------------------------------
(Registrant's Telephone Number)
Andrew J. Donohue
OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
- -------------------------------------------------------------------
(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 21, 1997 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
// On ___________, 1996 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, 1996, was filed on
December 26, 1996.
<PAGE>
OPPENHEIMER QUEST FOR VALUE FUNDS
FORM N-1A
Cross Reference Sheet
Oppenheimer Quest Small Cap Value Fund,
a series of the Registrant
Part A of
Form N-1A
Item No. Prospectus Heading
- --------- ------------------
1 Cover Page
2 Expenses; A Brief Overview of the Fund
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; A Brief Overview of the Fund;
Investment Objective and Policies; Investment
Risks; Investment Techniques and Strategies; How
the Fund is Managed
5 Expenses; A Brief Overview of the Fund; How the
Fund is Managed; Back Cover
5A Performance of the Fund
6 How the Fund is Managed; Dividends, Capital Gains
and Taxes
7 How to Buy Shares; Special Investor Services; How
to Sell Shares; How to Exchange Shares; Shareholder
Account Rules and Policies
8 Special Investor Services; How to Sell Shares; How
to Exchange Shares
9 *
Part B of
Form N-1A
Item No. Heading in Statement of Additional Information
- --------- ----------------------------------------------
10 Cover Page
11 Cover Page
12 *
3 Investment Objective and Policies
14 How the Fund is Managed
15 How the Fund is Managed
16 How the Fund is Managed; Distribution and Service
Plans; Additional Information about the Fund
17 How the Fund is Managed
18 Additional Information about the Fund
19 About Your 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; Additional Information
About the Fund - The Distributor; Distribution and
Service Plans
22 Performance of the Fund
23 Financial Statements
________________________
* Not applicable or negative answer. <PAGE>
OPPENHEIMER QUEST FOR VALUE FUNDS
FORM N-1A
Cross Reference Sheet
Oppenheimer Quest Growth & Income Value Fund,
a series of the Registrant
Part A of
Form N-1A
Item No. Prospectus Heading
- --------- ------------------
1 Cover Page
2 Expenses; A Brief Overview of the Fund
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; A Brief Overview of the Fund;
Investment Objective and Policies; Investment
Techniques and Strategies; How the Fund is Managed
5 Expenses; A Brief Overview of the Fund; How the
Fund is Managed; Back Cover
5A Performance of the Fund
6 How the Fund is Managed; Dividends, Capital Gains
and Taxes
7 How to Buy Shares; Special Investor Services; How
to Sell Shares; How to Exchange Shares; Shareholder
Account Rules and Policies
8 Special Investor Services; How to Sell Shares; How
to Exchange Shares
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
14 How the Fund is Managed
15 How the Fund is Managed
16 How the Fund is Managed; Distribution and Service
Plans; Additional Information about the Fund
17 How the Fund is Managed
18 Additional Information about the Fund
19 About Your 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; Additional Information
About the Fund - The Distributor; Distribution and
Service Plans
22 Performance of the Fund
23 Financial Statements
________________________
* Not applicable or negative answer. <PAGE>
OPPENHEIMER QUEST FOR VALUE FUNDS
FORM N-1A
Cross Reference Sheet
Oppenheimer Quest Opportunity Value Fund*,
a series of the Registrant
Part A of
Form N-1A
Item No. Prospectus Heading
- --------- ------------------
1 Cover Page
2 Expenses; A Brief Overview of the Fund
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; A Brief Overview of the Fund;
Investment Objective and Policies; Investment
Risks; Investment Techniques and Strategies; How
the Fund is Managed
5 Expenses; A Brief Overview of the Fund; How the
Fund is Managed; Back Cover
5A Performance of the Fund
6 How the Fund is Managed; Dividends, Capital Gains
and Taxes
7 How to Buy Shares; Special Investor Services; How
to Sell Shares; How to Exchange Shares; Shareholder
Account Rules and Policies
8 Special Investor Services; How to Sell Shares; How
to Exchange Shares
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
14 How the Fund is Managed
15 How the Fund is Managed
16 How the Fund is Managed; Distribution and Service
Plans; Additional Information about the Fund
17 How the Fund is Managed
18 Additional Information about the Fund
19 About Your 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; Additional Information
About the Fund - The Distributor; Distribution and
Service Plans
22 Performance of the Fund
23 Financial Statements
________________________
* Not being filed with this Post-Effective Amendment No. 40
** Not applicable or negative answer. <PAGE>
OPPENHEIMER QUEST FOR VALUE FUNDS
FORM N-1A
Cross Reference Sheet
Oppenheimer Quest Officers Value Fund,
a series of the Registrant
Part A of
Form N-1A
Item No. Prospectus Heading
- --------- ------------------
1 Cover Page
2 Expenses; A Brief Overview of the Fund
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; A Brief Overview of the Fund;
Investment Objective and Policies; Investment
Risks; Investment Techniques and Strategies; How
the Fund is Managed
5 Expenses; A Brief Overview of the Fund; How the
Fund is Managed; Back Cover
5A Performance of the Fund
6 How the Fund is Managed; Dividends, Capital Gains
and Taxes
7 How to Buy Shares; Special Investor Services; How
to Sell Shares; How to Exchange Shares;
Shareholder Account Rules and Policies
8 Special Investor Services; How to Sell Shares; How
to Exchange Shares
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
14 How the Fund is Managed
15 How the Fund is Managed
16 How the Fund is Managed; Distribution and Service
Plans; Additional Information about the Fund
17 How the Fund is Managed
18 Additional Information about the Fund
19 About Your 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; Additional Information
About the Fund - The Distributor; Distribution and
Service Plans
22 Performance of the Fund
23 Financial Statements
________________________
* Not applicable or negative answer.
<PAGE>
OPPENHEIMER QUEST SMALL CAP VALUE FUND
Supplement dated February 26, 1997 to the
Prospectus dated February 26, 1997
The Prospectus is changed as follows:
In addition to paying dealers the regular commission for (1)
sales of Class A shares stated in the sales charge table in "Buying
Class A Shares," (2) sales of Class B shares described in the
fifth paragraph in "Distribution and Service Plans for Class B and
Class C Shares," and (3) sales of Class C shares described in the
sixth paragraph in "Distribution and Service Plans for Class B and
Class C Shares," the Distributor will pay additional commission to
each broker, dealer and financial institution that has a sales
agreement with the Distributor and agrees to accept that additional
commission (these are referred to as "participating firms") for
Class A, Class B and Class C shares of the Fund sold in "qualifying
transactions" (the "promotion"). The additional commission will be
1.00% of the offering price of shares of the Fund sold by a
registered representative or sales representative of a
participating firm during the promotion. If the additional
commission is paid on the sale of Class A shares of $500,000 or
more or the sale of Class A shares to a SEP IRA with 100 or more
eligible participants and those shares are redeemed within 13
months from the end of the month in which they were purchased, the
participating firm will be required to return the additional
commission.
"Qualifying transactions" are aggregate sales of $150,000 or
more of Class A, Class B and/or Class C shares of any one or more
of the Oppenheimer funds (except money market funds and municipal
bond funds) for rollovers or trustee-to-trustee transfers from
another retirement plan trustee, of IRA assets or other employee
benefit plan assets from an account or investment other than an
account or investment in the Oppenheimer funds to (1) IRAs,
rollover IRAs, SEP IRAs and SAR-SEP IRAs, using the
OppenheimerFunds, Inc. prototype IRA agreement, if the rollover
contribution is received during the period from January 1, 1997
through April 15, 1997 (the "promotion period"), or the acceptance
of a direct rollover or trustee-to-trustee transfer is acknowledged
by the trustee of the OppenheimerFunds prototype IRA during the
promotion period, and (2) IRAs, rollover IRAs, SEP IRAs and SAR-
SEP IRAs using the A.G. Edwards & Sons, Inc. prototype IRA
agreement, if the rollover contribution or trustee-to-trustee
payment is received during the promotion period. "Qualifying
transactions" do not include (1) purchases of Class A shares
intended but not yet made under a Letter of Intent, and (2)
purchases of Class A, Class B and/or Class C shares with the
redemption proceeds from an existing Oppenheimer funds account.
February 26, 1997 PS0251.008
<PAGE>
Oppenheimer Quest Small Cap Value Fund
Prospectus dated February 26, 1997
Oppenheimer Quest Small Cap Value Fund 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 Objective and Policies" for more
information about the types of securities in which the Fund invests
and refer to "Investment Risks" for a discussion of the risks of
investing in the Fund.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and
keep it for future reference. You can find more detailed
information about the Fund in the February 26, 1997, Statement of
Additional Information. For a free copy, call OppenheimerFunds
Services, the Fund's Transfer Agent, at 1-800-525-7048, or write to
the Transfer Agent at the address on the back cover. The Statement
of Additional Information has been filed with the Securities and
Exchange Commission and is incorporated into this Prospectus by
reference (which means that it is legally part of this Prospectus).
(OppenheimerFunds logo)
Shares of the Fund are not deposits or obligations of any bank, are
not guaranteed by any bank, are not insured by the F.D.I.C. or any
other agency, and involve investment risks, including the possible
loss of the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
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
Investment Risks
Investment Techniques and Strategies
How the Fund is Managed
Performance of the Fund
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Appendix A: Special Sales Charge Arrangements for
Shareholders of the Former Quest for Value Funds
<PAGE>
ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for management of
its assets, administration, distribution of its shares and other
services, and those expenses are subtracted from the Fund's assets
to calculate the Fund's net asset value per share. All shareholders
therefore pay those expenses indirectly. Shareholders pay other
expenses directly, such as sales charges and account transaction
charges. The following tables are provided to help you understand
your direct expenses of investing in the Fund and your share of the
Fund's business operating expenses that you will bear indirectly.
The numbers below are based on the Fund's expenses during its last
fiscal year ended October 31, 1996.
Shareholder Transaction Expenses are charges you pay when
you buy or sell shares of the Fund. Please refer to "About Your
Account," starting on page __ for an explanation of how and when
these charges apply.
<TABLE>
<CAPTION>
Class 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)
- ----------------------------------------------------------------------
Maximum Deferred Sales Charge None(1) 5% in the first 1% if
(as a % of the lower of the year, declining shares are
original offering price or to 1% in the redeemed
redemption proceeds) sixth year and within 12
eliminated months of
thereafter(2) purchase(2)
- ----------------------------------------------------------------------
Maximum Sales Charge on None None None
Reinvested Dividends
- -----------------------------------------------------------------------
Exchange Fee None None None
- ------------------------------------------------------------------------
Redemption Fee None(3) None(3) None(3)
</TABLE>
(1)If you invest $1 million or more ($500,000 or more for
purchases by "Retirement Plans," as defined in "Class A Contingent
Deferred Sales Charge" on page _____) in Class A shares, you may
have to pay a sales charge of up to 1% if you sell your shares
within 18 calendar months from the end of the calendar month during
which you purchased those shares, depending upon when you purchased
such shares. See "How to Buy Shares - Buying Class A Shares,"
below.
(2)See "How to Buy Shares - Buying Class B Shares" and "How to Buy
Shares - Buying Class C Shares" below, for more information on the
contingent deferred sales charges.
(3) There is a $10 transaction fee for redemptions paid by Federal
Funds wire, but not for redemptions paid by ACH transfer through
Accou ntLink.
Annual Fund Operating Expenses are paid out of the Fund's
assets and represent the Fund's expenses of operating its business.
For example, the Fund pays management fees to its investment
adviser, OppenheimerFunds, Inc.(referred to in this Prospectus as
the "Manager"). The rates of the Manager's fees are set forth in
"How the Fund is Managed," below. The Fund has other regular
expenses for services, such as transfer agent fees, custodial fees
paid to the bank that holds the Fund's portfolio securities, audit
fees and legal expenses. Those expenses are detailed in the Fund's
Financial Statements in the Statement of Additional Information.
Annual Fund Operating Expenses (as a Percentage of Average Net
Assets)
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
- ------------------------------------------------------------
<S> <C> <C> <C>
Management Fees 1.00% 1.00% 1.00%
- ------------------------------------------------------------
12b-1 Distribution
Plan Fees 0.50% 1.00% 1.00%
- ------------------------------------------------------------
Other Expenses 0.40% 0.38% 0.40%
- ------------------------------------------------------------
Total Fund
Operating Expenses 1.90% 2.38% 2.40%
</TABLE>
The numbers in the chart above are based upon the Fund's
expenses in its last fiscal year ended October 31, 1996. 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 service fees (the maximum fee is
0.25% of the 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. For Class B and Class C shares, the 12b-1
Distribution Plan Fees are the service fees (the maximum fee is
0.25% of average annual net assets of those classes), 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 changes in the actual value of the
Fund's assets represented by each class of shares.
Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples
shown below. Assume that you make a $1,000 investment in each class
of shares of the Fund, and the Fund's annual return is 5%, and its
operating expenses for each class are the ones shown in the Annual
Fund Operating Expenses chart above and that Class B shares
automatically convert into Class A shares six years after purchase.
If you were to redeem your shares at the end of each period shown
below, your investment would incur the following expenses by the
end of 1, 3, 5 and 10 years:
1 year 3 years 5 years 10 years*
- -------------------------------------------------------------
Class A Shares $76 $114 $154 $267
Class B Shares $74 $104 $147 $249
Class C Shares $34 $ 75 $128 $274
If you did not redeem your investment, it would incur the
following expenses:
1 year 3 years 5 years 10 years*
- ------------------------------------------------------------
Class A Shares $76 $114 $154 $267
Class B Shares $24 $ 74 $127 $249
Class C Shares $24 $ 75 $128 $274
*In the first example, expenses include the Class A initial sales
charge and the applicable Class B or Class C contingent deferred
sales charge. In the second example, Class A expenses include the
initial sales charge, but Class B and Class C expenses do not
include contingent deferred sales charges. The Class B expenses in
years 7 through 10 are based on the Class A expenses shown above,
because the Fund automatically converts Class B shares into Class
A shares after 6 years. Because of the effect of the higher asset-
based sales charge and the contingent deferred sales charge on
Class B and Class C shares, long-term holders of Class B and Class
C shares could pay the economic equivalent of more than the
maximum front-end sales charge allowed under applicable
regulations. For Class B shareholders, the automatic conversion of
Class B shares to Class A shares is designed to minimize the
likelihood that this will occur. Please refer to "How to Buy
Shares - Buying Class B Shares" for more information.
These examples show the effect of expenses on an investment,
but are not meant to state or predict actual or expected costs or
investment returns of the Fund, all of which will vary.
<PAGE>
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized
below, with references to the section of this Prospectus where more
complete information can be found. You should carefully read the
entire Prospectus before making a decision about investing in the
Fund. Keep the Prospectus for reference after you invest,
particularly for information about your account, such as how to
sell or exchange shares.
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. 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 money market instruments. These
investments are more fully explained in "Investment Policies and
Strategies," starting on page __.
Who Manages the Fund? The Manager supervises the Fund's
investment program and handles its day-to-day business. The
Manager (including a subsidiary) manages investment company
portfolios having over $62 billion in assets as of December 31,
1996. The Manager is paid an advisory fee by the Fund, based on
its net assets. The Fund's sub-adviser is OpCap Advisors (the
"Sub-Adviser"), which is paid a fee by the Manager, not the Fund.
The Sub-Adviser provides day-to-day portfolio management of the
Fund. The Fund's portfolio managers are employed by the Sub-
Adviser and are primarily responsible for the selection of the
Fund's securities. The 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 are subject
to changes in their value from a number of factors such as changes
in general stock market movements, or the change in value of
particular stocks because of an event affecting the issuer. These
changes affect the value of the Fund's investments and its price
per share. The Fund's investments in smaller capitalization
issuers may involve greater risks than more traditional equity
investments. Smaller capitalization companies may experience higher
growth rates and higher failure rates than larger capitalization
companies. Further, the trading volume of securities of smaller
capitalization companies is normally lower than that of larger
capitalization companies, and may disproportionately affect their
market price. Investments in foreign securities involve additional
risks not associated with investment in domestic securities,
including risks associated with changes in currency rates.
While the Sub-Adviser tries to reduce risks by diversifying
investments, by carefully researching securities before they are
purchased for the Fund's portfolio, and in some cases by using
hedging techniques, there is no guarantee of success in achieving
the Fund's investment objective and your shares may be worth more
or less than their original cost when you redeem them. Please
refer to "Investment Risks" starting on page ___ for a more
complete discussion of the Fund's investment risks.
How Can I Buy Shares? You can buy shares through your
dealer or financial institution, or you can purchase shares
directly through OppenheimerFunds Distributor, Inc. (the
"Distributor") by completing an Application or by using an
Automatic Investment Plan under AccountLink. Please refer to "How
to Buy Shares" on page __ for more details.
Will I Pay a Sales Charge to Buy Shares? The Fund offers
Class A, Class B and Class C shares to the individual investor.
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. 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 6 years or 12 months, respectively, of buying
them. There is also an annual asset-based sales charge which is
higher on Class B and Class C shares. Please review "How to Buy
Shares" starting on page __ for more details, including a
discussion about factors you and your financial advisor should
consider in determining which class may be appropriate for you.
How Can I Sell My Shares? Shares can be redeemed by mail or
by telephone call to the Transfer Agent on any business day, or
through your dealer. Please refer to "How to Sell Shares" on page
__. The Fund also offers exchange privileges to other Oppenheimer
funds, described in "How to Exchange Shares" on page __.
How Has the Fund Performed? 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 a broad-based market index,
which we have done on pages __ and __. Please remember that past
performance does not guarantee future results.
<PAGE>
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, 1996, is included
in the Statement of Additional Information.
Oppenheimer Quest Small Cap Value Fund
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------
YEAR ENDED OCTOBER 31,
1996(2) 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 17.31 $ 16.33 $ 17.68 $ 14.60
- ----------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .03 .11(4) (.03)(4) (.04)(4)
Net realized and unrealized gain (loss) 2.79 1.29 .01 4.26
- ----------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations 2.82 1.40 (.02) 4.22
- ----------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.11) -- -- --
Distributions from net realized gain (.99) (.42) (1.33) (1.14)
- ----------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (1.10) (.42) (1.33) (1.14)
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 19.03 $ 17.31 $ 16.33 $ 17.68
==========================================================
- ----------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 17.17% 8.82% 0.04% 30.21%
- ----------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 102,746 $ 116,307 $ 120,102 $ 104,898
- ----------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 117,765 $ 119,440 $ 115,276 $ 75,500
- ----------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 0.11% 0.67% (0.14)% (0.36)%
Expenses 1.90% 1.80% 1.88% 1.89%
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 70.4% 76.0% 67.0% 74.0%
Average brokerage commission rate(9) $ 0.0515 -- -- --
</TABLE>
Oppenheimer Quest Small Cap Value Fund
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS C
--------------------------------------------------------
YEAR ENDED OCTOBER 31,
1996(2) 1995 1994 1993(1)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 17.11 $ 16.23 $ 17.67 $ 17.19
- --------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.05) .01(4) (.13)(4) (.02)(4)
Net realized and unrealized gain (loss) 2.75 1.29 .02 .50
- --------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations 2.70 1.30 (.11) .48
- --------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.06) -- -- --
Distributions from net realized gain (.99) (.42) (1.33) --
- --------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (1.05) (.42) (1.33) --
- --------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 18.76 $ 17.11 $ 16.23 $ 17.67
========================================================
- --------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 16.55% 8.24% (0.51)% 2.79%
- --------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 13,181 $ 9,068 $ 3,344 $ 235
- --------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 11,501 $ 6,114 $ 1,381 $ 138
- --------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) (0.40)% 0.08% (0.81)% (1.20)%(6)
Expenses 2.40% 2.38% 2.59% 2.57%(6)
- --------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 70.4% 76.0% 67.0% 74.0%
Average brokerage commission rate(9) $ 0.0515 -- -- --
</TABLE>
1. For the period from September 1, 1993 (inception of offering) to October 31,
1993.
2. On November 22, 1995, OppenheimerFunds, Inc. became the investment adviser to
the Fund.
3. For the period from January 1, 1989 (commencement of operations) to October
31, 1989.
4. Based on average shares outstanding for the period.
5. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
6. Annualized.
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. 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, 1996 were $96,608,078 and $113,296,341, respectively.
9. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold.
<PG$PCN>
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------
YEAR ENDED OCTOBER 31,
1992 1991 1990 1989(3)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 13.52 $ 8.80 $ 10.91 $ 10.00
- ------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) --(4) (.05)(4) .07(4) .08(4)
Net realized and unrealized gain (loss) 1.50 4.85 (2.04) .83
- ------------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations 1.50 4.80 (1.97) .91
- ------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income -- (.08) (.08) --
Distributions from net realized gain (.42) -- (.06) --
- ------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.42) (.08) (.14) --
- ------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 14.60 $ 13.52 $ 8.80 $ 10.91
============================================================
- ------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 11.60% 55.01% (18.33)% 9.10%
- ------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 39,693 $ 20,686 $ 1,880 $ 2,085
- ------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 32,551 -- -- --
- ------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) (0.04)% (0.41)%(7) 0.71%(7) 1.34%(6)(7)
Expenses 2.11% 2.25%(7) 2.00%(7) 1.74%(6)(7)
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 95.0% 103.0% 18.0% 32.0%
Average brokerage commission rate(9) -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
CLASS B
--------------------------------------------------------
YEAR ENDED OCTOBER 31,
1996(2) 1995 1994 1993(1)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 17.11 $ 16.24 $ 17.66 $ 17.19
- --------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.06) .02(4) (.11)(4) (.02)(4)
Net realized and unrealized gain (loss) 2.76 1.27 .02 .49
- --------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations 2.70 1.29 (.09) .47
- --------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.03) -- -- --
Distributions from net realized gain (.99) (.42) (1.33) --
- --------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (1.02) (.42) (1.33) --
- --------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 18.79 $ 17.11 $ 16.24 $ 17.66
========================================================
- --------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 16.57% 8.17% (0.39)% 2.73%
- --------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 30,766 $ 23,440 $ 16,144 $ 1,754
- --------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 26,478 $ 20,105 $ 9,401 $ 934
- --------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) (0.37)% 0.09% (0.70)% (1.15)%(6)
Expenses 2.38% 2.37% 2.48% 2.57%(6)
- --------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 70.4% 76.0% 67.0% 74.0%
Average brokerage commission rate(9) $ 0.0515 -- -- --
</TABLE>
1. For the period from September 1, 1993 (inception of offering) to October 31,
1993.
2. On November 22, 1995, OppenheimerFunds, Inc. became the investment adviser to
the Fund.
3. For the period from January 1, 1989 (commencement of operations) to October
31, 1989.
4. Based on average shares outstanding for the period.
5. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
6. Annualized.
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. 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, 1996 were $96,608,078 and $113,296,341, respectively.
9. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold.
<PG$PCN>
<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 they
have a rating lower than "Baa" by Moody's Investors Service, Inc.
("Moody's") or lower than "BBB" by Standard & Poor's Corporation
("S&P"), or another nationally recognized statistical rating
organization, 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; 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 of 1940 to be a particular percentage of outstanding voting
shares (and this term is explained in the Statement of Additional
Information). The Board of Trustees of the Trust (as defined
below) (the "Board of Trustees") may change non-fundamental
policies without shareholder approval, although significant changes
will be described in amendments to this Prospectus.
Foreign Securities. The Fund may purchase foreign
securities that are listed on a domestic or foreign securities
exchange, traded in domestic or foreign over-the counter markets or
represented by American Depository Receipts. 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 intends that its purchases of
securities issued by emerging market countries or by companies
located in those countries, if any, will be limited to 5% of its
total assets. Foreign currency will be held by the Fund only in
connection with the purchase or sale of foreign securities.
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" table above shows 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 gains
distributions the Fund pays to shareholders. The Fund qualified in
its last fiscal year and intends to do so in the coming year,
although there is no guarantee that it will qualify.
Investment Risks
All investments carry risks to some degree, whether they are
risks that market prices of the investment will fluctuate (this is
known as "market risk") or that the underlying issuer will
experience financial difficulties and may default on its obligation
under a fixed-income investment to pay interest and repay principal
(this is referred to as "credit risk"). The special risks of
certain types of investments that the Fund may hold are described
below. They affect the value of the Fund's investments, its
investment performance and the prices of its shares. These risks
collectively form the risk profile of the Fund.
Because of the types of securities the Fund invests in and the
investment techniques the Fund uses, the Fund is designed for
investors who are investing for the long term. It is not intended
for investors seeking assured income or preservation of capital.
While the Manager tries to reduce risks by diversifying
investments, by carefully researching securities before they are
purchased, and in some case by using hedging techniques, changes in
overall market prices can occur at any time and there is no
assurance that the Fund will achieve its investment objective. When
you redeem your shares, they may be worth more or less than what
you paid for them.
Stock Investment Risks. Because the Fund may invest a
substantial portion of its assets in stocks, the value of the
Fund's portfolio will be affected by changes in the stock markets.
At times, the stock markets can be volatile, and stock prices can
change substantially. 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.
<PAGE>
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 to 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.
Hedging Instruments Can Be Volatile Investments and May
Involve Special Risks. The Fund may invest in certain hedging
instruments, as described below. 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.
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 that have been created and for which a market
exists, but which are not available for immediate delivery. The
Fund does not intend to make such purchases for speculative
purposes. During the period between the purchase and settlement,
the underlying securities are subject to market fluctuations and no
interest accrues prior to delivery of the securities.
Repurchase Agreements. The Fund may enter into repurchase
agreements to generate income for liquidity purposes to meet
anticipated redemptions, or pending the investment of proceeds from
sales of Fund shares or settlement of purchases of portfolio
investments. In a repurchase transaction, the Fund buys a security
and simultaneously sells it to the vendor for delivery at a future
date. Repurchase agreements must be fully collateralized. However,
if the vendor fails to pay the resale price on the delivery date,
the Fund may incur costs in disposing of the collateral and may
experience losses if there is any delay in its ability to do so.
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 and procedures
established by the 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. 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. The
Manager monitors holdings of illiquid securities on an ongoing
basis and at times the Fund may be required to sell some holdings
to maintain adequate liquidity.
Loans of Portfolio Securities. To raise cash for liquidity
purposes, the Fund may lend its portfolio securities to brokers,
dealers, and other financial institutions. The Fund must receive
collateral for a loan. After any loan, the value of the securities
loaned is not expected to exceed 10% of the Fund's total assets.
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.
Hedging. 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. 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). 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 ("NASDAQ")of
The Nasdaq Stock Market, Inc. 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 owns the investment on which the call was
written or the Fund owns and segregates liquid assets to satisfy
its obligation if the call is exercised. 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 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.
Other Investment Restrictions. The Fund has other 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 a
temporary measure for extraordinary or emergency purposes and will
make no additional investments while such borrowings exceed 5% of
the Fund's total assets. With respect to this fundamental policy,
the Fund can borrow only if it maintains a 300% ratio of assets to
borrowings at all times in the manner set forth in the Investment
Company Act.
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 (the Fund has
undertaken as a non-fundamental policy to limit investments in
restricted securities to 5% of its total assets excluding
restricted securities that may be resold to "qualified
institutional buyers"). Notwithstanding this restriction on
illiquid securities, the Fund may purchase securities which are not
registered under the Securities Act of 1933 but which can be sold
to "qualified institutional buyers" in accordance with Rule 144A
under that Act. Any such security will not be considered illiquid,
provided that the Manager, under guidelines established by the
Board of Trustees, determines 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 continuous operation.
Unless this Prospectus states that a percentage restriction
applies on an ongoing basis, it applies only at the time the Fund
makes an investment, and the Fund need not sell securities to meet
the percentage limits if the value of the investment increases in
proportion to the size of the Fund. Other investment restrictions
are listed in "Investment Restrictions" in the Statement of
Additional Information.
How the Fund is Managed
Organization and History. The Fund is one of four portfolios of
Oppenheimer Quest For Value Funds (the "Trust"), 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 and the Sub-Adviser. "Trustees
and Officers of the Trust" in the Statement of Additional
Information names the Trustees and provides more information about
them and the officers of the Trust. Although the Trust will not
normally hold annual meetings of its shareholders, 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
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 entitles a shareholder to
vote on matters submitted to the shareholders to vote on, 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. Please refer to "How the Fund is Managed" in the
Statement of Additional Information for more information on the
voting of shares.
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
is responsible to pay to conduct its business.
The Manager has operated as an investment adviser since 1959.
The Manager (including a subsidiary) currently manages investment
companies, including other Oppenheimer funds, with assets of more
than $62 billion as of December 31, 1996, and with more than 3
million shareholder accounts. The Manager is owned by Oppenheimer
Acquisition Corp., a holding company that is owned in part by
senior officers of the Manager and controlled by Massachusetts
Mutual Life Insurance Company.
The Sub-Adviser. The Manager has retained the Sub-Adviser to
provide day-to-day portfolio management of the Fund. Prior to
November 22, 1995, the Sub-Adviser was named Quest for Value
Advisors and the Sub-Adviser was the investment adviser to the
Fund. The Sub-Adviser is a majority-owned subsidiary of Oppenheimer
Capital, a registered investment advisor, whose employees perform
all investment advisory services provided to the Fund by the Sub-
Adviser. 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.
Portfolio Managers. The portfolio managers of the Fund are
Timothy McCormack, Timothy Curro and Gavin Albert. Mr. McCormack
has been a portfolio manager of the Fund since May 1996, and
Messrs. Curro and Albert became the portfolio managers of the Fund
effective January 1, 1997. Mr. McCormack, a Vice President of
Oppenheimer Capital, joined that firm in 1994; from 1993 to 1994,
he was a securities analyst at U.S. Trust Company and prior thereto
he was a securities analyst at Gabelli & Company. Mr. Curro has
been a Vice President of Oppenheimer Capital since November 1996.
Prior thereto, he was a general partner of Value Holdings, L.P., an
investment partnership, from May 1995 to November 1996, a Vice
President in the equity research department at UBS Securities Inc.,
from June 1994 through May 1995 and from January 1991 through
February 1993 and was a partner with Omega Advisors, Inc. from
March 1993 to March 1994. Mr. Albert, a Vice President of
Oppenheimer Capital since December 1996, joined that firm in
September 1994 as a research analyst. Prior thereto he was a
management consultant for EDS Energy Management in 1994, a graduate
student at the Vanderbilt University Business School from September
1992 to May 1994 and a financial analyst in the Corporate Finance
department of Texaco, Inc. from 1990 to 1992.
The Sub-Adviser's equity investment policy is overseen by
George Long, President and Chief Investment Officer for Oppenheimer
Capital. Mr. Long has been with Oppenheimer Capital since 1981.
Fees and Expenses. Under the Investment Advisory Agreement,
the Fund pays the Manager an annual fee based on the Fund's daily
net assets, as follows: 1.00% of the first $400 million of average
annual net assets, 0.90% of the next $400 million, and 0.85% of
average annual net assets over $800 million. 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 and 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 pays 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 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 net assets of
the Fund that exceed the Base Amount.
The Sub-Adviser may select its affiliate, Oppenheimer & Co.,
Inc. ("Opco"), a registered broker-dealer, to execute transactions
for the Fund, provided that the commissions, fees or other
remuneration received by Opco are reasonable and fair compared to
those paid to other brokers in connection with comparable
transactions. When selecting broker-dealers other than Opco, the
Sub-Adviser may consider their record of sales of shares of the
Fund. Further information about the Fund's brokerage policies and
practices is set forth in "Brokerage Policies of the Fund" in the
Statement of Additional Information.
The Distributor. The Fund's shares are sold through dealers,
brokers and other financial institutions that have a sales
agreement with OppenheimerFunds Distributor, Inc., a subsidiary of
the Manager that acts as the Fund's Distributor. The Distributor
also distributes the shares of the other Oppenheimer funds managed
by the Manager and is sub-distributor for funds managed by a
subsidiary of the Manager.
The Transfer Agent and Shareholder Servicing Agent. The Fund's
transfer agent and shareholder servicing agent is OppenheimerFunds
Services, a division of the Manager. It also acts as the
shareholder servicing agent for certain other Oppenheimer funds.
Shareholders should direct inquiries about their accounts to the
Transfer Agent at the address and toll-free number shown below in
this Prospectus and on the back cover. 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 of shares will
usually be different as a result of the different kinds of expenses
each class bears. These returns measure the performance of a
hypothetical account in the Fund over various periods, and do not
show the performance of each shareholder's account (which will vary
if dividends are received in cash or shares are sold or additional
shares are purchased). The Fund's performance information may help
you see how well your investment in the Fund has done over time and
to compare it to other funds or market indices, as we have done
below on pages __ and __.
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, normally the
current maximum initial sales charge has been deducted. When total
returns are shown for Class B or Class C shares, normally the
contingent deferred sales charge that applies to the period for
which total return is shown has been deducted. However, total
returns may also be quoted "at net asset value," without including
the effect of the sales charge, and those returns would be lower if
sales charges were deducted.
How Has the Fund Performed? Below is a discussion by the Manager
of the Fund's performance during its last fiscal year ended October
31, 1996, followed by a graphical comparison of the Fund's
performance to an appropriate broad-based market index.
Management's Discussion of Performance. During the Fund's
fiscal year ended October 31, 1996 the small-cap market did not
experience the overall strong performance of the domestic stock
market for larger capitalization issuers. Investments by the Fund
in a telecommunications company and a producer of consumer durables
increased in value over the past fiscal year and helped the Fund
perform at net asset value ahead of its benchmark, the Russell 2000
Index. During the fiscal year, the Sub-Adviser continued its
conservative investment policy of seeking to preserve capital and
achieve growth by purchasing shares of companies believed to be
undervalued with established operating histories, strong balance
sheets and cash flow, and skilled, experienced management. The
Fund's portfolio and its portfolio managers' strategies are subject
to change.
Comparing the Fund's Performance to the Market. The graphs
below show the performance of a hypothetical $10,000 investment in
Class A, Class B and Class C shares of the Fund held until October
31, 1996. 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
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. 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 10/31/96
- ----------------------------------------------------
Class A Shares(1)
- -----------------
1-Year 5-Year Life
------ ------ ----
10.43 11.80 11.91
Class B Shares(2)
- -----------------
1-Year Life of Class
------ -------------
11.57 7.85
Class C Shares(3)
- -----------------
1-Year Life of Class
------ -------------
15.55 8.38
- ---------------------
Total returns and the ending account values in the graphs show
change in share value and include reinvestment of all dividends and
capital gains distributions.
(1)Class A returns are shown net of the current applicable 5.75%
maximum initial sales charge. The inception date of the Fund
(Class A shares) was 1/3/89.
(2) Class B shares of the Fund were first publicly offered on
9/1/93. 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
9/1/93. 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: Class A, Class B and Class C 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 "Retirement Plans," as defined in "Class
A Contingent Deferred Sales Charge" on page ____. If you purchase
Class A shares as part of an investment of at least $1 million
($500,000 for Retirement Plans) in shares of one or more
Oppenheimer funds, you will not pay an initial sales charge, but if
you sell any of those shares within 18 months of buying them, you
may pay a contingent deferred sales charge 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
charge rates are described in "Buying Class A Shares" below.
Class B Shares. If you buy Class B shares, you pay no
sales charge at the time of purchase, but if you sell your shares
within six years of buying them you will normally pay a contingent
deferred sales charge that varies, depending on how long you have
owned your shares as described in "Buying Class B Shares" below.
Class C Shares. If you buy Class C shares, you pay no
sales charge at the time of purchase, but if you sell your shares
within 12 months of buying them, you will normally pay a contingent
deferred sales charge of 1% as described in "Buying Class C Shares"
below.
Which Class of Shares Should You Choose? Once you decide that the
Fund is an appropriate investment for you, the decision as to which
class of shares is better suited to your needs depends on a number
of factors which you should discuss with your financial advisor.
The Fund's operating costs that apply to a class of shares and the
effect of the different types of sales charges on your investment
will vary your investment results over time. The most important
factors to consider are how much you plan to invest and how long
you plan to hold your investment. If your goals and objectives
change over time and you plan to purchase additional shares, you
should re-evaluate those factors to see if you should consider
another class of shares.
In the following discussion, to help provide you and your
financial advisor with a framework in which to choose a class, we
have made some assumptions using a hypothetical investment in the
Fund. We used the sales charge rates that apply to each class, and
considered the effect of the asset-based sales charge on Class B
and Class C expenses (which, like all expenses, will affect your
investment return). For the sake of comparison, we have assumed
that there is a 10% rate of appreciation in the investment each
year. Of course, the actual performance of your investment cannot
be predicted and will vary, based on the Fund's actual investment
returns and the operating expenses borne by each class of shares,
and which class of shares you invest in.
The factors discussed below are not intended to be investment
advice or recommendations, because each investor's financial
considerations are different. The discussion below of the factors
to consider in purchasing a particular class of shares assumes that
you will purchase only one class of shares and not a combination of
shares of different classes.
How Long Do You Expect to Hold Your Investment? While
future financial needs cannot be predicted with certainty, knowing
how long you expect to hold your investment will assist you in
selecting the appropriate class of shares. The effect of the sales
charge, over time, using our assumptions will generally depend on
the amount invested. Because of the effect of class-based expenses,
your choice will also depend on how much you plan to invest. For
example, the reduced sales charges available for larger purchases
of Class A shares may, over time, offset the effect of paying an
initial sales charge on your investment (which reduces the amount
of your investment dollars used to buy shares for your account),
compared to the effect over time of higher class-based expenses on
Class B or Class C shares for which no initial sales charge is
paid.
Investing for the Short Term. If you have a short-term
investment horizon (that is, you plan to hold your shares for not
more than six years), you should probably consider purchasing Class
A or Class C shares rather than Class B shares, because of the
effect of the Class B contingent deferred sales charge if you
redeem within 6 years, as well as the effect of the 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 economic
impact on your account over the longer term than the reduced front-
end sales charge available for larger purchases of Class A shares.
For example, Class A might be more advantageous than Class C (as
well as Class B) for investments of more than $100,000 expected to
be held for 5 or 6 years (or more). For investments over $250,000
expected to be held 4 to 6 years (or more), Class A shares may
become more advantageous than Class C (and Class B). If investing
$500,000 or more, Class A may be more advantageous as your
investment horizon approaches 3 years or more.
And for most investors who invest $1 million or more, in most
cases Class A shares will be the most advantageous choice, no
matter how long you intend to hold your shares. For that reason,
the Distributor normally will not accept purchase orders of
$500,000 or more of Class B shares or $1 million or more of Class
C shares from a single investor.
Investing for the Longer Term. If you are investing for
the longer term, for example, for retirement, and do not expect to
need access to your money for seven years or more, Class B shares
may be an appropriate consideration, if you plan to invest less
than $100,000. If you plan to invest more than $100,000 over the
long term, Class A shares will likely be more advantageous than
Class B shares or Class C shares, as discussed above, because of
the effect of the expected lower expenses for Class A shares and
the reduced initial sales charges available for larger investments
in Class A shares under the Fund's Right of Accumulation.
Of course, these examples are based on approximations of the
effect of current sales charges and expenses on a hypothetical
investment over time, using the assumed annual performance return
stated above, and therefore you should analyze your opinions
carefully.
Are There Differences in Account Features That Matter to
You? Because some account features may not be available for Class
B or Class C shareholders, or other features (such as Automatic
Withdrawal Plans) may not be advisable (because of the effect of
the contingent deferred sales charge in non-retirement accounts)
for Class B or Class C shareholders, you should carefully review
how you plan to use your investment account before deciding which
class of shares is better for you. For example, share certificates
are not available for Class B or Class C shares, and if you are
considering using your shares as collateral for a loan, that may be
a factor to consider. Additionally, dividends payable to Class B
and Class C shareholders will be reduced by the additional expenses
borne solely by those classes, or higher expenses, such as the
asset-based sales charges to which Class B and Class C shares are
subject, as described below and in the Statement of Additional
Information.
How Does It Affect Payments to My Broker? A salesperson,
such as a broker or any other person who is entitled to receive
compensation for selling Fund shares, may receive different
compensation for selling one class of shares than for selling
another class. It is important that investors understand that the
purpose of the contingent deferred sales charges and asset-based
sales charges for Class B and Class C shares are the same as the
purpose of the front-end sales charge on sales of Class A shares:
that is to compensate the Distributor for commissions it pays to
dealers and financial institutions for selling shares.
How Much Must You Invest? You can open a Fund account with a
minimum initial investment of $1,000 and make additional
investments at any time with as little as $25. There are reduced
minimum investments under special investment plans:
With Asset Builder Plans, Automatic Exchange Plans,
403(b)(7) custodial plans and military allotment plans, you can
make initial and subsequent investments of as little as $25; and
subsequent purchases of at least $25 can be made by telephone
through AccountLink.
Under pension, profit-sharing plans and 401(k) and
Individual Retirement Accounts (IRAs), you can make an initial
investment of as little as $250 (if your IRA is established under
an Asset Builder Plan, the $25 minimum applies), and subsequent
investments may be as little as $25.
There is no minimum investment requirement if you are buying
shares by reinvesting dividends from the Fund or other Oppenheimer
funds (a list of them appears in the Statement of Additional
Information, or you can ask your dealer or call the Transfer
Agent), or by reinvesting distributions from unit investment trusts
that have made arrangements with the Distributor.
How Are Shares Purchased? You can buy shares several ways:
through any dealer, broker or financial institution that has a
sales agreement with the Distributor, directly through the
Distributor, or automatically from your bank account through an
Asset Builder Plan under the OppenheimerFunds AccountLink service.
The Distributor may appoint certain servicing agents as the
Distributor's agent to accept purchase (and redemption) orders.
When you buy shares, be sure to specify Class A, Class B or Class
C shares. If you do not choose, your investment will be made in
Class A shares.
Buying Shares Through Your Dealer. Your dealer will place
your order with the Distributor on your behalf.
Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "OppenheimerFunds Distributor, Inc." Mail it to P.O. Box
5270, Denver, Colorado 80217. If you don't list a dealer on the
application, the Distributor will act as your agent in buying the
shares. However, we recommend that you discuss your investment
first with a financial advisor, to be sure it is appropriate for
you.
Buying Shares Through OppenheimerFunds AccountLink. You
can use AccountLink to link your Fund account with an account at a
U.S. bank or other financial institution that is an Automated
Clearing House (ACH) member, to transmit funds electronically to
purchase shares, to have the Transfer Agent send redemption
proceeds, or to transmit dividends and distributions to your bank
account.
Shares are purchased for your account on AccountLink on the
regular business day the Distributor is instructed by you to
initiate the ACH transfer to buy shares. You can provide those
instructions automatically, under an Asset Builder Plan, described
below, or by telephone instructions using OppenheimerFunds
PhoneLink, also described below. You should request AccountLink
privileges on the application or dealer settlement instructions
used to establish your account. Please refer to "AccountLink" below
for more details.
Asset Builder Plans. You may purchase shares of the Fund
(and up to four other Oppenheimer funds) automatically each month
from your account at a bank or other financial institution under an
Asset Builder Plan with AccountLink. Details are in the Statement
of Additional Information.
At What Price Are Shares Sold? Shares are sold at the
public offering price based on the net asset value (and any initial
sales charge that applies) that is next determined after the
Distributor or its designated agent receives the purchase order in
Denver, Colorado. 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,
in its sole discretion, may reject any purchase order for the
Fund's shares.
Special Sales Charge Arrangements for Certain Persons. Appendix
A to this Prospectus sets forth conditions for the waiver of, or
exemption from, sales charges or the special sales charge rates
that apply to shareholders of one of the Former Quest for Value
Funds (as defined in that Appendix), 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, purchases
are not subject to an initial sales charge, and the offering price
will be the net asset value. In some cases, reduced sales charges
may be available, as described below. Out of the amount you
invest, the Fund receives the net asset value to invest for your
account. The sales charge varies depending on the amount of your
purchase. A portion of the sales charge may be retained by the
Distributor and allocated to your dealer as commission. The
current sales charge rates and commissions paid to dealers and
brokers are as follows:
<TABLE>
<CAPTION>
Front-End Sales Charge Commission
As a Percentage of as Percentage
Offering Amount of Offering
Amount of Purchase Price Invested Price
- ----------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 4.75%
- ----------------------------------------------------------------
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
- ----------------------------------------------------------------
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
- ----------------------------------------------------------------
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
- ----------------------------------------------------------------
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
- ----------------------------------------------------------------
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
</TABLE>
The Distributor reserves the right to reallow the entire commission
to dealers. If that occurs, the dealer may be considered an
"underwriter" under Federal securities laws.
Class A Contingent Deferred Sales Charge. There is no
initial sales charge on purchases of Class A shares of any one or
more of the Oppenheimer funds in the following cases:
Purchases by a retirement plan qualified under section
401(a) if the retirement plan has total plan assets of $500,000 or
more.
Purchases aggregating $1 million or more.
Purchases by a retirement plan qualified under sections
401(a) or 401(k) of the Internal Revenue Code, by a non-qualified
deferred compensation plan (not including Section 457 plans),
employee benefit plan, group retirement plan (see "How to Buy
Shares - Retirement Plans" in the Statement of Additional
Information for further details), an employee's 403(b)(7) custodial
plan account, SEP IRA, SARSEP, or SIMPLE plan (all of these plans
are collectively referred to as "Retirement Plans"); that: (1) 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.
Purchases by an OppenheimerFunds Rollover IRA if the
purchases are made (1) through a broker, dealer, bank or registered
investment adviser that has made special arrangements with the
Distributor for these purchases, or (2) by a direct rollover of a
distribution from a qualified retirement plan if the administrator
of that plan has made special arrangements with the Distributor for
those purchases.
The Distributor pays dealers of record commissions on those
purchases in an amount equal to (i) 1.0% for non-Retirement Plan
accounts, and (ii) for Retirement Plan accounts, 1.0% of the first
$2.5 million, plus 0.50% of the next $2.5 million, plus 0.25% of
purchases over $5 million. That commission will be paid only on
those purchases that were not previously subject to a front-end
sales charge and dealer commission. No sales commission will be
paid to the dealer, broker or financial institution on sales of
Class A shares purchased with the redemption proceeds of shares of
a mutual fund offered as an investment option in a Retirement Plan
in which Oppenheimer funds are also offered as investment options
under a special arrangement with the Distributor if the purchase
occurs more than 30 days after the addition of the Oppenheimer
funds as an investment option to the Retirement Plan.
If you redeem any of those shares within 18 months of the end
of the calendar month of their purchase, a contingent deferred
sales charge (called the "Class A contingent deferred sales
charge") will be deducted from the redemption proceeds. That sales
charge may be equal to 1.0% of the lesser of (1) the aggregate net
asset value of the redeemed shares (not including shares purchased
by reinvestment of dividends or capital gain distributions) or (2)
the original offering price (which is the original net asset value)
of the redeemed shares. However, the Class A contingent deferred
sales charge will not exceed the aggregate amount of the
commissions the Distributor paid to your dealer on all Class A
shares of all Oppenheimer funds you purchased subject to the Class
A contingent deferred sales charge. 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, the contingent deferred sales charge will
apply.
Special Arrangements With Dealers. The Distributor may
advance up to 13 months' commissions to dealers that have
established special arrangements with the Distributor for Asset
Builder Plans for their clients.
Reduced Sales Charges for Class A Share Purchases. You may be
eligible to buy Class A shares at reduced sales charge rates in one
or more of the following ways:
Right of Accumulation. To qualify for the lower sales
charge rates that apply to larger purchases of Class A shares, you
and your spouse can add together Class A and Class B shares you
purchase for your individual accounts, or jointly, or for trust or
custodial accounts on behalf of your children who are minors. A
fiduciary can count all shares purchased for a trust, estate or
other fiduciary account (including one or more employee benefit
plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class
A and Class B shares of the Fund and other Oppenheimer funds to
reduce the sales charge rate that applies to current purchases of
Class A shares. You can also count Class A and Class B shares of
Oppenheimer funds you previously purchased subject to an initial or
contingent deferred sales charge to reduce the sales charge rate
for current purchases of Class A shares, provided that you still
hold your investment in one of the Oppenheimer funds. The value of
those shares will be based on the greater of the amount you paid
for the shares or their current value (at offering price). The
Oppenheimer funds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from
the Transfer Agent. The reduced sales charge will apply only to
current purchases and must be requested when you buy your shares.
Letter of Intent. Under a Letter of Intent, if you purchase
Class A shares or Class A and Class B shares of the Fund and other
Oppenheimer funds during a 13-month period, you can reduce the
sales charge rate that applies to your purchases of Class A shares.
The total amount of your intended purchases of both Class A and
Class B shares will determine the reduced sales charge rate for the
Class A shares purchased during that period. This can include
purchases made up to 90 days before the date of the Letter. More
information is contained in the Application and in "Reduced Sales
Charges" in the Statement of Additional Information.
Waivers of Class A Sales Charges. The Class A sales charges
are not imposed in the circumstances described below. There is an
explanation of this policy in "Reduced Sales Charges" in the
Statement of Additional Information.
Waivers of Initial and Contingent Deferred Sales Charges for
Certain Purchasers. Class A shares purchased by the following
investors are not subject to any Class A sales charges:
the Manager or its affiliates;
present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced
Sales Charges" in the Statement of Additional Information) of the
Fund, the Manager and its affiliates, and retirement plans
established by them for their employees;
registered management investment companies, or separate
accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose;
dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
employees and registered representatives (and their spouses)
of dealers or brokers described above or financial institutions
that have entered into sales arrangements with such dealers or
brokers (and are identified to the Distributor) or with the
Distributor; the purchaser must certify to the Distributor at the
time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor
children);
dealers, brokers, banks or registered investment advisers
that have entered into an agreement with the Distributor providing
specifically for the use of shares of the Fund in particular
investment products made available to their clients (those clients
may be charged a transaction fee by their dealer, broker or adviser
for the purchase or sale of Fund shares);
(1) investment advisors and financial planners who charge
an advisory, consulting or other fee for their services and buy
shares for their own accounts or the accounts of their clients, and
(2) retirement plans and deferred compensation plans and trusts
used to fund those plans (including, for example, plans qualified
or created under sections 401(a), 403(b) or 457 of the Internal
Revenue Code), and "rabbi trusts" that buy shares for their own
accounts, in each case if those purchases are made through a broker
or agent or other financial intermediary that has made special
arrangements with the Distributor for those purchases; (3) clients
of such investment advisors or financial planners who buy shares
for their own accounts may also purchase shares without sales
charge but only if their accounts are linked to a master account of
their investment advisor or financial planner on the books and
records of the broker, agent or financial intermediary with which
the Distributor has made such special arrangements (each of these
investors may be charged a fee by the broker, agent or financial
intermediary for purchasing shares);
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;
employee benefit plans purchasing shares through a
shareholder servicing agent which the Distributor has appointed as
agent to accept those purchase orders;
accounts for which Oppenheimer Capital is the investment
adviser (the Distributor must be advised of this arrangement) and
persons who are directors or trustees of the company or trust which
is the beneficial owner of such accounts;
any unit investment trust that has entered into an
appropriate agreement with the Distributor;
a TRAC-2000 401(k) plan (sponsored by the former Quest for
Value Advisors) whose Class B or Class C shares of a Former Quest
for Value Fund were exchanged for Class A shares of that Fund due
to the termination of the Class B and Class C TRAC-2000 program on
November 24, 1995; or
qualified retirement plans that had agreed with the former
Quest for Value Advisors to purchase shares of any of the Former
Quest for Value Funds at net asset value, with such shares to be
held through DCXchange, a sub-transfer agency mutual fund
clearinghouse, provided that such arrangements are consummated and
share purchases commence by December 31, 1996.
Waivers of Initial and Contingent Deferred Sales Charges in
Certain Transactions. Class A shares issued or purchased in the
following transactions are not subject to Class A sales charges:
shares issued in plans of reorganization, such as mergers,
asset acquisitions and exchange offers, to which the Fund is a
party;
shares purchased by the reinvestment of loan repayments by
a participant in a retirement plan for which the Manager or its
affiliates acts as sponsor;
shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds
(other than Oppenheimer Cash Reserves) or unit investment trusts
for which reinvestment arrangements have been made with the
Distributor; or
shares purchased and paid for with the proceeds of shares
redeemed in the past 12 months from a mutual fund (other than a
fund managed by the Manager or any of its subsidiaries) on which an
initial sales charge or contingent deferred sales charge was paid
(this waiver also applies to shares purchased by exchange of shares
of Oppenheimer Money Market Fund, Inc. that were purchased and paid
for in this manner); this waiver must be requested when the
purchase order is placed for your shares of the Fund, and the
Distributor may require evidence of your qualification for this
waiver; or
shares purchased with the proceeds of maturing principal of
units of any Qualified Unit Investment Liquid Trust Series.
Waivers of the Class A Contingent Deferred Sales Charge for
Certain Redemptions. The Class A contingent deferred sales charge
is also waived if shares that would otherwise be subject to the
contingent deferred sales charge are redeemed in the following
cases:
to make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the original account value;
involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see "Shareholder Account
Rules and Policies," below);
if, at the time a purchase order is placed for Class A
shares that would otherwise be subject to the Class A contingent
deferred sales charge, the dealer agrees in writing to accept the
dealer's portion of the commission payable on the sale in
installments of 1/18th of the commission per month (and no further
commission will be payable if the shares are redeemed within 18
months of purchase);
for distributions from a TRAC-2000 401(k) plan sponsored
by the Distributor due to the termination of the TRAC-2000 program;
or
for distributions from Retirement Plans, deferred
compensation plans or other employee benefit plans for any of the
following purposes: (1) following the death or disability (as
defined in the Internal Revenue Code) of the participant or
beneficiary (the death or disability must occur after the
participant's account was established); (2) to return excess
contributions; (3) to return contributions made due to a mistake of
fact; (4) hardship withdrawals, as defined in the plan; (5) under
a Qualified Domestic Relations Order, as defined in the Internal
Revenue Code; (6) to meet the minimum distribution requirements of
the Internal Revenue Code; (7) to establish "substantially equal
periodic payments" as described in Section 72(t) of the Internal
Revenue Code; (8) for retirement distributions or loans to
participants or beneficiaries; (9) separation from service; (10)
participant-directed redemptions to purchase shares of a mutual
fund (other than a fund managed by the Manager or its subsidiary)
offered as an investment option in a Retirement Plan in which
Oppenheimer funds are also offered as investment options under a
special arrangement with the Distributor; or (11) plan termination
or "in-service distributions", if the redemption proceeds are
rolled over directly to an OppenheimerFunds IRA.
Distribution and Service Plan for Class A Shares. The Fund
has adopted a Distribution and Service Plan for Class A shares to
reimburse the Distributor for a portion of its costs incurred in
connection with the personal service and maintenance of shareholder
accounts that hold Class A shares. Under the Plan, the Fund pays
an annual asset-based sales charge to the Distributor at an annual
rate of 0.25% of the average annual net assets of the class. The
Fund also pays a service fee to the Distributor 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 contingent deferred sales charge will be based
on the lesser of the net asset value of the redeemed shares at the
time of redemption or the original offering price (which is the
original net asset value). The contingent deferred sales charge is
not imposed on the amount of your account value represented by the
increase in net asset value over the initial purchase price. The
Class B contingent deferred sales charge is paid to the Distributor
to reimburse its expenses of providing distribution-related
services to the Fund in connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 6 years, and (3)
shares held the longest during the 6-year period. The contingent
deferred sales charge is not imposed in the circumstances described
in "Waivers of Class B and Class C Sales Charges" below.
The amount of the contingent deferred sales charge will depend
on the number of years since you invested and the dollar amount
being redeemed, according to the following schedule:
Years Since 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. 72 months after you
purchase Class B shares, those shares will automatically convert to
Class A shares. This conversion feature relieves Class B
shareholders of the asset-based sales charge that applies to Class
B shares under the Class B Distribution and Service Plan, described
below. The conversion is based on the relative net asset value of
the two classes, and no sales load or other charge is imposed. When
Class B shares convert, any other Class B shares that were acquired
by the reinvestment of dividends and distributions on the converted
shares will also convert to Class A shares. The conversion feature
is subject to the continued availability of a tax ruling described
in "Alternative Sales Arrangements - Class A, Class B and Class C
Shares" in the Statement of Additional Information.
Distribution and Service Plan for Class B Shares. The Fund
has adopted a Distribution and Service Plan for Class B shares to
compensate the Distributor for distributing Class B shares and
servicing accounts. This Plan is described below under "Buying
Class C Shares - Distribution and Service Plans for Class B and
Class C Shares."
Waivers of Class B Sales Charges. The Class B contingent
deferred sales charge will not apply to shares purchased in certain
types of transactions, nor will it apply to shares redeemed in
certain circumstances, as described below under "Buying Class C
Shares - Waivers of Class B and Class C Sales Charges."
Buying Class C Shares. Class C shares are sold at net asset
value per share without an initial sales charge. However, if Class
C shares are redeemed within 12 months of their purchase, a
contingent deferred sales charge of 1.0% will be deducted from the
redemption proceeds. That sales charge will not apply to shares
purchased by the reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge will be based
on the lesser of the net asset value of the redeemed shares at the
time of redemption or the original offering price (which is the
original net asset value). The contingent deferred sales charge is
not imposed on the amount of your account value represented by the
increase in net asset value over the initial purchase price. The
Class C contingent deferred sales charge is paid to compensate the
Distributor for its expenses of providing distribution-related
services to the Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 12 months, and (3)
shares held the longest during the 12-month period.
Distribution and Service Plans for Class B and Class C
Shares. The Fund has adopted Distribution and Service Plans for
Class B and Class C shares to compensate the Distributor for its
services and costs in distributing Class B and Class C shares and
servicing accounts. Under the Plans, the Fund pays the Distributor
an annual "asset-based sales charge" of 0.75% per year on Class B
shares that are outstanding for 6 years or less and on Class C
shares. The Distributor also receives a service fee of 0.25% per
year under each plan.
Under each Plan, both fees are computed on the average of the
net asset value of shares in the respective class, determined as of
the close of each regular business day during the period. The
asset-based sales charge and service fees increase Class B and
Class C expenses by up to 1.00% of the net assets per year of the
respective Class.
The Distributor uses the service fees to compensate dealers
for providing personal services for accounts that hold Class B or
Class C shares. Those services are similar to those provided under
the Class A Service Plan, described above. The Distributor pays
the 0.25% service fees to dealers in advance for the first year
after Class B or Class C shares have been sold by the dealer and
retains the service fee paid by the Fund in that year. After the
shares have been held for a year, the Distributor pays the service
fees to dealers on a quarterly basis.
The asset-based sales charge allows investors to buy Class B
or Class C shares without a front-end sales charge while allowing
the Distributor to compensate dealers that sell those shares. The
Fund pays the asset-based sales charges to the Distributor for its
services rendered in distributing Class B and Class C shares.
Those payments are at a fixed rate that is not related to the
Distributor's expenses. The services rendered by the Distributor
include paying and financing the payment of sales commissions,
service fees and other costs of distributing and selling Class B
and Class C shares.
The Distributor currently pays sales commissions of 3.75% of
the purchase price of Class B shares to dealers from its own
resources at the time of sale. Including the advance of the
service fee, the total amount paid by the Distributor to the dealer
at the time of sale of Class B shares is 4.00% of the purchase
price. The Distributor retains the Class B asset-based sales
charge.
The Distributor currently pays sales commissions of 0.75% of
the purchase price of Class C shares to dealers from its own
resources at the time of sale. Including the advance of the
service fee, the total amount paid by the Distributor to the dealer
at the time of sale of Class C shares is 1.00% of the purchase
price. The Distributor retains the asset-based sales charge during
the first year Class C shares are outstanding to recoup sales
commissions it has paid, the advances of service fee payments it
has made, and its financing costs and other expenses. The
Distributor plans to pay the asset-based sales charge as an ongoing
commission to the dealer on Class C shares that have been
outstanding for a year or more.
The Distributor's actual expenses in selling Class B and Class
C shares may be more than the payments it receives from contingent
deferred sales charges collected on redeemed shares and from the
Fund under the Distribution and Service Plans for Class B and Class
C shares. If either Plan is terminated by the Fund, the Board of
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 or Class C shares, as appropriate, 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 receives the
request), or (b) following the death or disability (as defined in
the Internal Revenue Code ("IRC")) of the participant or
beneficiary (the death or disability must have occurred after the
account was established);
redemptions from accounts other than Retirement Plans
following the death or disability of the last surviving shareholder
including a trustee of a "grantor" trust or revocable living trust
for which the trustee is also the sole beneficiary (the death or
disability must have occurred after the account was established,
and for disability you must provide evidence of a determination of
disability by the Social Security Administration);
returns of excess contributions to Retirement Plans;
distributions from retirement plans to make "substantially
equal periodic payments" under Section 72(t) of the Internal
Revenue Code, provided the distributions do not exceed 10% of the
account value annually, measured from the date the Transfer Agent
receives the request);
shares redeemed involuntarily, as described in "Shareholder
Account Rules and Policies," below; or
distributions from OppenheimerFunds prototype 401(k) plans:
(1) for hardship withdrawals; (2) under a Qualified Domestic
Relations Order, as defined in the Internal Revenue Code; (3) to
meet minimum distribution requirements as defined in the Internal
Revenue Code; (4) to make "substantially equal periodic payments"
as described in Section 72(t) of the Internal Revenue Code; or (5)
for separation from service.
Waivers for Shares Sold or Issued in Certain Transactions.
The contingent deferred sales charge is also waived on Class B and
Class C shares sold or issued in the following cases:
shares sold to the Manager or its affiliates;
shares sold to registered management investment companies or
separate accounts of insurance companies having an agreement with
the Manager or the Distributor for that purpose; or
shares issued in plans of reorganization to which the Fund
is a party.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund
account to your account at your bank or other financial institution
to enable you to send money electronically between those accounts
to perform a number of types of account transactions. These
include purchases of shares by telephone (either through a service
representative or by PhoneLink, described below), automatic
investments under Asset Builder Plans, and sending dividends and
distributions or Automatic Withdrawal Plan payments directly to
your bank account. Please call the Transfer Agent for more
information.
AccountLink privileges should be requested on your dealer's
settlement instructions if you buy your shares through your dealer.
After your account is established, you can request AccountLink
privileges by sending signature-guaranteed instructions to the
Transfer Agent. AccountLink privileges will apply to each
shareholder listed in the registration on your account as well as
to your dealer representative of record unless and until the
Transfer Agent receives written instructions terminating or
changing those privileges. After you establish AccountLink for your
account, any change of bank account information must be made by
signature-guaranteed instructions to the Transfer Agent signed by
all shareholders who own the account.
Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase
shares in amounts up to $250,000 through a telephone
representative, call the Distributor at 1-800-852-8457. The
purchase payment will be debited from your bank account.
PhoneLink. PhoneLink is the OppenheimerFunds automated
telephone system that enables shareholders to perform a number of
account transactions automatically using a touch-tone phone.
PhoneLink may be used on already-established Fund accounts after
you obtain a Personal Identification Number (PIN), by calling the
special PhoneLink number: 1-800-533-3310.
Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have
established AccountLink privileges to link your bank account with
the Fund, to pay for these purchases.
Exchanging Shares. With the OppenheimerFunds exchange
privilege, described below, you can exchange shares automatically
by phone from your Fund account to another Oppenheimer funds
account you have already established by calling the special
PhoneLink number. Please refer to "How to Exchange Shares," below,
for details.
Selling Shares. You can redeem shares by telephone
automatically by calling the PhoneLink number and the Fund will
send the proceeds directly to your AccountLink bank account.
Please refer to "How to Sell Shares," below, for details.
Automatic Withdrawal and Exchange Plans. The Fund has several plans
that enable you to sell shares automatically or exchange them to
another Oppenheimer funds account on a regular basis:
Automatic Withdrawal Plans. If your Fund account is worth
$5,000 or more, you can establish an Automatic Withdrawal Plan to
receive payments of at least $50 on a monthly, quarterly, semi-
annual or annual basis. The checks may be sent to you or sent
automatically to your bank account on AccountLink. You may even set
up certain types of withdrawals of up to $1,500 per month by
telephone. You should consult the Statement of Additional
Information for more details.
Automatic Exchange Plans. You can authorize the Transfer
Agent to exchange an amount you establish in advance automatically
for shares of up to five other Oppenheimer funds on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange
Plan. The minimum purchase for each other Oppenheimer funds
account is $25. These exchanges are subject to the terms of the
exchange privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class
A or Class B shares of the Fund, you have up to 6 months to
reinvest all or part of the redemption proceeds in Class A shares
of the Fund or other Oppenheimer funds without paying a sales
charge. This privilege applies to Class A shares that you
purchased subject to an initial sales charge and to Class A or
Class B shares on which you paid a contingent deferred sales charge
when you redeemed them. This privilege does not apply to Class C
shares. You must be sure to ask the Distributor for this privilege
when you send your payment. Please consult the Statement of
Additional Information for more details.
Retirement Plans. Fund shares are available as an investment for
your retirement plans. If you participate in a plan sponsored by
your employer, the plan trustee or administrator must make the
purchase of shares for your retirement plan account. The
Distributor offers a number of different retirement plans that can
be used by individuals and employers:
Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
403(b)(7) Custodial Plans for employees of eligible tax-
exempt organizations, such as schools, hospitals and charitable
organizations
SEP-IRAs (Simplified Employee Pension Plans) for small
business owners or people with income from self-employment,
including SAR/SEP IRAs
Pension and Profit-Sharing Plans for self-employed persons
and small business owners
401(k) prototype retirement plans for businesses
Please call the Distributor for the OppenheimerFunds plan
documents, which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account by selling
(redeeming) some or all of your shares on any regular business day.
Your shares will be sold at the next net asset value calculated
after your order is received and accepted by the Transfer Agent.
The Fund offers you a number of ways to sell your shares: in
writing or by telephone. You can also set up Automatic Withdrawal
Plans to redeem shares on a regular basis, as described above. If
you have questions about any of these procedures, and especially if
you are redeeming shares in a special situation, such as due to the
death of the owner, or from a retirement plan, please call the
Transfer Agent first, at 1-800-525-7048, for assistance.
Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must
submit a withholding form with your request to avoid delay. If your
retirement plan account is held for you by your employer, you must
arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the
Statement of Additional Information.
Certain Requests Require A Signature Guarantee. To protect
you and the Fund from fraud, certain redemption requests must be in
writing and must include a signature guarantee in the following
situations (there may be other situations also requiring a
signature guarantee):
You wish to redeem more than $50,000 worth of shares and
receive a check
The redemption check is not payable to all shareholders
listed on the account statement
The redemption check is not sent to the address of record on
your account statement
Shares are being transferred to a Fund account with a
different owner or name
Shares are redeemed by someone other than the owners (such
as an Executor)
Where Can I Have My Signature Guaranteed? The Transfer
Agent will accept a guarantee of your signature by a number of
financial institutions, including: a U.S. bank, trust company,
credit union or savings association, or by a foreign bank that has
a U.S. correspondent bank, or by a U.S. registered dealer or broker
in securities, municipal securities or government securities, or by
a U.S. national securities exchange, a registered securities
association or a clearing agency. If you are signing as a fiduciary
or on behalf of a corporation, partnership or other business, you
must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that
includes:
Your name
The Fund's name
Your Fund account number (from your account statement)
The dollar amount or number of shares to be redeemed
Any special payment instructions
Any share certificates for the shares you are selling
The signatures of all registered owners exactly as the
account is registered, and
Any special requirements or documents requested by the
Transfer Agent to assure proper authorization of the person asking
to sell shares.
Use the following address for Send courier or Express Mail
request by mail: requests to:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Ave., 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 in any 7-day period. The check must be
payable to all owners of record of the shares and must be sent to
the address on the account statement. This service is not
available within 30 days of changing the address on an account.
Telephone Redemptions Through AccountLink or by Wire. There
are no dollar limits on telephone redemption proceeds sent to a
bank account designated when you establish AccountLink. Normally
the ACH transfer to your bank is initiated on the business day
after the redemption. You do not receive dividends on the proceeds
of the shares you redeemed while they are waiting to be
transferred.
Shareholders may also have the Transfer Agent send redemption
proceeds of $2,500 or more by Federal Funds wire to a designated
commercial bank account. The bank must be a member of the Federal
Reserve wire system. There is a $10 fee for each Federal Funds
wire. To place a wire redemption request, call the Transfer Agent
at 1-800-852-8457. The wire will normally be transmitted on the
next bank business day after the shares are redeemed. There is a
possibility that the wire may be delayed up to seven days to enable
the Fund to sell securities to pay the redemption proceeds. No
dividends are accrued or paid on the proceeds of shares that have
been redeemed and are awaiting transmittal by wire. To establish
wire redemption privileges on an accout that is already
established, please contact the Transfer Agent for
instructions.
Selling Shares Through Your Dealer. The Distributor has made
arrangements to repurchase Fund shares from dealers and brokers on
behalf of their customers. Brokers or dealers may charge for that
service. Please call your dealer for more information about this
procedure. Please refer to "Special Arrangements for Repurchase of
Shares from Dealers and Brokers" in the Statement of Additional
Information for more details.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain
Oppenheimer funds at net asset value per share at the time of
exchange, without sales charge. To exchange shares, you must meet
several conditions:
Shares of the fund selected for exchange must be available
for sale in your state of residence
The prospectuses of this Fund and the fund whose shares you
want to buy must offer the exchange privilege
You must hold the shares you buy when you establish your
account for at least 7 days before you can exchange them; after the
account is open 7 days, you can exchange shares every regular
business day
You must meet the minimum purchase requirements for the fund
you purchase by exchange
Before exchanging into a fund, you should obtain and read
its prospectus
Shares of a particular class of the Fund may be exchanged only
for shares of the same class in the other Oppenheimer funds. For
example, you can exchange Class A shares of this Fund only for
Class A shares of another fund. At present, Oppenheimer Money
Market Fund, Inc. offers only one class of shares, which are
considered to be Class A shares for this purpose. In some cases,
sales charges may be imposed on exchange transactions. Please
refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.
Exchanges may be requested in writing or by telephone:
Written Exchange Requests. Submit an OppenheimerFunds
Exchange Request form, signed by all owners of the account. Send
it to the Transfer Agent at the addresses listed in "How to Sell
Shares."
Telephone Exchange Requests. Telephone exchange requests may
be made either by calling a service representative at 1-800-852-
8457 or by using PhoneLink for automated exchanges, by calling 1-
800-533-3310. Telephone exchanges may be made only between accounts
that are registered with the same name(s) and address. Shares held
under certificates may not be exchanged by telephone.
You can find a list of Oppenheimer funds currently available
for exchanges in the Statement of Additional Information or obtain
one by calling a service representative at 1-800-525-7048. That
list can change from time to time.
There are certain exchange policies you should be aware of:
Shares are normally redeemed from one fund and purchased
from the other fund in the exchange transaction on the same regular
business day on which the Transfer Agent receives an exchange
request that is in proper form by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M. but may be earlier
on some days. However, either fund may delay the purchase of
shares of the fund you are exchanging into up to 7 days if it
determines it would be disadvantaged by a same-day transfer of the
proceeds to buy shares. For example, the receipt of multiple
exchange requests from a dealer in a "market-timing" strategy might
require the sale of portfolio securities at a time or price
disadvantageous to the Fund.
Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange
request that will disadvantage it, or to refuse multiple exchange
requests submitted by a shareholder or dealer.
The Fund may amend, suspend or terminate the exchange
privilege at any time. Although the Fund will attempt to provide
you notice whenever it is reasonably able to do so, it may impose
these changes at any time.
For tax purposes, exchanges of shares involve a redemption
of the shares of the Fund you own and a purchase of the shares of
the other fund, which may result in a capital gain or loss. For
more information about the taxes affecting exchanges, please refer
to "How to Exchange Shares" in the Statement of Additional
Information.
If the Transfer Agent cannot exchange all the shares you
request because of a restriction cited above, only the shares
eligible for exchange will be exchanged.
Shareholder Account Rules and Policies
Net Asset Value Per Share is determined for each class of
shares as of the close of The New York Stock Exchange that day,
which is normally 4:00 P.M. but may be earlier on some days, on
each day the Exchange is open by dividing the value of the Fund's
net assets attributable to a class by the number of shares of that
class that are outstanding. The Board of Trustees has established
procedures to value the Fund's securities to determine net asset
value. In general, securities values are based on market value.
There are special procedures for valuing illiquid and restricted
securities and obligations for which market values cannot be
readily obtained. These procedures are described more completely
in the Statement of Additional Information.
The offering of shares may be suspended during any period in
which the determination of net asset value is suspended, and the
offering may be suspended by the Board of 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 Fund
at any time. If an account has more than one owner, the Fund and
the Transfer Agent may rely on the instructions of any one owner.
Telephone privileges apply to each owner of the account and the
dealer representative of record for the account unless and until
the Transfer Agent receives cancellation instructions from an owner
of the account.
The Transfer Agent will record any telephone calls to verify
data concerning transactions and has adopted other procedures to
confirm that telephone instructions are genuine, by requiring
callers to provide tax identification numbers and other account
data or by using PINs, and by confirming such transactions in
writing. If the Transfer Agent does not use reasonable procedures
it may be liable for losses due to unauthorized transactions, but
otherwise neither the Transfer Agent nor the Fund will be liable
for losses or expenses arising out of telephone instructions
reasonably believed to be genuine. If you are unable to reach the
Transfer Agent during periods of unusual market activity, you may
not be able to complete a telephone transaction and should consider
placing your order by mail.
Redemption or transfer requests will not be honored until
the Transfer Agent receives all required documents in proper form.
From time to time, the Transfer Agent in its discretion may waive
certain of the requirements for redemptions stated in this
Prospectus.
Dealers that can perform account transactions for their
clients by participating in NETWORKING through the National
Securities Clearing Corporation are responsible for obtaining their
clients' permission to perform those transactions and are
responsible to their clients who are shareholders of the Fund if
the dealer performs any transaction erroneously.
The redemption price for shares will vary from day to day
because the value of the securities in the Fund's portfolio
fluctuates, and the redemption price, which is the net asset value
per share, will normally be different for Class A, Class B and
Class C shares. Therefore, the redemption value of your shares may
be more or less than their original cost.
Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the
shareholder under the redemption procedures described above) within
7 days after the Transfer Agent receives redemption instructions in
proper form, except under unusual circumstances determined by the
Securities and Exchange Commission delaying or suspending such
payments. For accounts registered in the name of a broker-dealer,
payment will be forwarded within 3 business days. The Transfer
Agent may delay forwarding a check or processing a payment via
AccountLink for recently purchased shares, but only until the
purchase payment has cleared. That delay may be as much as 10 days
from the date the shares were purchased. That delay may be avoided
if you purchase shares by certified check or arrange to have your
bank 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 the Fund may be
redeemed "in kind", which means that the redemption proceeds will
be paid with securities from the Fund's portfolio. Please refer to
"How to Sell Shares" in the Statement of Additional Information for
more details.
"Backup Withholding" of Federal income tax may be applied at
the rate of 31% from taxable dividends, distributions and
redemption proceeds (including exchanges) if you fail to furnish
the Fund a certified Social Security or Employer Identification
Number when you sign your application, or if you violate Internal
Revenue Service regulations on tax reporting of dividends.
The Fund does not charge a redemption fee, but if your
dealer or broker handles your redemption, they may charge a fee.
That fee can be avoided by redeeming your Fund shares directly
through the Transfer Agent. Under the circumstances described in
"How to Buy Shares," you may be subject to a contingent deferred
sales charges when redeeming certain Class A, Class B and Class C
shares.
To avoid sending duplicate copies of materials to
households, the Fund will mail only one copy of each annual and
semi-annual report to shareholders having the same last name and
address on the Fund's records. However, each shareholder may call
the Transfer Agent at 1-800-525-7048 to ask that copies of those
materials be sent personally to that shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A,
Class B and Class C shares from net investment income on an annual
basis and normally pays those dividends to shareholders following
the end of its fiscal year, which is October 31. Dividends paid on
Class A shares generally are expected to be higher than for Class
B and Class C shares because expenses allocable to Class B and
Class C shares will generally be higher than for Class A shares.
There is no fixed dividend rate and there can be no assurance as to
the payment of any dividends or the realization of any gains.
Capital Gains. The Fund may make distributions annually in December
out of any net short-term or long-term capital gains, and the Fund
may make supplemental distributions of dividends and capital gains
following 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 Long-Term Capital Gains Only. You can elect to
reinvest long-term capital gains in the Fund while receiving
dividends by check or sent to your bank account on AccountLink.
Receive All Distributions in Cash. You can elect to receive
a check for all dividends and long-term capital gains distributions
or have them sent to your bank on AccountLink.
Reinvest Your Distributions in Another Oppenheimer Fund
Account. You can reinvest all distributions in another Oppenheimer
fund account you have established.
Taxes. If your account is not a tax-deferred retirement account,
you should be aware of the following tax implications of investing
in the Fund. Long-term capital gains are taxable as long-term
capital gains when distributed to shareholders. It does not matter
how long you have held your shares. Dividends paid from short-term
capital gains and net investment income are taxable as ordinary
income. Distributions are subject to federal income tax and may be
subject to state or local taxes. Your distributions are taxable
when paid, whether you reinvest them in additional shares or take
them in cash. Every year the Fund will send you and the IRS a
statement showing the amount of each taxable distribution you
received in the previous year.
"Buying a Dividend". When the Fund goes ex-dividend, its
share price is reduced by the amount of the distribution. If you
buy shares on or just before the ex-dividend date, or just before
the Fund declares a capital gains distribution, you will pay the
full price for the shares and then receive a portion of the price
back as a taxable dividend or capital gain.
Taxes on Transactions. Share redemptions, including
redemptions for exchanges, are subject to capital gains tax.
Generally speaking a capital gain or loss is the difference between
the price you paid for the shares and the price you receive when
you sell them.
Returns of Capital. In certain cases distributions made by
the Fund may be considered a non-taxable return of capital to
shareholders. If that occurs, it will be identified in notices to
shareholders. A non-taxable return of capital may reduce your tax
basis in your Fund shares.
This information is only a summary of certain federal tax
information about your investment. More information is contained
in the Statement of Additional Information, and in addition you
should consult with your tax adviser about the effect of an
investment in the Fund on your particular tax situation.
<PAGE>
APPENDIX A
Special Sales Charge Arrangements for Shareholders of
the Former Quest for Value Funds
The initial and contingent deferred sales charge rates and
waivers for Class A, Class B and Class C shares of the Fund
described elsewhere in this Prospectus are modified as described
below for those shareholders of (i) Oppenheimer Quest Value Fund,
Inc., Oppenheimer Quest Growth & Income Value Fund, Oppenheimer
Quest Opportunity Value Fund, Oppenheimer Quest Small Cap Value
Fund and Oppenheimer Quest Global Value Fund, Inc. on November 24,
1995, when OppenheimerFunds, Inc. became the investment adviser to
those funds, and (ii) Quest for Value U.S. Government Income Fund,
Quest for Value Investment Quality Income Fund, Quest for 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.
<TABLE>
<CAPTION>
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
<S> <C> <C> <C>
9 or fewer 2.50% 2.56% 2.00%
At least
10 but not
more than 49 2.00% 2.04% 1.60%
</TABLE>
For purchases by Qualified Retirement plans and Associations
having 50 or more eligible employees or members, there is no
initial sales charge on purchases of Class A shares, but those
shares are subject to the Class A contingent deferred sales charge
described on pages __ to __ 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.
Shareholders of the Fund that have continually owned shares
of the Fund prior to November 1, 1988.
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, Class B or Class C
shares of the Fund if those shares were purchased prior to March 6,
1995: in connection with (i) distributions to participants or
beneficiaries of plans qualified under Section 401(a) of the
Internal Revenue Code or from custodial accounts under
Section 403(b)(7) of the Code, Individual Retirement Accounts,
deferred compensation plans under Section 457 of the Code, and
other employee benefit plans, and returns of excess contributions
made to each type of plan, (ii) withdrawals under an automatic
withdrawal plan holding only either Class B or 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, Class B or Class C
shares of the Fund if those shares were purchased on or after March
6, 1995, but prior to November 24, 1995: (1) distributions to
participants or beneficiaries from Individual Retirement Accounts
under Section 408(a) of the Internal Revenue Code or retirement
plans under Section 401(a), 401(k), 403(b) and 457 of the Code, if
those distributions are made either (a) to an individual
participant as a result of separation from service or (b) following
the death or disability (as defined in the Code) of the participant
or beneficiary; (2) returns of excess contributions to such
retirement plans; (3) redemptions other than from retirement plans
following the death or disability of the shareholder(s) (as
evidenced by a determination of total disability by the U.S. Social
Security Administration); (4) withdrawals under an automatic
withdrawal plan (but only for Class B or 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 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 10/31/96, 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 10/31/96. 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 $9425 $10000
10/31/89 $10283 $11505
10/31/90 $8398 $8365
10/31/91 $13018 $13267
10/31/92 $14528 $14525
10/31/93 $18917 $19232
10/31/94 $18925 $19173
10/31/95 $20593 $22686
10/31/96 $24128 $26466
Oppenheimer
Fiscal Quest Small Cap Russell
Period Ended Fund B 2000 Index
- ------------ --------------- ----------
9/01/93(2) $10000 $10000
10/31/93 $10273 $10547
10/31/94 $10233 $10515
10/31/95 $11069 $12441
10/31/96 $12604 $14514
Oppenheimer
Fiscal Quest Small Cap Russell
Period Ended Fund C 2000 Index
9/01/93(2) $10000 $10000
10/31/93 $10279 $10547
10/31/94 $10227 $10515
10/31/95 $11069 $12441
10/31/96 $12901 $14514
- ---------------------
(2) Class B and 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
950 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, broker, salesperson or any other person has been
authorized to give any information or to make any representations
other than those contained in this Prospectus or the Statement of
Additional Information, and if given or made, such information and
representations must not be relied upon as having been authorized
by the Fund, OppenheimerFunds, Inc., OppenheimerFunds Distributor,
Inc. or any affiliate thereof. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any state to any person to whom it is
unlawful to make such an offer in such state.
PR0251.001 0297 Printed on recycled paper
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 26, 1997
This Statement of Additional Information of Oppenheimer Quest
Small Cap Value Fund is not a Prospectus. This document contains
additional information about the Fund and supplements information
in the Prospectus dated February 26, 1997. It should be read
together with the Prospectus, which may be obtained upon written
request to the Fund's Transfer Agent, OppenheimerFunds Services at
P.O. Box 5270, Denver, Colorado 80217, or by calling the Transfer
Agent at the toll-free number shown above.
Contents
Page
About the Fund
Investment Objective and Policies. . . . . . . . . . . 2
Investment Policies and Strategies . . . . . . . . . 2
Other Investment Techniques and Strategies . . . . . . 5
Other Investment Restrictions. . . . . . . . . . . . .13
How the Fund is Managed . . . . . . . . . . . . . . . 15
Organization and History . . . . . . . . . . . . . .15
Trustees and Officers of the Trust. . . . . . . . . .16
The Manager and Its Affiliates. . . . . . . . . . . . 19
Brokerage Policies of the Fund . . . . . . . . . . . . 22
Performance of the Fund. . . . . . . . . . . . . . . . 24
Distribution and Service Plans . . . . . . . . . . . . 28
About Your Account
How To Buy Shares. . . . . . . . . . . . . . . . . . . 30
How To Sell Shares . . . . . . . . . . . . . . . . . . 38
How To Exchange Shares . . . . . . . . . . . . . . . . 42
Dividends, Capital Gains and Taxes . . . . . . . . . . 44
Additional Information About the Fund. . . . . . . . . 45
Financial Information About the Fund
Independent Accountants' Report. . . . . . . . . . . . 46
Financial Statements . . . . . . . . . . . . . . . . . .47
Appendix A: Description of Ratings . . . . . . . . . . A-1
Appendix B: Corporate Industry Classifications . . . . B-1
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 may invest,
as well as the strategies the Fund may use to try to achieve its
objective. Capitalized terms used in this Statement of Additional
Information have the same meaning as those terms have in the
Prospectus.
Foreign Securities. As noted in the Prospectus the Fund may
invest in securities (which may be denominated in U.S. dollars or
non-U.S. currencies) issued or guaranteed by foreign corporations,
certain supranational entities (described below) and foreign
governments or their agencies or instrumentalities, and in
securities issued by U.S. corporations denominated in non-U.S.
currencies. All such securities are considered "foreign
securities."
Investing in foreign securities offers the Fund potential
benefits not available from investing solely in securities of
domestic issuers, including the opportunity to invest in foreign
issuers that appear to offer growth potential, or in foreign
countries with economic policies or business cycles different from
those of the U.S., or to reduce fluctuations in portfolio value by
taking advantage of foreign stock markets that do not move in a
manner parallel to U.S. markets. If the Fund's portfolio securities
are held abroad, the countries in which such securities may be held
and the sub-custodians or depositories holding them must be
approved by the Trust's Board of Trustees to the extent that
approval is required under applicable rules of the Securities and
Exchange Commission. In buying foreign securities, the Fund may
convert U.S. dollars into foreign currency but only to effect
securities transactions on foreign securities exchanges and not to
hold such foreign currency as an investment.
Risks of Foreign Investing. Investing in foreign securities
involves special additional risks and considerations not typically
associated with investing in securities of issuers traded in the
U.S. These include: reduction of income by foreign taxes;
fluctuation in value of foreign portfolio investments due to
changes in currency rates and control regulations (e.g., currency
blockage); transaction charges for currency exchange; lack of
public information about foreign issuers; lack of uniform
accounting, auditing and financial reporting standards comparable
to those applicable to domestic issuers; less volume on foreign
exchanges than on U.S. exchanges; greater volatility and less
liquidity on foreign markets than in the U.S.; less regulation of
foreign issuers, stock exchanges and brokers than in the U.S.;
greater difficulties in commencing lawsuits and obtaining judgments
in foreign courts; higher brokerage commission rates than in the
U.S.; increased risks of delays in settlement of portfolio
transactions or loss of certificates for portfolio securities;
possibilities in some countries of expropriation or nationalization
of assets, confiscatory taxation, political, financial or social
instability or adverse diplomatic developments; and unfavorable
differences between the U.S. economy and foreign economies. In the
past, U.S. Government policies have discouraged certain
investments abroad by U.S. investors, through taxation or other
restrictions, and it is possible that such restrictions could be
re-imposed.
Emerging Market Countries. The Fund may invest in 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 takes place
sometime after the transaction date on terms established on such
date. Normally, settlement on U.S. Government securities takes
place within ten days. The Fund only will make when-issued
commitments on eligible securities with the intention of actually
acquiring the securities. If the Fund chooses to dispose of the
right to acquire a when-issued security prior to its acquisition,
it could, as with the disposition of any other portfolio
obligation, incur a gain or loss due to market fluctuation. When-
issued commitments will not be made if, as a result, more than 15%
of the net assets of the Fund would be so committed.
Repurchase Agreements. The Fund may 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 purchases a security
from, and simultaneously resells it to, an approved vendor ( a U.S.
commercial bank or the U.S. branch of a foreign bank having total
domestic assets of at least $1 billion or a broker-dealer with a
net worth of at least $50 million and which 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) for delivery at an agreed upon future date. The resale price
exceeds the purchase price by an amount that reflects an agreed-
upon interest rate effective for the period during which the
repurchase agreement is in effect. The majority of these
transactions run from day to day, and delivery pursuant to the
resale typically will occur within one to five days of the
purchase. Repurchase agreements are considered "loans" under the
Investment Company Act, collateralized by the underlying security.
The Fund's repurchase agreements require that at all times while
the repurchase agreement is in effect, the value of the collateral
must equal or exceed the repurchase price to fully collateralize
the repayment obligation. Additionally, the Manager will impose
creditworthiness requirements to confirm that the vendor is
financially sound and will continuously monitor the collateral's
value.
Illiquid 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
illiquid 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-Adviser under Board-
approved guidelines. Those guidelines take into account the trading
activity for such securities and the availability of reliable
pricing information, among other factors. If there is a lack of
trading interest in a particular Rule 144A security, the Fund's
holding of that security may be deemed to be illiquid.
Loans of Portfolio Securities. The Fund may lend its
portfolio securities subject to the restrictions stated in the
Prospectus. 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 on securities, securities
indices or Stock Index Futures or (iii) write covered calls on
securities held by it, securities indices or on or 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, securities indices 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,
under the Rule the Fund must limit its aggregate initial futures
margins and related options premiums to 5% or less of the Fund's
total assets for hedging strategies that are considered bona fide
hedging strategies under the Rule. Under the Rule, the Fund also
must use short future and options on futures positions solely for
bona fide hedging purposes within the meaning and intent of
applicable provisions of the Commodity Exchange Act.
Transactions in options by the Fund are subject to limitations
established by option exchanges governing the maximum number of
options that may be written or held by a single investor or group
of investors acting in concert, regardless of whether the options
were written or purchased on the same or different exchanges or are
held in one or more accounts or through one or more different
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 there is no guarantee that it
will 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 and timing of gains (or losses) recognized
by the Fund on straddle positions. Generally, a loss sustained on
the disposition of a position making up a straddle is allowed only
to the extent such loss exceeds any unrecognized gain in the
offsetting positions making up the straddle. Disallowed loss is
generally allowed at the point where there is no unrecognized gain
in the offsetting positions making up the straddle, or the
offsetting position is disposed of.
Under the Internal Revenue Code, gains or losses attributable
to fluctuations in exchange rates that occur between the time the
Fund accrues interest or other receivables or accrues expenses or
other liabilities denominated in a foreign currency and the time
the Fund actually collects such receivables or pays such
liabilities generally are treated as ordinary income or ordinary
loss. Similarly, on disposition of debt securities denominated in
a foreign currency and on disposition foreign currency forward
contracts, gains or losses attributable to fluctuations in the
value of a foreign currency between the date of acquisition of the
security or contract and the date of the disposition also are
treated as an ordinary gain or loss. Currency gains and losses are
offset against market gains and losses on each trade before
determining a net "section 988" gain or loss under the Internal
Revenue Code, which may ultimately increase or decrease the amount
of the Fund's investment company income available for distribution
to its shareholders.
Additional Risk Factors in Hedging. 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 of
1940, 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 as 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. 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 managers (who are not officers),
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.
In addition to the Trust (including its other portfolios
Oppenheimer Quest Growth & Income Value Fund, Oppenheimer Quest
Opportunity Value Fund and Oppenheimer Quest Officers Value Fund),
all of the Trustees are also trustees or directors of Oppenheimer
Quest Value Fund, Inc., Oppenheimer Quest Global Value Fund, Inc.
(collectively, with the Fund and the Trust's other portfolios,
"Oppenheimer Quest Funds") and Limited-Term New York Municipal
Fund, Bond Fund Series - Oppenheimer Bond Fund For Growth and
Rochester Fund Municipals (collectively, the "Oppenheimer Rochester
Funds"). As of January 3, 1997, the trustees and officers of the
Trust as a group owned less than 1% of the outstanding shares of
each class of the Fund. The foregoing does not include shares held
of record by an employee benefit plan for employees of the Manager
for which one of the officers listed below, Mr. Donohue, is a
trustee, other than the shares beneficially owned under that plan
by the officers of the Fund listed below.
Bridget A. Macaskill, Chairman of the Board of Trustees and
President; Age: 48.
President, Chief Executive Officer and a Director of the Manager
and HarbourView Asset Management Corporation ("HarbourView"), a
subsidiary of the Manager; President and a Director of Oppenheimer
Acquisition Corp. ("OAC") the Manager's parent holding company, and
Oppenheimer Partnership Holdings, Inc.; Chairman and a Director of
Shareholder Services, Inc. ("SSI"), a transfer agent subsidiary of
the Manager and Shareholder Financial Services, Inc. ("SFSI"); and
a director of Oppenheimer Real Asset Management, Inc.
Paul Y. Clinton, Trustee; Age: 66
39 Blossom Avenue, Osterville, Massachusetts 02655
Principal of Clinton Management Associates, a financial and venture
capital consulting firm; Trustee of Capital Cash Management Trust,
a money-market fund and Narraganssett Tax-Free Fund, a tax-exempt
bond fund; Director of Quest Cash Reserves, Inc. and Trustee of
Quest For Value Accumulation Trust, all of which are open-end
investment companies. Formerly: Director, External Affairs,
Kravco Corporation, a national real estate owner and property
management corporation; President of Essex Management Corporation,
a management consulting company; a general partner of Capital
Growth Fund, a venture capital partnership; a general partner of
Essex Limited Partnership, an investment partnership; President of
Geneve Corp., a venture capital fund; Chairman of Woodland Capital
Corp., a small business investment company; and Vice President of
W.R. Grace & Co.
Thomas W. Courtney, Trustee; Age: 63
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
and Quest for Value Accumulation Trust; Director of Quest Cash
Reserves, Inc., each of which are open-end investment companies;
former President of Boston Company Institutional Investors; Trustee
of Hawaiian Tax-Free Trust and Tax Free Trust of Arizona, tax-
exempt bond funds; Director of several privately owned corpora-
tions; former Director of Financial Analysts Federation.
Lacy B. Herrmann, Trustee; Age: 67
380 Madison Avenue, Suite 2300, New York, New York 10017
President and Chairman of the Board of Aquila Management
Corporation, the sponsoring organization and Administrator and/or
Sub-Adviser to the following open-end investment companies, and
Chairman of the Board of Trustees and President of each: Churchill
Cash Reserves Trust, Short Term Asset Reserves, Pacific Capital
Cash Assets Trust, Pacific Capital U.S. Treasuries Cash Assets
Trust, Pacific Capital Tax-Free Cash Assets Trust, Prime Cash Fund,
Narragansett Insured Tax-Free Income Fund, Tax-Free Fund For Utah,
Churchill Tax-Free Fund of Kentucky, Tax-Free Fund of Colorado,
Tax-Free Trust of Oregon, Tax-Free Trust of Arizona, Hawaiian Tax-
Free Trust, and Aquila Rocky Mountain Equity Fund; Vice President,
Director, Secretary, and formerly Treasurer of Aquila Distributors,
Inc., distributor of the above funds; President and Chairman of the
Board of Trustees of Capital Cash Management Trust ("CCMT"), and an
Officer and Trustee/Director of its predecessors; President and
Director of STCM Management Company, Inc., sponsor and adviser to
CCMT; Chairman, President and a Director of InCap Management
Corporation, formerly sub-adviser and administrator of Prime Cash
Fund and Short Term Asset Reserves; Director 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: 82
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.
Robert C. Doll, Jr., Vice President; Age: 42
Executive Vice President and Director of Equity Investments of the
Manager; a Vice President and a director of OAC and an officer and
Portfolio Manager of other Oppenheimer funds.
Andrew J. Donohue, Secretary; Age: 46
Executive Vice President and General Counsel of the Manager and
OppenheimerFunds Distributor, Inc. (the "Distributor"); President
and a director of Centennial; Executive Vice
President, General Counsel and a director of HarbourView, SFSI, SSI
and Oppenheimer Partnership Holdings Inc.; President and a director
of Real Asset Management, Inc.; General Counsel of OAC; Executive
Vice President, Chief Legal Officer and a director of MultiSource
Services, Inc. (a broker-dealer) 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: 60
6803 South Tucson Way, Englewood, Colorado 80012
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; Senior Vice
President and Secretary of SSI; Vice President, Treasurer and
Secretary of SFSI, a transfer agent subsidiary of the Manager; Vice
President and Treasurer of Oppenheimer Real Asset Management, Inc.,
Chief Executive Officer, Treasurer and a director of MultiSource
Services, Inc. (a broker-dealer); an officer of other Oppenheimer
funds.
Gavin Albert, Portfolio Manager; Age: 28
Two World Financial Center, 225 Liberty Street, New York, New York
10080
Vice President of Oppenheimer Capital; formerly, a research analyst
with Oppenheimer Capital, prior to which (in reverse chronological
order) he was a management consultant for EDS Energy Management
(management consulting firm), a graduate student at the Vanderbilt
University Business School and a financial analyst in the Corporate
Finance department of Texaco, Inc. (integrated oil and gas
company).
Timothy Curro, Portfolio Manager; Age: 37
Two World Financial Center, 225 Liberty Street, New York, New York
10080
Vice President of Oppenheimer Capital; formerly a general partner
of Value Holdings, L.P., an investment partnership, prior to which
he was a Vice President in the equity research department at UBS
Securities Inc. (investment management ) and a partner with Omega
Advisors, Inc. (investment management).
Timothy McCormack, Portfolio Manager; Age: 32
Two World Financial Center, 225 Liberty Street, New York, New York
10080
Vice President of Oppenheimer Capital; formerly a securities
analyst at U.S. Trust Company (investment management) and prior
thereto a securities analyst at Gabelli & Company (invesment
management).
Robert Bishop, Assistant Treasurer; Age: 38
6803 South Tucson Way, Englewood, Colorado 80012
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: 31
6803 South Tucson Way, Englewood, Colorado 80012
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly a Fund Controller for the
Manager.
Robert G. Zack, Assistant Secretary; Age: 48
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; an officer of other
Oppenheimer funds.
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 remaining Trustees
of the Fund received the total amounts shown below from (i) the
Fund during its fiscal year ended October 31, 1996 and (ii) other
investment companies (or series thereof) managed by the Manager and
the Sub-Adviser paid during the calendar year ended December 31,
1996.
<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(1)
<S> <C> <C> <C> <C>
Paul Y. Clinton $5,627 None None $90,225
Thomas W. Courtney $5,627 None None $87,525
Lacy B. Herrmann $5,627 None None $90,225
George Loft $5,627 None None $95,700
(1) For the purpose of the chart above, "Fund Complex" includes the Fund, the other
Oppenheimer Quest Funds, the Oppenheimer Rochester Funds and three other funds advised by the
Sub-Adviser (the Sub-Adviser Funds ). For these purposes, each series constitutes a
separate fund. Messrs. Clinton, Courtney and Herrmann served as directors or trustees of two
Sub-Adviser Funds, for which they are to receive $38,550, $35,850 and $38,550, respectively,
and Mr. Loft served as a director or trustee of three Sub-Adviser Funds, for which he is to
receive $44,025.
</TABLE>
Major Shareholders. As of February 3, 1997, no person
owned of record or was known by the Fund to own beneficially 5% or
more of the Fund's outstanding Class A, Class B or Class C shares
except Oppenheimer Capital Accumulation Omnibus Plan, Oppenheimer
Tower, One World Financial Center, New York, New York 10281-1003,
which owned of record 419,428.737 Class A shares (approximately
6.82% of the Class A shares then outstanding).
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 obligated to
report to the Manager any violations of the Sub-Adviser's Code of
Ethics relating to the Fund. The Code of Ethics is designed to
detect and prevent improper personal trading by certain employees,
including the Fund's portfolio manager, who is an employee of the
Sub-Adviser, that would compete with or take advantage of the
Funds' portfolio transactions. Compliance with the Code of Ethics
is carefully monitored and strictly enforced by the Manager.
The Investment Advisory Agreement. The Manager acts as
investment adviser to the Fund pursuant to the terms of an
Investment Advisory Agreement dated as of November 22, 1995. The
Sub-Adviser previously served as the Fund's investment adviser from
the Fund's inception (January 3, 1989) 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 at an annual rate
$55,000, plus reimbursement for out-of-pocket expenses.
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. For the
fiscal period from November 24, 1995 (when the Manager became the
investment adviser to the Fund) to October 31, 1996 (the "Fiscal
Period"), the Fund paid to the Manager $1,467,707 in management
fees and paid or accrued accounting services fees to the Manager in
the amount of $51,634.
The Investment Advisory Agreement contains no expense
limitation. However, because of state regulations limiting fund
expenses that previously applied, the Manager had 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) would
not exceed the most stringent state regulatory limitation
applicable to the Fund. Due to changes in federal securities laws,
such state regulations no longer apply and the Manager s
undertaking is therefore inapplicable and has been withdrawn.
During the Fund s last fiscal year, the Fund s expenses did not
exceed the most stringent state regulatory limit and the voluntary
undertaking was not invoked.
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 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.
Fees Paid Under the Prior Investment Advisory Agreement.
The Sub-Adviser 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 $1,260,578 for the fiscal year ended October 31, 1994,
$1,456,594 for the fiscal year ended October 31, 1995 and $90,775
for the fiscal period November 1, 1995 to November 22, 1995 (the
"Interim Period").
For the fiscal years ended October 31, 1994 and 1995, and the
Interim Period, the Fund paid or accrued accounting services fees
to the Sub-Adviser in the amounts of $67,578 and $53,951, and
$2,292, 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, 1994 and 1995
in the amounts of $55,000 and $55,000 respectively; no fees were
accrued or paid with respect to the Interim Period.
The Subadvisory Agreement. The Subadvisory Agreement
provides that 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, 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 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. 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, 1996, the aggregate amount of
sales charges on sales of the Fund's Class A shares was $299,727 of
which the Distributor and affiliated brokers retained $115,180; no
amounts were retained by OCC Distributors, the Fund's distributor
prior to November 22, 1995. During the fiscal year ended October
31, 1996, the Distributor received contingent deferred sales
charges of $99,115 upon redemption of Class B shares, and received
contingent deferred sales charges of $3,583, 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 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 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 on behalf of the Manager. Soft dollar arrangements
for services may be entered into in order to facilitate an
improvement in performance in respect of the Sub-Adviser's service
to the Manager with respect to the Fund. Pursuant to these
arrangements, the Sub-Adviser will undertake to place brokerage
business with broker-dealers who pay third parties that provide
these services. Any such soft dollar arrangements will be made in
accordance with policies adopted by the Manager and the Board of
the Fund and in compliance with Section 28(e) of the Securities
Exchange Act of 1934, as amended.
Description of Brokerage Practices. Portfolio decisions are based
upon recommendations of the portfolio manager and the judgment of
the portfolio managers. The Fund will pay brokerage commissions on
transactions in listed options and equity securities. Prices of
portfolio securities purchased from underwriters of new issues
include a commission or concession paid by the issuer to the
underwriter, and prices of debt securities purchased from dealers
include a spread between the bid and asked prices.
Transactions may be directed to dealers during the course of
an underwriting in return for their brokerage and research
services, which are intangible and on which no dollar value can be
placed. There is no formula for such allocation. The research
information may or may not be useful to one or more of the Fund
and/or other accounts of the Manager or the Sub-Adviser;
information received in connection with directed orders of other
accounts managed by the Manager or the Sub-Adviser or its
affiliates may or may not be useful to one or more of the Funds.
Such information may be in written or oral form and includes
information on particular companies and industries as well as
market, economic or institutional activity areas. It serves to
broaden the scope and supplement the research activities of the
Manager or the Sub-Adviser, to make available additional views for
consideration and comparison, and to enable the Manager or the Sub-
Adviser to obtain market information for the valuation of
securities held in the Fund's assets.
Sales of shares of the Fund, subject to applicable rules
covering the Distributor's activities in this area, will also be
considered as a factor in the direction of portfolio transactions
to dealers, but only in conformity with the price, execution and
other considerations and practices discussed above. The Fund will
not purchase any securities from or sell any securities to an
affiliated broker-dealer including Oppenheimer & Co., Inc.
("Opco"), an affiliate of the Sub-Adviser, acting as principal for
its own account.
The Sub-Adviser currently serves as investment manager to a
number of clients, including other investment companies, and may in
the future act as investment manager or advisor to others. It is
the practice of the Sub-Adviser to cause purchase or sale
transactions to be allocated among the Fund and others whose assets
it manages in such manner as it deems equitable. In making such
allocations among the Fund and other client accounts, the main
factors considered are the respective investment objectives, the
relative size of portfolio holdings of the same or comparable
securities, the availability of cash for investment, the size of
investment commitments generally held and the opinions of the
persons responsible for managing the portfolios of each Fund and
other client accounts.
When orders to purchase or sell the same security on
identical terms are placed by more than one of the funds and/or
other advisory accounts managed by the Sub-Adviser or its
affiliates, the transactions are generally executed as received,
although a fund or advisory account that does not direct trades to
a specific broker ("free trades") usually will have its order
executed first. Purchases are combined where possible for the
purpose of negotiating brokerage commissions, which in some cases
might have a detrimental effect on the price or volume of the
security in a particular transaction as far as the Fund is
concerned. Orders placed by accounts that direct trades to a
specific broker will generally be executed after the free trades.
All orders placed on behalf of the Fund are considered free trades.
However, having an order placed first in the market does not
necessarily guarantee the most favorable price.
The following table presents information as to the allocation
of brokerage commissions paid by the Fund for the fiscal years
ended October 31, 1994, 1995 and 1996:
<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>
1994 $300,037 $143,991 48.0% $44,408,800 48.5%
1995 $400,477 $161,399 40.3% $52,738,643 36.6%
1996 $362,454 $147,765 40.8% $61,029,692 29.1%
</TABLE>
During the Fund's fiscal year ended October 31, 1996,
$17,963 was paid by the Fund to brokers as commissions in return
for research services; the aggregate dollar amount of those
transactions was $7,497,014.
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 advertised class 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, 1996 and for the period
from January 3, 1989 (commencement of operations) to October 31,
1996 were 10.43%, 11.80% and 11.91%, respectively.
The average annual total returns on Class B shares for the
one-year period ended October 31, 1996 and for the period September
1, 1993 (commencement of the public offering of the class) through
October 31, 1996 were 11.57% and 7.85%, respectively.
The average annual total returns on Class C shares for the
one-year period ended October 31, 1996 and for the period September
1, 1993 (commencement of the public offering of the class) through
October 31, 1996 were 15.55% and 8.38%, 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,
1996 was 141.28%. 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, 1996 was 27.04%. 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, 1996 was 29.02%.
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, 1996 and for the period from January 1, 1989
(commencement of operations) to October 31, 1996 were 17.17%,
13.13% and 12.76%, 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, 1996 was 156%.
The average annual total returns at net asset value on the
Fund's Class B shares for the one year period ended October 31,
1996 and for the period from September 1, 1993 (commencement of the
public offering of the class) through October 31, 1996 were 16.57%
and 8.38%, 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, 1996 was 29.04%.
The average annual total returns at net asset value on the
Fund's Class C shares for the one-year period ended October 31,
1996 and for the period September 1, 1993 (commencement of the
public offering of the class) through October 31, 1996 were 16.55%
and 8.38%, 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, 1996 was 29.02%.
Other Performance Comparisons. From time to time the Fund may
publish the ranking of its Class A, Class B or Class C shares by
Lipper Analytical Services, Inc. ("Lipper"), a widely-recognized
independent mutual fund monitoring service. Lipper monitors the
performance of regulated investment companies, including the Fund,
and ranks their performance for various periods based on categories
relating to investment objectives. The performance of the Fund is
ranked against (i) all other funds and (ii) all other small company
growth funds. The Lipper performance rankings are based on total
returns that include the reinvestment of capital gain distributions
and income dividends but do not take sales charges or taxes into
consideration.
From time to time the Fund may publish the star ranking of the
performance of its Class A, Class B or Class C shares by
Morningstar Inc., an independent mutual fund monitoring service.
Morningstar ranks mutual funds in broad investment categories:
domestic stock funds, international stock funds, taxable bond funds
and municipal bond funds, based on risk-adjusted total investment
returns. The Fund is ranked among small company growth funds.
Investment return measure a fund's or class's one, three, five and
ten-year average annual total returns (depending on the inception
of the fund or class) in excess of 90-day U.S. Treasury bill
returns after considering the fund's sales charges and expenses.
Risk measure a fund's class performance below 90-day U.S. Treasury
bill returns. Risk and investment return are combined to produce
star rankings reflecting performance relative to the average fund
in the fund's category. Five stars is the "highest" ranking (top
10%), four stars is "above average" (next 22.5%), three stars is
"average" (next 35%), two stars is "below average" (next 22.5%) and
one star is "lowest" (bottom 10%). The current star rankings is
the fund's or class's 3-year ranking or its combined 3 and 5-year
ranking (weighted 60%/40% respectively, or its combined 3-,5-and
10-year ranking (weighted 40%, 30% and 30%, respectively) depending
on the inception of the fund or class. Rankings are subject to
change monthly.
The Fund may also compare its performance to that of other
funds in its Morningstar Category. In addition to its star
rankings, Morningstar also categorizes and compares a fund's 3-year
performance on Morningstar's classification of the fund's
investments and investment style, rather than how a fund defines
its investment objective. Morningstar's four broad categories
(domestic equity, international equity, municipal bond and taxable
bond) are each further subdivided into categories based on types of
investments and investment styles. Those comparison by Morningstar
are based on the same risk and return measurements as its star
rankings but do not consider the effect of sales charges.
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 the Russell 2000 Index as described in the Prospectus.
The performance of the index includes a factor for the reinvestment
of income dividends, but does not reflect reinvestment of capital
gains, expenses or taxes.
The performance of the Fund's Class A, Class B, or Class C
shares may also be compared in publications to (i) the performance
of various market indices or to other investments for which
reliable performance data is available, and (ii) to averages,
performance rankings or other benchmarks prepared by recognized
mutual fund statistical services.
Total return information may be useful to investors in
reviewing the performance of the Fund's Class A, Class B or Class
C shares. However, when comparing total return of an investment in
Class A, Class B and Class C shares of the Fund, a number of
factors should be considered before using such information as a
basis for comparison with other investments. For example, an
investor may also wish to compare the Fund's Class A, Class B 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 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 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 at no cost to the Fund. The
Distributor and the Manager may, in their sole discretion, increase
or decrease the amount of payments they make from their own
resources to Recipients.
Unless terminated as described below, each plan continues in
effect from year to year but only as long as such continuance is
specifically approved at least annually by the 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 by a Securities and Exchange Commission rule to obtain
the approval of Class B as well as Class A shareholders for a
proposed material amendment to the Class A Plan that would
materially increase payments under the Plan. Such approval must be
by a "majority" of the Class A and Class B shares (as defined in
the Investment Company Act), voting separately by class. All
material amendments must be approved by the Board of 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 Class B and Class C Plans are subject to the
limitations imposed by the Conduct Rules of the National
Association of Securities Dealers, Inc. on payments of asset-based
sales charges and service fees.
For the Fiscal Period, (i) payments under the Plan for Class
A shares totaled $588,072, of which $139,245 was retained by the
Distributor and $1,102 that was paid to an affiliate of the
Distributor, (ii) payments made under the Class B Plan totaled
$264,640, of which $206,892 was retained by the Distributor and
$31 was paid to a dealer affiliated with the Distributor and (iii)
payments made under the Class C plan amounted to $115,068, of which
$65,837 was retained by the Distributor and $28 was paid to a
dealer affiliated with the Distributor. The Plans provide for the
Distributor to be compensated at a flat rate, whether the
Distributor's expenses are more or less than the amounts paid by
the Fund during that period. The asset-based sales charges paid to
the Distributor by the Fund under the Plans are intended to allow
the Distributor to recoup the cost of sales commissions paid to
authorized brokers and dealers at the time of sale, plus financing
costs, as described in the Prospectus. Such payments may also be
used to pay for the following expenses in connection with the
distribution of shares: (i) financing the advance of the service
fee payment to Recipients under the Plans, (ii) compensation and
expenses of personnel employed by the Distributor to support
distribution of shares, and (iii) costs of sales literature,
advertising and prospectuses (other than those furnished to current
shareholders).
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 Interim Period were $35,489, $114,295 and $5,503, respectively.
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 an
individual investor to choose the method of purchasing shares that
is more beneficial to the investor depending on the amount of the
purchase, the length of time the investor expects to hold shares
and other relevant circumstances. Investors should understand that
the purpose and function of the deferred sales charge and asset-
based sales charge with respect to Class B and Class C shares are
the same as those of the initial sales charge with respect to Class
A shares. Any salesperson or other person entitled to receive
compensation for selling Fund shares may receive different
compensation with respect to one class of shares than another. The
Distributor will generally not accept any order for $500,000 or
more of Class B shares or $1 million or more of Class C shares, on
behalf of a single investor (not including dealer "street name" or
omnibus accounts) because generally it will be more advantageous
for that investor to purchase Class A shares of the Fund instead.
The three classes of shares each represent an interest in the
same portfolio investments of the Fund. However, each class has
different shareholder privileges and features. The net income
attributable to Class B and Class C shares and the dividends
payable on Class B and Class C shares will be reduced by
incremental expenses borne solely by that class, respectively,
including the asset-based sales charges to which Class B and Class
C shares are subject.
The conversion of Class B shares to Class A shares after six
years is subject to the continuing availability of a private letter
ruling from the Internal Revenue Service, or an opinion of counsel
or tax adviser, to the effect that the conversion of Class B shares
does not constitute a taxable event for the holder under Federal
income tax law. If such a revenue ruling or opinion is no longer
available, the automatic conversion feature may be suspended, in
which event no further conversions of Class B shares would occur
while such suspension remained in effect. Although Class B shares
could then be exchanged for Class A shares on the basis of relative
net asset value of the two classes, without the imposition of a
sales charge or fee, such exchange could constitute a taxable event
for the holder, and absent such exchange, Class B shares might
continue to be subject to the asset-based sales charge for longer
than six years.
The methodology for calculating the net asset value, dividends
and distributions of the Fund's Class A, Class B and Class C shares
recognizes two types of expenses. General expenses that do not
pertain specifically to any class are allocated pro rata to the
shares of each class, based on the percentage of the net assets of
such class to the Fund's total net assets, and then equally to each
outstanding share within a given class. Such general expenses
include (i) management fees, (ii) legal, bookkeeping and audit
fees, (iii) printing and mailing costs of shareholder reports,
Prospectuses, Statements of Additional Information and other
materials for current shareholders, (iv) fees to Independent
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 (a) Distribution and Service Plan
fees, (b) incremental transfer and shareholder servicing agent fees
and expenses, (c) registration fees and (d) shareholder meeting
expenses, to the extent that such expenses pertain to a specific
class rather than to the Fund as a whole.
Determination of Net Asset Values Per Share. The net asset values
per share of Class A, Class B and Class C shares of the Fund are
determined as of the close of business of The New York Stock
Exchange (the "Exchange") on each day that the Exchange is open, by
dividing the value of the Fund's net assets attributable to that
class by the total number of Fund shares of that class outstanding.
The Exchange normally closes at 4:00 P.M. New York time, but may
close earlier on some other days (for example, in case of weather
emergencies or days falling before a holiday). The Exchange's most
recent annual announcement (which is subject to change) states that
it will close on New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. It may also close on other days. The Fund may
invest a substantial portion of its assets in foreign securities
primarily listed on foreign exchanges which may trade on Saturdays
or customary U.S. business holidays on which the Exchange is
closed. Because the Fund's net asset values will not be calculated
on those days, the Fund's net asset value per share may be
significantly affected on such days when shareholders may not
purchase or redeem shares.
The 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 U.S. securities exchange or on the
Automated Quotation System ("NASDAQ") of the Nasdaq Stock Market,
Inc. for which last sale information is regularly reported are
valued at the last reported sale price on their primary exchange or
NASDAQ that day (or, in the absence of sales that day, at values
based on the last sale prices of the preceding trading day, or
closing bid prices that day); (ii) securities traded on a foreign
securities exchange are valued generally at the last sale 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; or at the mean between "bid" and
"asked" prices obtained from the principal exchange or two active
market makers in the security on the basis of reasonable inquiry;
(iii) long-term debt securities having a remaining maturity in
excess of 60 days are valued based on the mean between the "bid"
and "asked" prices determined by a portfolio pricing service
approved by the Trust's Board of Trustees or obtained by the
Manager from two active market makers in the security on the basis
of reasonable inquiry; (iv) debt instruments having a maturity of
more than 397 days when issued, and non-money market type
instruments having a maturity of 397 days or less when issued,
which have a remaining maturity of 60 days or less are valued at
the mean between the "bid" and "asked" prices determined by a
pricing service approved by the Trust's Board of Trustees or
obtained from active market makers in the security on the basis of
reasonable inquiry; (v) money market debt securities that had a
maturity of less than 397 days when issued that have a remaining
maturity of 60 days or less are valued at cost, adjusted for
amortization of premiums and accretion of discounts; and (vi)
securities (including restricted securities) not having readily-
available market quotations are valued at fair value determined
under the Board's procedures. If the Manager is unable to locate
two market makers willing to give quotes (see (ii), (iii) and (iv)
above), the security may be priced at the mean between the "bid"
and "asked" prices provided by a single active market maker (which
in certain cases may be the bid price if no ask price is
available).
In the case of U.S. Government securities and mortgage-backed
securities, where last sale information is not generally available,
such pricing procedures may include "matrix" comparisons to the
prices for comparable instruments on the basis of quality, yield,
maturity and other special factors involved. The Manager may use
pricing services approved by the Board of Trustees to price any of
the types of securities described above to price U.S. Government
securities, mortgage-backed securities, foreign government
securities and corporate bonds. The Manager will monitor the
accuracy of such pricing services, which may include comparing
prices used for portfolio evaluation to actual sales prices of
selected securities.
Trading in securities on European and Asian exchanges and
over-the-counter markets is normally completed before the close of
the Exchange. Events affecting the values of foreign securities
traded in such 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 sale price on
the principal exchanges on which they are traded or on NASDAQ, as
applicable, as determined by a pricing service approved by the
Board of Trustees or by the Manager. If there were no sales that
day, value shall be the last sale price on the preceding trading
day if it is within the spread of the closing bid and ask prices
on the principal exchange or on NASDAQ on the valuation date, or,
if not, value shall be the closing bid price on the principal
exchange or on NASDAQ on the valuation date. If the put, call or
future is not traded on an exchange or on NASDAQ, it shall be
valued at the mean between bid and ask prices obtained by the
Manager from two active market makers (which in certain cases may
be the bid price if no ask price is available).
When the Fund writes an option, an amount equal to the premium
received by the Fund is included in the Fund's Statement of Assets
and Liabilities as an asset, and an equivalent deferred credit is
included in the liability section. Credit is adjusted ("marked-to-
market") to reflect the current market value of the option. In
determining the Fund's gain on investments, if a call or put
written by the Fund is exercised, the proceeds are increased by the
premium received. If a call or put written by the Fund expires,
the Fund has a gain in the amount of the premium; if the Fund
enters into a closing purchase transaction, it will have a gain or
loss depending on whether the premium received was more or less
than the cost of the closing transaction. If the Fund exercises a
put it holds, the amount the Fund receives on its sale of the
underlying investment is reduced by the amount of premium paid by
the Fund.
AccountLink. When shares are purchased through AccountLink, each
purchase must be at least $25.00. Shares will be purchased on the
regular business day the Distributor is instructed to initiate the
Automated Clearing House ("ACH") transfer to buy the shares.
Dividends will begin to accrue on shares purchased by the proceeds
of ACH transfers on the business day the Fund receives Federal
Funds for the purchase through the ACH system before the close of
The New York Stock Exchange. The Exchange normally closes at 4:00
P.M., but may close earlier on certain days. If Federal Funds are
received on a business day after the close of the Exchange, the
shares will be purchased and dividends will begin to accrue on the
next regular business day. The proceeds of ACH transfers are
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, aunts, uncles, nieces
and nephews, siblings, a sibling's spouse and a spouse's siblings.
The Oppenheimer Funds. The Oppenheimer funds are those
mutual funds for which the Distributor acts as the distributor or
the sub-distributor and include the following:
Oppenheimer Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer California Municipal Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer Insured Municipal Fund
Oppenheimer Main Street California Municipal Fund
Oppenheimer Florida Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Multiple Strategies Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion Income Fund
Oppenheimer Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer International Bond Fund
Oppenheimer International Growth 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.
Limited-Term New York Municipal Fund*
Oppenheimer Bond Fund For Growth
Rochester Fund Municipals*
Oppenheimer Disciplined Value Fund
Oppenheimer Disciplined Allocation Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Income Fund
Oppenheimer LifeSpan Growth Fund
Oppenheimer Developing Markets Fund
____________________
* Shares of the Fund are not presently exchangeable for shares of
this fund.
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
There is an initial sales charge on the purchase of Class A
shares of each the Oppenheimer funds except Money Market Funds
(under certain circumstances described herein, redemption proceeds
of Money Market Fund shares may be subject to a contingent
deferred sales charge).
Letters of Intent. A Letter of Intent ("Letter") is the
investor's statement in writing to the Distributor of the intention
to purchase Class A and Class B shares (or shares of either class)
of the Fund (and other eligible Oppenheimer funds) during the 13-
month period from the investor's first purchase pursuant to the
Letter (the "Letter of Intent period"), which may, at the
investor's request, include purchases made up to 90 days prior to
the date of the Letter. The Letter states the investor's intention
to make the aggregate amount of purchases (excluding any purchases
made by reinvestment of dividends or distributions or purchases
made at net asset value without sales charge), which together with
the investor's holdings of such funds (calculated at their
respective public offering prices calculated on the date of the
Letter) will equal or exceed the amount specified in the Letter.
This enables the investor to count the shares to be purchased under
the Letter of Intent to obtain the reduced sales charge rate on
purchases of Class A shares of the Fund (and other Oppenheimer
funds) that applies under the Right of Accumulation to current
purchases of Class A shares. Each purchase of Class A shares under
the Letter will be made at the public offering price (including the
sales charge) that applies to a single lump-sum purchase of shares
in the amount intended to be purchased under the Letter.
In submitting a Letter, the investor makes no commitment to
purchase shares, but if the investor's purchases of shares within
the Letter of Intent period, when added to the value (at offering
price) of the investor's holdings of shares on the last day of that
period, do not equal or exceed the intended purchase amount, the
investor agrees to pay the additional amount of sales charge
applicable to such purchases, as set forth in "Terms of Escrow,"
below (as those terms may be amended from time to time). The
investor agrees that shares equal in value to 5% of the intended
purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be
bound by the terms of the Prospectus, this Statement of Additional
Information and the Application used for such Letter of Intent, and
if such terms are amended, as they may be from time to time by the
Fund, that those amendments will apply automatically to existing
Letters of Intent.
For purchases of shares of the Fund and other Oppenheimer
funds by OppenheimerFunds prototype 401(k) plans under a Letter of
Intent, the Transfer Agent will not hold shares in escrow. If the
intended purchase amount under the Letter entered into by an
OppenheimerFunds prototype 401(k) plan is not purchased by the plan
by the end of the Letter of Intent period, there will be no
adjustment of commissions paid to the broker-dealer or financial
institution of record for accounts held in the name of that plan.
If the total eligible purchases made during the Letter of
Intent period do not equal or exceed the intended purchase amount,
the commissions previously paid to the dealer of record for the
account and the amount of sales charge retained by the Distributor
will be adjusted to the rates applicable to actual total purchases.
If total eligible purchases during the Letter of Intent period
exceed the intended purchase amount and exceed the amount needed to
qualify for the next sales charge rate reduction set forth in the
applicable prospectus, the sales charges paid will be adjusted to
the lower rate, but only if and when the dealer returns to the
Distributor the excess of the amount of commissions allowed or paid
to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the
Distributor will be used to purchase additional shares for the
investor's account at the net asset value per share in effect on
the date of such purchase, promptly after the Distributor's receipt
thereof.
In determining the total amount of purchases made under a
Letter, shares redeemed by the investor prior to the termination of
the Letter of Intent period will be deducted. It is the
responsibility of the dealer of record and/or the investor to
advise the Distributor about the Letter in placing any purchase
orders for the investor during the Letter of Intent period. All
of such purchases must be made through the Distributor.
Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in
value up to 5% of the intended purchase amount specified in the
Letter shall be held in escrow by the Transfer Agent. For example,
if the intended purchase amount is $50,000, the escrow shall be
shares valued in the amount of $2,500 (computed at the public
offering price adjusted for a $50,000 purchase). Any dividends and
capital gains distributions on the escrowed shares will be credited
to the investor's account.
2. If the total minimum investment purchase amount specified
under the Letter is completed within the thirteen-month Letter of
Intent period, the escrowed shares will be promptly released to the
investor.
3. If, at the end of the thirteen-month Letter of Intent
period the total purchases pursuant to the Letter are less than the
intended purchase amount specified in the Letter, the investor must
remit to the Distributor an amount equal to the difference between
the dollar amount of sales charges actually paid and the amount of
sales charges which would have been paid if the total amount
purchased had been made at a single time. Such sales charge
adjustment will apply to any shares redeemed prior to the
completion of the Letter. If such difference in sales charges is
not paid within twenty days after a request from the Distributor or
the dealer, the Distributor will, within sixty days of the
expiration of the Letter, redeem the number of escrowed shares
necessary to realize such difference in sales charges. Full and
fractional shares remaining after such redemption will be released
from escrow. If a request is received to redeem escrowed shares
prior to the payment of such additional sales charge, the sales
charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably
constitutes and appoints the Transfer Agent as attorney-in-fact to
surrender for redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the
holding of which may be counted toward completion of a Letter)
include (a) Class A shares sold with a front-end sales charge or
subject to a Class A contingent deferred sales charge, (b) Class B
shares of other Oppenheimer funds acquired subject to a contingent
deferred sales charge, and (c) Class A shares or Class B shares
acquired in exchange for either (i) Class A shares of one of the
other Oppenheimer funds that were acquired subject to a Class A
initial or contingent deferred sales charge or (ii) Class B shares
of one of the other Oppenheimer funds that were acquired subject to
a contingent deferred sales charge.
6. Shares held in escrow hereunder will automatically be
exchanged for shares of another fund to which an exchange is
requested, as described in the section of the Prospectus entitled
"Shareholder Account Rules and Policies," 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. If you make payments from your bank account to
purchase shares of the Fund, your bank account will be
automatically debited normally four to five days prior to the
investment dates selected in the Account Application. Neither the
Distributor, the Transfer Agent nor the Fund shall be responsible
for any delays in purchasing shares resulting from delays in ACH
transmission.
There is a front-end sales charge on the purchase of certain
Oppenheimer funds, or a contingent deferred sales charge may apply
to shares purchased by Asset Builder payments. An application
should be obtained from the Distributor, completed and returned,
and a prospectus of the selected fund(s) should be obtained from
the Distributor or your financial advisor before initiating Asset
Builder payments. The amount of the Asset Builder investment may
be changed or the automatic investments may be terminated at any
time by writing to the Transfer Agent. A reasonable period
(approximately 15 days) is required after the Transfer Agent's
receipt of such instructions to implement them. The Fund reserves
the right to amend, suspend, or discontinue offering such plans at
any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders
for the Fund's shares (for example, when a purchase check is
returned to the Fund unpaid) causes a loss to be incurred when the
net asset value of the Fund's shares on the cancellation date is
less than on the purchase date. That loss is equal to the amount
of the decline in the net asset value per share multiplied by the
number of shares in the purchase order. The investor is
responsible for that loss. If the investor fails to compensate the
Fund for the loss, the Distributor will do so. The Fund may
reimburse the Distributor for that amount by redeeming shares from
any account registered in that investor's name, or the Fund or the
Distributor may seek other redress.
Retirement Plans. In describing certain types of employee
benefit plans that may purchase Class A shares without being
subject to the Class A contingent differed sales charge, the term
"employee benefit plan" means any plan or arrangement, whether or
not "qualified" under the Internal Revenue Code, including, medical
savings accounts, payroll deduction plans or similar plans in which
Class A shares are purchased by a fiduciary or other person for the
account of participants who are employees of a single employer or
of affiliated employers, if the Fund account is registered in the
name of the fiduciary or other person for the benefit of
participants in the plan.
The term "group retirement plan" means any qualified or non-
qualified retirement plan (including 457 plans, SEPs, SARSEPs,
403(b) plans, and SIMPLE plans) for employees of a corporation or
a sole proprietorship, members and employees of a partnership or
association or other organized group of persons (the members of
which may include other groups), if the group has made special
arrangements with the Distributor and all members of the group
participating in the plan purchase Class A shares of the Fund
through a single investment dealer, broker or other financial
institution designated by the group.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and
conditions for redemptions set forth in the Prospectus.
Involuntary Redemptions. The Board of Directors has the
right to cause the involuntary redemption of the shares held in any
Fund account if the aggregate net asset value of those shares is
less than $500 or such lesser amount as the Board may fix. The
Board of Directors will not cause the involuntary redemption of
shares in an account if the aggregate net asset value of the shares
has fallen below the stated minimum solely as a result of market
fluctuations. Should the Board elect to exercise this right, it
may also fix, in accordance with the 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 that you purchased subject to an initial sales
charge or Class A contingent deferred sales charge, or (ii) Class
B shares on which you paid a contingent deferred sales charge when
you redeemed them. This privilege does not apply to Class C
shares. The reinvestment may be made without sales charge only in
Class A shares of the Fund or any of the other Oppenheimer funds
into which shares of the Fund are exchangeable as described in "How
to Exchange Shares" below, at the net asset value next computed
after the Transfer Agent receives the reinvestment order. The
shareholder must ask the Distributor for that privilege at the time
of reinvestment. Any capital gain that was realized when the
shares were redeemed is taxable, and reinvestment will not alter
any capital gains tax payable on that gain. If there has been a
capital loss on the redemption, some or all of the loss may not be
tax deductible, depending on the timing and amount of the
reinvestment. Under the Internal Revenue Code, if the redemption
proceeds of Fund shares on which a sales charge was paid are
reinvested in shares of the Fund or another of the Oppenheimer
funds within 90 days of payment of the sales charge, the
shareholder's basis in the shares of the Fund that were redeemed
may not include the amount of the sales charge paid. That would
reduce the loss or increase the gain recognized from the
redemption. However, in that case the sales charge would be added
to the basis of the shares acquired by the reinvestment of the
redemption proceeds. The Fund may amend, suspend or cease offering
this reinvestment privilege at any time as to shares redeemed after
the date of such amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of any class at the time of
transfer to the name of another person or entity (whether the
transfer occurs by absolute assignment, gift or bequest, not
involving, directly or indirectly, a public sale). The transferred
shares will remain subject to the contingent deferred sales charge,
calculated as if the transferee shareholder had acquired the
transferred shares in the same manner and at the same time as the
transferring shareholder. If less than all shares held in an
account are transferred, and some but not all shares in the account
would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus
under "How to Buy Shares" for the imposition of the Class B 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 the Statement of Additional
Information. The request must: (i) state the reason for the
distribution; (ii) state the owner's awareness of tax penalties if
the distribution is premature; and (iii) conform to the
requirements of the plan and the Fund's other redemption
requirements. Participants, other than self-employed persons
maintaining a plan account in their own name, in OppenheimerFunds-
sponsored prototype pension or profit-sharing or 401(k) plans may
not directly redeem or exchange shares held for their account under
those plans. The employer or plan administrator must sign the
request. Distributions from pension plans or 401(k) or profit
sharing plans are subject to special requirements under the
Internal Revenue Code and certain documents (available from the
Transfer Agent) must be completed before the distribution may be
made. Distributions from retirement plans are subject to
withholding requirements under the Internal Revenue Code, and IRS
Form W-4P (available from the Transfer Agent) must be submitted to
the Transfer Agent with the distribution request, or the
distribution may be delayed. Unless the shareholder has provided
the Transfer Agent with a certified tax identification number, the
Internal Revenue Code requires that tax be withheld from any
distribution even if the shareholder elects not to have tax
withheld. The Fund, the Manager, the Distributor, the Trustee and
the Transfer Agent assume no responsibility to determine whether a
distribution satisfies the conditions of applicable tax laws and
will not be responsible for any tax penalties assessed in
connection with a distribution.
Special Arrangements for Repurchase of Shares from Dealers and
Brokers. The Distributor is the Fund's agent to repurchase its
shares from authorized dealers or brokers on behalf of their
customers. The shareholder should contact the broker or dealer to
arrange this type of redemption. The repurchase price per share
will be the net asset value next computed after the Distributor
receives the order placed by the dealer or broker, except that if
the Distributor receives a repurchase order from the dealer or
broker after the close of The New York Stock Exchange on a regular
business day, it will be processed at that day's net asset value,
if the order was received by the dealer or broker from its customer
prior to the time the Exchange closes (normally, that is 4:00 P.M.,
but may be earlier on some days) and the order was transmitted to
and received by the Distributor prior to its close of business that
day (normally 5:00 P.M.). Ordinarily, for accounts redeemed by a
broker-dealer under this procedure, payment will be made within
three business days after the shares have been redeemed upon the
Distributor's receipt of the required redemption documents in
proper form, with the signature(s) of the registered owners
guaranteed on the redemption document as described in the
Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning
shares of the Fund valued at $5,000 or more can authorize the
Transfer Agent to redeem shares (minimum $50) automatically on a
monthly, quarterly, semi-annual or annual basis under an Automatic
Withdrawal Plan. Shares will be redeemed three business days prior
to the date requested by the shareholder for receipt of the
payment. Automatic withdrawals of up to $1,500 per month may be
requested by telephone if payments are to be made by check payable
to all shareholders of record and sent to the address of record for
the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on
this basis. Payments are normally made by check, but shareholders
having AccountLink privileges (see "How To Buy Shares") may arrange
to have Automatic Withdrawal Plan payments transferred to the bank
account designated on the OppenheimerFunds New Account Application
or signature-guaranteed instructions. Shares are normally redeemed
pursuant to an Automatic Withdrawal Plan three business days before
the date you select in the Account Application. If a contingent
deferred sales charge applies to the redemption, the amount of the
check or payment will be reduced accordingly. The Fund cannot
guarantee receipt of a payment on the date requested and reserves
the right to amend, suspend or discontinue offering such plans at
any time without prior notice. Because of the sales charge
assessed on Class A share purchases, shareholders should not make
regular additional Class A share purchases while participating in
an Automatic Withdrawal Plan. Class B and Class C shareholders
should not establish withdrawal plans because of the imposition of
the contingent deferred sales charges on such withdrawals (except
where the Class B and Class C contingent deferred sales charges are
waived as described in the Prospectus under "Waivers of Class B and
Class C Contingent Deferred Sales Charges").
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such
plans, as stated below as well as the Prospectus. These provisions
may be amended from time to time by the Fund and/or the
Distributor. When adopted, such amendments will automatically
apply to existing Plans.
Automatic Exchange Plans. Shareholders can authorize the
Transfer Agent (on the OppenheimerFunds Application or signature-
guaranteed instructions) to exchange a pre-determined amount of
shares of the Fund for shares (of the same class) of other
Oppenheimer funds automatically on a monthly, quarterly, semi-
annual or annual basis under an Automatic Exchange Plan. The
minimum amount that may be exchanged to each other fund account is
$25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "How to
Exchange Shares" in the Prospectus and below in this Statement of
Additional Information.
Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a
sales charge will be redeemed first and shares acquired with
reinvested dividends and capital gains distributions will be
redeemed next, followed by shares acquired with a sales charge, to
the extent necessary to make withdrawal payments. Depending upon
the amount withdrawn, the investor's principal may be depleted.
Payments made under withdrawal plans should not be considered as a
yield or income on your investment. It may not be desirable to
purchase additional Class A shares while making automatic
withdrawals because of the sales charges that apply to purchases
when made. Accordingly, a shareholder normally may not maintain an
Automatic Withdrawal Plan while simultaneously making regular
purchases of Class A shares.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the
"Planholder") who executed the Plan authorization and application
submitted to the Transfer Agent. Neither the Transfer Agent nor
the Fund shall incur any liability to the Planholder for any action
taken or omitted by the Transfer Agent in good faith to administer
the Plan. Certificates will not be issued for shares of the Fund
purchased for and held under the Plan, but the Transfer Agent will
credit all such shares to the account of the Planholder on the
records of the Fund. Any share certificates held by a Planholder
may be surrendered unendorsed to the Transfer Agent with the Plan
application so that the shares represented by the certificate may
be held under the Plan.
For accounts subject to Automatic Withdrawal Plans,
distributions of capital gains must be reinvested in shares of the
Fund, which will be done at net asset value without a sales charge.
Dividends on shares held in the account may be paid in cash or
reinvested.
Redemptions of shares needed to make withdrawal payments will
be made at the net asset value per share determined on the
redemption date. Checks or ACH transfer payments of the proceeds
of Plan withdrawals will normally be transmitted three business
days prior to the date selected for receipt of the payment (receipt
of payment on the date selected cannot be guaranteed), according to
the choice specified in writing by the Planholder.
The amount and the interval of disbursement payments and the
address to which checks are to be mailed or AccountLink payments
are to be sent may be changed at any time by the Planholder by
writing to the Transfer Agent. The Planholder should allow at
least two weeks' time in mailing such notification for the
requested change to be put in effect. The Planholder may, at any
time, instruct the Transfer Agent by written notice (in proper form
in accordance with the requirements of the then-current Prospectus
of the Fund) to redeem all, or any part of, the shares held under
the Plan. In that case, the Transfer Agent will redeem the number
of shares requested at the net asset value per share in effect in
accordance with the Fund's usual redemption procedures and will
mail a check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by
writing to the Transfer Agent. A Plan may also be terminated at
any time by the Transfer Agent upon receiving directions to that
effect from the Fund. The Transfer Agent will also terminate a
Plan upon receipt of evidence satisfactory to it of the death or
legal incapacity of the Planholder. Upon termination of a Plan by
the Transfer Agent or the Fund, shares that have not been redeemed
from the account will be held in uncertificated form in the name of
the Planholder, and the account will continue as a dividend-
reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder or his or her
executor or guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt,
the Planholder may request issuance of a portion of the shares in
certificated form. Upon written request from the Planholder, the
Transfer Agent will determine the number of shares for which a
certificate may be issued without causing the withdrawal checks to
stop because of exhaustion of uncertificated shares needed to
continue payments. However, should such uncertificated shares
become exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the
Fund, the Planholder will be deemed to have appointed any successor
transfer agent to act as agent in administering the Plan.
How To Exchange Shares
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 Money Market Trust, Centennial America
Fund, L.P., and Daily Cash Accumulation Fund, Inc., which only
offer Class A shares, and Oppenheimer Main Street California
Municipal Fund which only offers Class A and Class B shares (Class
B and Class C shares of Oppenheimer Cash Reserves are generally
available only by exchange from the same class of shares of other
Oppenheimer funds or through OppenheimerFunds sponsored 401(k)
plans). A current list showing which funds offer which classes can
be obtained by calling the distributor at 1-800-525-7048.
For accounts established on or before March 8, 1996 holding
Class M shares of Oppenheimer Bond Fund for Growth, Class M shares
can be exchanged only for Class A shares of other Oppenheimer
funds, including Rochester Fund Municipals and Limited Term New
York Municipal Fund. Class A shares of Rochester Fund Municipals
or Limited Term New York Municipal Fund acquired on the exchange of
Class M shares of Oppenheimer Bond Fund for Growth may be exchanged
for Class M shares of that fund. For accounts of Oppenheimer Bond
Fund for Growth established after March 8, 1996, Class M shares may
be exchanged for Class A shares of other Oppenheimer funds except
Rochester Fund Municipals and Limited-Term New York Municipals.
Exchanges to Class M shares of Oppenheimer Bond Fund for Growth are
permitted from Class A shares of Oppenheimer Money Market Fund,
Inc. or Oppenheimer Cash Reserves that were acquired by exchange
from Class M shares. Otherwise no exchanges of any class of any
Oppenheimer fund into Class M shares are permitted.
Class A shares of Oppenheimer funds may be exchanged at net
asset value for shares of any Money Market Fund. Shares of any
Money Market Fund purchased without a sales charge may be exchanged
for shares of Oppenheimer funds offered with a sales charge upon
payment of the sales charge (or, if applicable, may be used to
purchase shares of Oppenheimer funds subject to a contingent
deferred sales charge). However, shares of Oppenheimer Money
Market Fund, Inc. purchased with the redemption proceeds of shares
of other mutual funds (other than funds managed by the Manager or
its subsidiaries) redeemed within the 12 months prior to that
purchase may subsequently be exchanged for shares of other
Oppenheimer funds without being subject to an initial or contingent
deferred sales charge, whichever is applicable. To qualify for
that privilege, the investor or the investor's dealer must notify
the Distributor of eligibility for this privilege at the time the
shares of Oppenheimer Money Market Fund, Inc. are purchased, and,
if requested, must supply proof of entitlement to this privilege.
Shares of the Fund acquired by reinvestment of dividends or
distributions from any other of the Oppenheimer funds (except
Oppenheimer Cash Reserves) or from any unit investment trust for
which reinvestment arrangements have been made with the Distributor
may be exchanged at net asset value for shares of any of the
Oppenheimer funds. No contingent deferred sales charge is imposed
on exchanges of shares of any class purchased subject to a
contingent deferred sales charge. However, when Class A shares
acquired by exchange of Class A shares of other Oppenheimer funds
purchased subject to a Class A contingent deferred sales charge are
redeemed within 18 months of the end of the calendar month of the
initial purchase of the exchanged Class A shares, the Class A
contingent deferred sales charge is imposed on the redeemed shares
(see "Class A Contingent Deferred Sales Charge" in the Prospectus).
The Class B contingent deferred sales charge is imposed on Class B
shares acquired by exchange if they are redeemed within six years
of the initial purchase of the exchanged Class B shares. The Class
C contingent deferred sales charge is imposed on Class C shares
acquired by exchange if they are redeemed within 12 months of the
initial purchase of the exchanged Class C shares.
When Class B or Class C shares are redeemed to effect an
exchange, the priorities described in "How To Buy Shares" in the
Prospectus for the imposition of the Class B and Class C contingent
deferred sales charges will be followed in determining the order in
which the shares are exchanged. Shareholders should take into
account the effect of any exchange on the applicability and rate of
any contingent deferred sales charge that might be imposed in the
subsequent redemption of remaining shares. Shareholders owning
shares of more than one class must specify whether they intend to
exchange Class A, Class B or Class C shares.
The Fund reserves the right to reject telephone or written
exchange requests submitted in bulk by anyone on behalf of more
than one account. The Fund may accept requests for exchanges of up
to 50 accounts per day from representatives of authorized dealers
that qualify for this privilege. In connection with any exchange
request, the number of shares exchanged may be less than the number
requested if the exchange or the number requested would include
shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information or would include shares covered
by a share certificate that is not tendered with the request. In
those cases, only the shares available for exchange without
restriction will be exchanged.
When exchanging shares by telephone, a shareholder must either
have an existing account in, or obtain and acknowledge receipt of
a prospectus of, the fund to which the exchange is to be made. For
full or partial exchanges of an account made by telephone, any
special account features such as Asset Builder Plans, Automatic
Withdrawal Plans and retirement plan contributions will be switched
to the new account unless the Transfer Agent is instructed
otherwise. If all telephone lines are busy (which might occur, for
example, during periods of substantial market fluctuations),
shareholders might not be able to request exchanges by telephone
and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business
day the Transfer Agent receives an exchange request in proper form
(the "Redemption Date"). Normally, shares of the fund to be
acquired are purchased on the Redemption Date, but such purchases
may be delayed by either fund up to five business days if it
determines that it would be disadvantaged by an immediate transfer
of the redemption proceeds. The Fund reserves the right, in its
discretion, to refuse any exchange request that may disadvantage it
(for example, if the receipt of multiple exchange requests from a
dealer might require the disposition of portfolio securities at a
time or at a price that might be disadvantageous to the Fund).
The different Oppenheimer funds available for exchange have
different investment objectives, policies and risks, and a
shareholder should assure that the Fund selected is appropriate for
his or her investment and should be aware of the tax consequences
of an exchange. For federal income tax purposes, an exchange
transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. "Reinvestment Privilege," above,
discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and
the Transfer Agent are unable to provide investment, tax or legal
advice to a shareholder in connection with an exchange request or
any other investment transaction.
Dividends, Capital Gains and Taxes
Tax Status of the Fund's Dividends and Distributions. The Federal
tax treatment of the Fund's dividends and capital gains
distributions is explained in the Prospectus under the caption
"Dividends, Capital Gains and Taxes." Special provisions of the
Internal Revenue Code govern the eligibility of the Fund's
dividends for the dividends-received deduction for corporate
shareholders. Long-term capital gains distributions are not
eligible for the deduction. In addition, the amount of dividends
paid by the Fund which may qualify for the deduction is limited to
the aggregate amount of qualifying dividends that the Fund derives
from its portfolio investments that the Fund has held for a minimum
period, usually 46 days. A corporate shareholder will not be
eligible for the deduction on dividends paid on Fund shares held
for 45 days or less. To the extent the Fund's dividends are
derived from gross income from option premiums, interest income or
short-term gains from the sale of securities or dividends from
foreign corporations, those dividends will not qualify for the
deduction.
Under the Internal Revenue Code, by December 31 each year, the
Fund must distribute 98% of its taxable investment income earned
from January 1 through December 31 of that year and 98% of its
capital gains realized in the period from November 1 of the prior
year through October 31 of the current year, or else the Fund must
pay an excise tax on the amounts not distributed. While it is
presently anticipated that the Fund will meet those requirements,
the Board of 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 distributions.
The Fund qualified during its last fiscal year, and intends to
qualify in current and future years, but reserves the right not to
do so. The Internal Revenue Code contains a number of complex
tests to determine whether the Fund will qualify, and the Fund
might not meet those tests in a particular year. For example, if
the Fund derives 30% or more of its gross income from the sale of
securities held less than three months, it may fail to qualify (see
"Tax Aspects of Covered Calls and Hedging Instruments," above). If
it did not so qualify, the Fund would be treated for tax purposes
as an ordinary corporation and receive no tax deduction for
payments made to shareholders.
The amount of a class's distributions may vary from time to
time depending on market conditions, the composition of the Fund's
portfolio, and expenses borne by the Fund or borne separately by a
class, as described in "Alternative Sales Arrangements -- Class A,
Class B and Class C Shares," above. Dividends are calculated in
the same manner, at the same time and on the same day for shares of
each class. However, dividends on Class B and Class C shares are
expected to be lower as a result of the asset-based sales charge on
Class B and Class C shares, and Class B and Class C dividends will
also differ in amount as a consequence of any difference in net
asset value between the classes.
Dividends, distributions and the proceeds of the redemption of
Fund shares represented by checks returned to the Transfer Agent by
the Postal Service as undeliverable will be invested in shares of
Oppenheimer Money Market Fund, Inc., as promptly as possible after
the return of such checks to the Transfer Agent, to enable the
investor to earn a return on otherwise idle funds.
Dividend Reinvestment in Another Fund. Shareholders of the Fund
may elect to reinvest all dividends and/or capital gains
distributions in shares of the same class of any of the other
Oppenheimer funds listed in "Reduced Sales Charges," above, at net
asset value without sales charge. To elect this option, a
shareholder must notify the Transfer Agent in writing and either
must have an existing account in the fund selected for reinvestment
or must obtain a prospectus for that fund and an application from
the Distributor to establish an account. The investment will be
made at the net asset value per share in effect at the close of
business on the payable date of the dividend or distribution.
Dividends and/or distributions from certain of the Oppenheimer
funds may be invested in shares of this Fund on the same basis.
Additional Information About the Fund
The Custodian. State Street Bank and Trust Company acts as
custodian of the assets of the 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 serves as the
Fund's independent accountants. Their services include examining
the annual financial statements of the Fund as well as other
related services.
16 Oppenheimer Quest Small Cap Value Fund
<PAGE> 17
REPORT OF INDEPENDENT ACCOUNTANTS
================================================================================
To the Board of Trustees and Shareholders of
Oppenheimer Quest Small Cap Value Fund
In our opinion, the accompanying statement of assets
and liabilities, including the statement 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 Oppenheimer
Quest Small Cap Value Fund (formerly Quest for Value
Small Capitalization Fund, one of the portfolios
constituting Oppenheimer Quest for Value Funds,
formerly Quest for Value Family of Funds, hereafter
referred to as the Fund) at October 31, 1996, the
results of its operations for the year then ended,
the changes in its net assets for each of the two
years in the period then ended and the financial
highlights for 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, 1996 by correspondence
with the custodian and the application of
alternative auditing procedures for unsettled
security transactions, provide a reasonable basis
for the opinion expressed above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Denver, Colorado
November 21, 1996
5 Oppenheimer Quest Small Cap Value Fund
<PAGE> 6
STATEMENT OF INVESTMENTS October 31, 1996
<TABLE>
<CAPTION>
FACE
MARKET VALUE
AMOUNT
SEE NOTE 1
================================================================================================================
====================
<S> <C>
<C>
SHORT-TERM NOTES--10.3%
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Household Finance Corp., 5.25%, 11/26/96(1)
$10,668,000 $10,629,106
- --------------------------------------------------------------------------------------------------
Prudential Funding Corp., 5.25%, 12/4/96(1)
4,509,000 4,487,301
----------
Total Short-Term Notes (Cost $15,116,407)
15,116,407
================================================================================================================
====================
NON-CONVERTIBLE CORPORATE BONDS AND NOTES--0.0%
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Collins Industries, Inc., 8.75% Nts., 1/11/00 (Cost $62,950)
62,950 57,636
================================================================================================================
====================
CONVERTIBLE CORPORATE BONDS AND NOTES--1.0%
- ----------------------------------------------------------------------------------------------------------------
- --------------------
Security Capital Realty, Inc., 12% Cv. Sub. Debs., 6/30/14(2)
1,363,500 1,410,948
- --------------------------------------------------------------------------------------------------
Security Capital Realty, Inc., 12% Cv. Sub. Debs. Interest Shares,
6/30/14(2)
78,585 78,585
---------
Total Convertible Corporate Bonds and Notes (Cost $1,372,940)
1,489,533
<CAPTION>
SHARES
================================================================================================================
====================
<S> <C> <C>
<C>
COMMON STOCKS--91.1%
- ----------------------------------------------------------------------------------------------------------------
- --------------------
BASIC MATERIALS--3.2%
- ----------------------------------------------------------------------------------------------------------------
- --------------------
CHEMICALS--1.1% McWhorter Technologies, Inc.(3)
84,200 1,620,850
- ----------------------------------------------------------------------------------------------------------------
- --------------------
PAPER--2.1% Shorewood Packaging Corp.(3)
162,000 3,057,750
- ----------------------------------------------------------------------------------------------------------------
- --------------------
CONSUMER CYCLICALS--11.9%
- ----------------------------------------------------------------------------------------------------------------
- --------------------
AUTOS & HOUSING--8.1% Borg-Warner Automotive, Inc.
55,100 2,114,462
- --------------------------------------------------------------------------------------------------
Cousins Properties, Inc.
101,800 2,328,675
- --------------------------------------------------------------------------------------------------
Security Capital Industrial Trust
150,600 2,729,625
- --------------------------------------------------------------------------------------------------
Security Capital Pacific Trust
120,363 2,708,167
- --------------------------------------------------------------------------------------------------
Security Capital Realty, Inc.(2)(3)
1,800 1,948,320
------------
11,829,249
- ----------------------------------------------------------------------------------------------------------------
- --------------------
MEDIA--1.2% Katz Media Group, Inc.(3)
210,400 1,762,100
- ----------------------------------------------------------------------------------------------------------------
- --------------------
RETAIL: GENERAL--1.8% WestPoint Stevens, Inc.(3)
100,000 2,662,500
- ----------------------------------------------------------------------------------------------------------------
- --------------------
RETAIL: SPECIALTY--0.8% Nu-Kote Holding, Inc., Cl. A(3)
120,200 1,141,900
- ----------------------------------------------------------------------------------------------------------------
- --------------------
CONSUMER NON-CYCLICALS--11.4%
- ----------------------------------------------------------------------------------------------------------------
- --------------------
HEALTHCARE/DRUGS--6.7% Dentsply International, Inc.
51,900 2,186,287
- --------------------------------------------------------------------------------------------------
SpaceLabs Medical, Inc.(3)
320,000 6,480,000
- --------------------------------------------------------------------------------------------------
Sylvan, Inc.(3)
84,700 1,090,512
-----------
9,756,799
- ----------------------------------------------------------------------------------------------------------------
- --------------------
HEALTHCARE/SUPPLIES & Magellan Health Services, Inc.(3)
355,300 6,528,637
SERVICES--4.7%
- --------------------------------------------------------------------------------------------------
Vital Signs, Inc.
14,200 301,750
-----------
6,830,387
</TABLE>
6 Oppenheimer Quest Small Cap Value Fund
<PAGE> 7
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE
NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- ------------
<S> <C> <C>
<C>
ENERGY--6.3%
- ----------------------------------------------------------------------------------------------------------------
- ------------
ENERGY SERVICES & Petroleum Heat & Power Co., Inc., Cl. A 165,000
$ 1,216,875
PRODUCERS--2.3%
- ------------------------------------------------------------------------------------------
St. Mary Land & Exploration Co. 105,500
2,136,375
- -----------
3,353,250
- ----------------------------------------------------------------------------------------------------------------
- ------------
OIL-INTEGRATED--4.0% Belden & Blake Corp.(3) 49,000
1,298,500
- ------------------------------------------------------------------------------------------
Nuevo Energy Co.(3) 31,800
1,586,025
- ------------------------------------------------------------------------------------------
Seagull Energy Corp.(3) 58,000
1,254,250
- ------------------------------------------------------------------------------------------
Triton Energy Corp.(3) 37,400
1,668,975
- -----------
5,807,750
- ----------------------------------------------------------------------------------------------------------------
- ------------
FINANCIAL--14.0%
- ----------------------------------------------------------------------------------------------------------------
- ------------
BANKS--0.6% First Financial Caribbean Corp. 36,000
927,000
- ----------------------------------------------------------------------------------------------------------------
- ------------
INSURANCE--13.4% ACE Ltd. 68,000
3,723,000
- ------------------------------------------------------------------------------------------
Berkley (W.R.) Corp. 39,200
2,038,400
- ------------------------------------------------------------------------------------------
Delphi Financial Group, Inc., Cl. A 113,640
3,181,920
- ------------------------------------------------------------------------------------------
E.W. Blanch Holdings, Inc. 149,400
3,081,375
- ------------------------------------------------------------------------------------------
Everest Reinsurance Holdings, Inc. 44,000
1,122,000
- ------------------------------------------------------------------------------------------
Horace Mann Educators Corp. 95,000
3,253,750
- ------------------------------------------------------------------------------------------
Protective Life Corp. 43,500
1,500,750
- ------------------------------------------------------------------------------------------
United Wisconsin Services, Inc. 69,900
1,808,662
- -----------
19,709,857
- ----------------------------------------------------------------------------------------------------------------
- ------------
INDUSTRIAL--20.6%
- ----------------------------------------------------------------------------------------------------------------
- ------------
ELECTRICAL EQUIPMENT--4.3% AVX Corp. 41,400
765,900
- ------------------------------------------------------------------------------------------
Oak Industries, Inc.(3) 219,300
5,564,738
- ----------
6,330,638
- ----------------------------------------------------------------------------------------------------------------
- ------------
INDUSTRIAL MATERIALS--3.2% Dal-Tile International, Inc.(3) 144,000
2,520,000
- ------------------------------------------------------------------------------------------
Interpool, Inc. 101,700
2,211,975
- ----------
4,731,975
- ----------------------------------------------------------------------------------------------------------------
- ------------
INDUSTRIAL SERVICES--3.2% Briggs & Stratton Corp. 45,000
1,800,000
- ------------------------------------------------------------------------------------------
International Imaging Materials, Inc.(3) 87,600
2,080,500
- ------------------------------------------------------------------------------------------
McGrath Rentcorp 36,300
862,125
- -----------
4,742,625
- ----------------------------------------------------------------------------------------------------------------
- ------------
MANUFACTURING--9.9% Baldwin Technology Co., Inc., Cl. A(3) 510,500
1,531,500
- ------------------------------------------------------------------------------------------
Carlisle Cos., Inc. 43,300
2,462,688
- ------------------------------------------------------------------------------------------
Crane Co. 62,800
2,920,200
- ------------------------------------------------------------------------------------------
EASCO, Inc. 5,000
30,000
- ------------------------------------------------------------------------------------------
Greenfield Industries, Inc. 42,200
1,118,300
- ------------------------------------------------------------------------------------------
Harmon Industries, Inc. 50,400
856,800
- ------------------------------------------------------------------------------------------
United Dominion Industries Ltd. 269,600
5,560,500
- -----------
14,479,988
</TABLE>
7 Oppenheimer Quest Small Cap Value Fund
<PAGE> 8
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE
NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- -----------
<S> <C> <C>
TECHNOLOGY--22.7%
- ----------------------------------------------------------------------------------------------------------------
- -----------
AEROSPACE/DEFENSE--1.3% Tracor, Inc.(3) 87,000 $
1,979,250
- ----------------------------------------------------------------------------------------------------------------
- -----------
COMPUTER HARDWARE--2.5% Exabyte Corp.(3) 164,000
2,173,000
- -----------------------------------------------------------------------------------------
Wang Laboratories, Inc.(3) 65,000
1,519,375
- ------------
3,692,375
- ----------------------------------------------------------------------------------------------------------------
- -----------
COMPUTER SOFTWARE--3.6% BancTec, Inc.(3) 258,900
5,275,088
- ----------------------------------------------------------------------------------------------------------------
- -----------
ELECTRONICS--14.1% Arrow Electronics, Inc.(3) 70,100
3,338,513
- -----------------------------------------------------------------------------------------
Channell Commercial Corp.(3) 32,000
374,000
- -----------------------------------------------------------------------------------------
EG&G, Inc. 381,200
6,718,650
- -----------------------------------------------------------------------------------------
Exar Corp.(3) 261,500
3,595,625
- -----------------------------------------------------------------------------------------
Marshall Industries(3) 177,300
5,341,163
- -----------------------------------------------------------------------------------------
Unitrode Corp.(3) 56,200
1,348,800
- ------------
20,716,751
- ----------------------------------------------------------------------------------------------------------------
- -----------
TELECOMMUNICATIONS- ECI Telecommunications Ltd. 89,000
1,780,000
TECHNOLOGY--1.2%
- ----------------------------------------------------------------------------------------------------------------
- -----------
UTILITIES--1.0%
- ----------------------------------------------------------------------------------------------------------------
- -----------
Aquila Gas Pipeline Corp. 96,600
1,400,700
- ------------
Total Common Stocks (Cost $120,275,475)
133,588,782
- ----------------------------------------------------------------------------------------------------------------
- -----------
TOTAL INVESTMENTS, AT VALUE (COST $136,827,772) 102.4%
150,252,358
- ----------------------------------------------------------------------------------------------------------------
- -----------
LIABILITIES IN EXCESS OF OTHER ASSETS (2.4)
(3,559,147)
--------
- ------------
NET ASSETS 100.0%
$146,693,211
========
============
</TABLE>
1. Short-term notes are generally traded on a discount basis; the
interest rate is the discount rate received by the Fund at the time of
purchase.
2. Identifies issues considered to be illiquid--See Note 5 of Notes to
Financial Statements.
3. Non-income producing security. See accompanying Notes to Financial
Statements.
8 Oppenheimer Quest Small Cap Value Fund
<PAGE> 9
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1996
<TABLE>
================================================================================================================
=========
<S> <C> <C>
ASSETS Investments, at value (cost $136,827,772)--see accompanying statement
$150,252,358
- -----------------------------------------------------------------------------------------------
Receivables:
Shares of beneficial interest sold
1,029,023
Investments sold
838,142
Interest and dividends
155,909
- -----------------------------------------------------------------------------------------------
Other
9,200
- ------------
Total assets
152,284,632
================================================================================================================
=========
LIABILITIES Bank overdraft
164,639
- -----------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased
4,134,293
Shares of beneficial interest redeemed
1,147,923
Distribution and service plan fees
31,510
Transfer agent and accounting service fees
10,077
Trustees' fees
3,276
Other
99,703
- ------------
Total liabilities
5,591,421
================================================================================================================
=========
NET ASSETS
$146,693,211
============
================================================================================================================
=========
COMPOSITION OF Par value of shares of beneficial interest $
77,390
NET ASSETS
- -----------------------------------------------------------------------------------------------
Additional paid-in capital
114,615,487
- -----------------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions
18,575,748
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3
13,424,586
- ------------
Net assets
$146,693,211
============
================================================================================================================
=========
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on net
assets of $102,746,109 and 5,398,787 shares of beneficial
interest outstanding)
$19.03
Maximum offering price per share (net asset value plus sales
charge of 5.75% of offering price)
$20.19
- -----------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $30,765,729 and 1,637,492 shares of
beneficial interest outstanding)
$18.79
- -----------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $13,181,373 and 702,671 shares of
beneficial interest outstanding)
$18.76
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer Quest Small Cap Value Fund
<PAGE> 10
STATEMENT OF OPERATIONS For the Year Ended October 31, 1996
<TABLE>
- ----------------------------------------------------------------------------------------------------------------
- ---------
<S> <C> <C>
INVESTMENT INCOME Dividends (net of foreign withholding taxes of $6,932) $
1,867,796
- -----------------------------------------------------------------------------------------------
Interest
1,256,038
- -----------
Total income
3,123,834
================================================================================================================
=========
EXPENSES Management fees--Note 4
1,558,482
- -----------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A
588,072
Class B
264,640
Class C
115,068
- -----------------------------------------------------------------------------------------------
Transfer agent and accounting service fees--Note 4
235,421
- -----------------------------------------------------------------------------------------------
Shareholder reports
163,557
- -----------------------------------------------------------------------------------------------
Registration and filing fees:
Class A
62,575
Class B
9,573
Class C
6,633
- -----------------------------------------------------------------------------------------------
Legal and auditing fees
38,885
- -----------------------------------------------------------------------------------------------
Custodian fees and expenses
32,948
- -----------------------------------------------------------------------------------------------
Trustees' fees and expenses
24,625
- -----------------------------------------------------------------------------------------------
Other
39,366
- -----------
Total expenses
3,139,845
================================================================================================================
=========
NET INVESTMENT LOSS
(16,011)
================================================================================================================
=========
REALIZED AND Net realized gain on investments
19,244,292
UNREALIZED GAIN
- -----------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments
4,837,245
- -----------
Net realized and unrealized gain
24,081,537
================================================================================================================
=========
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$24,065,526
===========
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Quest Small Cap Value Fund
<PAGE> 11
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER
31,
1996
1995
================================================================================================================
=============
<S> <C> <C>
<C>
OPERATIONS Net investment income (loss) $ (16,011)
$ 818,568
- ------------------------------------------------------------------------------------------------
Net realized gain 19,244,292
8,543,743
- ------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 4,837,245
3,040,965
-----------
- -----------
Net increase in net assets resulting from operations 24,065,526
12,403,276
================================================================================================================
=============
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS TO Class A (758,969)
--
SHAREHOLDERS Class B (44,363)
--
Class C (29,083)
--
- ------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (6,609,655)
(3,010,761)
Class B (1,335,461)
(434,007)
Class C (506,878)
(91,772)
================================================================================================================
=============
BENEFICIAL INTEREST Net increase (decrease) in net assets resulting from beneficial interest
TRANSACTIONS transactions--Note 2:
Class A (24,805,861)
(11,016,993)
Class B 4,861,970
6,073,460
Class C 3,040,987
5,301,995
================================================================================================================
=============
NET ASSETS Total increase (decrease) (2,121,787)
9,225,198
- ------------------------------------------------------------------------------------------------
Beginning of period 148,814,998
139,589,800
------------
- ------------
End of period (including undistributed net investment income
of $817,130 in 1995) $146,693,211
$148,814,998
============
============
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer Quest Small Cap Value Fund
<PAGE> 12
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
- --------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
1996(2) 1995 1994 1993
1992
================================================================================================================
================
<S> <C> <C> <C> <C>
<C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $17.31 $16.33 $17.68 $14.60
$13.52
- ----------------------------------------------------------------------------------------------------------------
- ----------------
Income (loss) from investment operations:
Net investment income (loss) .03 .11(3) (.03)(3) (.04)(3)
--(3)
Net realized and unrealized gain 2.79 1.29 .01 4.26
1.50
--------- ------- ------- -------
--------
Total income (loss) from
investment operations 2.82 1.40 (.02) 4.22
1.50
- ----------------------------------------------------------------------------------------------------------------
- ----------------
Dividends and distributions to shareholders:
Dividends from net investment income (.11) -- -- --
--
Distributions from net realized gain (.99) (.42) (1.33) (1.14)
(.42)
--------- ------- ------- -------
--------
Total dividends and distributions to shareholders (1.10) (.42) (1.33) (1.14)
(.42)
- ----------------------------------------------------------------------------------------------------------------
- ----------------
Net asset value, end of period $19.03 $17.31 $16.33 $17.68
$14.60
========= ======= ======= =======
========
================================================================================================================
================
TOTAL RETURN, AT NET ASSET VALUE(4) 17.17% 8.82% 0.04% 30.21%
11.60%
================================================================================================================
================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $102,746 $116,307 $120,102 $104,898
$39,693
- ----------------------------------------------------------------------------------------------------------------
- ----------------
Average net assets (in thousands) $117,765 $119,440 $115,276 $75,500
$32,551
- ----------------------------------------------------------------------------------------------------------------
- ----------------
Ratios to average net assets:
Net investment income (loss) 0.11% 0.67% (0.14)% (0.36)%
(0.04)%
Expenses 1.90% 1.80% 1.88% 1.89%
2.11%
- ----------------------------------------------------------------------------------------------------------------
- ----------------
Portfolio turnover rate(6) 70.4% 76.0% 67.0% 74.0%
95.0%
Average brokerage commission rate(7) $0.0515 -- -- --
--
</TABLE>
1. For the period from September 1, 1993 (inception of
offering) to October 31, 1993.
2. On November 22, 1995, OppenheimerFunds, Inc. became the
investment adviser to the Fund.
3. Based on average shares outstanding for the period.
4. Assumes a hypothetical initial investment on the business
day before the first day of the fiscal period (or inception
of offering), with all dividends and distributions
reinvested in additional shares on the reinvestment date,
and redemption at the net asset value calculated on the last
business day of the fiscal period. Sales charges are not
reflected in the total returns. Total returns are not
annualized for periods of less than one full year.
12 Oppenheimer Quest Small Cap Value Fund
<PAGE> 13
<TABLE>
<CAPTION>
CLASS B CLASS C
- -----------------------------------------------------------
- -----------------------------------------------------
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
1996(2) 1995 1994 1993(1) 1996(2) 1995 1994
1993(1)
================================================================================================================
==============
<S> <C> <C> <C> <C> <C> <C>
<C>
$17.11 $16.24 $17.66 $17.19 $17.11 $16.23 $17.67
$17.19
- ----------------------------------------------------------------------------------------------------------------
- --------------
(.06) .02(3) (.11)(3) (.02)(3) (.05) .01(3) (.13)(3)
(.02)(3)
2.76 1.27 .02 .49 2.75 1.29 .02
.50
- ------- ------- ------- ------- -------- ------- -------
-------
2.70 1.29 (.09) .47 2.70 1.30 (.11)
.48
- ----------------------------------------------------------------------------------------------------------------
- --------------
(.03) -- -- -- (.06) -- --
--
(.99) (.42) (1.33) -- (.99) (.42) (1.33)
--
- ------- ------- ------- ------- -------- ------- -------
-------
(1.02) (.42) (1.33) -- (1.05) (.42) (1.33)
--
- ----------------------------------------------------------------------------------------------------------------
- --------------
$18.79 $17.11 $16.24 $17.66 $18.76 $17.11 $16.23
$17.67
======= ======= ======= ======= ======== ======= =======
=======
================================================================================================================
==============
16.57% 8.17% (0.39)% 2.73% 16.55% 8.24% (0.51)%
2.79%
================================================================================================================
==============
$30,766 $23,440 $16,144 $1,754 $13,181 $9,068 $3,344
$235
- ----------------------------------------------------------------------------------------------------------------
- --------------
$26,478 $20,105 $9,401 $934 $11,501 $6,114 $1,381
$138
- ----------------------------------------------------------------------------------------------------------------
- --------------
(0.37)% 0.09% (0.70)% (1.15)%(5) (0.40)% 0.08% (0.81)%
(1.20)%(5)
2.38% 2.37% 2.48% 2.57%(5) 2.40% 2.38% 2.59%
2.57%(5)
- ----------------------------------------------------------------------------------------------------------------
- --------------
70.4% 76.0% 67.0% 74.0% 70.4% 76.0% 67.0%
74.0%
$0.0515 -- -- -- $0.0515 -- --
--
</TABLE>
5. Annualized.
6. 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, 1996 were $96,608,078 and $113,296,341,
respectively.
7. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold.
See accompanying Notes to Financial Statements.
13 Oppenheimer Quest Small Cap Value Fund
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. SIGNIFICANT
ACCOUNTING POLICIES
Oppenheimer Quest Small Cap Value Fund (the Fund),
formerly named Quest for Value Small Capitalization
Fund, a series of Oppenheimer Quest for Value Funds,
is a diversified open-end management investment
company registered under the Investment Company Act
of 1940, as amended. 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. 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
OppenheimerFunds, Inc. (the Manager), which resulted
in the sale to the Manager of certain mutual fund
assets of OCC Distributors and OpCap Advisors
including the transfer of Quest for Value Funds and
the use of the name "Quest for Value." As part of
the transaction, the Fund entered into an investment
advisory agreement with the Manager and the Manager
entered into a sub-advisory agreement with OpCap
Advisors (the former Manager). The Fund offers Class
A, Class B and Class C shares. Class A shares are
sold with a front-end sales charge. Class B and
Class C shares may be subject to a contingent
deferred sales charge. All three classes of shares
have identical rights to earnings, assets and voting
privileges, except that each class has its own
distribution and/or service plan, expenses directly
attributable to a particular class and exclusive
voting rights with respect to matters affecting a
single class. Class B shares will automatically
convert to Class A shares six years after the date
of purchase. The following is a summary of
significant accounting policies consistently
followed by the Fund.
-----------------------------------------------------
INVESTMENT VALUATION. Portfolio securities are
valued at the close of the New York Stock Exchange
on each trading day. Listed and unlisted securities
for which such information is regularly reported are
valued at the last sale price of the day or, in the
absence of sales, at values based on the closing bid
or the last sale price on the prior trading day.
Long-term and short-term "non-money market" debt
securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities
which cannot be valued by the approved portfolio
pricing service are valued using dealer-supplied
valuations provided the Manager is satisfied that
the firm rendering the quotes is reliable and that
the quotes reflect current market value, or are
valued under consistently applied procedures
established by the Board of Trustees to determine
fair value in good faith. Short-term "money market
type" debt securities having a remaining maturity of
60 days or less are valued at cost (or last
determined market value) adjusted for amortization
to maturity of any premium or discount.
-----------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, AND GAINS AND
LOSSES. Income, expenses (other than those
attributable to a specific class) and gains and
losses are allocated daily to each class of shares
based upon the relative proportion of net assets
represented by such class. Operating expenses
directly attributable to a specific class are
charged against the operations of that class.
-----------------------------------------------------
FEDERAL TAXES. The Fund intends to continue to
comply with provisions of the Internal Revenue Code
applicable to regulated investment companies and to
distribute all of its taxable income, including any
net realized gain on investments not offset by loss
carryovers, to shareholders. Therefore, no federal
income or excise tax provision is required.
-----------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and
distributions to shareholders are recorded on the
ex-dividend date.
-----------------------------------------------------
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net
investment income (loss) and net realized gain
(loss) may differ for financial statement and tax
purposes. The character of the distributions made
during the year from net investment income or net
realized gains may differ from their ultimate
characterization for federal income tax purposes.
Also, due to timing of dividend distributions, the
fiscal year in which amounts are distributed may
differ from the year that the income or realized
gain (loss) was recorded by the Fund.
During the year ended October 31, 1996,
the Fund adjusted the classification of net
investment income and capital gain (loss) to reflect
the differences between financial statement amounts
and distributions determined in accordance with
income tax regulations. Accordingly, during the year
ended October 31, 1996, amounts have been
reclassified to reflect a decrease in accumulated
net realized gain on investments of $31,296. Net
investment income was decreased by the same amount.
14 Oppenheimer Quest Small Cap Value Fund
<PAGE> 15
================================================================================
1. SIGNIFICANT
ACCOUNTING POLICIES
(CONTINUED)
OTHER. Investment transactions are accounted for on
the date the investments are purchased or sold
(trade date) and dividend income is recorded on the
ex-dividend date. Realized gains and losses on
investments and unrealized appreciation and
depreciation are determined on an identified cost
basis, which is the same basis used for federal
income tax purposes.
The preparation of financial statements
in conformity with generally accepted accounting
principles requires management to make estimates and
assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial
statements and the reported amounts of income and
expenses during the reporting period. Actual results
could differ from those estimates.
================================================================================
2. SHARES OF
BENEFICIAL INTEREST
The Fund has authorized an unlimited number of $.01
par value shares of beneficial interest.
Transactions in shares of beneficial interest were
as follows:
<TABLE>
<CAPTION>
Year Ended October 31, 1996 Year Ended
October 31, 1995
----------------------------
- ----------------------------
Shares Amount Shares
Amount
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
<C>
Class A:
Sold 1,937,231 $35,893,632 2,307,655
$38,194,245
Dividends and distributions reinvested 420,196 7,076,100 181,647
2,840,961
Redeemed (3,676,057) (67,775,591) (3,125,095)
(52,052,199)
---------- ------------ ----------
------------
Net decrease (1,318,630) $(24,805,859) (635,793)
$(11,016,993)
========== ============ ==========
============
- -----------------------------------------------------------------------------------------------------
Class B:
Sold 551,514 $10,124,916 620,242
$10,160,304
Dividends and distributions reinvested 78,798 1,315,750 26,272
408,265
Redeemed (362,432) (6,578,696) (271,244)
(4,495,109)
---------- ------------ ----------
------------
Net increase 267,880 $4,861,970 375,270
$6,073,460
========== ============ ==========
============
- -----------------------------------------------------------------------------------------------------
Class C:
Sold 389,343 $7,061,411 389,503
$6,393,572
Dividends and distributions reinvested 31,101 518,457 5,721
88,907
Redeemed (247,719) (4,538,881) (71,284)
(1,180,484)
---------- ------------ ----------
------------
Net increase 172,725 $3,040,987 323,940
$5,301,995
========== ============ ==========
============
================================================================================================================
===============
</TABLE>
3. UNREALIZED GAINS AND
LOSSES ON INVESTMENTS
At October 31, 1996, net unrealized appreciation on
investments of $13,424,586 was composed of gross
appreciation of $19,225,136, and gross depreciation
of $5,800,550.
================================================================================
4. MANAGEMENT FEES
AND OTHER TRANSACTIONS
WITH AFFILIATES
Management fees paid to the Manager were in
accordance with the investment advisory agreement
with the Fund which provides for a fee of 1.00% on
the first $400 million of average annual net assets,
0.90% on the next $400 million and 0.85% on net
assets in excess of $800 million. Prior to November
22, 1995, management fees were paid to the former
Manager at an annual rate of 1.00% of the Fund's
average net assets. The Manager has agreed to
reimburse the Fund if aggregate expenses (with
specified exceptions) exceed the most stringent
applicable regulatory limit on Fund expenses. The
Manager acts as the accounting agent for the Fund at
an annual fee of $55,000, plus out-of-pocket costs
and expenses reasonably incurred. Prior to November
22, 1995, accounting service fees were paid monthly
to the former Manager.
Effective November 22, 1995, the
Manager pays OpCap Advisors (the Sub-Adviser) based
on the fee schedule set forth in the Prospectus. For
the period ended October 31, 1996, the Manager paid
$581,663 to the Sub-Adviser.
For the year ended October 31, 1996,
commissions (sales charges paid by investors) on
sales of Class A shares totaled $297,166, of which
$115,180 was retained by OppenheimerFunds
Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by affiliated
broker/dealers. Sales charges advanced to
broker/dealers by OFDI on sales of the Fund's Class
B and Class C shares totaled $317,703 and $58,943,
of which $5,034 was paid to an affiliated
broker/dealer for Class B. During the year ended
October 31, 1996, OFDI received contingent deferred
sales charges of $99,115 and $3,583, respectively,
upon redemption of Class B and Class C shares as
reimbursement for sales commissions advanced by OFDI
at the time of sale of such shares.
15 Oppenheimer Quest Small Cap Value Fund
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
4. MANAGEMENT FEES
AND OTHER TRANSACTIONS
WITH AFFILIATES
(CONTINUED)
OppenheimerFunds Services (OFS), a division of the
Manager, is the transfer and shareholder servicing
agent for the Fund, and for other registered
investment companies. The Fund pays OFS an annual
maintenance fee of $14.85 for each Fund shareholder
account and reimburses OFS for its out-of-pocket
expenses. During the period ended October 31, 1996,
the Fund paid OFS $169,511.
The Fund has adopted a Distribution and
Service Plan for Class A shares to compensate OFDI
for a portion of its costs incurred in connection
with the personal service and maintenance of
accounts that hold Class A shares. Under the Plan,
the Fund pays an annual asset-based sales charge to
OFDI of 0.25% per year on Class A shares. The Fund
also pays a service fee to OFDI of 0.25% per year.
Both fees are computed on the average annual net
assets of Class A shares of the Fund, determined as
of the close of each regular business day. OFDI uses
all of the service fee and a portion of the
asset-based sales charge to compensate brokers,
dealers, banks and other financial institutions
quarterly for providing personal service and
maintenance of accounts of their customers that hold
Class A shares. OFDI retains the balance of the
asset-based sales charge to reimburse itself for its
other expenditures under the Plan. During the period
ended October 31, 1996, OFDI paid $1,102 to an
affiliated broker/dealer as compensation for Class A
personal service and maintenance expenses.
The Fund has adopted compensation type
Distribution and Service Plans for Class B and Class
C shares to compensate OFDI for its services and
costs in distributing Class B and Class C shares and
servicing accounts. Under the Plans, the Fund pays
OFDI an annual asset-based sales charge of 0.75% per
year on Class B and Class C shares, as compensation
for sales commissions paid from its own resources at
the time of sale and associated financing costs. If
the Plans are terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of
the asset-based sales charge to OFDI for certain
expenses it incurred before the Plans were
terminated. OFDI also receives a service fee of
0.25% per year as compensation for costs incurred in
connection with the personal service and maintenance
of accounts that hold shares of the Fund, including
amounts paid to brokers, dealers, banks and other
financial institutions. Both fees are computed on
the average annual net assets of Class B and Class C
shares, determined as of the close of each regular
business day. During the year ended October 31,
1996, OFDI retained $206,892 and $65,837,
respectively, as compensation for Class B and Class
C sales commissions and service fee advances, as
well as financing costs. At October 31, 1996, OFDI
had incurred unreimbursed expenses of $82,925 for
Class B and $36,379 for Class C.
================================================================================
5. ILLIQUID AND RESTRICTED
SECURITIES
At October 31, 1996, investments in securities
included issues that are illiquid or restricted.
Restricted securities are often purchased in private
placement transactions, are not registered under the
Securities Act of 1933, may have contractual
restrictions on resale, and are valued under methods
approved by the Board of Trustees as reflecting fair
value. A security may be considered illiquid if it
lacks a readily available market or if its valuation
has not changed for a certain period of time. The
Fund intends to invest no more than 10% of its net
assets (determined at the time of purchase and
reviewed from time to time) in illiquid or
restricted securities. Certain restricted
securities, eligible for resale to qualified
institutional investors, are not subject to that
limit. The aggregate value of illiquid or restricted
securities subject to this limitation at October 31,
1996 was $3,437,853, which represents 2.34% of the
Fund's net assets. Information concerning restricted
securities is as follows:
<TABLE>
<CAPTION>
VALUATION PER UNIT
SECURITY ACQUISITION DATES COST PER UNIT AS
OF OCT. 31, 1996
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Security Capital Realty, Inc. 7/29/93--1/19/94 $683.92
$1,082.40
- --------------------------------------------------------------------------------------------------------
Security Capital Realty, Inc.,
12% Cv. Sub. Debs., 6/30/14 7/1/94 94.26
103.48
- --------------------------------------------------------------------------------------------------------
Security Capital Realty, Inc.,
12% Cv. Sub. Debs.
Interest Shares, 6/30/14 1/1/95--6/30/96 100.00
100.00
</TABLE>
<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 Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
<PAGE>
Food
Gas Transmission*
Gas Utilities*
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking<PAGE>
_________________
* For purposes of the Fund's investment policy not to concentrate
in securities of issuers in the same industry, gas utilities and
gas transmission utilities each will be considered a separate
industry.
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 Accountants
Price Waterhouse LLP
950 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
<PAGE>
OPPENHEIMER QUEST GROWTH & INCOME VALUE FUND
Supplement dated February 21, 1997 to the
Prospectus dated February 21, 1997
The Prospectus is changed as follows:
In addition to paying dealers the regular commission for (1)
sales of Class A shares stated in the sales charge table in "Buying
Class A Shares," (2) sales of Class B shares described in the
fifth paragraph in "Distribution and Service Plans for Class B and
Class C Shares," and (3) sales of Class C shares described in the
sixth paragraph in "Distribution and Service Plans for Class B and
Class C Shares," the Distributor will pay additional commission to
each broker, dealer and financial institution that has a sales
agreement with the Distributor and agrees to accept that additional
commission (these are referred to as "participating firms") for
Class A, Class B and Class C shares of the Fund sold in "qualifying
transactions" (the "promotion"). The additional commission will be
1.00% of the offering price of shares of the Fund sold by a
registered representative or sales representative of a
participating firm during the promotion. If the additional
commission is paid on the sale of Class A shares of $500,000 or
more or the sale of Class A shares to a SEP IRA with 100 or more
eligible participants and those shares are redeemed within 13
months from the end of the month in which they were purchased, the
participating firm will be required to return the additional
commission.
"Qualifying transactions" are aggregate sales of $150,000 or
more of Class A, Class B and/or Class C shares of any one or more
of the Oppenheimer funds (except money market funds and municipal
bond funds) for rollovers or trustee-to-trustee transfers from
another retirement plan trustee, of IRA assets or other employee
benefit plan assets from an account or investment other than an
account or investment in the Oppenheimer funds to (1) IRAs,
rollover IRAs, SEP IRAs and SAR-SEP IRAs, using the
OppenheimerFunds, Inc. prototype IRA agreement, if the rollover
contribution is received during the period from January 1, 1997
through April 15, 1997 (the "promotion period"), or the acceptance
of a direct rollover or trustee-to-trustee transfer is acknowledged
by the trustee of the OppenheimerFunds prototype IRA during the
promotion period, and (2) IRAs, rollover IRAs, SEP IRAs and SAR-
SEP IRAs using the A.G. Edwards & Sons, Inc. prototype IRA
agreement, if the rollover contribution or trustee-to-trustee
payment is received during the promotion period. "Qualifying
transactions" do not include (1) purchases of Class A shares
intended but not yet made under a Letter of Intent, and (2)
purchases of Class A, Class B and/or Class C shares with the
redemption proceeds from an existing Oppenheimer funds account.
February 21, 1997 PS0257.006
<PAGE>
Oppenheimer
Quest Growth & Income Value Fund
Prospectus dated February 21, 1997
Oppenheimer Quest Growth & Income Value Fund 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 to be undervalued in
the marketplace and to offer the possibility of increased value.
Ordinarily, the Fund invests its assets in common stocks (with an
emphasis on dividend paying stocks), preferred stocks, securities
convertible into common stock, and debt securities. The Fund may
invest up to 25% of its total assets in lower-grade, high-yield
debt securities. In an uncertain investment environment, the Fund
may stress defensive investment methods. Please refer to
"Investment Objective and Policies" for more information about the
types of securities in which the Fund invests, and refer to
"Investment Risks" for a discussion of the risks of investing in
the Fund.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and
keep it for future reference. You can find more detailed
information about the Fund in the February 21, 1997 Statement of
Additional Information. For a free copy, call OppenheimerFunds
Services, the Fund's Transfer Agent, at 1-800-525-7048, or write to
the Transfer Agent at the address on the back cover. The Statement
of Additional Information has been filed with the Securities and
Exchange Commission and is incorporated into this Prospectus by
reference (which means that it is legally part of this Prospectus).
(OppenheimerFunds logo)
Shares of the Fund are not deposits or obligations of any bank, are
not guaranteed by any bank, are not insured by the F.D.I.C. or any
other agency, and involve investment risks, including the possible
loss of the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
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
Investment Risks
Investment Techniques and Strategies
How the Fund is Managed
Performance of the Fund
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Appendix A: Special Sales Charge Arrangements for
Shareholders of the Former Quest for Value Funds
Appendix B: Description of Ratings
<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 will bear indirectly.
The numbers below are based on the Fund's expenses during its last
fiscal year ended October 31, 1996.
Shareholder Transaction Expenses are charges you pay when
you buy or sell shares of the Fund. Please refer to "About Your
Account" starting on page __ for an explanation of how and when
these charges apply.
<TABLE>
<CAPTION>
Class 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)
- ------------------------------------------------------------------------
Maximum Deferred Sales Charge None(1) 5% in the first 1% if
(as a % of the lower of the year, declining shares are
original offering price or to 1% in the redeemed
redemption proceeds) sixth year and within 12
eliminated months of
thereafter(2) purchase(2)
- ------------------------------------------------------------------------
Maximum Sales Charge on None None None
Reinvested Dividends
- ------------------------------------------------------------------------
Exchange Fee None None None
- ------------------------------------------------------------------------
Redemption Fee None(3) None(3) None(3)
</TABLE>
(1)If you invest $1 million or more ($500,000 or more for
purchases by "Retirement Plans," as defined in "Class A Contingent
Deferred Sales Charge" on page _____) in Class A shares, you may
have to pay a sales charge of up to 1% if you sell your shares
within 18 calendar months from the end of the calendar month during
which you purchased those shares, depending upon when you purchased
such shares. See "How to Buy Shares - Buying Class A Shares,"
below.
(2)See "How to Buy Shares - Buying Class B Shares" and "How to Buy
Shares - Buying Class C Shares" below, for more information on the
contingent deferred sales charges.
(3) There is a $10 transaction fee for redemptions paid by Federal
Funds wire, but not for redemptions paid by ACH transfer through
AccountLink.
Annual Fund Operating Expenses are paid out of the Fund's
assets and represent the Fund's expenses of operating its business.
For example, the Fund pays management fees to it's investment
adviser, OppenheimerFunds, Inc. (referred to in this Prospectus as
the "Manager"). The rates of the Manager's fees are set forth in
"How the Fund is Managed," below. The Fund has other regular
expenses for services, such as transfer agent fees, custodial fees
paid to the bank that holds the Fund's portfolio securities, audit
fees and legal expenses. Those expenses are detailed in the Fund's
Financial Statements in the Statement of Additional Information.
Annual Fund Operating Expenses (as a Percentage of Average Net
Assets)
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
- ---------------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.85% 0.85% 0.85%
- ---------------------------------------------------------------
12b-1 Distribution
Plan Fees 0.40% 1.00% 1.00%
- ---------------------------------------------------------------
Other Expenses 0.65% 0.68% 0.68%
- ---------------------------------------------------------------
Total Fund
Operating Expenses 1.90% 2.53% 2.53%
</TABLE>
The numbers in the chart above are based upon the Fund's
expenses in its last fiscal year ended October 31, 1996. 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 service fees (the maximum fee is
0.25% of average annual net assets of that class), and the asset-
based sales charge 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 fees (the maximum fee is
0.25% of average annual net assets of those classes) 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 changes in the actual value of the
Fund's assets represented by each class of shares.
Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples
shown below. Assume that you make a $1,000 investment in each class
of shares of the Fund, and the Fund's annual return is 5%, and that
its operating expenses for each class are the ones shown in the
Annual Fund Operating Expenses chart above and that Class B shares
automatically convert into Class A shares six years after purchase.
If you were to redeem your shares at the end of each period shown
below, your investment would incur the following expenses by the
end of 1, 3, 5 and 10 years:
1 year 3 years 5 years 10 years*
- --------------------------------------------------------------
Class A Shares $76 $114 $154 $267
Class B Shares $76 $109 $155 $257
Class C Shares $36 $ 79 $135 $287
If you did not redeem your investment, it would incur the
following expenses:
1 year 3 years 5 years 10 years*
- --------------------------------------------------------------
Class A Shares $76 $114 $154 $267
Class B Shares $26 $ 79 $135 $257
Class C Shares $26 $ 79 $135 $287
*In the first example, expenses include the Class A initial
sales charge and the applicable Class B or Class C contingent
deferred sales charge. In the second example, Class A expenses
include the initial sales charge, but Class B and Class C expenses
do not include contingent deferred sales charges. The Class B
expenses in years 7 through 10 are based on the Class A expenses
shown above, because the Fund automatically converts Class B shares
into Class A shares after 6 years. Because of the effect of the
higher asset-based sales charge and the contingent deferred sales
charge on Class B and Class C shares, long-term holders of Class B
and Class C shares could pay the economic equivalent of more than
the maximum front-end sales charge allowed under applicable
regulations. For Class B shareholders, the automatic conversion of
Class B shares to Class A shares is designed to minimize the
likelihood that this will occur. Please refer to "How to Buy
Shares - Buying Class B Shares" for more information.
These examples show the effect of expenses on an investment,
but are not meant to state or predict actual or expected costs or
investment returns of the Fund, all of which may be more or less
than those shown.
<PAGE>
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized
below, with references to the section of this Prospectus where more
complete information can be found. You should carefully read the
entire Prospectus before making a decision about investing in the
Fund. Keep the Prospectus for reference after you invest,
particularly for information about your account, such as how to
sell or exchange shares.
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 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. The Fund may invest up to 25% of its total assets
in lower-grade, high-yield debt securities (commonly known as "junk
bonds"). To provide liquidity, the Fund typically invests a part
of its assets in various types of U.S. Government securities and
money market instruments. For temporary defensive purposes, the
Fund may invest up to 100% of its assets in such money market
instruments. These investments are more fully explained in
"Investment Policies and Strategies," starting on page ___.
Who Manages the Fund? The Manager supervises the Fund's
investment program and handles its day-to-day business. The
Manager (including a subsidiary) manages investment company
portfolios having over $62 billion in assets as of December 31,
1996. The Manager is paid an advisory fee by the Fund, based on
its net assets. The Fund's sub-adviser is OpCap Advisors (the
"Sub-Adviser"), which is paid a fee by the Manager, not the Fund.
The Sub-Adviser provides day-to-day portfolio management of the
Fund. The Fund's portfolio manager is employed by the Sub-Adviser
and is primarily responsible for the selection of the Fund's
securities. The Board of 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 bonds and stocks,
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.
Investments in foreign securities involve additional risks not
associated with investments in domestic securities, including risks
associated with changes in currency rates.
While the Sub-Adviser tries to reduce risks by diversifying
investments, by carefully researching securities before they are
purchased for the Fund's portfolio, and in some cases by using
hedging techniques, there is no guarantee of success in achieving
the Fund's investment objective and your shares may be worth more
or less than their original cost when you redeem them. 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 Risks"
starting on page __ for a more complete discussion of the Fund's
investment risks.
How Can I Buy Shares? You can buy shares through your
dealer or financial institution, or you can purchase shares
directly through OppenheimerFunds Distributor, Inc. (the
"Distributor") by completing an Application or by using an
Automatic Investment Plan under AccountLink. Please refer to "How
to Buy Shares" on page __ for more details.
Will I Pay a Sales Charge to Buy Shares? The Fund offers
Class A, Class B and Class C shares to the individual investor.
All classes have 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 6 years or 12 months, respectively, of buying them.
There is also an annual asset-based sales charge which is higher on
Class B and Class C shares. Please review "How to Buy Shares"
starting on page __ for more details, including a discussion about
factors you and your financial advisor should consider in
determining which class may be appropriate for you.
How Can I Sell My Shares? Shares can be redeemed by mail
or by telephone call to the Transfer Agent on any business day, or
through your dealer. Please refer to "How to Sell Shares" on page
__. The Fund also offers exchange privileges to other Oppenheimer
funds, described in "How to Exchange Shares" on page __.
How Has the Fund Performed? 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 a broad-based market index,
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, 1996, is included
in the Statement of Additional Information.
<PAGE>
<TABLE>
<CAPTION>
====================
FINANCIAL HIGHLIGHTS
CLASS A
----------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
1996(2) 1995 1994 1993 1992
====================================================================================================================
PER SHARE OPERATING DATA:
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.92 $10.09 $11.24 $10.80 $10.00
- --------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .23 .27(3) .32(3) .30(3) .28(3)
Net realized and unrealized gain 2.05 1.27 .55 .73 .80
- --------------------------------------------------------------------------------------------------------------------
Total income from investment
operations 2.28 1.54 .87 1.03 1.08
- --------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.22) (.29) (.32) (.26) (.28)
Distributions from net realized gain (.50) (.42) (1.70) (.33) --
- --------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.72) (.71) (2.02) (.59) (.28)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.48 $10.92 $10.09 $11.24 $10.80
======================================================================
====================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 21.84% 16.35% 8.64% 9.93% 10.84%
====================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $49,322 $37,082 $30,576 $28,466 $8,057
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $43,428 $33,397 $29,112 $23,771 $6,940
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 2.03% 2.60%(5) 3.16%(5) 2.66%(5) 2.73%(5)
Expenses(7) 1.90% 1.99%(5) 1.86%(5) 1.90%(5) 2.23%(5)
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 124.2% 130.0% 113.0% 192.0% 77.0%
Average brokerage commission rate(9) $0.0548 -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
====================
FINANCIAL HIGHLIGHTS
CLASS B
-------------------------------------------------------
YEAR ENDED OCTOBER 31,
1996(2) 1995 1994 1993(1)
=====================================================================================================
PER SHARE OPERATING DATA:
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.88 $10.07 $11.23 $11.21
- -----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .17 .19(3) .25(3) .04(3)
Net realized and unrealized gain 2.03 1.28 .56 .05
- -----------------------------------------------------------------------------------------------------
Total income from investment
operations 2.20 1.47 .81 .09
- -----------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.16) (.24) (.27) (.07)
Distributions from net realized gain (.50) (.42) (1.70) --
- -----------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.66) (.66) (1.97) (.07)
- -----------------------------------------------------------------------------------------------------
Net asset value, end of period $12.42 $10.88 $10.07 $11.23
=======================================================
=====================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 21.07% 15.65% 7.96% 0.81%
=====================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $13,175 $7,623 $2,928 $319
- -----------------------------------------------------------------------------------------------------
Average net assets (in thousands) $10,097 $4,856 $1,586 $228
- -----------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.40% 1.71%(5) 2.53%(5) 1.83%(5)(6)
Expenses(7) 2.53% 2.59%(5) 2.47%(5) 2.49%(5)(6)
- -----------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 124.2% 130.0% 113.0% 192.0%
Average brokerage commission rate(9) $0.0548 -- -- --
</TABLE>
1. For the period from September 1, 1993 (inception of offering) to October 31,
1993.
2. On November 22, 1995, OppenheimerFunds, Inc. became the investment adviser
to the Fund.
3. Based on average shares outstanding for the period.
4. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
5. During the periods presented above, the former 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%, respectively, for the year ended 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%, respectively, for Class B and 1.80% and 2.87%, respectively, for
Class C, for the period September 1, 1993 (inception of offering) to October
31, 1993.
<PAGE>
<TABLE>
<CAPTION>
--------------------------------
FINANCIAL HIGHLIGHTS (Continued)
CLASS C
------------------------------------------------------
YEAR ENDED OCTOBER 31,
1996(2) 1995 1994 1993(1)
====================================================================================================
PER SHARE OPERATING DATA:
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.89 $10.07 $11.23 $11.21
- ----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .17 .15(3) .24(3) .04(3)
Net realized and unrealized gain 2.02 1.30 .56 .05
- ----------------------------------------------------------------------------------------------------
Total income from investment
operations 2.19 1.45 .80 .09
- ----------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.15) (.21) (.26) (.07)
Distributions from net realized gain (.50) (.42) (1.70) --
- ----------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.65) (.63) (1.96) (.07)
- ----------------------------------------------------------------------------------------------------
Net asset value, end of period $12.43 $10.89 $10.07 $11.23
======================================================
====================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 20.97% 15.38% 7.91% 0.81%
====================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $2,809 $1,828 $455 $102
- ----------------------------------------------------------------------------------------------------
Average net assets (in thousands) $2,200 $ 968 $298 $100
- ----------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.40% 1.39%(5) 2.39%(5) 2.18%(5)(6)
Expenses(7) 2.53% 2.88%(5) 2.62%(5) 2.49%(5)(6)
- ----------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 124.2% 130.0% 113.0% 192.0%
Average brokerage commission rate(9) $0.0548 -- -- --
</TABLE>
6. Annualized.
7. Beginning in fiscal 1996, the expense ratio reflects the effect of gross
expenses paid indirectly by the Fund. Prior year expense ratios have not been
adjusted.
8. 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, 1996 were $66,479,417 and $66,212,071, respectively.
9. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold.
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 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 Sub-Adviser
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
give 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; 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 of 1940 to be a particular percentage of outstanding voting
shares (and this term is explained in the Statement of Additional
Information). The Board of Trustees of the Trust (as defined
below) (the "Board of Trustees") may change non-fundamental
policies without shareholder approval, although significant changes
will be described in amendments to this Prospectus.
U.S. Government Obligations, including Mortgage-Backed
Securities. As described above, the Fund may invest its assets in
U.S. Government obligations. These 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 the 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 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.
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.
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" table above, shows 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 gains distributions the Fund pays to shareholders. The
Fund qualified in its last fiscal year and intends to do so in the
coming year, although there is no guarantee that it will qualify.
Investment Risks
All investments carry risks to some degree, whether they are
risks that market prices of the investment will fluctuate (this is
known as "market risk") or that the underlying issuer will
experience financial difficulties and may default on its obligation
under a fixed-income investment to pay interest and repay principal
(this is referred to as "credit risk"). These general investment
risks and the special risks of certain types of investments that
the Fund may hold are described below. They affect the value of the
Fund's investments, its investment performance and the prices of
its shares. These risks collectively form the risk profile of the
Fund.
Because of the types of securities the Fund invests in and
the investment techniques the Fund uses, the Fund is designed for
investors who are investing for the long term. It is not intended
for investors seeking assured income or preservation of capital.
While the Sub-Adviser tries to reduce risks by diversifying
investments, by carefully researching securities before they are
purchased, and in some cases by using hedging techniques, changes
in overall market prices can occur at any time, and because the
income earned on securities is subject to change, there is no
assurance that the Fund will achieve its investment objective. When
you redeem your shares, they may be worth more or less than what
you paid for them. <PAGE>
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, 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. 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 values 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.
Mortgage-backed securities and CMOs present specific risks.
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
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.
Special Risks of Lower-Grade Securities. The Fund may
invest up to 25% of its total assets in lower-grade, high-yield
debt securities. These are debt securities rated below "investment
grade," which means they have a rating lower than "Baa" by Moody's
Investors Service, Inc. ("Moody's") or lower than "BBB" by Standard
& Poor's Corporation ("S&P"), or another nationally recognized
statistical rating organization, 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 does not
intend to hold such lower-rated securities unless the opportunities
for capital appreciation and income, combined, remain attractive.
The Fund may invest in securities rated as low as "Caa" by Moody's
or "CCC" by S&P although it presently does not intend to do so. A
reduction in the rating of a security after its purchase by the
Fund will not require the Fund to dispose of the security. Once the
rating of a security has been changed, the Fund will consider all
circumstances deemed relevant in determining whether to continue to
hold the security. Appendix B to this Prospectus describes these
rating categories.
Lower-grade, high-yield, 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.
<PAGE>
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 to 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.
Hedging Instruments Can Be Volatile Investments and May
Involve Special Risks. The Fund may invest in certain hedging
instruments, as described below. 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 Sub-Adviser 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.
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 that have been created and for which a market
exists, but which are not available for immediate delivery. The
Fund does not intend to make such purchases for speculative
purposes. During the period between the purchase and settlement,
the underlying securities are subject to market fluctuations and no
interest accrues prior to delivery of the securities.
Repurchase Agreements. The Fund may enter into repurchase
agreements to generate income for liquidity purposes to meet
anticipated redemptions, or pending the investment of proceeds from
sales of Fund shares or settlement of purchases of portfolio
investments. In a repurchase transaction, the Fund buys a security
and simultaneously sells it to the vendor for delivery at a future
date. Repurchase agreements must be fully collateralized. However,
if the vendor fails to pay the resale price on the delivery date,
the Fund may incur costs in disposing of the collateral and may
experience losses if there is any delay in its ability to do so.
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 and procedures
established by the 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. 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. The
Manager monitors holdings of illiquid securities on an ongoing
basis and at times the Fund may be required to sell some holdings
to maintain adequate liquidity.
Loans of Portfolio Securities. To attempt to increase its
total return, the Fund may lend its portfolio securities to
brokers, dealers, and other financial institutions. The Fund must
receive collateral for a loan. After any loan, the value of the
securities loaned is not expected to exceed 33-1/3% of the Fund's
total assets. 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.
Hedging. 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). 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 ("NASDAQ") of
The Nasdaq Stock Market, Inc. 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 owns the investment on which the
call was written or the Fund owns and segregates liquid assets to
satisfy its obligation if the call is exercised. 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.
Other Investment Restrictions. The Fund has other 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 a temporary measure for extraordinary or emergency purposes and
will make no additional investments while such borrowings exceed 5%
of the Fund's total assets. With respect to this fundamental
policy, the Fund can borrow only if it maintains a 300% ratio of
assets to borrowings at all times in the manner set forth in the
Investment Company Act.
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 (the Fund has
undertaken as a non-fundamental policy to limit investments in
restricted securities to 5% of its total assets excluding
restricted securities that may be resold to "qualified
institutional buyers"). Notwithstanding this restriction on
illiquid securities, the Fund may purchase securities which are not
registered under the Securities Act of 1933 but which can be sold
to "qualified institutional buyers" in accordance with Rule 144A
under the Act. Any such security will not be considered illiquid,
provided that the Manager, under guidelines established by the
Board of Trustees, determines that an adequate trading market
exists for that security.
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.
Unless this Prospectus states that a percentage restriction
applies continuously, it applies only at the time the Fund makes an
investment, and the Fund need not sell securities to meet the
percentage limits if the value of the investment increases in
proportion to the size of the Fund. Other investment restrictions
are listed in "Investment Restrictions" in the Statement of
Additional Information.
How the Fund is Managed
Organization and History. The Fund is one of four portfolios of
Oppenheimer Quest For Value Funds (the "Trust"), 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 and the Sub-Adviser. "Trustees
and Officers of the Trust" in the Statement of Additional
Information names the Trustees and provides more information about
them and the officers of the Trust. Although the Trust does not
intend to hold annual meetings of its shareholders, 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
or to take other action described in the Trust'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 entitles a shareholder to
vote on matters submitted to the shareholders to vote on, 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. Please refer to "How the Fund is Managed" in the
Statement of Additional Information for more information on the
voting of shares.
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 is responsible to pay to conduct its
business.
The Manager has operated as an investment adviser since 1959.
The Manager (including a subsidiary) currently manages investment
companies, including other Oppenheimer funds, with assets of more
than $62 billion as of December 31, 1996, and with more than 3
million shareholder accounts. The Manager is owned by Oppenheimer
Acquisition Corp., a holding company that is owned in part by
senior officers of the Manager and controlled by Massachusetts
Mutual Life Insurance Company.
The Sub-Adviser. The Manager has retained the Sub-Adviser to
provide day-to-day portfolio management of the Fund. Prior to
November 22, 1995, the Sub-Adviser was named Quest for Value
Advisors and was the investment adviser to the Fund. The Sub-
Adviser is a majority-owned subsidiary of Oppenheimer Capital, a
registered investment advisor, whose employees perform all
investment advisory services provided to the Fund by the Sub-
Adviser. 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.
Portfolio Manager. The Fund's portfolio manager, Colin
Glinsman, is employed by the Sub-Adviser and is primarily
responsible for the selection of the Fund's securities. Mr.
Glinsman, who is also a Senior Vice President of Oppenheimer
Capital, has been the Fund's portfolio manager since December, 1992
and has been a securities analyst with Oppenheimer Capital since
1989.
The Sub-Adviser's equity investment policy is overseen by
George Long, President and Chief Investment Officer for Oppenheimer
Capital. Mr. Long has been with Oppenheimer Capital since 1981.
Fees and Expenses. Under the Investment Advisory
Agreement, the Fund pays the Manager an annual fee based on the
Fund's daily net assets at the rate of 0.85% of average annual 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 and legal and auditing costs; the Fund also reimburses the
Manager for bookkeeping and accounting services performed on behalf
of the Fund. These expenses are paid out of the Fund's assets and
are not paid directly by shareholders. However, they reduce the
net asset value of shares, and therefore are indirectly borne by
shareholders through their investment. More information about the
Investment Advisory Agreement and the other expenses paid by the
Fund is contained in the Statement of Additional Information.
The Manager pays the Sub-Adviser an annual fee based on the
average daily net assets of the Fund equal to 40% of the advisory
fee collected by the Manager based on the 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 net assets of
the Fund that exceed the Base Amount.
The Sub-Adviser may select its affiliate, Oppenheimer & Co.,
Inc. ("Opco"), a registered broker-dealer, to execute transactions
for the Fund, provided that the commissions, fees or other
remuneration received by Opco are reasonable and fair compared to
those paid to other brokers in connection with comparable
transactions. When selecting broker-dealers other than Opco, the
Sub-Adviser may consider their record of sales of shares of the
Fund. Further information about the Fund's brokerage policies and
practices is set forth in "Brokerage Policies of the Fund" in the
Statement of Additional Information.
The Distributor. The Fund's shares are sold through dealers,
brokers and other financial institutions that have a sales
agreement with OppenheimerFunds Distributor, Inc., a subsidiary of
the Manager that acts as the Fund's Distributor. The Distributor
also distributes the shares of other Oppenheimer funds managed by
the Manager and is sub-distributor for funds managed by a
subsidiary of the Manager.
The Transfer Agent and Shareholder Servicing Agent. The Fund's
transfer agent and shareholder servicing agent is OppenheimerFunds
Services, a division of the Manager. It also acts as the
shareholder servicing agent for certain other Oppenheimer funds.
Shareholders should direct inquiries about their accounts to the
Transfer Agent at the address and toll-free number shown below in
this Prospectus and on the back cover. 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 of shares will
usually be different as a result of the different kinds of expenses
each class bears. These returns measure the performance of a
hypothetical account in the Fund over various periods, and do not
show the performance of each shareholder's investment (which will
vary if dividends are received in cash or shares are sold or
additional shares are purchased). The Fund's performance
information may help you see how well your investment in the Fund
has done over time and to compare it to other funds or market
indices, as we have done on pages __ and ___.
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, normally
the current maximum initial sales charge has been deducted. When
total returns are shown for Class B or Class C shares, normally the
contingent deferred sales charge that applies to the period for
which total return is shown has been deducted. However, total
returns may also be quoted "at net asset value," without including
the sales charge, and those returns would be lower if sales charges
were deducted.
How Has the Fund Performed? Below is a discussion by the Manager
of the Fund's performance during its last fiscal year ended October
31, 1996, followed by a graphical comparison of the Fund's
performance to an appropriate broad-based market index.
Management's Discussion of Performance. During the past
fiscal year ended October 31, 1996, approximately two-thirds of the
Fund's assets were invested in common stocks, with the remainder
invested in fixed-income securities and, to a lesser extent, short-
term notes. By virtue of this asset composition, the Fund was able
to participate to a significant extent in the strong performance of
the domestic stock market and during the past fiscal year performed
ahead of the average for its peer group. Interest rate concerns
during the year led to volatility in the bond market, which in turn
affected the value of the Fund's fixed-income investments. In
response, the Fund's weighting in long-term bonds, which are more
sensitive to fluctuations in interest rates than short-term bonds,
was reduced. The Fund's portfolio and its portfolio manager's
strategies are subject to change.
Comparing the Fund's Performance to the Market. The graphs
below show the performance of a hypothetical $10,000 investment in
Class A, Class B and Class C shares of the Fund held until October
31, 1996. In the case of Class A shares, performance is measured
from the commencement of operations on November 1, 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
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 index 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 10/31/96
- ----------------------------------------------------
Class A Shares(1)
- -----------------
1-Year 5 Years
------ -------
14.84% 12.08%
Class B Shares(2)
- -----------------
1-Year Life of Class
------ ---------------
16.07% 13.76%
Class C Shares(3)
- -----------------
1-Year Life of Class
------ ---------------
19.97% 14.10%
- ---------------------
Total returns and the ending account values in the graphs show
change in share value and include reinvestment of all dividends and
capital gains distributions.
(1) Class A returns are shown net of the current applicable
5.75% maximum initial sales charge. The inception date of the Fund
(Class A shares) was 11/1/91.
(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 "Retirement Plans", as defined in "Class
A Contingent Deferred Sales Charge" on page ___). If you purchase
Class A shares as part of an investment of at least $1 million
($500,000 for Retirement Plans) in shares of one or more
Oppenheimer funds you will not pay an initial sales charge, but if
you sell any of those shares within 18 months of buying them, you
may pay a contingent deferred sales charge 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 charge
rates are described in "Buying Class A Shares" below.
Class B Shares. If you buy Class B shares, you pay no
sales charge at the time of purchase, but if you sell your shares
within six years of buying them you will normally pay a contingent
deferred sales charge that varies, depending on how long you have
owned your shares as described in "Buying Class B Shares" below.
Class C Shares. If you buy Class C shares, you pay no
sales charge at the time of purchase, but if you sell your shares
within 12 months of buying them, you will normally pay a contingent
deferred sales charge of 1% as described in "Buying Class C Shares"
below.
Which Class of Shares Should You Choose? Once you decide that
the Fund is an appropriate investment for you, the decision as to
which class of shares is better suited to your needs depends on a
number of factors which you should discuss with your financial
advisor. The Fund's operating costs that apply to a class of
shares and the effect of the different types of sales charges on
your investment will vary your investment results over time. The
most important factors to consider are how much you plan to invest
and how long you plan to hold your investment. If your goals and
objectives change over time and you plan to purchase additional
shares, you should re-evaluate those factors to see if you should
consider another class of shares.
In the following discussion, to help provide you and your
financial advisor with a framework in which to choose a class, we
have made some assumptions using a hypothetical investment in the
Fund. We used the sales charge rates that apply to each class, and
considered the effect of the asset-based sales charge on Class B
and Class C expenses (which, like all expenses, will affect your
investment return). For the sake of comparison, we have assumed
that there is a 10% rate of appreciation in the investment each
year. Of course, the actual performance of your investment cannot
be predicted and will vary, based on the Fund's actual investment
returns and the operating expenses borne by each class of shares,
and which class of shares you invest in.
The factors discussed below are not intended to be investment
advice or recommendations, because each investor's financial
considerations are different. The discussion below of the factors
to consider in purchasing a particular class of shares assumes that
you will purchase only one class of shares and not a combination of
shares of different classes.
How Long Do You Expect to Hold Your Investment? While
future financial needs cannot be predicted with certainty, knowing
how long you expect to hold your investment will assist you in
selecting the appropriate class of shares. The effect of the sales
charge, over time, using our assumptions will generally depend on
the amount invested. Because of the effect of class-based
expenses, your choice will also depend on how much you plan to
invest. For example, the reduced sales charges available for
larger purchases of Class A shares may, over time, offset the
effect of paying an initial sales charge on your investment (which
reduces the amount of your investment dollars used to buy shares
for your account), compared to the effect over time of higher
class-based expenses on Class B or Class C shares for which no
initial sales charge is paid.
Investing for the Short Term. If you have a short-term
investment horizon (that is, you plan to hold your shares for not
more than six years), you should probably consider purchasing Class
A or Class C shares rather than Class B shares, because of the
effect of the Class B contingent deferred sales charge if you
redeem within 6 years, as well as the effect of the 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 economic
impact on your account over the longer term than the reduced front-
end sales charge available for larger purchases of Class A shares.
For example, Class A might be more advantageous than Class C (as
well as Class B) for investments of more than $100,000 expected to
be held for 5 or 6 years (or more). For investments over $250,000
expected to be held 4 to 6 years (or more), Class A shares may
become more advantageous than Class C (and Class B). If investing
$500,000 or more, Class A may be more advantageous as your
investment horizon approaches 3 years or more.
And for most investors who invest $1 million or more, in most
cases Class A shares will be the most advantageous choice, no
matter how long you intend to hold your shares. For that reason,
the Distributor normally will not accept purchase orders of
$500,000 more of Class B shares or $1 million or more of Class C
shares from a single investor.
Investing for the Longer Term. If you are investing for
the longer term, for example, for retirement, and do not expect to
need access to your money for seven years or more, Class B shares
may be an appropriate consideration, if you plan to invest less
than $100,000. If you plan to invest more than $100,000 over the
long term, Class A shares will likely be more advantageous than
Class B shares or Class C shares, as discussed above, because of
the effect of the expected lower expenses for Class A shares and
the reduced initial sales charges available for larger investments
in Class A shares under the Fund's Right of Accumulation.
Of course, these examples are based on approximations of the
effect of current sales charges and expenses on a hypothetical
investment over time, using the assumed annual performance return
stated above, and therefore you should analyze your options
carefully.
Are There Differences in Account Features That Matter to
You? Because some account features may not be available for Class
B or Class C shareholders, or other features (such as Automatic
Withdrawal Plans) may not be advisable (because of the effect of
the contingent deferred sales charge in non-retirement accounts)
for Class B or Class C shareholders, you should carefully review
how you plan to use your investment account before deciding which
class of shares is better for you. For example, share certificates
are not available for Class B or Class C shares, and if you are
considering using your shares as collateral for a loan, that may be
a factor to consider. Additionally, dividends payable to Class B
and Class C shareholders will be reduced by the additional expenses
borne solely by those classes, or higher expenses, such as the
asset-based sales charges to which Class B and Class C shares are
subject, as described below and in the Statement of Additional
Information.
How Does It Affect Payments to My Broker? A salesperson,
such as a broker or any other person who is entitled to receive
compensation for selling Fund shares, may receive different
compensation for selling one class of shares than for selling
another class. It is important that investors understand that the
purpose of the contingent deferred sales charges and asset-based
sales charges for Class B and Class C shares are the same as the
purpose of the front-end sales charge on sales of Class A shares:
that is, to compensate the Distributor for commissions it pays to
dealers and financial institutions for selling shares.
How Much Must You Invest? You can open a Fund account with a
minimum initial investment of $1,000 and make additional
investments at any time with as little as $25. There are reduced
minimum investments under special investment plans:
With Asset Builder Plans, Automatic Exchange Plans,
403(b)(7) custodial plans and military allotment plans, you can
make initial and subsequent investments of as little as $25; and
subsequent purchases of at least $25 can be made by telephone
through AccountLink.
Under pension, profit-sharing plans and 401(k) and
Individual Retirement Accounts (IRAs), you can make an initial
investment of as little as $250 (if your IRA is established under
an Asset Builder Plan, the $25 minimum applies), and subsequent
investments may be as little as $25.
There is no minimum investment requirement if you are buying
shares by reinvesting dividends from the Fund or other Oppenheimer
funds (a list of them appears in the Statement of Additional
Information, or you can ask your dealer or call the Transfer
Agent), or by reinvesting distributions from unit investment trusts
that have made arrangements with the Distributor.
How Are Shares Purchased? You can buy shares several ways:
through any dealer, broker or financial institution that has a
sales agreement with the Distributor, directly through the
Distributor, or automatically from your bank account through an
Asset Builder Plan under the OppenheimerFunds AccountLink service.
The Distributor may appoint certain servicing agents as the
Distributor's agent to accept purchase (and redemption) orders.
When you buy shares, be sure to specify Class A, Class B or Class
C shares. If you do not choose, your investment will be made in
Class A shares.
Buying Shares Through Your Dealer. Your dealer will place
your order with the Distributor on your behalf.
Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "OppenheimerFunds Distributor, Inc." Mail it to P.O. Box
5270, Denver, Colorado 80217. If you don't list a dealer on the
application, the Distributor will act as your agent in buying the
shares. However, we recommend that you discuss your investment
first with a financial advisor, to be sure it is appropriate for
you.
Buying Shares Through OppenheimerFunds AccountLink. You
can use AccountLink to link your Fund account with an account at a
U.S. bank or other financial institution that is an Automated
Clearing House (ACH) member, to transmit funds electronically to
purchase shares, to have the Transfer Agent send redemption
proceeds, or to transmit dividends and distributions to your bank
account
Shares are purchased for your account on AccountLink on the
regular business day the Distributor is instructed by you to
initiate the ACH transfer to buy shares. You can provide those
instructions automatically, under an Asset Builder Plan, described
below, or by telephone instructions using OppenheimerFunds
PhoneLink, also described below. You should request AccountLink
privileges on the application or dealer settlement instructions
used to establish your account. Please refer to "AccountLink" below
for more details.
Asset Builder Plans. You may purchase shares of the Fund
(and up to four other Oppenheimer funds) automatically each month
from your account at a bank or other financial institution under an
Asset Builder Plan with AccountLink. Details are in the Statement
of Additional Information.
At What Price Are Shares Sold? Shares are sold at the
public offering price based on the net asset value (and any initial
sales charge that applies) that is next determined after the
Distributor or its designated agent receives the purchase order in
Denver, Colorado. 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
in its sole discretion may reject any purchase order for the Fund's
shares.
Special Sales Charge Arrangements for Certain Persons. Appendix
A to this Prospectus sets forth conditions for the waiver of, or
exemption from, sales charges or the special sales charge rates
that apply to shareholders of one of the Former Quest for Value
Funds (as defined in that Appendix), 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, purchases
are not subject to an initial sales charge, and the offering price
will be the net asset value. In some cases, reduced sales charges
may be available, as described below. Out of the amount you
invest, the Fund receives the net asset value to invest for your
account. The sales charge varies depending on the amount of your
purchase. A portion of the sales charge may be retained by the
Distributor and allocated to your dealer as commission. The
current sales charge rates and commissions paid to dealers and
brokers are as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
Front-End Sales Charge Commission
As a Percentage of as Percentage
Offering Amount of Offering
Amount of Purchase Price Invested Price
- ----------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
</TABLE>
The Distributor reserves the right to reallow the entire commission
to dealers. If that occurs, the dealer may be considered an
"underwriter" under Federal securities laws.
Class A Contingent Deferred Sales Charge. There is no
initial sales charge on purchases of Class A shares of any one or
more of the Oppenheimer funds in the following cases:
Purchases aggregating $1 million or more.
Purchases by a retirement plan qualified under sections
401(a) or 401(k) of the Internal Revenue Code, by a non-qualified
deferred compensation plan (not including Section 457 plans),
employee benefit plan, group retirement plan (see "How to Buy
Shares - Retirement Plans" in the Statement of Additional
Information for further details), an employee's 403(b)(7) custodial
plan account, SEP IRA, SARSEP, or SIMPLE plan (all of these plans
are collectively referred to as "Retirement Plans"); that: (1) 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.
Purchases by an OppenheimerFunds Rollover IRA if the
purchases are made (1) through a broker, dealer, bank or registered
investment adviser that has made special arrangements with the
Distributor for these purchases, or (2) by a direct rollover of a
distribution from a qualified retirement plan if the administrator
of that plan has made special arrangements with the Distributor for
those purchases.
Purchases by a retirement plan qualified under section
401(a) if the retirement plan has total plan assets of $500,000 or
more.
The Distributor pays dealers of record commissions on those
purchases in an amount equal to (i) 1.0% for non-Retirement Plan
accounts, and (ii) for Retirement Plan accounts, 1.0% of the first
$2.5 million, plus 0.50% of the next $2.5 million, plus 0.25% of
purchases over $5 million. That commission will be paid only on
those purchases that were not previously subject to a front-end
sales charge and dealer commission. No sales commission will be
paid to the dealer, broker or financial institution on sales of
Class A shares purchased with the redemption proceeds of shares of
a mutual fund offered as an investment option in a Retirement Plan
in which Oppenheimer funds are also offered as investment options
under a special arrangement with the Distributor if the purchase
occurs more than 30 days after the addition of the Oppenheimer
funds as an investment option to the Retirement Plan.
If you redeem any of those shares within 18 months of the end
of the calendar month of their purchase, a contingent deferred
sales charge (called the "Class A contingent deferred sales
charge") will be deducted from the redemption proceeds. That sales
charge may be equal to 1.0% of the lesser of (1) the aggregate net
asset value of the redeemed shares (not including shares purchased
by reinvestment of dividends or capital gain distributions) or (2)
the original offering price (which is the original net asset value)
of the redeemed shares. However, the Class A contingent deferred
sales charge will not exceed the aggregate 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, the contingent deferred sales charge will
apply.
Special Arrangements With Dealers. The Distributor may
advance up to 13 months' commissions to dealers that have
established special arrangements with the Distributor for Asset
Builder Plans for their clients.
Reduced Sales Charges for Class A Share Purchases. You may be
eligible to buy Class A shares at reduced sales charge rates in one
or more of the following ways:
Right of Accumulation. To qualify for the lower sales
charge rates that apply to larger purchases of Class A shares, you
and your spouse can add together Class A and Class B shares you
purchase for your individual accounts, or jointly, or for trust or
custodial accounts on behalf of your children who are minors. A
fiduciary can count all shares purchased for a trust, estate or
other fiduciary account (including one or more employee benefit
plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class
A and Class B shares of the Fund and other Oppenheimer funds to
reduce the sales charge rate that applies to current purchases of
Class A shares. You can also count Class A and Class B shares of
Oppenheimer funds you previously purchased subject to an initial or
contingent deferred sales charge to reduce the sales charge rate
for current purchases of Class A shares, provided that you still
hold your investment in one of the Oppenheimer funds. The value of
those shares will be based on the greater of the amount you paid
for the shares or their current value (at offering price). The
Oppenheimer funds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from
the Transfer Agent. The reduced sales charge will apply only to
current purchases and must be requested when you buy your shares.
Letter of Intent. Under a Letter of Intent, if you purchase
Class A shares or Class A and Class B shares of the Fund and other
Oppenheimer funds during a 13-month period, you can reduce the
sales charge rate that applies to your purchases of Class A shares.
The total amount of your intended purchases of both Class A and
Class B shares will determine the reduced sales charge rate for the
Class A shares purchased during that period. This can include
purchases made up to 90 days before the date of the Letter. More
information is contained in the Application and in "Reduced Sales
Charges" in the Statement of Additional Information.
Waivers of Class A Sales Charges. The Class A sales charges
are not imposed in the circumstances described below. There is an
explanation of this policy in "Reduced Sales Charges" in the
Statement of Additional Information.
Waivers of Initial and Contingent Deferred Sales Charges for
Certain Purchasers. Class A shares purchased by the following
investors are not subject to any Class A sales charges:
the Manager or its affiliates;
present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced
Sales Charges" in the Statement of Additional Information) of the
Fund, the Manager and its affiliates, and retirement plans
established by them for their employees;
registered management investment companies, or separate
accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose;
dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
employees and registered representatives (and their spouses)
of dealers or brokers described above or financial institutions
that have entered into sales arrangements with such dealers or
brokers (and are identified to the Distributor) or with the
Distributor; the purchaser must certify to the Distributor at the
time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor
children);
dealers, brokers, banks or registered investment advisers
that have entered into an agreement with the Distributor providing
specifically for the use of shares of the Fund in particular
investment products made available to their clients (those clients
may be charged a transaction fee by their dealer, broker or adviser
for the purchase or sale of Fund shares);
(1) investment advisors and financial planners who charge
an advisory, consulting or other fee for their services and buy
shares for their own accounts or the accounts of their clients, and
(2) retirement plans and deferred compensation plans and trusts
used to fund those plans (including, for example, plans qualified
or created under sections 401(a), 403(b) or 457 of the Internal
Revenue Code), and "rabbi trusts" that buy shares for their own
accounts, in each case if those purchases are made through a broker
or agent or other financial intermediary that has made special
arrangements with the Distributor for those purchases; (3) clients
of such investment advisors or financial planners who buy shares
for their own accounts may also purchase shares without sales
charge but only if their accounts are linked to a master account of
their investment advisor or financial planner on the books and
records of the broker, agent or financial intermediary with which
the Distributor has made such special arrangements (each of these
investors may be charged a fee by the broker, agent or financial
intermediary for purchasing shares);
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;
employee benefit plans purchasing shares through a
shareholder servicing agent which the Distributor has appointed as
agent to accept those purchase orders;
accounts for which Oppenheimer Capital is the investment
adviser (the Distributor must be advised of this arrangement) and
persons who are directors or trustees of the company or trust which
is the beneficial owner of such accounts;
any unit investment trust that has entered into an
appropriate agreement with the Distributor;
a TRAC-2000 401(k) plan (sponsored by the former Quest for
Value Advisors) whose Class B or Class C shares of a Former Quest
for Value Fund were exchanged for Class A shares of that Fund due
to the termination of the Class B and Class C TRAC-2000 program on
November 24, 1995; or
qualified retirement plans that had agreed with the former
Quest for Value Advisors to purchase shares of any of the Former
Quest for Value Funds at net asset value, with such shares to be
held through DCXchange, a sub-transfer agency mutual fund
clearinghouse, provided that such arrangements are consummated and
share purchases commence by December 31, 1996.
Waivers of Initial and Contingent Deferred Sales Charges in
Certain Transactions. Class A shares issued or purchased in the
following transactions are not subject to Class A sales charges:
shares issued in plans of reorganization, such as mergers,
asset acquisitions and exchange offers, to which the Fund is a
party;
shares purchased by the reinvestment of loan repayments by
a participant in a retirement plan for which the Manager or its
affiliates acts as sponsor;
shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds
(other than Oppenheimer Cash Reserves) or unit investment trusts
for which reinvestment arrangements have been made with the
Distributor;
shares purchased and paid for with the proceeds of shares
redeemed in the past 12 months from a mutual fund (other than a
fund managed by the Manager or any of its subsidiaries) on which an
initial sales charge or contingent deferred sales charge was paid
(this waiver also applies to shares purchased by exchange of shares
of Oppenheimer Money Market Fund, Inc. that were purchased and paid
for in this manner); this waiver must be requested when the
purchase order is placed for your shares of the Fund, and the
Distributor may require evidence of your qualification for this
waiver; or
shares purchased with the proceeds of maturing principal of
units of any Qualified Unit Investment Liquid Trust Series.
Waivers of the Class A Contingent Deferred Sales Charge for
Certain Redemptions. The Class A contingent deferred sales charge
is also waived if shares that would otherwise be subject to the
contingent deferred sales charge are redeemed in the following
cases:
to make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the original account value;
involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see "Shareholder Account
Rules and Policies," below);
if, at the time a purchase order is placed for Class A
shares that would otherwise be subject to the Class A contingent
deferred sales charge, the dealer agrees in writing to accept the
dealer's portion of the commission payable on the sale in
installments of 1/18th of the commission per month (and no further
commission will be payable if the shares are redeemed within 18
months of purchase);
for distributions from a TRAC-2000 401(k) plan sponsored
by the Distributor due to the termination of the TRAC-2000 program;
or
for distributions from Retirement Plans, deferred
compensation plans or other employee benefit plans for any of the
following purposes: (1) following the death or disability (as
defined in the Internal Revenue Code) of the participant or
beneficiary (the death or disability must occur after the
participant's account was established); (2) to return excess
contributions; (3) to return contributions made due to a mistake of
fact; (4) hardship withdrawals, as defined in the plan; (5) under
a Qualified Domestic Relations Order, as defined in the Internal
Revenue Code; (6) to meet the minimum distribution requirements of
the Internal Revenue Code; (7) to establish "substantially equal
periodic payments" as described in Section 72(t) of the Internal
Revenue Code; (8) for retirement distributions or loans to
participants or beneficiaries; (9) separation from service; (10)
participant-directed redemptions to purchase shares of a mutual
fund (other than a fund managed by the Manager or its subsidiary)
offered as an investment option in a Retirement Plan in which
Oppenheimer funds are also offered as investment options under a
special arrangement with the Distributor; or (11) plan termination
or "in-service distributions", if the redemption proceeds are
rolled over directly to an OppenheimerFunds IRA.
Distribution and Service Plan for Class A Shares. The Fund
has adopted a Distribution and Service Plan for Class A shares to
reimburse the Distributor for a portion of its costs incurred in
connection with the personal service and maintenance of shareholder
accounts that hold Class A shares. Under the Plan, the Fund pays
an annual asset-based sales charge to the Distributor at an annual
rate of 0.15% 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 contingent deferred sales charge will be based
on the lesser of the net asset value of the redeemed shares at the
time of redemption or the original offering price (which is the
original net asset value). The contingent deferred sales charge is
not imposed on the amount of your account value represented by the
increase in net asset value over the initial purchase price. The
Class B contingent deferred sales charge is paid to the Distributor
to reimburse its expenses of providing distribution-related
services to the Fund in connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 6 years, and (3)
shares held the longest during the 6-year period. The contingent
deferred sales charge is not imposed in the circumstances described
in "Waivers of Class B and Class C sales Charges" below.
The amount of the contingent deferred sales charge will depend
on the number of years since you invested and the dollar amount
being redeemed, according to the following schedule:
Years Since 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. 72 months after you
purchase Class B shares, those shares will automatically convert to
Class A shares. This conversion feature relieves Class B
shareholders of the asset-based sales charge that applies to Class
B shares under the Class B Distribution and Service Plan, described
below. The conversion is based on the relative net asset value of
the two classes, and no sales load or other charge is imposed. When
Class B shares convert, any other Class B shares that were acquired
by the reinvestment of dividends and distributions on the converted
shares will also convert to Class A shares. The conversion feature
is subject to the continued availability of a tax ruling described
in "Alternative Sales Arrangements - Class A, Class B and Class C
Shares" in the Statement of Additional Information.
Distribution and Service Plan for Class B Shares. The Fund
has adopted a Distribution and Service Plan for Class B shares to
compensate the Distributor for distributing Class B shares and
servicing accounts. This Plan is described below under "Buying
Class C Shares - Distribution and Service Plans for Class B and
Class C Shares."
Waivers of Class B Sales Charges. The Class B contingent
deferred sales charge will not apply to shares purchased in certain
types of transactions, nor will it apply to shares redeemed in
certain circumstances, as described below under "Buying Class C
Shares - Waivers of Class B and Class C Sales Charges."
Buying Class C Shares. Class C shares are sold at net asset
value per share without an initial sales charge. However, if Class
C shares are redeemed within 12 months of their purchase, a
contingent deferred sales charge of 1.0% will be deducted from the
redemption proceeds. That sales charge will not apply to shares
purchased by the reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge will be based
on the lesser of the net asset value of the redeemed shares at the
time of redemption or the original offering price (which is the
original net asset value). The contingent deferred sales charge is
not imposed on the amount of your account value represented by the
increase in net asset value over the initial purchase price. The
Class C contingent deferred sales charge is paid to compensate the
Distributor for its expenses of providing distribution-related
services to the Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 12 months, and (3)
shares held the longest during the 12-month period.
Distribution and Service Plans for Class B and Class C
Shares. The Fund has adopted Distribution and Service Plans for
Class B and Class C shares to compensate the Distributor for its
services and costs in distributing Class B and Class C shares and
servicing accounts. Under the Plans, the Fund pays the Distributor
an annual "asset-based sales charge" of 0.75% per year on Class B
shares that are outstanding for 6 years or less and on Class C
shares. The Distributor also receives a service fee of 0.25% per
year under each plan.
Under each Plan, both fees are computed on the average of the
net asset value of shares in the respective class, determined as of
the close of each regular business day during the period. The
asset-based sales charge and service fees increase Class B and
Class C expenses by up to 1.00% of the net assets per year of the
respective class.
The Distributor uses the service fees to compensate dealers
for providing personal services for accounts that hold Class B or
Class C shares. Those services are similar to those provided under
the Class A Service Plan, described above. The Distributor pays
the 0.25% service fees to dealers in advance for the first year
after Class B or Class C shares have been sold by the dealer and
retains the service fee paid by the Fund in that year. After the
shares have been held for a year, the Distributor pays the service
fees to dealers on a quarterly basis.
The asset-based sales charge allows investors to buy Class
B or Class C shares without a front-end sales charge while allowing
the Distributor to compensate dealers that sell those shares. The
Fund pays the asset-based sales charges to the Distributor for its
services rendered in distributing Class B and Class C shares.
Those payments are at a fixed rate that is not related to the
Distributor's expenses. The services rendered by the Distributor
include paying and financing the payment of sales commissions,
service fees and other costs of distributing and selling Class B
and Class C shares.
The Distributor currently pays sales commissions of 3.75% of
the purchase price of Class B shares to dealers from its own
resources at the time of sale. Including the advance of the
service fee, the total amount paid by the Distributor to the dealer
at the time of sale of Class B shares is 4.00% of the purchase
price. The Distributor retains the Class B asset-based sales
charge.
The Distributor currently pays sales commissions of 0.75% of
the purchase price of Class C shares to dealers from its own
resources at the time of sale. Including the advance of the
service fee the total amount paid by the Distributor to the dealer
at the time of sale of Class C shares is 1.00% of the purchase
price. The Distributor retains the asset-based sales charge during
the first year Class C shares are outstanding to recoup sales
commissions it has paid, the advances of service fee payments it
has made, and its financing costs and other expenses. The
Distributor plans to pay the asset-based sales charge as an ongoing
commission to the dealer on Class C shares that have been
outstanding for a year or more.
The Distributor's actual expenses in selling Class B and Class
C shares may be more than the payments it receives from contingent
deferred sales charges collected on redeemed shares and from the
Fund under the Distribution and Service Plans for Class B and Class
C shares. If either Plan is terminated by the Fund, the Board of
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 or Class C shares, as appropriate, 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 receives the
request), or (b) following the death or disability (as defined in
the Internal Revenue Code ("IRC")) of the participant or
beneficiary (the death or disability must have occurred after the
account was established);
redemptions from accounts other than Retirement Plans
following the death or disability of the last surviving
shareholder, including a trustee of a "grantor" trust or revocable
living trust for which the trustee is also the sole beneficiary
(the death or disability must have occurred after the account was
established, and for disability you must provide evidence of a
determination of disability by the Social Security Administration);
returns of excess contributions to Retirement Plans;
distributions from retirement plans to make "substantially
equal periodic payments" under Section 72(t) of the Internal
Revenue Code, provided the distributions do not exceed 10% of the
account value annually, measured from the date the Transfer Agent
receives the request;
shares redeemed involuntarily, as described in "Shareholder
Account Rules and Policies," below; or
distributions from OppenheimerFunds prototype 401(k) plans:
(1) for hardship withdrawals; (2) under a Qualified Domestic
Relations Order, as defined in the Internal Revenue Code; (3) to
meet minimum distribution requirements as defined in the Internal
Revenue Code; (4) to make "substantially equal periodic payments"
as described in Section 72(t) of the Internal Revenue Code; or (5)
for separation from service.
Waivers for Shares Sold or Issued in Certain Transactions.
The contingent deferred sales charge is also waived on Class B and
Class C shares sold or issued in the following cases:
shares sold to the Manager of its affiliates;
shares sold to registered management investment companies or
separate accounts of insurance companies having an agreement with
the Manager or the Distributor for that purpose; or
shares issued in plans of reorganization to which the Fund
is a party.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund
account to your account at your bank or other financial institution
to enable you to send money electronically between those accounts
to perform a number of types of account transactions. These
include purchases of shares by telephone (either through a service
representative or by PhoneLink, described below), automatic
investments under Asset Builder Plans, and sending dividends and
distributions or Automatic Withdrawal Plan payments directly to
your bank account. Please call the Transfer Agent for more
information.
AccountLink privileges should be requested on your dealer's
settlement instructions if you buy your shares through your dealer.
After your account is established, you can request AccountLink
privileges by sending signature-guaranteed instructions to the
Transfer Agent. AccountLink privileges will apply to each
shareholder listed in the registration on your account as well as
to your dealer representative of record unless and until the
Transfer Agent receives written instructions terminating or
changing those privileges. After you establish AccountLink for your
account, any change of bank account information must be made by
signature-guaranteed instructions to the Transfer Agent signed by
all shareholders who own the account.
Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase
shares in amounts up to $250,000 through a telephone
representative, call the Distributor at 1-800-852-8457. The
purchase payment will be debited from your bank account.
PhoneLink. PhoneLink is the OppenheimerFunds automated
telephone system that enables shareholders to perform a number of
account transactions automatically using a touch-tone phone.
PhoneLink may be used on already-established Fund accounts after
you obtain a Personal Identification Number (PIN), by calling the
special PhoneLink number: 1-800-533-3310.
Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have
established AccountLink privileges to link your bank account with
the Fund, to pay for these purchases.
Exchanging Shares. With the OppenheimerFunds exchange
privilege, described below, you can exchange shares automatically
by phone from your Fund account to another Oppenheimer funds
account you have already established by calling the special
PhoneLink number. Please refer to "How to Exchange Shares," below,
for details.
Selling Shares. You can redeem shares by telephone
automatically by calling the PhoneLink number and the Fund will
send the proceeds directly to your AccountLink bank account.
Please refer to "How to Sell Shares," below, for details.
Automatic Withdrawal and Exchange Plans. The Fund has several
plans that enable you to sell shares automatically or exchange them
to another Oppenheimer funds account on a regular basis:
Automatic Withdrawal Plans. If your Fund account is worth
$5,000 or more, you can establish an Automatic Withdrawal Plan to
receive payments of at least $50 on a monthly, quarterly, semi-
annual or annual basis. The checks may be sent to you or sent
automatically to your bank account on AccountLink. You may even set
up certain types of withdrawals of up to $1,500 per month by
telephone. You should consult the Statement of Additional
Information for more details.
Automatic Exchange Plans. You can authorize the Transfer
Agent to exchange an amount you establish in advance automatically
for shares of up to five other Oppenheimer funds on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange
Plan. The minimum purchase for each other Oppenheimer funds
account is $25. These exchanges are subject to the terms of the
exchange privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class
A or Class B shares of the Fund, you have up to 6 months to
reinvest all or part of the redemption proceeds in Class A shares
of the Fund or other Oppenheimer funds without paying a sales
charge. This privilege applies to Class A or Class B 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. This privilege does not apply to Class C
shares. You must be sure to ask the Distributor for this privilege
when you send your payment. Please consult the Statement of
Additional Information for more details.
Retirement Plans. Fund shares are available as an investment for
your retirement plans. If you participate in a plan sponsored by
your employer, the plan trustee or administrator must make the
purchase of shares for your retirement plan account. The
Distributor offers a number of different retirement plans that can
be used by individuals and employers:
Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
403(b)(7) Custodial Plans for employees of eligible tax-
exempt organizations, such as schools, hospitals and charitable
organizations
SEP-IRAs (Simplified Employee Pension Plans) for small
business owners or people with income from self-employment,
including SAR/SEP IRAs
Pension and Profit-Sharing Plans for self-employed persons
and small business owners
401(k) prototype retirement plans for businesses
Please call the Distributor for the OppenheimerFunds plan
documents, which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account by selling
(redeeming) some or all of your shares on any regular business day.
Your shares will be sold at the next net asset value calculated
after your order is received and accepted by the Transfer Agent.
The Fund offers you a number of ways to sell your shares: in
writing or by telephone. You can also set up Automatic Withdrawal
Plans to redeem shares on a regular basis, as described above. If
you have questions about any of these procedures, and especially if
you are redeeming shares in a special situation, such as due to the
death of the owner, or from a retirement plan, please call the
Transfer Agent first, at 1-800-525-7048, for assistance.
Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must
submit a withholding form with your request to avoid delay. If your
retirement plan account is held for you by your employer, you must
arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the
Statement of Additional Information.
Certain Requests Require A Signature Guarantee. To protect
you and the Fund from fraud, certain redemption requests must be in
writing and must include a signature guarantee in the following
situations (there may be other situations also requiring a
signature guarantee):
You wish to redeem more than $50,000 worth of shares and
receive a check
The redemption check is not payable to all shareholders
listed on the account statement
The redemption check is not sent to the address of record on
your account statement
Shares are being transferred to a Fund account with a
different owner or name
Shares are redeemed by someone other than the owners (such
as an Executor)
Where Can I Have My Signature Guaranteed? The Transfer
Agent will accept a guarantee of your signature by a number of
financial institutions, including: a U.S. bank, trust company,
credit union or savings association, or by a foreign bank that has
a U.S. correspondent bank, or by a U.S. registered dealer or broker
in securities, municipal securities or government securities, or by
a U.S. national securities exchange, a registered securities
association or a clearing agency. If you are signing as a fiduciary
or on behalf of a corporation, partnership or other business, you
must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that
includes:
Your name
The Fund's name
Your Fund account number (from your account statement)
The dollar amount or number of shares to be redeemed
Any special payment instructions
Any share certificates for the shares you are selling
The signatures of all registered owners exactly as the
account is registered, and
Any special requirements or documents requested by the
Transfer Agent to assure proper authorization of the person asking
to sell shares.
Use the following address for Send courier or Express Mail
request by mail: requests to:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Ave., 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 in any 7-day period. The check must be
payable to all owners of record of the shares and must be sent to
the address on the account statement. This service is not
available within 30 days of changing the address on an account.
Telephone Redemptions Through AccountLink or by Wire. There
are no dollar limits on telephone redemption proceeds sent to a
bank account designated when you establish AccountLink. Normally
the ACH transfer to your bank is initiated on the business day
after the redemption. You do not receive dividends on the proceeds
of the shares you redeemed while they are waiting to be
transferred.
Shareholders may also have the Transfer Agent send redemption
proceeds of $2,500 or more by Federal Funds wire to a designated
commercial bank account. The bank must be a member of the Federal
Reserve wire system. There is a $10 fee for each Federal Funds
wire. To place a wire redemption request, call the Transfer Agent
at 1-800-852-8457. The wire will normally be transmitted on the
next bank business day after the shares are redeemed. There is a
possibility that the wire may be delayed up to seven days to enable
the Fund to sell securities to pay the redemption proceeds. No
dividends are accrued or paid on the proceeds of shares that have
been redeemed and are awaiting transmittal by wire. To establish
wire redemption privileges on an accout that is already
established, please contact the Transfer Agent for instructions.
Selling Shares Through Your Dealer. The Distributor has made
arrangements to repurchase Fund shares from dealers and brokers on
behalf of their customers. Brokers or dealers may charge for that
service. Please call your dealer for more information about this
procedure. Please refer to "Special Arrangements for Repurchase of
Shares from Dealers and Brokers" in the Statement of Additional
Information for more details.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain
Oppenheimer funds at net asset value per share at the time of
exchange, without sales charge. To exchange shares, you must meet
several conditions:
Shares of the fund selected for exchange must be available
for sale in your state of residence
The prospectuses of this Fund and the fund whose shares you
want to buy must offer the exchange privilege
You must hold the shares you buy when you establish your
account for at least 7 days before you can exchange them; after the
account is open 7 days, you can exchange shares every regular
business day
You must meet the minimum purchase requirements for the fund
you purchase by exchange
Before exchanging into a fund, you should obtain and read
its prospectus
Shares of a particular class of the Fund may be exchanged only
for shares of the same class in the other Oppenheimer funds. For
example, you can exchange Class A shares of this Fund only for
Class A shares of another fund. At present, Oppenheimer Money
Market Fund, Inc. offers only one class of shares, which are
considered to be Class A shares for this purpose. In some cases,
sales charges may be imposed on exchange transactions. Please
refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.
Exchanges may be requested in writing or by telephone:
Written Exchange Requests. Submit an OppenheimerFunds
Exchange Request form, signed by all owners of the account. Send
it to the Transfer Agent at the addresses listed in "How to Sell
Shares."
Telephone Exchange Requests. Telephone exchange requests may
be made either by calling a service representative at 1-800-852-
8457 or by using PhoneLink for automated exchanges, by calling 1-
800-533-3310. Telephone exchanges may be made only between accounts
that are registered with the same name(s) and address. Shares held
under certificates may not be exchanged by telephone.
You can find a list of Oppenheimer funds currently available
for exchanges in the Statement of Additional Information or obtain
one by calling a service representative at 1-800-525-7048. That
list can change from time to time.
There are certain exchange policies you should be aware of:
Shares are normally redeemed from one fund and purchased
from the other fund in the exchange transaction on the same regular
business day on which the Transfer Agent receives an exchange
request that is in proper form by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M. but may be earlier
on some days. However, either fund may delay the purchase of
shares of the fund you are exchanging into up to 7 days if it
determines it would be disadvantaged by a same-day transfer of the
proceeds to buy shares. For example, the receipt of multiple
exchange requests from a dealer in a "market-timing" strategy might
require the sale of portfolio securities at a time or price
disadvantageous to the Fund.
Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange
request that will disadvantage it, or to refuse multiple exchange
requests submitted by a shareholder or dealer.
The Fund may amend, suspend or terminate the exchange
privilege at any time. Although the Fund will attempt to provide
you notice whenever it is reasonably able to do so, it may impose
these changes at any time.
For tax purposes, exchanges of shares involve a redemption
of the shares of the Fund you own and a purchase of the shares of
the other fund, which may result in a capital gain or loss. For
more information about the taxes affecting exchanges, please refer
to "How to Exchange Shares" in the Statement of Additional
Information.
If the Transfer Agent cannot exchange all the shares you
request because of a restriction cited above, only the shares
eligible for exchange will be exchanged.
Shareholder Account Rules and Policies
Net Asset Value Per Share is determined for each class of
shares as of the close of The New York Stock Exchange that day,
which is normally 4:00 P.M. but may be earlier on some days, on
each day the Exchange is open by dividing the value of the Fund's
net assets attributable to a class by the number of shares of that
class that are outstanding. The Fund's Board of Trustees has
established procedures to value the Fund's securities to determine
net asset value. In general, securities values are based on market
value. There are special procedures for valuing illiquid and
restricted securities and obligations for which market values
cannot be readily obtained. These procedures are described more
completely in the Statement of Additional Information.
The offering of shares may be suspended during any period in
which the determination of net asset value is suspended, and the
offering may be suspended by the Board of 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 Fund
at any time. If an account has more than one owner, the Fund and
the Transfer Agent may rely on the instructions of any one owner.
Telephone privileges apply to each owner of the account and the
dealer representative of record for the account unless and until
the Transfer Agent receives cancellation instructions from an owner
of the account.
The Transfer Agent will record any telephone calls to verify
data concerning transactions and has adopted other procedures to
confirm that telephone instructions are genuine, by requiring
callers to provide tax identification numbers and other account
data or by using PINs, and by confirming such transactions in
writing. If the Transfer Agent does not use reasonable procedures
it may be liable for losses due to unauthorized transactions, but
otherwise neither the Transfer Agent nor the Fund will be liable
for losses or expenses arising out of telephone instructions
reasonably believed to be genuine. If you are unable to reach the
Transfer Agent during periods of unusual market activity, you may
not be able to complete a telephone transaction and should consider
placing your order by mail.
Redemption or transfer requests will not be honored until
the Transfer Agent receives all required documents in proper form.
From time to time, the Transfer Agent in its discretion may waive
certain of the requirements for redemptions stated in this
Prospectus.
Dealers that can perform account transactions for their
clients by participating in NETWORKING through the National
Securities Clearing Corporation are responsible for obtaining their
clients' permission to perform those transactions and are
responsible to their clients who are shareholders of the Fund if
the dealer performs any transaction erroneously.
The redemption price for shares will vary from day to day
because the value of the securities in the Fund's portfolio
fluctuates, and the redemption price, which is the net asset value
per share, will normally be different for Class A, Class B and
Class C shares. Therefore, the redemption value of your shares may
be more or less than their original cost.
Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the
shareholder under the redemption procedures described above) within
7 days after the Transfer Agent receives redemption instructions in
proper form, except under unusual circumstances determined by the
Securities and Exchange Commission delaying or suspending such
payments. For accounts registered in the name of a broker-dealer,
payment will be forwarded within 3 business days. The Transfer
Agent may delay forwarding a check or processing a payment via
AccountLink for recently purchased shares, but only until the
purchase payment has cleared. That delay may be as much as 10 days
from the date the shares were purchased. That delay may be avoided
if you purchase shares by certified check or arrange to have your
bank 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 the Fund may be
redeemed the "in kind", which means that the redemption proceeds
will be paid with securities from the Fund's portfolio. Please
refer to "How to Sell Shares" the Statement of Additional
Information for more details.
"Backup Withholding" of Federal income tax may be applied at
the rate of 31% from taxable dividends, distributions and
redemption proceeds (including exchanges) if you fail to furnish
the Fund a certified Social Security or Employer Identification
Number when you sign your application, or if you violate Internal
Revenue Service regulations on tax reporting of dividends.
The Fund does not charge a redemption fee, but if your
dealer or broker handles your redemption, they may charge a fee.
That fee can be avoided by redeeming your Fund shares directly
through the Transfer Agent. Under the circumstances described in
"How to Buy Shares," you may be subject to a contingent deferred
sales charges when redeeming certain Class A, Class B and Class C
shares.
To avoid sending duplicate copies of materials to
households, the Fund will mail only one copy of each annual and
semi-annual report to shareholders having the same last name and
address on the Fund's records. However, each shareholder may call
the Transfer Agent at 1-800-525-7048 to ask that copies of those
materials be sent personally to that shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares 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 or
the realization of any gains.
Capital Gains. The Fund may make distributions annually in December
out of any net short-term or long-term capital gains, and the Fund
may make supplemental distributions of dividends and capital gains
following 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 Long-Term Capital Gains Only. You can elect to
reinvest long-term capital gains in the Fund while receiving
dividends by check or sent to your bank account on AccountLink.
Receive All Distributions in Cash. You can elect to receive
a check for all dividends and long-term capital gains distributions
or have them sent to your bank on AccountLink.
Reinvest Your Distributions in Another Oppenheimer Fund
Account. You can reinvest all distributions in another Oppenheimer
fund account you have established.
Taxes. If your account is not a tax-deferred retirement account,
you should be aware of the following tax implications of investing
in the Fund. Long-term capital gains are taxable as long-term
capital gains when distributed to shareholders. It does not matter
how long have 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 the Fund will send you and the IRS a
statement showing the amount of each taxable distribution you
received in the previous year.
"Buying a Dividend". When the Fund goes ex-dividend, its
share price is reduced by the amount of the distribution. If you
buy shares on or just before the ex-dividend date, or just before
the Fund declares a capital gains distribution, you will pay the
full price for the shares and then receive a portion of the price
back as a taxable dividend or capital gain.
Taxes on Transactions. Share redemptions, including
redemptions for exchanges, are subject to capital gains tax.
Generally speaking a capital gain or loss is the difference
between the price you paid for the shares and the price you receive
when you sell them.
Returns of Capital. In certain cases distributions made by
the Fund may be considered a non-taxable return of capital to
shareholders. If that occurs, it will be identified in notices to
shareholders. A non-taxable return of capital may reduce your tax
basis in your Fund shares.
This information is only a summary of certain federal tax
information about your investment. More information is contained
in the Statement of Additional Information, and in addition you
should consult with your tax adviser about the effect of an
investment in the Fund on your particular tax situation.
<PAGE>
APPENDIX A
Special Sales Charge Arrangements for Shareholders of
the Former Quest for Value Funds
The initial and contingent deferred sales charge rates and
waivers for Class A, Class B and Class C shares of the Fund
described elsewhere in this Prospectus are modified as described
below for those shareholders of (i) Oppenheimer Quest Value Fund,
Inc., Oppenheimer Quest Growth & Income Value Fund, Oppenheimer
Quest Opportunity Value Fund, Oppenheimer Quest Small Cap Value
Fund and Oppenheimer Quest Global Value Fund, Inc. on November 24,
1995, when OppenheimerFunds, Inc. became the investment adviser to
those funds, and (ii) Quest for Value U.S. Government Income Fund,
Quest for Value Investment Quality Income Fund, Quest for 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.
<TABLE>
<CAPTION>
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
<S> <C> <C> <C>
9 or fewer 2.50% 2.56% 2.00%
At least 10 but not
more than 49 2.00% 2.04% 1.60%
</TABLE>
For purchases by Qualified Retirement plans and Associations
having 50 or more eligible employees or members, there is no
initial sales charge on purchases of Class A shares, but those
shares are subject to the Class A contingent deferred sales charge
described on pages __ to __ 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.
Shareholders of the Fund that have continually owned shares
of the Fund prior to November 1, 1988.
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, Class B or Class C
shares of the Fund if those shares were purchased prior to March 6,
1995: in connection with (i) distributions to participants or
beneficiaries of plans qualified under Section 401(a) of the
Internal Revenue Code or from custodial accounts under
Section 403(b)(7) of the Code, Individual Retirement Accounts,
deferred compensation plans under Section 457 of the Code, and
other employee benefit plans, and returns of excess contributions
made to each type of plan, (ii) withdrawals under an automatic
withdrawal plan holding only either Class B or 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, Class B or Class C
shares of the Fund if those shares were purchased on or after March
6, 1995, but prior to November 24, 1995: (1) distributions to
participants or beneficiaries from Individual Retirement Accounts
under Section 408(a) of the Internal Revenue Code or retirement
plans under Section 401(a), 401(k), 403(b) and 457 of the Code, if
those distributions are made either (a) to an individual
participant as a result of separation from service or (b) following
the death or disability (as defined in the Code) of the participant
or beneficiary; (2) returns of excess contributions to such
retirement plans; (3) redemptions other than from retirement plans
following the death or disability of the shareholder(s) (as
evidenced by a determination of total disability by the U.S. Social
Security Administration); (4) withdrawals under an automatic
withdrawal plan (but only for Class B or 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 10/31/96, 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 10/31/96. 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 $9425 $10000
10/31/92 $10447 $10995
10/31/93 $11484 $12634
10/31/94 $12476 $13122
10/31/95 $14516 $16587
10/31/96 $17686 $20581
Oppenheimer Quest
Fiscal Growth & Income S&P 500
Period Ended Fund B Index
- ------------ ----------------- -------
9/01/93(2) $10000 $10000
10/31/93 $10081 $10128
10/31/94 $10884 $10519
10/31/95 $12588 $13297
10/31/96 $14940 $16499
Oppenheimer Quest
Fiscal Growth & Income S&P 500
Period Ended Fund C Index
- ------------ ----------------- -------
9/01/93(2) $10000 $10000
10/31/93 $10081 $10128
10/31/94 $10879 $10519
10/31/95 $12552 $13297
10/31/96 $15183 $16499
- ---------------------
(2) Class B and 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
950 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, broker, salesperson or any other person has been
authorized to give any information or to make any representations
other than those contained in this Prospectus or the Statement of
Additional Information, and if given or made, such information and
representations must not be relied upon as having been authorized
by the Fund, OppenheimerFunds, Inc., OppenheimerFunds Distributor,
Inc. or any affiliate thereof. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any state to any person to whom it is
unlawful to make such an offer in such state.
PR0257.001.297 Printed on recylced paper
<PAGE>
OPENHEIMER QUEST GROWTH & INCOME VALUE FUND
Two World Trade Center, New York, New York 10048
1-800-525-7048
Statement of Additional Information dated February 21, 1997
This Statement of Additional Information of Oppenheimer Quest
Growth & Income Value Fund is not a Prospectus. This document
contains additional information about the Fund and supplements
information in the Prospectus dated February 21, 1997. It should
be read together with the Prospectus, which may be obtained upon
written request to the Fund's Transfer Agent, OppenheimerFunds
Services at P.O. Box 5270, Denver, Colorado 80217, or by calling
the Transfer Agent at the toll-free number shown above.
Contents
Page
About the Fund
Investment Objective and Policies. . . . . . . . . . . . 2
Investment Policies and Strategies . . . . . . . . . . 2
Other Investment Techniques and Strategies . . . . . . 6
Other Investment Restrictions. . . . . . . . . . . . .15
How the Fund is Managed . . . . . . . . . . . . . . . .16
Organization and History . . . . . . . . . . . . . . .16
Trustees and Officers of the Trust . . . . . . . . . .17
The Manager and Its Affiliates . . . . . . . . . . . .20
Brokerage Policies of the Fund . . . . . . . . . . . . .23
Performance of the Fund. . . . . . . . . . . . . . . . .26
Distribution and Service Plans . . . . . . . . . . . . .29
About Your Account39
How To Buy Shares. . . . . . . . . . . . . . . . . . . .31
How To Sell Shares . . . . . . . . . . . . . . . . . . .39
How To Exchange Shares . . . . . . . . . . . . . . . . .43
Dividends, Capital Gains and Taxes . . . . . . . . . . .45
Additional Information About the Fund. . . . . . . . . .46
Financial Information About the Fund
Report of Independent Accountants. . . . . . . . . . . 47
Financial Statements . . . . . . . . . . . . . . . . . 48
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 may invest,
as well as the strategies the Fund may use to try to achieve its
objective. Capitalized terms used in this Statement of Additional
Information have the same meaning as those terms have in the
Prospectus.
Foreign Securities. As noted in the Prospectus the Fund may
invest in securities (which may be denominated in U.S. dollars or
non-U.S. currencies) issued or guaranteed by foreign corporations,
certain supranational entities (described below) and foreign
governments or their agencies or instrumentalities, and in
securities issued by U.S. corporations denominated in non-U.S.
currencies. All such securities are considered "foreign
securities."
Investing in foreign securities offers the Fund potential
benefits not available from investing solely in securities of
domestic issuers, including the opportunity to invest in foreign
issuers that appear to offer growth potential, or in foreign
countries with economic policies or business cycles different from
those of the U.S., or to reduce fluctuations in portfolio value by
taking advantage of foreign stock markets that do not move in a
manner parallel to U.S. markets. If the Fund's portfolio securities
are held abroad, the countries in which such securities may be held
and the sub-custodians or depositories holding them must be
approved by the Trust's Board of Trustees to the extent that
approval is required under applicable rules of the Securities and
Exchange Commission. In buying foreign securities, the Fund may
convert U.S. dollars into foreign currency, but only to effect
securities transactions on foreign securities exchanges and not to
hold such foreign currency as an investment.
Risks of Foreign Investing. Investing in foreign securities
involves special additional risks and considerations not typically
associated with investing in securities of issuers traded in the
U.S. These include: reduction of income by foreign taxes;
fluctuation in value of foreign portfolio investments due to
changes in currency rates and control regulations (e.g., currency
blockage); transaction charges for currency exchange; lack of
public information about foreign issuers; lack of uniform
accounting, auditing and financial reporting standards comparable
to those applicable to domestic issuers; less volume on foreign
exchanges than on U.S. exchanges; greater volatility and less
liquidity on foreign markets than in the U.S.; less regulation of
foreign issuers, stock exchanges and brokers than in the U.S.;
greater difficulties in commencing lawsuits and obtaining judgments
in foreign courts; higher brokerage commission rates than in the
U.S.; increased risks of delays in settlement of portfolio
transactions or loss of certificates for portfolio securities;
possibilities in some countries of expropriation or nationalization
of assets, confiscatory taxation, political, financial or social
instability or adverse diplomatic developments; and unfavorable
differences between the U.S. economy and foreign economies. In the
past, U.S. Government policies have discouraged certain
investments abroad by U.S. investors, through taxation or other
restrictions, and it is possible that such restrictions could be
re-imposed.
Emerging Market Countries. The Fund may invest in 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. The
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 "Caa" by
Moody's or "CCC" 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 takes place
sometime after the transaction date on terms established on such
date. Normally, settlement on U.S. Government securities takes
place within ten days. The Fund only will make when-issued
commitments on eligible securities with the intention of actually
acquiring the securities. If the Fund chooses to dispose of the
right to acquire a when-issued security prior to its acquisition,
it could, as with the disposition of any other portfolio
obligation, incur a gain or loss due to market fluctuation. When-
issued commitments will not be made if, as a result, more than 15%
of the net assets of the Fund would be so committed.
Repurchase Agreements. The Fund may 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 purchases a security
from, and simultaneously resells it to, an approved vendor (U.S.
commercial bank or the U.S. branch of a foreign bank having total
domestic assets of at least $1 billion or a broker-dealer with a
net worth of at least $50 million and which 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) for delivery at an agreed upon future date. The resale price
exceeds the purchase price by an amount that reflects an agreed-
upon interest rate effective for the period during which the
repurchase agreement is in effect. The majority of these
transactions run from day to day, and delivery pursuant to the
resale typically will occur within one to five days of the
purchase. Repurchase agreements are considered "loans" under the
Investment Company Act, collateralized by the underlying security.
The Fund's repurchase agreements require that at all times while
the repurchase agreement is in effect, the value of the collateral
must equal or exceed the repurchase price to fully collateralize
the repayment obligation. Additionally, the Manager will impose
creditworthiness requirements to confirm that the vendor is
financially sound and will continuously monitor the collateral's
value.
Illiquid 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
illiquid 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,
under the Rule the Fund must limit its aggregate initial futures
margin and related options premiums to 5% or less of the Fund's
total assets for hedging strategies that are not considered bona
fide hedging strategies under the Rule. Under the Rule, the Fund
also must use short futures and options on futures positions solely
for bona fide hedging purposes within the meaning and intent of
applicable provisions of the Commodity Exchange Act.
Transactions in options by the Fund are subject to limitations
established by option exchanges governing the maximum number of
options that may be written or held by a single investor or group
of investors acting in concert, regardless of whether the options
were written or purchased on the same or different exchanges or are
held in one or more accounts or through one or more different
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 there is no guarantee that it
will 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 and timing of gains (or losses) recognized
by the Fund on straddle positions. Generally, a loss sustained on
the disposition of a position making up a straddle is allowed only
to the extent such loss exceeds any unrecognized gain in the
offsetting positions making up the straddle. Disallowed loss is
generally allowed at the point where there is no unrecognized gain
in the offsetting positions making up the straddle, or the
offsetting position is disposed of.
Under the Internal Revenue Code, gains or losses attributable
to fluctuations in exchange rates that occur between the time the
Fund accrues interest or other receivables or accrues expenses or
other liabilities denominated in a foreign currency and the time
the Fund actually collects such receivables or pays such
liabilities generally are treated as ordinary income or ordinary
loss. Similarly, on disposition of debt securities denominated in
a foreign currency and on disposition foreign currency forward
contracts, gains or losses attributable to fluctuations in the
value of a foreign currency between the date of acquisition of the
security or contract and the date of the disposition also are
treated as an ordinary gain or loss. Currency gains and losses are
offset against market gains and losses on each trade before
determining a net "section 988" gain or loss under the Internal
Revenue Code, which may ultimately increase or decrease the amount
of the Fund's investment company income available for distribution
to its shareholders.
Additional Risk Factors in Hedging. 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 of
1940, 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 as described in the Prospectus, the Fund has adopted, as a
matter of non-fundamental policy, the corporate industry
classifications set forth in Appendix A to this Statement of
Additional Information.
How the Fund is Managed
Organization and History. The Fund is 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 Trust'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. In
addition to the Trust (including its other portfolios Oppenheimer
Quest Small Cap Value Fund, Oppenheimer Quest Opportunity Value
Fund, and Oppenheimer Quest Officers Value Fund) all of the
Trustees are also trustees or directors of Oppenheimer Quest Value
Fund, Inc. and Oppenheimer Quest Global Value Fund, Inc.
(collectively, with the Fund, the "Oppenheimer Quest Funds"), and
Rochester Portfolio Series - Limited-Term New York Municipal Fund,
Bond Fund Series - Oppenheimer Bond Fund For Growth and Rochester
Fund Municipals (collectively, the "Oppenheimer Rochester Funds").
As of February 3, 1997, the trustees and officers of the Trust as
a group owned less than 1% of the outstanding shares of each class
of the Fund. The foregoing does not include shares held of record
by an employee benefit plan for employees of the Manager for which
one of the officers below, Mr. Donohue, is a trustee, other than
the shares beneficially owned under that plan by the officers of
the Fund listed below.
Bridget A. Macaskill, Chairman of the Board of Trustees and
President; Age: 48.
President, Chief Executive Officer and a Director of the Manager
and HarbourView Asset Management Corporation ("HarbourView"), a
subsidiary of the Manager; President and a Director of Oppenheimer
Acquisition Corp. ("OAC") the Manager's parent holding company, and
Oppenheimer Partnership Holdings, Inc.; Chairman and a Director of
Shareholder Services, Inc. ("SSI"), a transfer agent subsidiary of
the Manager and Shareholder Financial Services, Inc. ("SFSI"); and
a director of Oppenheimer Real Asset Management, Inc.
Paul Y. Clinton, Trustee; Age: 66
39 Blossom Avenue, Osterville, Massachusetts 02655
Principal of Clinton Management Associates, a financial and venture
capital consulting firm; Trustee of Capital Cash Management Trust,
a money-market fund and Narraganssett Tax-Free Fund, a tax-exempt
bond fund; Director of OCC Cash Reserves, Inc. and Trustee of OCC
Accumulation Trust, all of which are open-end investment companies.
Formerly: Director, External Affairs, Kravco Corporation, a
national real estate owner and property management corporation;
President of Essex Management Corporation, a management consulting
company; a general partner of Capital Growth Fund, a venture
capital partnership; a general partner of Essex Limited
Partnership, an investment partnership; President of Geneve Corp.,
a venture capital fund; Chairman of Woodland Capital Corp., a small
business investment company; and Vice President of W.R. Grace & Co.
Thomas W. Courtney, Trustee; Age: 63
833 Wyndemere Way, Naples, Florida 34105
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
and OCC Accumulation Trust; Director of OCC Cash Reserves, Inc.,
each 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: 67
380 Madison Avenue, Suite 2300, New York, New York 10017
President and Chairman of the Board of Aquila Management
Corporation, the sponsoring organization and Administrator and/or
Sub-Adviser to the following open-end investment companies, and
Chairman of the Board of Trustees and President of each: Churchill
Cash Reserves Trust, Short Term Asset Reserves, Pacific Capital
Cash Assets Trust, Pacific Capital U.S. Treasuries Cash Assets
Trust, Pacific Capital Tax-Free Cash Assets Trust, Prime Cash Fund,
Narragansett Insured Tax-Free Income Fund, Tax-Free Fund For Utah,
Churchill Tax-Free Fund of Kentucky, Tax-Free Fund of Colorado,
Tax-Free Trust of Oregon, Tax-Free Trust of Arizona, Hawaiian Tax-
Free Trust, and Aquila Rocky Mountain Equity Fund; Vice President,
Director, Secretary, and formerly Treasurer of Aquila Distributors,
Inc., distributor of the above funds; President and Chairman of the
Board of Trustees of Capital Cash Management Trust ("CCMT"), and an
Officer and Trustee/Director of its predecessors; President and
Director of STCM Management Company, Inc., sponsor and adviser to
CCMT; Chairman, President and a Director of InCap Management
Corporation, formerly sub-adviser and administrator of Prime Cash
Fund and Short Term Asset Reserves; Director of OCC Cash Reserves,
Inc. and Trustee of OCC Accumulation Trust and The Saratoga
Advantage Trust, each of which is an open-end investment company;
Trustee of Brown University.
George Loft, Trustee; Age: 82
51 Herrick Road, Sharon, Connecticut 06069
Private Investor; Director of OCC Cash Reserves, Inc., and Trustee
of OCC Accumulation Trust and The Saratoga Advantage Trust, all of
which are open-end investment companies, and Director of the Quest
for Value Dual Purpose Fund, Inc., a closed-end investment company.
Robert C. Doll, Jr., Vice President; Age: 42
Executive Vice President and Director of Equity Investments of the
Manager; a Vice President and a director of OAC and an officer and
Portfolio Manager of other Oppenheimer funds.
Andrew J. Donohue, Secretary; Age: 46
Executive Vice President and General Counsel of the Manager and
OppenheimerFunds Distributor, Inc. (the "Distributor"); President
and a director of Centennial; Executive Vice
President, General Counsel and a director of HarbourView, SFSI, SSI
and Oppenheimer Partnership Holdings Inc.; President and a director
of Real Asset Management, Inc.; General Counsel of OAC; Executive
Vice President, Chief Legal Officer and a director of MultiSource
Services, Inc. (a broker-dealer) 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: 60
6803 South Tucson Way, Englewood, Colorado 80012
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; Senior Vice
President and Secretary of SSI; Vice President, Treasurer and
Secretary of SFSI, a transfer agent subsidiary of the Manager; Vice
President and Treasurer of Oppenheimer Real Asset Management, Inc.,
Chief Executive Officer, Treasurer and a director of MultiSource
Services, Inc. (a broker-dealer); an officer of other Oppenheimer
funds.
Colin Glinsman, Portfolio Manager, Age: 39
One World Financial Center, 200 Liberty Street, New York, New York
10281
Senior Vice President of Oppenheimer Capital.
Robert Bishop, Assistant Treasurer; Age: 38
6803 South Tucson Way, Englewood, Colorado 80012
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: 31
6803 South Tucson Way, Englewood, Colorado 80012
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: 48
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 remaining Trustees of
the Fund received the total amounts shown below from (i) the Fund
during its fiscal year ended October 31, 1996 and (ii) other
investment companies (or series thereof) managed by the Manager and
the Sub-Adviser, paid during the calendar year ended December 31,
1996.
<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(1)
<S> <C> <C> <C> <C>
Paul Y. Clinton $5,627 None None $90,225
Thomas W. Courtney $5,627 None None $87,525
Lacy B. Herrmann $5,627 None None $90,225
George Loft $5,627 None None $95,700
(1) For the purpose of the chart above, "Fund Complex" includes the Fund, the other
Oppenheimer Quest Funds, the Oppenheimer Rochester Funds and three other funds advised by the
Sub-Adviser (the Sub-Adviser Funds ). For these purposes, each series constitutes a
separate fund. Messrs. Clinton, Courtney and Herrmann served as directors or trustees of two
Sub-Adviser Funds, for which they are to receive $38,550, $35,850 and $38,550, respectively,
and Mr. Loft served as a director or trustee of three Sub-Adviser Funds, for which he is to
receive $44,025.
</TABLE>
Major Shareholders. As of January 31, 1997, no person owned
of record or was known by the Fund to own beneficially 5% or more
of the Fund's outstanding Class A, Class B or Class C shares
except:Unified Advisers, Inc. as agent for Oppenheimer Quest Growth
& Income Value Fund, 429 North Pennsylvania Street, Indianapolis,
Indiana 46204-1873, which owned of record 1,792,515.116 Class A
shares (approximately 41.25% of the Class A shares then
outstanding); City Distributing Co., Inc., P.O. Box 4130,
Petersburg, Virginia 23803-0130, which owned of record 33,537.120
Class C shares (approximately 10.45% of the Class C shares then
outstanding); and Merrill Lynch Pierce Fenner & Smith, 4800 Deer
Lake Drive, 3rd Floor, Jacksonville, Florida 32246-6484 which owned
of record 19,802.000 Class C shares (approximately 6.17% of the
Class C shares then outstanding).
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 obligated to
report to the Manager any violations of the Sub-Adviser's Code of
Ethics relating to the Fund. The Code of Ethics is designed to
detect and prevent improper personal trading by certain employees,
including the Fund's portfolio manager, who is an employee of the
Sub-Adviser, that would compete with or take advantage of the
Funds' portfolio transactions. Compliance with the Code of Ethics
is carefully monitored and strictly enforced by the Manager.
The Investment Advisory Agreement. The Manager acts as
investment adviser to the Fund pursuant to the terms of an
Investment Advisory Agreement dated as of November 22, 1995. The
Fund's Sub-Adviser previously served as the Fund's investment
adviser from the Fund's inception (November 1, 1991) 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 at an annual rate of
$55,000, plus reimbursement for out-of-pocket expenses.
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. For the
fiscal period from November 24, 1995 (when the Manager became the
investment adviser to the Fund) to October 31, 1996 (the "Fiscal
Period"), the Fund paid to the Manager $448,353 in management fees
and paid or accrued accounting services fees to the Manager in the
amount of $51,630.
The Investment Advisory Agreement contains no expense
limitation. However, because of state regulations limiting fund
expenses that previously applied, the Manager had 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) would
not exceed the most stringent state regulatory limitation
applicable to the Fund. Due to changes in federal securities laws,
such state regulations no longer apply and the Manager s
undertaking is therefore inapplicable and has been withdrawn.
During the Fund s last fiscal year, the Fund s expenses did not
exceed the most stringent state regulatory limit and the voluntary
undertaking was not invoked.
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 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 its
inception until November 22, 1995. Under the prior Investment
Advisory Agreement, the total advisory fees accrued or paid by the
Fund for the fiscal year ended October 31, 1993, was $202,511, of
which $66,413 was waived by the Sub-Adviser; for the fiscal year
ended October 31, 1994, the total advisory fees accrued or paid by
the Fund was $263,469, of which $142,772 was waived by the Sub-
Adviser; and for the fiscal period November 1, 1995 to November 22,
1995 (the "Interim Period"), the total advisory fees accrued or
paid by the Fund was $24,482.
For the fiscal years ended October 31, 1994, and 1995 and the
Interim Period, the Fund paid or accrued accounting services fees
to the Sub-Adviser in the amounts of $68,117, $57,800 and $2,291,
respectively. 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, 1994 and 1995 in the amounts of
$55,000 and $55,000 respectively; no fees were accrued or paid by
the Fund for the Interim Period.
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. 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, 1996, the aggregate amount of
sales charges on sales of the Fund's Class A shares was $121,912 of
which the Distributor and affiliated brokers retained $53,994; no
amounts were retained by OCC Distributors, the Fund's Distributor
prior to November 22, 1995, with respect to the Interim Period.
During the fiscal year ended October 31, 1996, the Distributor
received contingent deferred sales charges of $25,162 upon
redemption of Class B shares, and received contingent deferred
sales charges of $1,359 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 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 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 on behalf of the Manager. Soft dollar arrangements
for services may be entered into in order to facilitate an
improvement in performance in respect of the Sub-Adviser's service
to the Manager with respect to the Fund. Pursuant to these
arrangements, the Sub-Adviser will undertake to place brokerage
business with broker-dealers who pay third parties that provide
these services. Any such soft dollar arrangements will be made in
accordance with policies adopted by the Manager and the Board of
the Fund and in compliance with Section 28(e) of the Securities
Exchange Act of 1934, as amended.
Description of Brokerage Practices. Portfolio decisions are based
upon recommendations of the portfolio manager and the judgment of
the portfolio managers. The Fund will pay brokerage commissions on
transactions in listed options and equity securities. Prices of
portfolio securities purchased from underwriters of new issues
include a commission or concession paid by the issuer to the
underwriter, and prices of debt securities purchased from dealers
include a spread between the bid and asked prices.
Transactions may be directed to dealers during the course of
an underwriting in return for their brokerage and research
services, which are intangible and on which no dollar value can be
placed. There is no formula for such allocation. The research
information may or may not be useful to one or more of the Fund
and/or other accounts of the Manager or the Sub-Adviser;
information received in connection with directed orders of other
accounts managed by the Manager or the Sub-Adviser or its
affiliates may or may not be useful to one or more of the Funds.
Such information may be in written or oral form and includes
information on particular companies and industries as well as
market, economic or institutional activity areas. It serves to
broaden the scope and supplement the research activities of the
Manager or the Sub-Adviser, to make available additional views for
consideration and comparison, and to enable the Manager or the Sub-
Adviser to obtain market information for the valuation of
securities held in the Fund's assets.
Sales of shares of the Fund, subject to applicable rules
covering the Distributor's activities in this area, will also be
considered as a factor in the direction of portfolio transactions
to dealers, but only in conformity with the price, execution and
other considerations and practices discussed above. The Fund will
not purchase any securities from or sell any securities to an
affiliated broker-dealer including Oppenheimer & Co., Inc.
("Opco"), an affiliate of the Sub-Adviser, acting as principal for
its own account.
The Sub-Adviser currently serves as investment manager to a
number of clients, including other investment companies, and may in
the future act as investment manager or advisor to others. It is
the practice of the Sub-Adviser to cause purchase or sale
transactions to be allocated among the Fund and others whose assets
it manages in such manner as it deems equitable. In making such
allocations among the Fund and other client accounts, the main
factors considered are the respective investment objectives, the
relative size of portfolio holdings of the same or comparable
securities, the availability of cash for investment, the size of
investment commitments generally held and the opinions of the
persons responsible for managing the portfolios of each Fund and
other client accounts.
When orders to purchase or sell the same security on
identical terms are placed by more than one of the funds and/or
other advisory accounts managed by the Sub-Adviser or its
affiliates, the transactions are generally executed as received,
although a fund or advisory account that does not direct trades to
a specific broker ("free trades") usually will have its order
executed first. Purchases are combined where possible for the
purpose of negotiating brokerage commissions, which in some cases
might have a detrimental effect on the price or volume of the
security in a particular transaction as far as the Fund is
concerned. Orders placed by accounts that direct trades to a
specific broker will generally be executed after the free trades.
All orders placed on behalf of the Fund are considered free trades.
However, having an order placed first in the market does not
necessarily guarantee the most favorable price.
The following table presents information as to the allocation
of brokerage commissions paid by the Fund for the fiscal years
ended October 31, 1994, 1995 and 1996:
<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>
1994 $ 74,334 $55,911 75.2% $38,409,929 77.5%
1995 $112,411 $54,131 48.2% $29,045,570 48.9%
1996 $100,216 $46,979 46.8% $36,417,627 27.4%
</TABLE>
During the Fund's fiscal year ended October 31, 1996,
$4,700 was paid by the Fund to brokers as commissions in return for
research services; the aggregate dollar amount of those
transactions was $4,707,374.
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 advertised class of shares of the Fund for the 1, 5, and 10-
year periods (or the life of the class, if less) ending as of the
most recently-ended calendar quarter prior to the publication of
the advertisement. This enables an investor to compare the Fund's
performance to the performance of other funds for the same periods.
However, a number of factors should be considered before using such
information as a basis for comparison with other investments. An
investment in the Fund is not insured; its returns and share prices
are not guaranteed and normally will fluctuate on a daily basis.
When redeemed, an investor's shares may be worth more or less than
their original cost. Returns for any given past period are not a
prediction or representation by the Fund of future returns. The
returns of Class A, Class B and Class C shares of the Fund are
affected by portfolio quality, the type of investments the Fund
holds and its operating expenses allocated to the particular class.
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, 1996 were 14.84% and
12.08%, respectively.
The average annual total returns on Class B shares for the
one-year period ended October 31, 1996 and for the period September
1, 1993 (commencement of the public offering of the class) through
October 31, 1996 were 16.07% and 13.76%, respectively.
The average annual total returns on Class C shares for the
one-year period ended October 31, 1996 and for the period September
1, 1993 (commencement of the public offering of the class) through
October 31, 1996 were 19.97% and 14.10%, 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 1, 1991 (commencement of operations) to October 31,
1996 was 76.87%. 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, 1996 was 50.40%. 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, 1996 was 51.83%.
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, 1996 were 21.84% and 13.42%, respectively. The
cumulative total return at net asset value on the Fund's Class A
shares for the period November 1, 1991 through October 31, 1996 was
87.66%.
The average annual total returns at net asset value on the
Fund's Class B shares for the one year period ended October 31,
1996 and for the period from September 1, 1993 (commencement of the
public offering of the class) through October 31, 1996 were 21.07%
and 14.23%, 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, 1996 was 52.40%.
The average annual total returns at net asset value on the
Fund's Class C shares for the one-year period ended October 31,
1996 and for the from period September 1, 1993 (commencement of the
public offering of the class) through October 31, 1996 were 20.97%
and 14.10%, 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, 1996 was 51.83%.
Other Performance Comparisons. From time to time the Fund may
publish the ranking of its Class A, Class B or Class C shares by
Lipper Analytical Services, Inc. ("Lipper"), a widely-recognized
independent mutual fund monitoring service. Lipper monitors the
performance of regulated investment companies, including the Fund,
and ranks their performance for various periods based on categories
relating to investment objectives. The performance of the Fund is
ranked against (i) all other funds and (ii) all other growth &
income funds. The Lipper performance rankings are based on total
returns that include the reinvestment of capital gain distributions
and income dividends but do not take sales charges or taxes into
consideration.
From time to time the Fund may publish the star ranking of the
performance of its Class A, Class B or Class C shares by
Morningstar Inc., an independent mutual fund monitoring service.
Morningstar ranks mutual funds in broad investment categories:
domestic stock funds, international stock funds, taxable bond funds
and municipal bond funds, based on risk-adjusted total investment
returns. The Fund is ranked among growth and income funds.
Investment return measure a fund's or class's one, three, five and
ten-year average annual total returns (depending on the inception
of the fund or class) in excess of 90-day U.S. Treasury bill
returns after considering the fund's sales charges and expenses.
Risk measure a fund's class performance below 90-day U.S. Treasury
bill returns. Risk and investment return are combined to produce
star rankings reflecting performance relative to the average fund
in the fund's category. Five stars is the "highest" ranking (top
10%), four stars is "above average" (next 22.5%), three stars is
"average" (next 35%), two stars is "below average" (next 22.5%) and
one star is "lowest" (bottom 10%). The current star rankings is
the fund's or class's 3-year ranking or its combined 3 and 5-year
ranking (weighted 60%/40% respectively, or its combined 3-,5-and
10-year ranking (weighted 40%, 30% and 30%, respectively) depending
on the inception of the fund or class. Rankings are subject to
change monthly.
The Fund may also compare its performance to that of other
funds in its Morningstar Category. In addition to its star
rankings, Morningstar also categorizes and compares a fund's 3-year
performance on Morningstar's classification of the fund's
investments and investment style, rather than how a fund defines
its investment objective. Morningstar's four broad categories
(domestic equity, international equity, municipal bond and taxable
bond) are each further subdivided into categories based on types of
investments and investment styles. Those comparison by Morningstar
are based on the same risk and return measurements as its star
rankings but do not consider the effect of sales charges.
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 the S&P 500 Index as described in the Prospectus. The
performance of the index includes a factor for the reinvestment of
income dividends, but does not reflect reinvestment of capital
gains, expenses or taxes.
The performance of the Fund's Class A, Class B, or Class C
shares may also be compared in publications to (i) the performance
of various market indices or to other investments for which
reliable performance data is available, and (ii) to averages,
performance rankings or other benchmarks prepared by recognized
mutual fund statistical services.
Total return information may be useful to investors in
reviewing the performance of the Fund's Class A, Class B or Class
C shares. However, when comparing total return of an investment in
Class A, Class B and Class C shares of the Fund, a number of
factors should be considered before using such information as a
basis for comparison with other investments. For example, an
investor may also wish to compare the Fund's Class A, Class B 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 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 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 at no cost to the Fund. The
Distributor and the Manager may, in their sole discretion, increase
or decrease the amount of payments they make from their own
resources to Recipients.
Unless terminated as described below, each plan continues in
effect from year to year but only as long as such continuance is
specifically approved at least annually by the 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 by a Securities and Exchange Commission rule to obtain
the approval of Class B as well as Class A shareholders for a
proposed material amendment to the Class A Plan that would
materially increase payments under the Plan. Such approval must be
by a "majority" of the Class A and Class B shares (as defined in
the Investment Company Act), voting separately by class. All
material amendments must be approved by the Board of 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 Class B and Class C Plans are subject to the
limitations imposed by the Conduct Rules of the National
Association of Securities Dealers, Inc. on payments of asset-based
sales charges and service fees.
For the Fiscal Period, (i) payments under the Plan for Class
A shares totaled $173,048 of which $19,172 was retained by the
Distributor and $565 was paid to an affiliate of the Distributor,
(ii) payments made under the Class B Plan totaled $100,727, of
which $83,077 was retained by the Distributor and $2 was paid to
a dealer affiliated with the Distributor and (iii) payments made
under the Class C plan amounted to $22,005, of which $11,762 was
retained by the Distributor. The Plans provide for the Distributor
to be compensated at a flat rate, whether the Distributor's
expenses are more or less than the amounts paid by the Fund during
that period. The asset-based sales charges paid to the Distributor
by the Fund under the Plans are intended to allow the Distributor
to recoup the cost of sales commissions paid to authorized brokers
and dealers at the time of sale, plus financing costs, as described
in the Prospectus. Such payments may also be used to pay for the
following expenses in connection with the distribution of shares:
(i) financing the advance of the service fee payment to Recipients
under the Plans, (ii) compensation and expenses of personnel
employed by the Distributor to support distribution of shares, and
(iii) costs of sales literature, advertising and prospectuses
(other than those furnished to current shareholders).
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 Interim Period were $9,178, $4,741 and $1,117, respectively.
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 an
individual investor to choose the method of purchasing shares that
is more beneficial to the investor depending on the amount of the
purchase, the length of time the investor expects to hold shares
and other relevant circumstances. Investors should understand that
the purpose and function of the deferred sales charge and asset-
based sales charge with respect to Class B and Class C shares are
the same as those of the initial sales charge with respect to Class
A shares. Any salesperson or other person entitled to receive
compensation for selling Fund shares may receive different
compensation with respect to one class of shares than another. The
Distributor will generally not accept any order for $500,000 or
more of Class B shares or $1 million or more of Class C shares, on
behalf of a single investor (not including dealer "street name" or
omnibus accounts) because generally it will be more advantageous
for that investor to purchase Class A shares of the Fund instead.
The three classes of shares each represent an interest in the
same portfolio investments of the Fund. However, each class has
different shareholder privileges and features. The net income
attributable to Class B and Class C shares and the dividends
payable on Class B and Class C shares will be reduced by
incremental expenses borne solely by that class, respectively,
including the asset-based sales charges to which Class B and Class
C shares are subject.
The conversion of Class B shares to Class A shares after six
years is subject to the continuing availability of a private letter
ruling from the Internal Revenue Service, or an opinion of counsel
or tax adviser, to the effect that the conversion of Class B shares
does not constitute a taxable event for the holder under Federal
income tax law. If such a revenue ruling or opinion is no longer
available, the automatic conversion feature may be suspended, in
which event no further conversions of Class B shares would occur
while such suspension remained in effect. Although Class B shares
could then be exchanged for Class A shares on the basis of relative
net asset value of the two classes, without the imposition of a
sales charge or fee, such exchange could constitute a taxable event
for the holder, and absent such exchange, Class B shares might
continue to be subject to the asset-based sales charge for longer
than six years.
The methodology for calculating the net asset value, dividends
and distributions of the Fund's Class A, Class B and Class C shares
recognizes two types of expenses. General expenses that do not
pertain specifically to class are allocated pro rata to the shares
of each class, based on the percentage of the net assets of such
class to the Fund's total net assets, and then equally to each
outstanding share within a given class. Such general expenses
include (i) management fees, (ii) legal, bookkeeping and audit
fees, (iii) printing and mailing costs of shareholder reports,
Prospectuses, Statements of Additional Information and other
materials for current shareholders, (iv) fees to Independent
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 (a) Distribution and Service Plan
fees, (b) incremental transfer and shareholder servicing agent fees
and expenses, (c) registration fees and (d) shareholder meeting
expenses, to the extent that such expenses pertain to a specific
class rather than to the Fund as a whole.
Determination of Net Asset Values Per Share. The net asset
values per share of Class A, Class B and Class C shares of the Fund
are determined as of the close of business of The New York Stock
Exchange (the "Exchange") on each day that the Exchange is open, by
dividing the value of the Fund's net assets attributable to that
class by the total number of Fund shares of that class outstanding.
The Exchange normally closes at 4:00 P.M. New York time, but may
close earlier on some other days (for example, in case of weather
emergencies or days falling before a holiday). The Exchange's most
recent annual announcement (which is subject to change) states that
it will close on New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. It may also close on other days. The Fund may
invest a substantial portion of its assets in foreign securities
primarily listed on foreign exchanges which may trade on Saturdays
or customary U.S. business holidays on which the Exchange is
closed. Because the Fund's net asset values will not be calculated
on those days, the Fund's net asset value per share may be
significantly affected on such days when shareholders may not
purchase or redeem shares.
The 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 U.S. securities exchange or on the
Automated Quotation System ("NASDAQ") of the Nasdaq Stock Market,
Inc. for which last sale information is regularly reported are
valued at the last reported sale price on their primary exchange or
NASDAQ that day (or, in the absence of sales that day, at values
based on the last sale prices of the preceding trading day, or
closing bid prices that day); (ii) securities traded on a foreign
securities exchange are valued generally at the last sale 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; or at the mean between "bid" and
"asked" prices obtained from the principal exchange or two active
market makers in the security on the basis of reasonable inquiry;
(iii) long-term debt securities having a remaining maturity in
excess of 60 days are valued based on the mean between the "bid"
and "asked" prices determined by a portfolio pricing service
approved by the Trust's Board of Trustees or obtained by the
Manager from two active market makers in the security on the basis
of reasonable inquiry; (iv) debt instruments having a maturity of
more than 397 days when issued, and non-money market type
instruments having a maturity of 397 days or less when issued,
which have a remaining maturity of 60 days or less are valued at
the mean between the "bid" and "asked" prices determined by a
pricing service approved by the Trust's Board of Trustees or
obtained from active market makers in the security on the basis of
reasonable inquiry; (v) money market debt securities that had a
maturity of less than 397 days when issued that have a remaining
maturity of 60 days or less are valued at cost, adjusted for
amortization of premiums and accretion of discounts; and (vi)
securities (including restricted securities) not having readily-
available market quotations are valued at fair value determined
under the Board's procedures. If the Manager is unable to locate
two market makers willing to give quotes (see (ii), (iii) and (iv)
above), the security may be priced at the mean between the "bid"
and "asked" prices provided by a single active market maker (which
in certain cases may be the bid price if no ask price is
available).
In the case of U.S. Government securities and mortgage-backed
securities, where last sale information is not generally available,
such pricing procedures may include "matrix" comparisons to the
prices for comparable instruments on the basis of quality, yield,
maturity and other special factors involved. The Manager may use
any of the pricing services approved by the Board of Trustees to
price any of the types of securities described above and to price
U.S. Government securities, mortgage-backed securities, foreign
government securities and corporate bonds. The Manager will
monitor the accuracy of such pricing services, which may include
comparing prices used for portfolio evaluation to actual sales
prices of selected securities.
Trading in securities on European and Asian exchanges and
over-the-counter markets is normally completed before the close of
the Exchange. Events affecting the values of foreign securities
traded in such 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 sale price on
the principal exchanges on which they are traded or on NASDAQ, as
applicable, as determined by a pricing service approved by the
Board of Trustees or by the Manager. If there were no sales that
day, value shall be the last sale price on the preceding trading
day if it is within the spread of the closing bid and ask prices
on the principal exchange or on NASDAQ on the valuation date, or,
if not, value shall be the closing bid price on the principal
exchange or on NASDAQ on the valuation date. If the put, call or
future is not traded on an exchange or on NASDAQ, it shall be
valued at the mean between bid and ask prices obtained by the
Manager from two active market makers (which in certain cases may
be the bid price if no ask price is available).
When the Fund writes an option, an amount equal to the premium
received by the Fund is included in the Fund's Statement of Assets
and Liabilities as an asset, and an equivalent deferred credit is
included in the liability section. Credit is adjusted ("marked-to-
market") to reflect the current market value of the option. In
determining the Fund's gain on investments, if a call or put
written by the Fund is exercised, the proceeds are increased by the
premium received. If a call or put written by the Fund expires,
the Fund has a gain in the amount of the premium; if the Fund
enters into a closing purchase transaction, it will have a gain or
loss depending on whether the premium received was more or less
than the cost of the closing transaction. If the Fund exercises a
put it holds, the amount the Fund receives on its sale of the
underlying investment is reduced by the amount of premium paid by
the Fund.
AccountLink. When shares are purchased through AccountLink, each
purchase must be at least $25.00. Shares will be purchased on the
regular business day the Distributor is instructed to initiate the
Automated Clearing House ("ACH") transfer to buy the shares.
Dividends will begin to accrue on shares purchased by the proceeds
of ACH transfers on the business day the Fund receives Federal
Funds for the purchase through the ACH system before the close of
The New York Stock Exchange. The Exchange normally closes at 4:00
P.M., but may close earlier on certain days. If Federal Funds are
received on a business day after the close of the Exchange, the
shares will be purchased and dividends will begin to accrue on the
next regular business day. The proceeds of ACH transfers are
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, aunts, uncles, nieces
and nephews, siblings, a sibling's spouse and a spouse's siblings.
The Oppenheimer Funds. The Oppenheimer funds are those
mutual funds for which the Distributor acts as the distributor or
the sub-distributor and include the following:
Oppenheimer Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer California Municipal Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer Insured Municipal Fund
Oppenheimer Main Street California Municipal Fund
Oppenheimer Florida Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Multiple Strategies Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion Income Fund
Oppenheimer Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer International 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.
Limited-Term New York Municipal Fund*
Oppenheimer Bond Fund For Growth
Rochester Fund Municipals*
Oppenheimer Disciplined Value Fund
Oppenheimer Disciplined Allocation Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Income Fund
Oppenheimer LifeSpan Growth Fund
Oppenheimer Developing Markets Fund
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
__________________
* Shares of the Fund are not presently exchangeable for shares of
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 an
investor's statement in writing to the Distributor of the intention
to purchase Class A shares or Class A and Class B shares (or
shares of either class) of the Fund (and other eligible Oppenheimer
funds) during the 13-month period from the investor's first
purchase pursuant to the Letter (the "Letter of Intent period"),
which may, at the investor's request, include purchases made up to
90 days prior to the date of the Letter. The Letter states the
investor's intention to make the aggregate amount of purchases
(excluding any purchases made by reinvestment of dividends or
distributions or purchases made at net asset value without sales
charge), which together with the investor's holdings of such funds
(calculated at their respective public offering prices calculated
on the date of the Letter) will equal or exceed the amount
specified in the Letter. This enables the investor to count the
shares to be purchased under the Letter of Intent to obtain the
reduced sales charge rate on purchases of Class A shares of the
Fund (and other Oppenheimer Funds) that applies under the Right of
Accumulation to current purchases of Class A shares. Each purchase
of Class A shares under the Letter will be made at the public
offering price (including the sales charge) that applies to a
single lump-sum purchase of shares in the amount intended to be
purchased under the Letter.
In submitting a Letter, the investor makes no commitment to
purchase shares, but if the investor's purchases of shares within
the Letter of Intent period, when added to the value (at offering
price) of the investor's holdings of shares on the last day of that
period, do not equal or exceed the intended purchase amount, the
investor agrees to pay the additional amount of sales charge
applicable to such purchases, as set forth in "Terms of Escrow,"
below (as those terms may be amended from time to time). The
investor agrees that shares equal in value to 5% of the intended
purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be
bound by the terms of the Prospectus, this Statement of Additional
Information and the Application used for such Letter of Intent, and
if such terms are amended, as they may be from time to time by the
Fund, that those amendments will apply automatically to existing
Letters of Intent.
For purchases of shares of the Fund and other Oppenheimer
funds by OppenheimerFunds prototype 401(k) plans under a Letter of
Intent, the Transfer Agent will not hold shares in escrow. If the
intended purchase amount under the Letter entered into by an
OppenheimerFunds prototype 401(k) plan is not purchased by the plan
by the end of the Letter of Intent period, there will be no
adjustment of commissions paid to the broker-dealer or financial
institution of record for accounts held in the name of that plan.
If the total eligible purchases made during the Letter of
Intent period do not equal or exceed the intended purchase amount,
the commissions previously paid to the dealer of record for the
account and the amount of sales charge retained by the Distributor
will be adjusted to the rates applicable to actual total purchases.
If total eligible purchases during the Letter of Intent period
exceed the intended purchase amount and exceed the amount needed to
qualify for the next sales charge rate reduction set forth in the
applicable prospectus, the sales charges paid will be adjusted to
the lower rate, but only if and when the dealer returns to the
Distributor the excess of the amount of commissions allowed or paid
to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the
Distributor will be used to purchase additional shares for the
investor's account at the net asset value per share in effect on
the date of such purchase, promptly after the Distributor's receipt
thereof.
In determining the total amount of purchases made under a
Letter, shares redeemed by the investor prior to the termination of
the Letter of Intent period will be deducted. It is the
responsibility of the dealer of record and/or the investor to
advise the Distributor about the Letter in placing any purchase
orders for the investor during the Letter of Intent period. All
of such purchases must be made through the Distributor.
Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in
value up to 5% of the intended purchase amount specified in the
Letter shall be held in escrow by the Transfer Agent. For example,
if the intended purchase amount is $50,000, the escrow shall be
shares valued in the amount of $2,500 (computed at the public
offering price adjusted for a $50,000 purchase). Any dividends and
capital gains distributions on the escrowed shares will be credited
to the investor's account.
2. If the total minimum investment purchase amount specified
under the Letter is completed within the thirteen-month Letter of
Intent period, the escrowed shares will be promptly released to the
investor.
3. If, at the end of the thirteen-month Letter of Intent
period the total purchases pursuant to the Letter are less than the
intended purchase amount specified in the Letter, the investor must
remit to the Distributor an amount equal to the difference between
the dollar amount of sales charges actually paid and the amount of
sales charges which would have been paid if the total amount
purchased had been made at a single time. Such sales charge
adjustment will apply to any shares redeemed prior to the
completion of the Letter. If such difference in sales charges is
not paid within twenty days after a request from the Distributor or
the dealer, the Distributor will, within sixty days of the
expiration of the Letter, redeem the number of escrowed shares
necessary to realize such difference in sales charges. Full and
fractional shares remaining after such redemption will be released
from escrow. If a request is received to redeem escrowed shares
prior to the payment of such additional sales charge, the sales
charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably
constitutes and appoints the Transfer Agent as attorney-in-fact to
surrender for redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the
holding of which may be counted toward completion of a Letter)
include (a) Class A shares sold with a front-end sales charge or
subject to a Class A contingent deferred sales charge, (b) Class B
shares of other Oppenheimer funds acquired subject to a contingent
deferred sales charge, and (c) Class A shares or Class B shares
acquired in exchange for either (i) Class A shares of one of the
other Oppenheimer funds that were acquired subject to a Class A
initial or contingent deferred sales charge or (ii) Class B shares
of one of the other Oppenheimer funds that were acquired subject to
a contingent deferred sales charge.
6. Shares held in escrow hereunder will automatically be
exchanged for shares of another fund to which an exchange is
requested, as described in the section of the Prospectus entitled
"How to Exchange Shares," and the escrow will be transferred to
that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a
bank account, a check (minimum $25) for the initial purchase must
accompany the application. Shares purchased by Asset Builder Plan
payments from bank accounts are subject to the redemption
restrictions for recent purchases described in "Shareholder Account
Rules and Policies" in the Prospectus. Asset Builder Plans also
enable shareholders of Oppenheimer Cash Reserves to use those
accounts for monthly automatic purchases of shares of up to four
other Oppenheimer funds. If you make payments from your bank
account to purchase shares of the Fund, your bank account will be
automatically debited normally four to five business days prior to
the investment dates selected in the Account Application. Neither
the Distributor, the Transfer Agent nor the Fund shall be
responsible for any delays in purchasing shares resulting from
delays in ACH transmission.
There is a front-end sales charge on the purchase of certain
Oppenheimer funds, or a contingent deferred sales charge may apply
to shares purchased by Asset Builder payments. An application
should be obtained from the Distributor, completed and returned,
and a prospectus of the selected fund(s) should be obtained from
the Distributor or your financial advisor before initiating Asset
Builder payments. The amount of the Asset Builder investment may
be changed or the automatic investments may be terminated at any
time by writing to the Transfer Agent. A reasonable period
(approximately 15 days) is required after the Transfer Agent's
receipt of such instructions to implement them. The Fund reserves
the right to amend, suspend, or discontinue offering such plans at
any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders
for the Fund's shares (for example, when a purchase check is
returned to the Fund unpaid) causes a loss to be incurred when the
net asset value of the Fund's shares on the cancellation date is
less than on the purchase date. That loss is equal to the amount
of the decline in the net asset value per share multiplied by the
number of shares in the purchase order. The investor is
responsible for that loss. If the investor fails to compensate the
Fund for the loss, the Distributor will do so. The Fund may
reimburse the Distributor for that amount by redeeming shares from
any account registered in that investor's name, or the Fund or the
Distributor may seek other redress.
Retirement Plans. In describing certain types of employee
benefit plans that may purchase Class A shares without being
subject to the Class A contingent differed sales charge, the term
"employee benefit plan" means any plan or arrangement, whether or
not "qualified" under the Internal Revenue Code, including, medical
savings accounts, payroll deduction plans or similar plans in which
Class A shares are purchased by a fiduciary or other person for the
account of participants who are employees of a single employer or
of affiliated employers, if the Fund account is registered in the
name of the fiduciary or other person for the benefit of
participants in the plan.
The term "group retirement plan" means any qualified or non-
qualified retirement plan (including 457 plans, SEPs, SARSEPs,
403(b) plans, and SIMPLE plans) for employees of a corporation or
a sole proprietorship, members and employees of a partnership or
association or other organized group of persons (the members of
which may include other groups), if the group has made special
arrangements with the Distributor and all members of the group
participating in the plan purchase Class A shares of the Fund
through a single investment dealer, broker or other financial
institution designated by the group.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and
conditions for redemptions set forth in the Prospectus.
Involuntary Redemptions. The Board of Directors has the
right to cause the involuntary redemption of the shares held in any
Fund account if the aggregate net asset value of those shares is
less than $500 or such lesser amount as the Board may fix. The
Board of 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 that you purchased subject to an initial sales
charge or Class A contingent deferred sales charge, or (ii) Class
B shares on which you paid a contingent deferred sales charge when
you redeemed them. This privilege does not apply to Class C
shares. The reinvestment may be made without sales charge only in
Class A shares of the Fund or any of the other Oppenheimer funds
into which shares of the Fund are exchangeable as described in "How
to Exchange Shares" below, at the net asset value next computed
after the Transfer Agent receives the reinvestment order. The
shareholder must ask the Distributor for that privilege at the time
of reinvestment. Any capital gain that was realized when the
shares were redeemed is taxable, and reinvestment will not alter
any capital gains tax payable on that gain. If there has been a
capital loss on the redemption, some or all of the loss may not be
tax deductible, depending on the timing and amount of the
reinvestment. Under the Internal Revenue Code, if the redemption
proceeds of Fund shares on which a sales charge was paid are
reinvested in shares of the Fund or another of the Oppenheimer
funds within 90 days of payment of the sales charge, the
shareholder's basis in the shares of the Fund that were redeemed
may not include the amount of the sales charge paid. That would
reduce the loss or increase the gain recognized from the
redemption. However, in that case the sales charge would be added
to the basis of the shares acquired by the reinvestment of the
redemption proceeds. The Fund may amend, suspend or cease offering
this reinvestment privilege at any time as to shares redeemed after
the date of such amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of any class at the time of
transfer to the name of another person or entity (whether the
transfer occurs by absolute assignment, gift or bequest, not
involving, directly or indirectly, a public sale). The transferred
shares will remain subject to the contingent deferred sales charge,
calculated as if the transferee shareholder had acquired the
transferred shares in the same manner and at the same time as the
transferring shareholder. If less than all shares held in an
account are transferred, and some but not all shares in the account
would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus
under "How to Buy Shares" for the imposition of the Class B 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 the Statement of Additional
Information. The request must: (i) state the reason for the
distribution; (ii) state the owner's awareness of tax penalties if
the distribution is premature; and (iii) conform to the
requirements of the plan and the Fund's other redemption
requirements. Participants, other than self-employed persons
maintaining a plan account in their own name, in OppenheimerFunds-
sponsored prototype pension, 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 or
401(k) plans are subject to special requirements under the Internal
Revenue Code and certain documents (available from the Transfer
Agent) must be completed before the distribution may be made.
Distributions from retirement plans are subject to withholding
requirements under the Internal Revenue Code, and IRS Form W-4P
(available from the Transfer Agent) must be submitted to the
Transfer Agent with the distribution request, or the distribution
may be delayed. Unless the shareholder has provided the Transfer
Agent with a certified tax identification number, the Internal
Revenue Code requires that tax be withheld from any distribution
even if the shareholder elects not to have tax withheld. The Fund,
the Manager, the Distributor, the Trustee and the Transfer Agent
assume no responsibility to determine whether a distribution
satisfies the conditions of applicable tax laws and will not be
responsible for any tax penalties assessed in connection with a
distribution.
Special Arrangements for Repurchase of Shares from Dealers and
Brokers. The Distributor is the Fund's agent to repurchase its
shares from authorized dealers or brokers on behalf of their
customers. The shareholder should contact the broker or dealer to
arrange this type or redemption. The repurchase price per share
will be the net asset value next computed after the Distributor
receives the order placed by the dealer or broker, except that if
the Distributor receives a repurchase order from the dealer or
broker after the close of The New York Stock Exchange on a regular
business day, it will be processed at that day's net asset value,
if the order was received by the dealer or broker from its customer
prior to the time the Exchange closes (normally, that is 4:00 P.M.,
but may be earlier on some days) and the order was transmitted to
and received by the Distributor prior to its close of business that
day (normally 5:00 P.M.). Ordinarily, for accounts redeemed by a
broker-dealer under this procedure, payment will be made within
three business days after the shares have been redeemed upon the
Distributor's receipt of the required redemption documents in
proper form, with the signature(s) of the registered owners
guaranteed on the redemption document as described in the
Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning
shares of the Fund valued at $5,000 or more can authorize the
Transfer Agent to redeem shares (minimum $50) automatically on a
monthly, quarterly, semi-annual or annual basis under an Automatic
Withdrawal Plan. Shares will be redeemed three business days prior
to the date requested by the shareholder for receipt of the
payment. Automatic withdrawals of up to $1,500 per month may be
requested by telephone if payments are to be made by check payable
to all shareholders of record and sent to the address of record for
the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on
this basis. Payments are normally made by check, but shareholders
having AccountLink privileges (see "How To Buy Shares") may arrange
to have Automatic Withdrawal Plan payments transferred to the bank
account designated on the OppenheimerFunds New Account Application
or signature-guaranteed instructions. Shares are normally redeemed
pursuant to an Automatic Withdrawal Plan three business days before
the date you select in the Account Application. If a contingent
deferred sales charge applies to the redemption, the amount of the
check or payment will be reduced accordingly. The Fund cannot
guarantee receipt of a payment on the date requested and reserves
the right to amend, suspend or discontinue offering such plans at
any time without prior notice. Because of the sales charge
assessed on Class A share purchases, shareholders should not make
regular additional Class A share purchases while participating in
an Automatic Withdrawal Plan. Class B and Class C shareholders
should not establish withdrawal plans because of the imposition of
the contingent deferred sales charges on such withdrawals (except
where the Class B and Class C contingent deferred sales charges are
waived as described in the Prospectus under "Waivers of Class B and
Class C Contingent Deferred Sales Charges").
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such
plans, as stated below as well as the Prospectus. These provisions
may be amended from time to time by the Fund and/or the
Distributor. When adopted, such amendments will automatically
apply to existing Plans.
Automatic Exchange Plans. Shareholders can authorize the
Transfer Agent (on the OppenheimerFunds Application or signature-
guaranteed instructions) to exchange a pre-determined amount of
shares of the Fund for shares (of the same class) of other
Oppenheimer funds automatically on a monthly, quarterly, semi-
annual or annual basis under an Automatic Exchange Plan. The
minimum amount that may be exchanged to each other fund account is
$25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "How to
Exchange Shares" in the Prospectus and below in this Statement of
Additional Information.
Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a
sales charge will be redeemed first and shares acquired with
reinvested dividends and capital gains distributions will be
redeemed next, followed by shares acquired with a sales charge, to
the extent necessary to make withdrawal payments. Depending upon
the amount withdrawn, the investor's principal may be depleted.
Payments made under withdrawal plans should not be considered as a
yield or income on your investment. It may not be desirable to
purchase additional Class A shares while making automatic
withdrawals because of the sales charges that apply to purchases
when made. Accordingly, a shareholder normally may not maintain an
Automatic Withdrawal Plan while simultaneously making regular
purchases of Class A shares.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the
"Planholder") who executed the Plan authorization and application
submitted to the Transfer Agent. Neither the Transfer Agent nor
the Fund shall incur any liability to the Planholder for any action
taken or omitted by the Transfer Agent in good faith to administer
the Plan. Certificates will not be issued for shares of the Fund
purchased for and held under the Plan, but the Transfer Agent will
credit all such shares to the account of the Planholder on the
records of the Fund. Any share certificates held by a Planholder
may be surrendered unendorsed to the Transfer Agent with the Plan
application so that the shares represented by the certificate may
be held under the Plan.
For accounts subject to Automatic Withdrawal Plans,
distributions of capital gains must be reinvested in shares of the
Fund, which will be done at net asset value without a sales charge.
Dividends on shares held in the account may be paid in cash or
reinvested.
Redemptions of shares needed to make withdrawal payments will
be made at the net asset value per share determined on the
redemption date. Checks or ACH transfer payments of the proceeds
of Plan withdrawals will normally be transmitted three business
days prior to the date selected for receipt of the payment (receipt
of payment on the date selected cannot be guaranteed), according to
the choice specified in writing by the Planholder.
The amount and the interval of disbursement payments and the
address to which checks are to be mailed or AccountLink payments
are to be sent may be changed at any time by the Planholder by
writing to the Transfer Agent. The Planholder should allow at
least two weeks' time in mailing such notification for the
requested change to be put in effect. The Planholder may, at any
time, instruct the Transfer Agent by written notice (in proper form
in accordance with the requirements of the then-current Prospectus
of the Fund) to redeem all, or any part of, the shares held under
the Plan. In that case, the Transfer Agent will redeem the number
of shares requested at the net asset value per share in effect in
accordance with the Fund's usual redemption procedures and will
mail a check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by
writing to the Transfer Agent. A Plan may also be terminated at
any time by the Transfer Agent upon receiving directions to that
effect from the Fund. The Transfer Agent will also terminate a
Plan upon receipt of evidence satisfactory to it of the death or
legal incapacity of the Planholder. Upon termination of a Plan by
the Transfer Agent or the Fund, shares that have not been redeemed
from the account will be held in uncertificated form in the name of
the Planholder, and the account will continue as a dividend-
reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder or his or her
executor or guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt,
the Planholder may request issuance of a portion of the shares in
certificated form. Upon written request from the Planholder, the
Transfer Agent will determine the number of shares for which a
certificate may be issued without causing the withdrawal checks to
stop because of exhaustion of uncertificated shares needed to
continue payments. However, should such uncertificated shares
become exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the
Fund, the Planholder will be deemed to have appointed any successor
transfer agent to act as agent in administering the Plan.
How To Exchange Shares
As stated in the Prospectus, shares of a particular class of
Oppenheimer funds having more than one class of shares may be
exchanged only for shares of the same class of other Oppenheimer
funds. Shares of the Oppenheimer funds that have a single class
without a class designation are deemed "Class A" shares for this
purpose. All of the Oppenheimer funds offer Class A, 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 Money Market Trust, Centennial America
Fund, L.P., and Daily Cash Accumulation Fund, Inc., which only
offer Class A shares, and Oppenheimer Main Street California
Municipal Fund which only offers Class A and Class B shares (Class
B and Class C shares of Oppenheimer Cash Reserves are generally
available only by exchange from the same class of shares of other
Oppenheimer funds or through OppenheimerFunds sponsored 401(k)
plans). A current list showing which funds offer which classes can
be obtained by calling the distributor at 1-800-525-7048.
For accounts established on or before March 8, 1996 holding
Class M shares of Oppenheimer Bond Fund for Growth, Class M shares
can be exchanged only for Class A shares of other Oppenheimer
funds, including Rochester Fund Municipals and Limited Term New
York Municipal Fund. Class A shares of Rochester Fund Municipals
or Limited Term New York Municipal Fund acquired on the exchange of
Class M shares of Oppenheimer Bond Fund for Growth may be exchanged
for Class M shares of that fund. For accounts of Oppenheimer Bond
Fund for Growth established after March 8, 1996, Class M shares may
be exchanged for Class A shares of other Oppenheimer funds except
Rochester Fund Municipals and Limited-Term New York Municipals.
Exchanges to Class M shares of Oppenheimer Bond Fund for Growth are
permitted from Class A shares of Oppenheimer Money Market Fund,
Inc. or Oppenheimer Cash Reserves that were acquired by exchange
from Class M shares. Otherwise no exchanges of any class of any
Oppenheimer fund into Class M shares are permitted.
Class A shares of Oppenheimer funds may be exchanged at net
asset value for shares of any Money Market Fund. Shares of any
Money Market Fund purchased without a sales charge may be exchanged
for shares of Oppenheimer funds offered with a sales charge upon
payment of the sales charge (or, if applicable, may be used to
purchase shares of Oppenheimer funds subject to a contingent
deferred sales charge). However, shares of Oppenheimer Money
Market Fund, Inc. purchased with the redemption proceeds of shares
of other mutual funds (other than funds managed by the Manager or
its subsidiaries) redeemed within the 12 months prior to that
purchase may subsequently be exchanged for shares of other
Oppenheimer funds without being subject to an initial or contingent
deferred sales charge, whichever is applicable. To qualify for
that privilege, the investor or the investor's dealer must notify
the Distributor of eligibility for this privilege at the time the
shares of Oppenheimer Money Market Fund, Inc. are purchased, and,
if requested, must supply proof of entitlement to this privilege.
Shares of the Fund acquired by reinvestment of dividends or
distributions from any other of the Oppenheimer funds (except
Oppenheimer Cash Reserves) or from any unit investment trust for
which reinvestment arrangements have been made with the Distributor
may be exchanged at net asset value for shares of any of the
Oppenheimer funds. No contingent deferred sales charge is imposed
on exchanges of shares of any class purchased subject to a
contingent deferred sales charge. However, when Class A shares
acquired by exchange of Class A shares of other Oppenheimer funds
purchased subject to a Class A contingent deferred sales charge are
redeemed within 18 months of the end of the calendar month of the
initial purchase of the exchanged Class A shares, the Class A
contingent deferred sales charge is imposed on the redeemed shares
(see "Class A Contingent Deferred Sales Charge" in the Prospectus).
The Class B contingent deferred sales charge is imposed on Class B
shares acquired by exchange if they are redeemed within six years
of the initial purchase of the exchanged Class B shares. The Class
C contingent deferred sales charge is imposed on Class C shares
acquired by exchange if they are redeemed within 12 months of the
initial purchase of the exchanged Class C shares.
When Class B or Class C shares are redeemed to effect an
exchange, the priorities described in "How To Buy Shares" in the
Prospectus for the imposition of the Class B and Class C contingent
deferred sales charges will be followed in determining the order in
which the shares are exchanged. Shareholders should take into
account the effect of any exchange on the applicability and rate of
any contingent deferred sales charge that might be imposed in the
subsequent redemption of remaining shares. Shareholders owning
shares of more than one class must specify whether they intend to
exchange Class A, Class B or Class C shares.
The Fund reserves the right to reject telephone or written
exchange requests submitted in bulk by anyone on behalf or more
than one account. The Fund may accept requests for exchanges of up
to 50 accounts per day from representatives of authorized dealers
that qualify for this privilege. In connection with any exchange
request, the number of shares exchanged may be less than the number
requested if the exchange or the number requested would include
shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information or would include shares covered
by a share certificate that is not tendered with the request. In
those cases, only the shares available for exchange without
restriction will be exchanged.
When exchanging shares by telephone, a shareholder must either
have an existing account in, or obtain and acknowledge receipt of
a prospectus of, the fund to which the exchange is to be made. For
full or partial exchanges of an account made by telephone, any
special account features such as Asset Builder Plans, Automatic
Withdrawal Plans and retirement plan contributions will be switched
to the new account unless the Transfer Agent is instructed
otherwise. If all telephone lines are busy (which might occur, for
example, during periods of substantial market fluctuations),
shareholders might not be able to request exchanges by telephone
and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business
day the Transfer Agent receives an exchange request in proper form
(the "Redemption Date"). Normally, shares of the fund to be
acquired are purchased on the Redemption Date, but such purchases
may be delayed by either fund up to five business days if it
determines that it would be disadvantaged by an immediate transfer
of the redemption proceeds. The Fund reserves the right, in its
discretion, to refuse any exchange request that may disadvantage it
(for example, if the receipt of multiple exchange requests from a
dealer might require the disposition of portfolio securities at a
time or at a price that might be disadvantageous to the Fund).
The different Oppenheimer funds available for exchange have
different investment objectives, policies and risks, and a
shareholder should assure that the Fund selected is appropriate for
his or her investment and should be aware of the tax consequences
of an exchange. For federal income tax purposes, an exchange
transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. "Reinvestment Privilege," above,
discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and
the Transfer Agent are unable to provide investment, tax or legal
advice to a shareholder in connection with an exchange request or
any other investment transaction.
Dividends, Capital Gains and Taxes
Tax Status of the Fund's Dividends and Distributions. The Federal
tax treatment of the Fund's dividends and capital gains
distributions is explained in the Prospectus under the caption
"Dividends, Capital Gains and Taxes." Special provisions of the
Internal Revenue Code govern the eligibility of the Fund's
dividends for the dividends-received deduction for corporate
shareholders. Long-term capital gains distributions are not
eligible for the deduction. In addition, the amount of dividends
paid by the Fund which may qualify for the deduction is limited to
the aggregate amount of qualifying dividends that the Fund derives
from its portfolio investments that the Fund has held for a minimum
period, usually 46 days. A corporate shareholder will not be
eligible for the deduction on dividends paid on Fund shares held
for 45 days or less. To the extent the Fund's dividends are
derived from gross income from option premiums, interest income or
short-term gains from the sale of securities or dividends from
foreign corporations, those dividends will not qualify for the
deduction.
Under the Internal Revenue Code, by December 31 each year, the
Fund must distribute 98% of its taxable investment income earned
from January 1 through December 31 of that year and 98% of its
capital gains realized in the period from November 1 of the prior
year through October 31 of the current year, or else the Fund must
pay an excise tax on the amounts not distributed. While it is
presently anticipated that the Fund will meet those requirements,
the Board of 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 distributions.
The Fund qualified during its last fiscal year, and intends to
qualify in current and future years, but reserves the right not to
do so. The Internal Revenue Code contains a number of complex
tests to determine whether the Fund will qualify, and the Fund
might not meet those tests in a particular year. For example, if
the Fund derives 30% or more of its gross income from the sale of
securities held less than three months, it may fail to qualify (see
"Tax Aspects of Covered Calls and Hedging Instruments," above). If
it did not so qualify, the Fund would be treated for tax purposes
as an ordinary corporation and receive no tax deduction for
payments made to shareholders.
The amount of a class's distributions may vary from time to
time depending on market conditions, the composition of the Fund's
portfolio, and expenses borne by the Fund or borne separately by a
class, as described in "Alternative Sales Arrangements -- Class A,
Class B and Class C Shares," above. Dividends are calculated in
the same manner, at the same time and on the same day for shares of
each class. However, dividends on Class B and Class C shares are
expected to be lower as a result of the asset-based sales charge on
Class B and Class C shares, and Class B and Class C dividends will
also differ in amount as a consequence of any difference in net
asset value between the classes.
Dividends, distributions and the proceeds of the redemption of
Fund shares represented by checks returned to the Transfer Agent by
the Postal Service as undeliverable will be invested in shares of
Oppenheimer Money Market Fund, Inc., as promptly as possible after
the return of such checks to the Transfer Agent, to enable the
investor to earn a return on otherwise idle funds.
Dividend Reinvestment in Another Fund. Shareholders of the Fund
may elect to reinvest all dividends and/or capital gains
distributions in shares of the same class of any of the other
Oppenheimer funds listed in "Reduced Sales Charges," above, at net
asset value without sales charge. To elect this option, a
shareholder must notify the Transfer Agent in writing and either
must have an existing account in the fund selected for reinvestment
or must obtain a prospectus for that fund and an application from
the Distributor to establish an account. The investment will be
made at the net asset value per share in effect at the close of
business on the payable date of the dividend or distribution.
Dividends and/or distributions from certain of the Oppenheimer
funds may be invested in shares of this Fund on the same basis.
Additional Information About the Fund
The Custodian. State Street Bank and Trust Company acts as
custodian of the assets of the 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 serves as the
Fund's independent accountants. Their services include examining
the annual financial statements of the Fund as well as other
related services.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Oppenheimer Quest Growth & Income Value Fund
To the Board of Trustees and Shareholders of
Oppenheimer Quest Growth & Income Value Fund
In our opinion, the accompanying statement of assets and liabilities,
including the statement 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
Oppenheimer Quest Growth & Income Value Fund (formerly Quest for Value
Growth and Income Fund, one of the portfolios constituting Oppenheimer
Quest for Value Funds, formerly Quest for Value Family of Funds, hereafter
referred to as the Fund) at October 31, 1996, the results of its operations
for the year then ended, the changes in its net assets for each of the two
years in the period then ended and the financial highlights for 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, 1996
by correspondence with the custodian, provide a reasonable basis for the
opinion expressed above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Denver, Colorado
November 21, 1996
4 Oppenheimer Quest Growth & Income Value Fund
<PAGE>
<TABLE>
<CAPTION>
=========================================
STATEMENT OF INVESTMENTS OCTOBER 31, 1996
FACE
MARKET VALUE
AMOUNT
SEE NOTE 1
================================================================================================================
=============
<S> <C> <C>
<C>
SHORT-TERM NOTES - 11.5%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Deere (John) Capital Corp., 5.27%, 11/4/96(1) $3,000,000
$ 2,998,683
- ------------------------------------------------------------------------------------------------------------------
Household Finance Corp., 5.25%, 11/26/96(1) 4,564,000
4,547,360
- ------------
Total Short-Term Notes (Cost $7,546,043)
7,546,043
================================================================================================================
=============
NON-CONVERTIBLE CORPORATE BONDS AND NOTES - 20.5%
- ----------------------------------------------------------------------------------------------------------------
- -------------
CONSUMER CYCLICALS - 7.9%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Comcast Corp., 10.625% Sr. Sub. Debs., 7/15/12 2,500,000
2,671,875
- ------------------------------------------------------------------------------------------------------------------
Time Warner, Inc., 8.05% Debs., 1/15/16 2,000,000
1,958,190
- ------------------------------------------------------------------------------------------------------------------
Time Warner, Inc., 9.125% Debs., 1/15/13 500,000
543,065
- ------------
5,173,130
- ----------------------------------------------------------------------------------------------------------------
- -------------
CONSUMER NON-CYCLICALS - 7.8%
- ----------------------------------------------------------------------------------------------------------------
- -------------
HEALTHCARE/SUPPLIES & SERVICES - 4.1%
- ------------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp., 8.625% Sr. Unsec. Nts., 12/1/03 2,500,000
2,656,250
- ----------------------------------------------------------------------------------------------------------------
- -------------
HOUSEHOLD GOODS - 3.7%
- ------------------------------------------------------------------------------------------------------------------
Playtex Family Products Corp., 9% Sr. Sub. Nts., 12/15/03 2,500,000
2,443,750
- ----------------------------------------------------------------------------------------------------------------
- -------------
FINANCIAL - 1.6%
- ----------------------------------------------------------------------------------------------------------------
- -------------
NationsBank Corp., 7.75% Sub. Nts., 8/15/15 1,000,000
1,029,718
- ----------------------------------------------------------------------------------------------------------------
- -------------
TECHNOLOGY - 3.2%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Northrop Grumman Corp., 7.75% Nts., 3/1/16 2,000,000
2,057,230
- ------------
Total Non-Convertible Corporate Bonds and Notes (Cost $13,219,007)
13,360,078
SHARES
================================================================================================================
=============
COMMON STOCKS - 64.6%
- ----------------------------------------------------------------------------------------------------------------
- -------------
CONSUMER CYCLICALS - 11.9%
- ----------------------------------------------------------------------------------------------------------------
- -------------
LEISURE & ENTERTAINMENT - 1.7%
- ------------------------------------------------------------------------------------------------------------------
McDonald's Corp. 25,000
1,109,375
- ----------------------------------------------------------------------------------------------------------------
- -------------
MEDIA - 5.7%
- ------------------------------------------------------------------------------------------------------------------
Tele-Communications, Inc. (New), TCI Group, Series A(2) 300,000
3,731,250
- ----------------------------------------------------------------------------------------------------------------
- -------------
RETAIL: GENERAL - 4.5%
- ------------------------------------------------------------------------------------------------------------------
VF Corp. 45,000
2,941,875
- ----------------------------------------------------------------------------------------------------------------
- -------------
CONSUMER NON-CYCLICALS - 5.4%
- ----------------------------------------------------------------------------------------------------------------
- -------------
BEVERAGES - 2.7%
- ------------------------------------------------------------------------------------------------------------------
PepsiCo, Inc. 60,000
1,777,500
- ----------------------------------------------------------------------------------------------------------------
- -------------
HEALTHCARE/SUPPLIES & SERVICES - 1.7%
- ------------------------------------------------------------------------------------------------------------------
Becton, Dickinson & Co. 26,000
1,131,000
- ----------------------------------------------------------------------------------------------------------------
- -------------
HOUSEHOLD GOODS - 1.0%
- ------------------------------------------------------------------------------------------------------------------
Avon Products, Inc. 12,000
651,000
- ----------------------------------------------------------------------------------------------------------------
- -------------
ENERGY - 0.9%
- ----------------------------------------------------------------------------------------------------------------
- -------------
OIL-INTEGRATED - 0.9%
- ------------------------------------------------------------------------------------------------------------------
Triton Energy Corp.(2) 13,000
580,125
- ----------------------------------------------------------------------------------------------------------------
- -------------
FINANCIAL - 14.7%
- ----------------------------------------------------------------------------------------------------------------
- -------------
BANKS - 5.6%
- ------------------------------------------------------------------------------------------------------------------
Citicorp 10,000
990,000
- ------------------------------------------------------------------------------------------------------------------
Wells Fargo & Co. 10,000
2,671,250
- ------------
3,661,250
</TABLE>
5 Oppenheimer Quest Growth & Income Value Fund
<PAGE>
<TABLE>
<CAPTION>
====================================
STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE
SHARES
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- -------------
FINANCIAL (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
- -------------
<S> <C> <C>
<C>
DIVERSIFIED FINANCIAL - 4.5%
- ------------------------------------------------------------------------------------------------------------------
Countrywide Credit Industries, Inc. $ 50,000
$ 1,425,000
- ------------------------------------------------------------------------------------------------------------------
United Asset Management Corp. 60,000
1,470,000
- ------------
2,895,000
- ----------------------------------------------------------------------------------------------------------------
- -------------
INSURANCE - 4.6%
- ------------------------------------------------------------------------------------------------------------------
ACE Ltd. 55,000
3,011,250
- ----------------------------------------------------------------------------------------------------------------
- -------------
INDUSTRIAL - 9.8%
- ----------------------------------------------------------------------------------------------------------------
- -------------
INDUSTRIAL SERVICES - 3.4%
- ------------------------------------------------------------------------------------------------------------------
Briggs & Stratton Corp. 55,000
2,200,000
- ----------------------------------------------------------------------------------------------------------------
- -------------
MANUFACTURING - 2.5%
- ------------------------------------------------------------------------------------------------------------------
Caterpillar, Inc. 15,000
1,029,375
- ------------------------------------------------------------------------------------------------------------------
Grand Metropolitan plc, Sponsored ADR 20,245
620,003
- -----------
1,649,378
- ----------------------------------------------------------------------------------------------------------------
- -------------
TRANSPORTATION - 3.9%
- ------------------------------------------------------------------------------------------------------------------
Canadian Pacific Ltd. (New) 100,000
2,525,000
- ----------------------------------------------------------------------------------------------------------------
- -------------
TECHNOLOGY - 21.9%
- ----------------------------------------------------------------------------------------------------------------
- -------------
AEROSPACE/DEFENSE - 3.4%
- ------------------------------------------------------------------------------------------------------------------
McDonnell Douglas Corp. 40,000
2,180,000
- ----------------------------------------------------------------------------------------------------------------
- -------------
COMPUTER HARDWARE - 0.9%
- ------------------------------------------------------------------------------------------------------------------
Adaptec, Inc.(2) 10,000
608,750
- ----------------------------------------------------------------------------------------------------------------
- -------------
COMPUTER SOFTWARE - 8.2%
- ------------------------------------------------------------------------------------------------------------------
Electronic Arts, Inc.(2) 100,000
3,750,000
- ------------------------------------------------------------------------------------------------------------------
Maxis, Inc.(2) 125,000
1,625,000
- ------------
5,375,000
- ----------------------------------------------------------------------------------------------------------------
- -------------
ELECTRONICS - 5.9%
- ------------------------------------------------------------------------------------------------------------------
General Instrument Corp.(2) 120,000
2,415,000
- ------------------------------------------------------------------------------------------------------------------
Intel Corp. 13,000
1,428,375
- ------------
3,843,375
- ----------------------------------------------------------------------------------------------------------------
- -------------
TELECOMMUNICATIONS-TECHNOLOGY - 3.5%
- ------------------------------------------------------------------------------------------------------------------
Sprint Corp. 15,000
588,750
- ------------------------------------------------------------------------------------------------------------------
WorldCom, Inc.(2) 70,000
1,706,250
- ------------
2,295,000
- ------------
Total Common Stocks (Cost $36,149,776)
42,166,128
================================================================================================================
=============
OTHER SECURITIES - 2.1%
- ----------------------------------------------------------------------------------------------------------------
- -------------
Merrill Lynch & Co., Inc., 6% Cv. Preferred, Structured Yield
Product Exchangeable for Cox Communication, Inc. Common Stock
(Cost $1,642,425) 71,800
1,391,125
- ------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $58,557,251) 98.7%
64,463,374
- ------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.3
842,807
------
- ------------
NET ASSETS 100.0%
$65,306,181
======
============
</TABLE>
1. Short-term notes are generally traded on a discount basis; the
interest rate is the discount rate received by the Fund at the time
of purchase.
2. Non-income producing security.
See accompanying Notes to Financial Statements.
6 Oppenheimer Quest Growth & Income Value Fund
<PAGE>
<TABLE>
<CAPTION>
====================================================
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1996
================================================================================================================
=============
<S> <C>
<C>
ASSETS Investments, at value (cost $58,557,251) - see accompanying statement
$64,463,374
- ----------------------------------------------------------------------------------------------------
Receivables:
Shares of beneficial interest sold
762,948
Interest and dividends
373,459
- ----------------------------------------------------------------------------------------------------
Other
6,725
- ------------
Total assets
65,606,506
================================================================================================================
=============
LIABILITIES Bank overdraft
62,106
- ----------------------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed
172,002
Shareholder reports
21,488
Transfer agent and accounting service fees
13,917
Distribution and service plan fees
13,620
Trustees' fees
3,096
Other
14,096
- ------------
Total liabilities
300,325
================================================================================================================
=============
NET ASSETS
$65,306,181
============
================================================================================================================
=============
COMPOSITION OF Par value of shares of beneficial interest
$ 52,398
NET ASSETS
- ----------------------------------------------------------------------------------------------------
Additional paid-in capital
52,727,002
- ----------------------------------------------------------------------------------------------------
Undistributed net investment income
120,291
- ----------------------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions
6,500,367
- ----------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments - Note 3
5,906,123
- ------------
Net assets
$65,306,181
============
================================================================================================================
=============
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on net assets
of $49,322,380 and 3,952,924 shares of beneficial interest outstanding)
$12.48
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price)
$13.24
- ----------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $13,174,944 and 1,060,887 shares of beneficial interest outstanding)
$12.42
- ----------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $2,808,857 and 225,974 shares of beneficial interest outstanding)
$12.43
</TABLE>
See accompanying Notes to Financial Statements.
7 Oppenheimer Quest Growth & Income Value Fund
<PAGE>
<TABLE>
<CAPTION>
===========================================================
STATEMENT OF OPERATIONS FOR THE YEAR ENDED OCTOBER 31, 1996
================================================================================================================
=============
<S> <C>
<C>
INVESTMENT INCOME Interest
$ 1,602,402
- ----------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $4,829)
574,115
- ------------
Total income
2,176,517
================================================================================================================
=============
EXPENSES Management fees - Note 4
472,835
- ----------------------------------------------------------------------------------------------------
Distribution and service plan fees - Note 4:
Class A
173,048
Class B
100,727
Class C
22,005
- ----------------------------------------------------------------------------------------------------
Transfer agent and accounting service fees - Note 4
136,194
- ----------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A
41,572
Class B
13,329
Class C
2,758
- ----------------------------------------------------------------------------------------------------
Shareholder reports
53,836
- ----------------------------------------------------------------------------------------------------
Legal and auditing fees
29,778
- ----------------------------------------------------------------------------------------------------
Trustees' fees and expenses
24,859
- ----------------------------------------------------------------------------------------------------
Custodian fees and expenses
24,719
- ----------------------------------------------------------------------------------------------------
Other
38,383
- ------------
Total expenses
1,134,043
Less expenses paid indirectly - Note 4
(13,485)
- ------------
Net expenses
1,120,558
================================================================================================================
=============
NET INVESTMENT INCOME
1,055,959
================================================================================================================
=============
REALIZED AND Net realized gain on investments
6,454,155
UNREALIZED GAIN
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments
3,175,436
- ------------
Net realized and unrealized gain
9,629,591
================================================================================================================
=============
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$10,685,550
============
</TABLE>
See accompanying Notes to Financial Statements.
8 Oppenheimer Quest Growth & Income Value Fund
<PAGE>
<TABLE>
<CAPTION>
===================================
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED OCTOBER
31,
1996
1995
================================================================================================================
=============
<S> <C> <C>
<C>
OPERATIONS Net investment income $ 1,055,959
$ 965,811
- ----------------------------------------------------------------------------------------------------
Net realized gain 6,454,155
2,227,731
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 3,175,436
2,324,387
- -------------------------------
Net increase in net assets resulting
from operations 10,685,550
5,517,929
================================================================================================================
=============
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS Class A (830,842)
(917,781)
TO SHAREHOLDERS Class B (138,167)
(105,700)
Class C (28,888)
(17,697)
- ----------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (1,723,234)
(1,275,011)
Class B (359,598)
(129,812)
Class C (82,370)
(20,124)
================================================================================================================
=============
BENEFICIAL INTEREST Net increase in net assets resulting from
TRANSACTIONS beneficial interest transactions - Note 2:
Class A 6,377,895
3,863,132
Class B 4,189,051
4,358,519
Class C 683,425
1,300,722
================================================================================================================
=============
NET ASSETS Total increase 18,772,822
12,574,177
- ----------------------------------------------------------------------------------------------------
Beginning of period 46,533,359
33,959,182
- -------------------------------
End of period (including undistributed net investment
income of $120,291 and $62,229, respectively) $65,306,181
$46,533,359
===============================
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer Quest Growth & Income Value Fund
<PAGE>
<TABLE>
<CAPTION>
====================
FINANCIAL HIGHLIGHTS
CLASS A
----------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
1996(2) 1995 1994 1993 1992
====================================================================================================================
PER SHARE OPERATING DATA:
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.92 $10.09 $11.24 $10.80 $10.00
- --------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .23 .27(3) .32(3) .30(3) .28(3)
Net realized and unrealized gain 2.05 1.27 .55 .73 .80
- --------------------------------------------------------------------------------------------------------------------
Total income from investment
operations 2.28 1.54 .87 1.03 1.08
- --------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.22) (.29) (.32) (.26) (.28)
Distributions from net realized gain (.50) (.42) (1.70) (.33) --
- --------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.72) (.71) (2.02) (.59) (.28)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.48 $10.92 $10.09 $11.24 $10.80
======================================================================
====================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 21.84% 16.35% 8.64% 9.93% 10.84%
====================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $49,322 $37,082 $30,576 $28,466 $8,057
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $43,428 $33,397 $29,112 $23,771 $6,940
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 2.03% 2.60%(5) 3.16%(5) 2.66%(5) 2.73%(5)
Expenses(7) 1.90% 1.99%(5) 1.86%(5) 1.90%(5) 2.23%(5)
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 124.2% 130.0% 113.0% 192.0% 77.0%
Average brokerage commission rate(9) $0.0548 -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
====================
FINANCIAL HIGHLIGHTS
CLASS B
-------------------------------------------------------
YEAR ENDED OCTOBER 31,
1996(2) 1995 1994 1993(1)
=====================================================================================================
PER SHARE OPERATING DATA:
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.88 $10.07 $11.23 $11.21
- -----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .17 .19(3) .25(3) .04(3)
Net realized and unrealized gain 2.03 1.28 .56 .05
- -----------------------------------------------------------------------------------------------------
Total income from investment
operations 2.20 1.47 .81 .09
- -----------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.16) (.24) (.27) (.07)
Distributions from net realized gain (.50) (.42) (1.70) --
- -----------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.66) (.66) (1.97) (.07)
- -----------------------------------------------------------------------------------------------------
Net asset value, end of period $12.42 $10.88 $10.07 $11.23
=======================================================
=====================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 21.07% 15.65% 7.96% 0.81%
=====================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $13,175 $7,623 $2,928 $319
- -----------------------------------------------------------------------------------------------------
Average net assets (in thousands) $10,097 $4,856 $1,586 $228
- -----------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.40% 1.71%(5) 2.53%(5) 1.83%(5)(6)
Expenses(7) 2.53% 2.59%(5) 2.47%(5) 2.49%(5)(6)
- -----------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 124.2% 130.0% 113.0% 192.0%
Average brokerage commission rate(9) $0.0548 -- -- --
</TABLE>
1. For the period from September 1, 1993 (inception of offering) to October 31,
1993.
2. On November 22, 1995, OppenheimerFunds, Inc. became the investment adviser
to the Fund.
3. Based on average shares outstanding for the period.
4. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
5. During the periods presented above, the former 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%, respectively, for the year ended 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%, respectively, for Class B and 1.80% and 2.87%, respectively, for
Class C, for the period September 1, 1993 (inception of offering) to October
31, 1993.
10 Oppenheimer Quest Growth & Income Value Fund
<PAGE>
<TABLE>
<CAPTION>
--------------------------------
FINANCIAL HIGHLIGHTS (Continued)
CLASS C
------------------------------------------------------
YEAR ENDED OCTOBER 31,
1996(2) 1995 1994 1993(1)
====================================================================================================
PER SHARE OPERATING DATA:
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.89 $10.07 $11.23 $11.21
- ----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .17 .15(3) .24(3) .04(3)
Net realized and unrealized gain 2.02 1.30 .56 .05
- ----------------------------------------------------------------------------------------------------
Total income from investment
operations 2.19 1.45 .80 .09
- ----------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.15) (.21) (.26) (.07)
Distributions from net realized gain (.50) (.42) (1.70) --
- ----------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.65) (.63) (1.96) (.07)
- ----------------------------------------------------------------------------------------------------
Net asset value, end of period $12.43 $10.89 $10.07 $11.23
======================================================
====================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(4) 20.97% 15.38% 7.91% 0.81%
====================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $2,809 $1,828 $455 $102
- ----------------------------------------------------------------------------------------------------
Average net assets (in thousands) $2,200 $ 968 $298 $100
- ----------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.40% 1.39%(5) 2.39%(5) 2.18%(5)(6)
Expenses(7) 2.53% 2.88%(5) 2.62%(5) 2.49%(5)(6)
- ----------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 124.2% 130.0% 113.0% 192.0%
Average brokerage commission rate(9) $0.0548 -- -- --
</TABLE>
6. Annualized.
7. Beginning in fiscal 1996, the expense ratio reflects the effect of gross
expenses paid indirectly by the Fund. Prior year expense ratios have not been
adjusted.
8. 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, 1996 were $66,479,417 and $66,212,071, respectively.
9. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold.
See accompanying Notes to Financial Statements.
11 Oppenheimer Quest Growth & Income Value Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Quest Growth & Income Value Fund (the Fund), formerly named
Quest for Value Growth and Income Fund, a series of Oppenheimer Quest for
Value Funds, is a diversified open-end management investment company
registered under the Investment Company Act of 1940, as amended. The Fund's
investment objective is to seek a combination of growth of capital and
investment income with growth of capital as the primary objective. 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
OppenheimerFunds, Inc. (the Manager), which resulted in the sale to the
Manager of certain mutual fund assets of OCC Distributors and OpCap
Advisors including the transfer of Quest for Value Funds and the use of the
name "Quest for Value." As part of the transaction, the Fund entered into
an investment advisory agreement with the Manager and the Manager has
entered into a sub-advisory agreement with OpCap Advisors (the former
Manager). The Fund offers Class A, Class B and Class C shares. Class A
shares are sold with a front-end sales charge. Class B and Class C shares
may be subject to a contingent deferred sales charge. All three classes of
shares have identical rights to earnings, assets and voting privileges,
except that each class has its own distribution and/or service plan,
expenses directly attributable to a particular class and exclusive voting
rights with respect to matters affecting a single class. Class B shares
will automatically convert to Class A shares six years after the date of
purchase. The following is a summary of significant accounting policies
consistently followed by the Fund.
INVESTMENT VALUATION. Portfolio securities are valued at the close of the
New York Stock Exchange on each trading day. Listed and unlisted securities
for which such information is regularly reported are valued at the last
sale price of the day or, in the absence of sales, at values based on the
closing bid or the last sale price on the prior trading day. Long-term and
short-term "non-money market" debt securities are valued by a portfolio
pricing service approved by the Board of Trustees. Such securities which
cannot be valued by the approved portfolio pricing service are valued using
dealer-supplied valuations provided the Manager is satisfied that the firm
rendering the quotes is reliable and that the quotes reflect current market
value, or are valued under consistently applied procedures established by
the Board of Trustees to determine fair value in good faith. Short-term
"money market type" debt securities having a remaining maturity of 60 days
or less are valued at cost (or last determined market value) adjusted for
amortization to maturity of any premium or discount.
ALLOCATION OF INCOME, EXPENSES, AND GAINS AND LOSSES. Income, expenses
(other than those attributable to a specific class) and gains and losses
are allocated daily to each class of shares based upon the relative
proportion of net assets represented by such class. Operating expenses
directly attributable to a specific class are charged against the
operations of that class.
FEDERAL TAXES. The Fund intends to continue to comply with provisions of
the Internal Revenue Code applicable to regulated investment companies and
to distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required. At October 31, 1996,
the Fund had available for federal income purposes an unused capital loss
carryover of approximately $46,000, which expires in 2000.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders
are recorded on the ex-dividend date.
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income
(loss) and net realized gain (loss) may differ for financial statement and
tax purposes. The character of the distributions made during the year from
net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts are distributed
may differ from the year that the income or realized gain (loss) was
recorded by the Fund.
12 Oppenheimer Quest Growth & Income Value Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
OTHER. Investment transactions are accounted for on the date the
investments are purchased or sold (trade date) and dividend income is
recorded on the ex-dividend date. Interest income in accrued on a daily
basis. Realized gains and losses on investments and unrealized appreciation
and depreciation are determined on an identified cost basis, which is the
same basis used for federal income tax purposes.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses during
the reporting period. Actual results could differ from those estimates.
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of $.01 par value shares of
beneficial interest. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
--------------------------- ----------------
SHARES AMOUNT SHARES AMOUNT
Class A:
<S> <C> <C> <C> <C>
Sold 966,147 $11,466,003 790,817 $ 8,471,883
Dividends and distributions
reinvested 219,311 2,441,586 216,701 2,097,137
Redeemed (627,593) (7,529,694) (641,530) (6,705,888)
--------- ------------ --------- ------------
Net increase 557,865 $ 6,377,895 365,988 $ 3,863,132
========= ============ ========= ============
Class B:
Sold 482,330 $ 5,647,365 438,682 $ 4,674,731
Dividends and distributions
reinvested 42,284 468,109 22,368 217,205
Redeemed (164,144) (1,926,423) (51,318) (533,417)
--------- ------------ --------- ------------
Net increase 360,470 $ 4,189,051 409,732 $ 4,358,519
========= ============ ========= ============
Class C:
Sold 96,190 $ 1,134,271 140,694 $ 1,497,250
Dividends and distributions
reinvested 9,569 105,983 3,711 36,149
Redeemed (47,618) (556,829) (21,778) (232,677)
--------- ------------ --------- ------------
Net increase 58,141 $ 683,425 122,627 $ 1,300,722
========= ============ ========= ============
</TABLE>
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At October 31, 1996, net unrealized appreciation on investments of
$5,906,123 was composed of gross appreciation of $8,340,380, and gross
depreciation of $2,434,257.
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of 0.85% of
average annual net assets. Prior to November 22, 1995, management fees were
paid to the former Manager at an annual rate of 0.85% of the Fund's average
net assets. The Manager has agreed to reimburse the Fund if aggregate
expenses (with specified exceptions) exceed the most stringent applicable
regulatory limit on Fund expenses. The Manager acts as the accounting agent
for the Fund at an annual fee of $55,000, plus out-of-pocket costs and
expenses reasonably incurred. Prior to November 22, 1995, accounting service
fees were paid monthly to the former Manager.
Effective November 22, 1995, the Manager pays OpCap Advisors (the
Sub-Adviser) a monthly fee based on the fee schedule set forth in the
Prospectus. For the period ended October 31, 1996, the Manager paid $173,666
to the Sub-Adviser.
13 Oppenheimer Quest Growth & Income Value Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED)
For the year ended October 31, 1996, commissions (sales charges paid by
investors) on sales of Class A shares totaled $121,912, of which $53,994 was
retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by affiliated broker/dealers. Sales
charges advanced to broker/dealers by OFDI on sales of the Fund's Class B
and Class C shares totaled $184,452 and $9,314, respectively, of which
$10,906 was paid to an affiliated broker/dealer for Class B shares. During
the year ended October 31, 1996, OFDI received contingent deferred sales
charges of $25,162 and $1,359, respectively, upon redemption of Class B and
C shares, as reimbursement for sales commissions advanced by OFDI at the
time of sale of such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the transfer
and shareholder servicing agent for the Fund, and for other registered
investment companies. The Fund pays OFS an annual maintenance fee of $14.85
for each Fund shareholder account and reimburses OFS for its out-of-pocket
expenses. During the period ended October 31, 1996, the Fund paid OFS
$64,382.
Expenses paid indirectly represent a reduction of custodian fees for
earnings on cash balances maintained by the Fund.
The Fund has adopted a Distribution and Service Plan for Class A shares to
compensate OFDI for a portion of its costs incurred in connection with the
personal service and maintenance of accounts that hold Class A shares. Under
the Plan, the Fund pays an annual asset-based sales charge to OFDI of 0.15%
per year on Class A shares. The Fund also pays a service fee to OFDI of
0.25% per year. Both fees are computed on the average annual net assets of
Class A shares of the Fund, determined as of the close of each regular
business day. OFDI uses all of the service fee and a portion of the
asset-based sales charge to compensate brokers, dealers, banks and other
financial institutions quarterly for providing personal service and
maintenance of accounts of their customers that hold Class A shares. OFDI
retains the balance of the asset-based sales charge to reimburse itself for
its other expenditures under the Plan.
The Fund has adopted compensation type Distribution and Service Plans for
Class B and Class C shares to compensate OFDI for its services and costs in
distributing Class B and Class C shares and servicing accounts. Under the
Plans, the Fund pays OFDI an annual asset-based sales charge of 0.75% per
year on Class B and Class C shares, as compensation for sales commissions
paid from its own resources at the time of sale and associated financing
costs. OFDI also receives a service fee of 0.25% per year as compensation
for costs incurred in connection with the personal service and maintenance
of accounts that hold shares of the Fund, including amounts paid to brokers,
dealers, banks and other financial institutions. Both fees are computed on
the average annual net assets of Class B and Class C shares, determined as
of the close of each regular business day. During the year ended October 31,
1996, OFDI retained $83,077 and $11,762, respectively, as compensation for
Class B and Class C sales commissions and service fee advances, as well as
financing costs. If the Plans are terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of the asset-based sales
charge to OFDI for certain expenses it incurred before the Plans were
terminated. At October 31, 1996, OFDI had incurred unreimbursed expenses of
$106,918 for Class B and $1,913 for Class C.
Appendix A
Corporate Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
<PAGE>
Food
Gas Transmission*
Gas Utilities*
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking
_________________
* For purposes of the Fund's investment policy not to concentrate
in securities of issuers in the same industry, gas utilities and
gas transmission utilities each will be considered a separate
industry.
<PAGE>
Oppenheimer Quest 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
950 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
<PAGE>
OPPENHEIMER QUEST OFFICERS VALUE FUND
Supplement dated February 24, 1997 to the
Prospectus dated February 24, 1997
The Prospectus is changed as follows:
In addition to paying dealers the regular commission for (1)
sales of Class A shares stated in the sales charge table in "Buying
Class A Shares," (2) sales of Class B shares described in the fifth
paragraph in "Distribution and Service Plans for Class B Shares,"
and (3) sales of Class C shares described in the sixth paragraph in
"Distribution and Service Plans for Class C Shares," the
Distributor will pay additional commission to each broker, dealer
and financial institution that has a sales agreement with the
Distributor and agrees to accept that additional commission (these
are referred to as "participating firms") for Class A, Class B and
Class C shares of the Fund sold in "qualifying transactions" (the
"promotion"). The additional commission will be 1.00% of the
offering price of shares of the Fund sold by a registered
representative or sales representative of a participating firm
during the promotion. If the additional commission is paid on the
sale of Class A shares of $500,000 or more or the sale of Class A
shares to a SEP IRA with 100 or more eligible participants and
those shares are redeemed within 13 months from the end of the
month in which they were purchased, the participating firm will be
required to return the additional commission.
"Qualifying transactions" are aggregate sales of $150,000 r
more of Class A, Class B and/or Class C shares of any one or more
of the Oppenheimer funds (except money market funds and municipal
bond funds) for rollovers or trustee-to-trustee transfers from
another retirement plan trustee, of IRA assets or other employee
benefit plan assets from an account or investment other than an
account or investment in the Oppenheimer funds to (1) IRAs,
rollover IRAs, SEP IRAs and SAR-SEP IRAs, using the
OppenheimerFunds, Inc. prototype IRA agreement, if the rollover
contribution is received during the period from January 1, 1997
through April 15, 1997 (the "promotion period"), or the acceptance
of a direct rollover or trustee-to-trustee transfer is acknowledged
by the trustee of the OppenheimerFunds prototype IRA during the
promotion period, and (2) IRAs, rollover IRAs, SEP IRAs and SAR-
SEP IRAs using the A.G. Edwards & Sons, Inc. prototype IRA
agreement, if the rollover contribution or trustee-to-trustee
payment is received during the promotion period. "Qualifying
transactions" do not include (1) purchases of Class A shares
intended but not yet made under a Letter of Intent, and (2)
purchases of Class A, Class B and/or Class C shares with the
redemption proceeds from an existing Oppenheimer funds account.
February 24, 1997 PS0229.007
Oppenheimer Quest Officers Value Fund
Prospectus dated February 24, 1997
Oppenheimer Quest Officers Value Fund is a mutual fund that
seeks capital appreciation through investment in securities
(primarily equity securities) of companies believed to be
undervalued in the marketplace in relation to factors such as the
companies' assets, earnings, growth potential and cash flows
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 in which the
Fund invests and refer to "Investment Risks" for a discussion of
the risks of investing in the Fund.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and
keep it for future reference. You can find more detailed
information about the Fund in the February 24, 1997 Statement of
Additional Information. For a free copy, call OppenheimerFunds
Services, the Fund's Transfer Agent, at 1-800-525-7048, or write to
the Transfer Agent at the address on the back cover. The Statement
of Additional Information has been filed with the Securities and
Exchange Commission and is incorporated into this Prospectus by
reference (which means that it is legally part of this Prospectus).
(OppenheimerFunds logo)
Shares of the Fund are not deposits or obligations of any bank, are
not guaranteed by any bank, are not insured by the F.D.I.C. or any
other agency, and involve investment risks, including the possible
loss of the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
Contents
ABOUT THE FUND
Page
Expenses
A Brief Overview of the Fund
Financial Highlights
Investment Objective and Policies
Investment Risks
Investment Techniques and Strategies
How the Fund is Managed
Performance of the Fund
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Appendix A: Special Sales Charge Arrangements for
Shareholders of the Former Quest for Value Funds
Appendix B: Description of Ratings
<PAGE>
ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for management of
its assets, administration, distribution of its shares and other
services, and those expenses are subtracted from the Fund's assets
to calculate the Fund's net asset value per share. All
shareholders therefore pay those expenses indirectly. Shareholders
pay other expenses directly, such as sales charges and account
transaction charges. The following tables are provided to help you
understand your direct expenses of investing in the Fund and your
share of the Fund's business operating expenses that you will bear
indirectly. The numbers below are based on the Fund's expenses
during its last fiscal year ended October 31, 1996.
Shareholder Transaction Expenses are charges you pay when
you buy or sell shares of the Fund. Please refer to "About Your
Account," starting on page __, for an explanation of how and when
these charges apply. The Fund currently offers only Class A
shares.
<TABLE>
<CAPTION>
Class Class Class
A Shares B Shares C Shares
<S> <C> <C> <C>
Maximum Sales Charge
on Purchases (as a %
of offering price) 5.75% None None
- --------------------------------------------------------------------------
Maximum Deferred Sales None(1) 5% in the first 1% if redeemed
Charge(as a % of year, declining within 12
the lower of the to 1% in the months of
original offering sixth year purchase(2)
price or redemption and eliminated
price) thereafter(2)
- -------------------------------------------------------------------------------
Maximum Sales Charge
on Reinvested Dividends None None None
- --------------------------------------------------------------------------------
Exchange Fee None None None
- --------------------------------------------------------------------------------
Redemption Fee None(3) None(3) None(3)
</TABLE>
(1) If you invest $1 million or more ($500,000 or more for
purchases by "Retirement Plans" as defined in "Class A
Contingent Deferred Sales Charge" on page __) in Class A
shares, you may have to pay a sales charge of up to 1% if you
sell your shares within 18 calendar months from the end of the
calendar month during which you purchased those shares,
depending upon when you purchased such shares. See "How to
Buy Shares - Buying Class A Shares," below.
(2) See "How to Buy Shares - Buying Class B Shares" and "How to
Buy Shares - Buying Class C Shares" below, for more
information on the contingent deferred sales charges.
(3) There is a $10 transaction fee for redemptions paid by Federal
Funds wire, but not for redemptions paid by ACH transfer
through AccountLink.
Annual Fund Operating Expenses are paid out of the Fund's
assets and represent the Fund's expenses of operating its business.
For example, the Fund pays management fees to its investment
adviser, OppenheimerFunds, Inc. (referred to in this Prospectus as
the "Manager"). The rates of the Manager's fees are set forth in
"How the Fund is Managed," below. The Fund has other regular
expenses for services, such as transfer agent fees, custodial fees
paid to the bank that holds the Fund's portfolio securities, audit
fees and legal expenses. Those expenses are detailed in the Fund's
Financial Statements in the Statement of Additional Information.
Annual Fund Operating Expense (as a Percentage of Average Net
Assets)
Class A
Shares
Management Fees (after waiver) 0.66%
12b-1 Distribution
Plan Fees (after waiver) None
Other Expenses 0.77%
-----
Total Fund Operating
Expenses (after waivers) 1.43%
The numbers in the chart above are based upon the Fund's
expenses in its last fiscal year ended October 31, 1996. 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 12b-1 Distribution Plan 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 "Management Fees", "12b-1 Distribution Plan Fees" and
"Total Fund Operating Expenses" in the table above reflect
voluntary fee waivers by the Manager, the Distributor (as defined
below) and the Sub-Adviser (as defined below) effective August 1,
1996. These fee waivers lowered the Fund's overall expense ratio.
Without such fee waivers, the "Management Fees," "12b-1
Distribution Plan Fees" and "Total Fund Operating Expenses" for
Class A shares would have been 0.87%, 0.28% and 1.92%,
respectively. The voluntary fee waivers are described in "How the
Fund is Managed - Fees and Expenses" and the Statement of
Additional Information and may be modified or withdrawn by the
Manager, the Distributor and the Sub-Adviser at any time.
The actual expenses for Class A shares in future years may be
more or less than the numbers in the chart above, depending on a
number of factors, including changes in the actual value of the
Fund's assets represented by such shares.
Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples
shown below. Assume that you make a $1,000 investment in 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. Your investment would
incur the following expenses by the end of 1, 3, 5 and 10 years
whether you redeemed your shares or did not redeem your shares:
1 year 3 years 5 years 10 years
Class A Shares $71 $100 $131 $219
These examples show the effect of expenses on an
investment, but are not meant to state or predict actual or
expected costs or investment returns of the Fund which may be more
or less than those shown. Currently, only Class A shares of the
Fund are offered, and such Class A shares are only offered to
certain purchasers described below in "About Your Account - How to
Buy Shares" that are eligible to purchase such shares without a
sales charge. Accordingly, these examples do not reflect the
maximum sales charge on purchases which, if imposed, would increase
shareholder transaction expenses.<PAGE>
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized
below, with references to the section of this Prospectus where more
complete information can be found. You should carefully read the
entire Prospectus before making a decision about investing in the
Fund. Keep the Prospectus for reference after you invest,
particularly for information about your account, such as how to
sell or exchange shares.
What is the Fund's Investment Objective? The Fund's
investment objective is to seek capital appreciation through
investment in securities (primarily equity securities) of companies
believed by the Sub-Adviser 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 Baa3 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"). 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 money market instruments. These
investments are more fully explained in "Investment Policies and
Strategies," starting on page _.
Who Manages the Fund? The Manager supervises the Fund's
investment program and handles its day-to-day business. The
Manager (including a subsidiary) manages investment company
portfolios having over $62 billion in assets as of December 31,
1996. The Manager is paid an advisory fee by the Fund, based on
its net assets. The Fund's sub-adviser is OpCap Advisors (the
"Sub-Adviser"), which is paid a fee by the Manager, not the Fund.
The Sub-Adviser provides day-to-day portfolio management of the
Fund. The Fund's portfolio manager is employed by the Sub-Adviser
and is primarily responsible for the selection of the Fund's
securities. The Board of 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.
<PAGE>
How Risky is the Fund? All investments carry risks to some
degree. It is important to remember that the Fund is designed for
long-term investors. The Fund's investments in stocks and bonds
are subject to changes in their value from a number of factors such
as changes in general stock and bond market movements, the change
in value of particular stocks because of an event affecting the
issuer or changes in interest rates that can affect bond prices.
These changes affect the value of the Fund's investments and its
price per share. Investments in foreign securities involve
additional risks not associated with investments in domestic
securities, including risks associated with changes in currency
rates.
While the Sub-Adviser tries to reduce risks by diversifying
investments, by carefully researching securities before they are
purchased for the Fund's portfolio, and in some cases by using
hedging techniques, there is no guarantee of success in achieving
the Fund's investment objective, and your shares may be worth more
or less than their original cost when you redeem them. Please
refer to "Investment Risks" starting on page _ for a more complete
discussion of the Fund's investment risks.
How Can I Buy Shares? You can buy shares through your
dealer or financial institution, or you can purchase shares
directly through OppenheimerFunds Distributor, Inc. (the
"Distributor") by completing an Application or by using an
Automatic Investment Plan under AccountLink. Please refer to "How
To Buy Shares" on page __ for more details.
Will I Pay a Sales Charge to Buy Shares? The Fund is
authorized to issue three classes of shares. All classes have the
same investment portfolio but have different expenses. Currently,
the only class of shares offered is Class A shares. 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 six years or 12
months, respectively, of buying them. There is also an annual
asset-based sales charge which is higher on Class B and Class C
shares. Please review "How To Buy Shares" starting on page __ for
more details, including a discussion about factors you and your
financial advisor should consider in determining which class may be
appropriate for you.
How Can I Sell My Shares? Shares can be redeemed by mail or
by telephone call to the Transfer Agent on any business day, or
through your dealer. Please refer to "How To Sell Shares" on page
__. The Fund also offers exchange privileges to other Oppenheimer
funds, described in "How to Exchange Shares" on page __.
How Has the Fund Performed? 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-based 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 Price Waterhouse LLP, the Fund's independent accountants
whose report on the Fund's financial statements for the fiscal year
ended October 31, 1996 is included in the Statement of Additional
Information.
<PAGE>
<TABLE>
<CAPTION>
====================
FINANCIAL HIGHLIGHTS
YEAR ENDED OCTOBER 31,
1996(2) 1995(1)
===============================================================================================
PER SHARE OPERATING DATA:
<S> <C> <C>
Net asset value, beginning of period $12.30 $10.00
- -----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (.01) .24
Net realized and unrealized gain 4.06 2.10
- -----------------------------------------------------------------------------------------------
Total income from investment
operations 4.05 2.34
- -----------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.26) (.04)
Distributions from net realized gain (.83) --
--------------------------------------
Total dividends and distributions
to shareholders (1.09) (.04)
- -----------------------------------------------------------------------------------------------
Net asset value, end of period $15.26 $12.30
======================================
===============================================================================================
TOTAL RETURN, AT NET ASSET VALUE(3) 35.17% 23.44%
===============================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $11,429 $3,647
- -----------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 6,973 $2,873
- -----------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (0.42)%(6) 2.44%(4)(5)
Expenses 1.92% (6) 0.00%(4)
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 137.4% 108.0%
Average brokerage commission rate(8) $0.0501 --
</TABLE>
1. For the period from November 8, 1994 (commencement of operations) to October
31, 1995.
2. On November 22, 1995, OppenheimerFunds, Inc. became the investment adviser to
the Fund.
3. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions reinvested
in additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Sales charges
are not reflected in the total returns. Total returns are not annualized for
periods of less than one full year.
4. During the period noted above, the former Manager 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 net
expenses to average daily net assets would have been 0.47% and 1.97%,
respectively.
5. Annualized.
6. The ratio of net investment income to average daily net assets and the ratio
of net expenses to average net assets would have been (0.74)% and 2.24%,
respectively, absent the voluntary reimbursement by both the former Manager and
the current Manager.
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, 1996 were $15,705,162 and $8,679,712, respectively.
8. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold.
<PAGE>
Investment Objective and Policies
Objective. The Fund seeks capital appreciation through
investment in securities (primarily equity securities) of companies
believed by the Sub-Adviser 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 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 Baa3 by Moody's or BBB- by 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 money market instruments. At
any time that the Fund for temporary defensive purposes invests in
money market instruments, to the extent of such investments, it is
not pursuing its investment objective.
Can the Fund's Investment Objective and Policies Change?
The Fund has an investment objective, which is described above, as
well as investment policies it follows to try to achieve its
objective. Additionally, the Fund uses certain investment
techniques and strategies in carrying out those investment
policies. 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 of 1940 to be a particular percentage of outstanding voting
shares (and this term is explained in the Statement of Additional
Information). The Board of Trustees of the Trust (as defined
below) (the "Board of Trustees") may change non-fundamental
policies without shareholder approval, although significant changes
will be described in amendments to this Prospectus.
Foreign Securities. The Fund may purchase foreign
securities that are listed on a domestic or foreign securities
exchange, traded in domestic or foreign over-the-counter markets or
represented by American Depository Receipts, European Depository
Receipts or Global Depository Receipts. There is no limit to the
amount of foreign securities the Fund may acquire. The Fund will
hold foreign currency only in connection with the purchase or sale
of foreign securities.
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. As a non-fundamental policy the Fund may invest up
to 5% of its total assets in warrants or rights. Of such 5%, no
more than 2% of the Fund's total assets may be invested in warrants
that are not listed on the New York or American Stock Exchanges.
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.
Portfolio turnover affects brokerage costs, dealer markups and
other transaction costs, and results in the Fund's realization of
capital gains or losses for tax purposes. It may also affect the
Fund's ability to qualify as a "regulated investment company" under
the Internal Revenue Code for tax deductions for dividends and
capital gains distributions the Fund pays to shareholders. The
Fund qualified in its last fiscal year and intends to do so in the
coming year, although there is no guarantee that it will qualify.
Investment Risks
All investments carry risks to some degree, whether they are
risks that market prices of the investment will fluctuate (this is
known as "market risk") or that the underlying issuer will
experience financial difficulties and may default on its obligation
under a fixed-income investment to pay interest and repay principal
(this is referred to as "credit risk"). These general investment
risks and the special risks of certain types of investments that
the Fund may hold are described below. They affect the value of the
Fund's investments, its investment performance and the prices of
its shares. These risks collectively form the risk profile of the
Fund.
Because of the types of securities the Fund invests in and the
investment techniques the Fund uses, the Fund is designed for
investors who are investing for the long term. It is not intended
for investors seeking assured income or preservation of capital.
While the Manager tries to reduce risks by diversifying
investments, by carefully researching securities before they are
purchased, and in some case by using hedging techniques, changes in
overall market prices can occur at any time, and because the income
earned on securities is subject to change, there is no assurance
that the Fund will achieve its investment objective. When you
redeem your shares, they may be worth more or less than what you
paid for them.
Stock Investment Risks. Because the Fund 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 (for example, poor earnings reports by an
issuer, loss of major customers, major litigation against an
issuer, or changes in government regulations affecting an
industry). Not all of these factors can be predicted.
The Fund attempts to limit market risks by diversifying its
investments, that is, by not holding a substantial amount of the
stock of any one company and by not investing too great a
percentage of the Fund's assets in any one company. Because
changes in market prices can occur at any time, there is no
assurance that the Fund will achieve its investment objective, and
when you redeem your shares, they may be worth more or less than
what you paid for them.
Foreign securities Have Special Risks. For example, foreign
issuers are not subject to the same accounting and disclosure
requirements as U.S. companies. The value of foreign investments
may be affected by changes in foreign currency rates, exchange
control regulations, expropriation or nationalization of a
company's assets, foreign taxes, delays in settlement of
transactions, changes in governmental economic or monetary policy
in the U.S. or abroad, or other political and economic factors. The
Fund may invest in emerging market countries; such countries may
have relatively unstable governments, economies based on only a few
industries that are dependent upon international trade and reduced
secondary market liquidity. More information about the risks and
potential rewards of investing in foreign securities is contained
in the Statement of Additional Information.
Risks of Fixed-Income Securities. 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 or lower than "BBB-" by 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, the Sub-Adviser will
make a determination as to the debt security's investment grade
quality. High-yield, lower-grade securities, whether rated or
unrated, often have speculative characteristics and special risks
that make them riskier investments than investment grade
securities. They may be subject to greater market fluctuations and
risk of loss of income and principal than lower yielding,
investment grade securities. There may be less of a market for
them and therefore they may be harder to sell at an acceptable
price. There is a relatively greater possibility that the issuer's
earnings may be insufficient to make the payments of interest due
on the bonds. The issuer's low creditworthiness may increase the
potential for its insolvency. More information about investment in
fixed-income securities, including convertible securities, is
contained in the Statement of Additional Information.
Hedging Instruments Can Be Volatile Investments and may
Involve Special Risks. The Fund may invest in certain hedging
instruments, as described below. 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.
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. 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 owns the investment on which the call was
written or the Fund owns and segregates liquid assets to satisfy
its obligation 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.
Illiquid and Restricted Securities. Under the policies and
procedures established by the 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 (notwithstanding the foregoing,
the Fund has undertaken as a non-fundamental policy to limit
investments in such illiquid securities to 15% of its net assets).
The Fund's percentage limitation on illiquid and restricted
investments does not apply to certain restricted securities that
are eligible for resale to qualified institutional purchasers. The
Manager monitors holdings of illiquid securities on an ongoing
basis and at times the Fund may be required to sell some holdings
to maintain adequate liquidity.
Loans of Portfolio Securities. To attempt to raise cash for
liquidity purposes, the Fund may lend its portfolio securities to
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 to generate income for liquidity purposes to meet
anticipated redemptions, or pending the investment of proceeds from
sales of Fund shares or settlement of purchases of portfolio
investments. In a repurchase transaction, the Fund buys a security
and simultaneously sells it to the vendor for delivery at a future
date. Repurchase agreements must be fully collateralized. However,
if the vendor fails to pay the resale price on the delivery date,
the Fund may incur costs in disposing of the collateral and may
experience losses if there is any delay in its ability to do so.
The Fund may enter into reverse repurchase agreements.
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 such securities on a "delayed delivery" basis or on a "firm
commitment" basis. These terms refer to securities that have been
created and for which a market exists, but which are not available
for immediate delivery. The Fund does not intend to make such
purchases for speculative purposes. During the period between the
purchase and settlement, the underlying securities are subject to
market fluctuations and no interest accrues prior to delivery of
the securities.
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 a "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:
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. With respect to this fundamental policy, the Fund
can borrow only if it maintains a 300% ratio of assets to
borrowings at all times in the manner set forth in the Investment
Company Act.
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
the foregoing, the Fund has undertaken as a non-fundamental policy
to limit investment in such illiquid securities to 15% of its net
assets). 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 Manager, acting under guidelines
established by the Board of Trustees, 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).
<PAGE>
Unless this Prospectus states that a percentage restriction
applies on an ongoing basis, it applies only at the time the Fund
makes an investment, and the Fund need not sell securities to meet
the percentage limits if the value of the investment increases in
proportion to the size of the Fund. Other investment restrictions
are listed in "Investment Restrictions" in the Statement of
Additional Information.
How the Fund is Managed
Organization and History. The Fund is one of four portfolios of
Oppenheimer Quest For Value Funds (the "Trust"), 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 Trust 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 Trust" in the Statement of Additional
Information names the Trustees and officers of the Trust and
provides more information about them. Although the Trust 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 Trust'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 is
authorized to issue three classes of shares, Class A, Class B and
Class C, although only Class A shares are currently offered. All
classes invest in the same investment portfolio. Each class has
its own dividends and distributions and pays certain expenses which
may be different for the different classes. Each class may have a
different net asset value. Each share entitles a shareholder to
one vote on matters submitted to the shareholders to vote on with
fractional shares voting proportionally 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. Please refer to "How the Fund is Managed" in the
Statement of Additional Information for more information on the
voting of shares.
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
is responsible to pay to conduct its business.
The Manager has operated as an investment adviser since 1959.
The Manager (including a subsidiary) currently manages investment
companies, including other Oppenheimer funds, with assets of more
than $62 billion as of December 31, 1996, and with more than 3
million shareholder accounts. The Manager is owned by Oppenheimer
Acquisition Corp., a holding company that is owned in part by
senior officers of the Manager and controlled by Massachusetts
Mutual Life Insurance Company.
Sub-Adviser. The Manager has retained the Sub-Adviser to
provide day-to-day portfolio management of the Fund. Prior to
November 22, 1995, the Sub-Adviser was named Quest for Value
Advisors and was the investment adviser to the Fund. The Sub-
Adviser is a majority-owned subsidiary of Oppenheimer Capital, a
registered investment advisor, whose employees perform all
investment advisory services provided to the Fund by the Sub-
Adviser. 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.
Portfolio Manager. The Fund's portfolio manager, Jeffrey C.
Whittington, is employed by the Sub-Adviser and is primarily
responsible for the selection of the Fund's securities. Mr.
Whittington, who is also a Senior Vice President of Oppenheimer
Capital, 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, President and Chief Investment Officer for Oppenheimer
Capital. Mr. Long has been with Oppenheimer Capital since 1981.
Fees and Expenses. Under the Investment Advisory Agreement,
the Fund pays the Manager an annual fee of 1.0% of the Fund's
average annual net assets. This management fee is higher than that
paid by most other investment companies. A voluntary waiver of a
portion of this fee is currently in effect, as described below.
The Fund pays expenses related to its daily operations, such as
custodian fees, Trustees' fees, transfer agency fees and 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 pays 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 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 net assets of
the Fund that exceed the Base Amount. Effective August 1, 1996,
the Sub-Adviser voluntarily agreed to waive its entire subadvisory
fee. Concurrently with such waiver, the Manager voluntarily agreed
to waive that portion of its management fee equal to what would
otherwise have been payable to the Sub-Adviser if the Sub-Adviser
had not waived its subadvisory fee. These expense waivers may be
modified or withdrawn at any time.
Distributor. The Fund's shares are sold through dealers,
brokers and other financial institutions that have a sales
agreement with OppenheimerFunds Distributor, Inc., a subsidiary of
the Manager that acts as the Fund's Distributor. The Distributor
also distributes the shares of the other Oppenheimer funds managed
by the Manager and is sub-distributor for funds managed by a
subsidiary of the Manager.
Transfer Agent and Shareholder Servicing Agent. The Fund's
transfer agent and shareholder servicing agent is OppenheimerFunds
Services, a division of the Manager. It also acts as the
shareholder servicing agent for certain other Oppenheimer funds.
Shareholders should direct inquiries about their accounts to the
Transfer Agent at the address and toll-free number shown below in
this Prospectus and on the back cover. 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.
formance of the Fund
Explanation of Performance Terminology. The Fund uses the terms
"total return" and "average annual total return" to illustrate its
performance. The performance of each class of shares is shown
separately, because the performance of each class of shares will
usually be different as a result of the different kinds of expenses
each class bears. These returns measure the performance of a
hypothetical account in the Fund over various periods, and do not
show the performance of each shareholder's investment (which will
vary if dividends are received in cash, or shares are sold or
additional shares are purchased). The Fund's performance
information may help you see how well your investment in the Fund
has done over time and to compare it to other funds or market
indices, as we have done on page ___.
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, normally the
current maximum initial sales charge has been deducted. When total
returns are shown for Class B or Class C shares, normally the
contingent deferred sales charge that applies to the period for
which the total return is shown has been deducted. However, total
returns may also be quoted at net asset value, without including
the sales charge, and those returns would be less if sales charges
were deducted.
Has the Fund Performed? Below is a discussion by the Manager of
the Fund's performance during its last fiscal year ended October
31, 1996, followed by a graphical comparison of the Fund's
performance to an appropriate broad-based market index.
Management's Discussion of Performance. During the fiscal
year ended October 31, 1996, the Fund remained virtually fully
invested in equity securities, and participated in the domestic
stock market's strong performance. Consistent with its investment
objective, the Fund sought reasonably priced investments in
companies with three specific traits: potential for profitability,
growth and stability. Using this investment philosophy, the Fund's
performance during the past fiscal year benefited from its holdings
of two highly profitable companies in the insurance and
telecommunications sectors. During the fiscal year, the Fund
maintained an average cash position and was positioned to take
advantage of attractive buying opportunities. The Fund's portfolio
and its portfolio manager's strategies are subject to change.
Comparing the Fund's Performance to the Market. The graph
below shows the performance of a hypothetical $10,000 investment in
Class A shares of the Fund held from inception (November 8, 1994)
until October 31, 1996. 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
S&P 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. Currently, only Class A shares of
the Fund are offered, and such Class A shares are only offered to
certain purchasers described below in "About Your Account - How to
Buy Shares" that are eligible to purchase such shares without a
sales charge. Accordingly, the Fund's performance does not reflect
the deduction of the current maximum sales charge of 5.75% for
Class A shares which, if imposed, would decrease returns. The
Fund's performance does reflect 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.
Class A Shares
Comparison of Change in Value
of $10,000 Hypothetical Investment in:
Oppenheimer Quest Officers Value Fund,
and the S&P Mid-Cap Index
[Graph]
Average Annual Total Return of the Fund at 10/31/96
1 Year Life of Class1
Class A : 35.17% 29.50%
Total returns and ending account values in the graph show change in
share value and include reinvestment of all dividends and capital
gains distributions
1 Currently, Class A shares are offered at net asset value only
and the class A returns and ending account value in the graph do
not reflect any maximum initial sales charge. The inception date
of the Fund (Class A shares) was 11/08/94. Average annual total
returns of Class A shares at 10/31/96 net of the maximum initial
sales charge would have been 27.40% and 25.68% for the one year and
life-of-class, respectively.
ABOUT YOUR ACCOUNT
How to Buy Shares
sses of Shares. The Fund is authorized to issue three different
classes of shares. Currently, the only class of shares offered to
investors 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 Trust, 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. Presently, as a policy matter trustees of
the Trust will not purchase shares of the Fund until it is
generally available for sale to the public. The different classes
of shares represent investments in the same portfolio of securities
but may be subject to different expenses and will likely have
different share prices. Although Class B and Class C shares are
not currently offered, a discussion with respect to such classes of
shares is set forth below for your information.
Class A Shares. If you buy Class A shares, you may pay an
initial sales charge on investments up to $1 million (up to
$500,000 for purchases by "Retirement Plans," as defined in "Class
A contingent Deferred Sales Charge" on page __). If you purchase
Class A shares as part of an investment of at least $1 million
($500,000 for Retirement Plans) in shares of one or more
Oppenheimer funds, you will not pay an initial sales charge, but if
you sell any of those shares within 18 months of buying them, you
may pay a contingent deferred sales charge. The amount of that
sales charge will vary depending on the amount you invested. Sales
charge rates are described in "Buying Class A Shares" below.
Class B Shares. If you buy Class B shares, you pay no
sales charge at the time of purchase, but if you sell your shares
within six years of buying them you will normally pay a contingent
deferred sales charge that varies, depending on how long you have
owned your shares as described in "Buying Class B Shares" below.
Class C Shares. If you buy Class C shares, you pay no
sales charge at the time of purchase, but if you sell your shares
within 12 months of buying them, you will normally pay a contingent
deferred sales charge of 1% as described in "Buying Class C Shares"
below.
ch Class of Shares Should You Choose? Once you decide that the
Fund is an appropriate investment for you, the decision as to which
class of shares is better suited to your needs depends on a number
of factors which you should discuss with your financial advisor.
The Fund's operating costs that apply to a class of shares and the
effect of the different types of sales charges on your investment
will vary your investment results over time. The most important
factors to consider are how much you plan to invest and how long
you plan to hold your investment. If your goals and objectives
change over time and you plan to purchase additional shares, you
should re-evaluate those factors to see if you should consider
another class of shares.
In the following discussion, to help provide you and your
financial advisor with a framework in which to choose a class, we
have made some assumptions using a hypothetical investment in the
Fund. We used the sales charge rates that apply to each class, and
considered the effect of the asset-based sales charge on Class B
and Class C expenses (which, like all expenses, will affect your
investment return). For the sake of comparison, we have assumed
that there is a 10% rate of appreciation in the investment each
year. Of course, the actual performance of your investment cannot
be predicted and will vary, based on the Fund's actual investment
returns and the operating expenses borne by each class of shares,
and which class of shares you invest in.
The factors discussed below are not intended to be investment
advice or recommendations, because each investor's financial
considerations are different. The discussion below of the factors
to consider in purchasing a particular class of shares assumes that
you will purchase only one class of shares and not a combination of
shares of different classes.
How Long Do You Expect to Hold Your Investment? While
future financial needs cannot be predicted with certainty, knowing
how long you expect to hold your investment will assist you in
selecting the appropriate class of shares. The effect of the sales
charge, over time, using our assumptions will generally depend on
the amount invested. Because of the effect of class-based
expenses, your choice will also depend on how much you plan to
invest. For example, the reduced sales charges available for
larger purchases of Class A shares may, over time, offset the
effect of paying an initial sales charge on your investment (which
reduces the amount of your investment dollars used to buy shares
for your account), compared to the effect over time of higher
class-based expenses on Class B or Class C shares for which no
initial sales charge is paid.
Investing for the Short-Term. If you have a short-term
investment horizon (that is, you plan to hold your shares for not
more than six years), you should probably consider purchasing Class
A or Class C shares rather than Class B shares, because of the
effect of the Class B contingent deferred sales charge if you
redeem within 6 years, as well as the effect of the 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 economic
impact on your account over the longer term than the reduced front-
end sales charge available for larger purchases of Class A shares.
For example, Class A might be more advantageous than Class C (as
well as Class B) for investments of more than $100,000 expected to
be held for 5 or 6 years (or more). For investments over $250,000
expected to be held 4 to 6 years (or more), Class A shares may
become more advantageous than Class C (and Class B). If investing
$500,000 or more, Class A may be more advantageous as your
investment horizon approaches 3 years or more.
And for most investors who invest $1 million or more, in most
cases Class A shares will be the most advantageous choice, no
matter how long you intend to hold your shares. For that reason,
the Distributor normally will not accept purchase orders of
$500,000 or more of Class B shares or $1 million or more of Class
C shares from a single investor.
Investing for the Longer Term. If you are investing for
the longer term, for example, for retirement, and do not expect to
need access to your money for seven years or more, Class B shares
may be an appropriate consideration, if you plan to invest less
than $100,000. If you plan to invest more than $100,000 over the
long term, Class A shares will likely be more advantageous than
Class B shares or Class C shares, as discussed above, because of
the effect of the expected lower expenses for Class A shares and
the reduced initial sales charges available for larger investments
in Class A shares under the Fund's Right of Accumulation.
Of course, these examples are based on approximations of the
effect of current sales charges and expenses on a hypothetical
investment over time, using the assumed annual performance return
stated above, and therefore you should analyze your options
carefully.
Are There Differences in Account Features That Matter to
You? Because some account features may not be available for Class
B or Class C shareholders, or other features (such as Automatic
Withdrawal Plans) may not be advisable (because of the effect of
the contingent deferred sales charge in on-retirement accounts) for
Class B or Class C shareholders, you should carefully review how
you plan to use your investment account before deciding which class
of shares is better for you. For example, share certificates are
not available for Class B or Class C shares, and if you are
considering using your shares as collateral for a loan, that may be
a factor to consider. Additionally, dividends payable to Class B
and Class C shareholders will be reduced by the additional expenses
borne solely by those classes or higher expenses, such as the
asset-based sales charges to which Class B and Class C shares are
subject, as described below and in the Statement of Additional
Information.
How Does It Affect Payments to My Broker? A salesperson,
such as a broker, or any other person who is entitled to receive
compensation for selling Fund shares, may receive different
compensation for selling one class of shares than for selling
another class. It is important that investors understand that the
purpose of the contingent deferred sales charges and asset-based
sales charges for Class B and Class C shares is the same as the
purpose of the front-end sales charge on sales of Class A shares:
that is, to compensate the Distributor for commissions it pays to
dealers and financial institutions for selling shares.
How Much Must You Invest? You can open a Fund account with a
minimum initial investment of $1,000 and make additional
investments at any time with as little as $25. There are reduced
minimum investments under special investment plans:
With Asset Builder Plans, Automatic Exchange Plans,
403(b)(7) custodial plans and military allotment plans, you can
make initial and subsequent investments of as little as $25; and
subsequent purchases of at least $25 can be made by telephone
through AccountLink.
Under pension, profit-sharing plans and 401(k) and
Individual Retirement Accounts (IRAs), you can make an initial
investment of as little as $250 (if your IRA is established under
an Asset Builder Plan, the $25 minimum applies), and subsequent
investments may be as little as $25.
There is no minimum investment requirement if you are buying
shares by reinvesting dividends from the Fund or other Oppenheimer
funds (a list of them appears in the Statement of Additional
Information, or you can ask your dealer or call the Transfer
Agent), or by reinvesting distributions from unit investment trusts
that have made arrangements with the Distributor.
How Are Shares Purchased? You can buy shares several ways:
through any dealer, broker or financial institution that has a
sales agreement with the Distributor, directly through the
Distributor, or automatically from your bank account through an
Asset Builder Plan under the OppenheimerFunds AccountLink service.
The Distributor may appoint certain servicing agents as the
Distributor's agent to accept purchase (and redemption) orders.
When you buy shares, be sure to specify Class A, Class B or Class
C shares. If you do not choose, your investment will be made in
Class A shares.
Buying Shares Through Your Dealer. Your dealer will place
your order with the Distributor on your behalf.
Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "OppenheimerFunds Distributor, Inc." Mail it to P.O. Box
5270, Denver, Colorado 80217. If you don't list a dealer on the
application, the Distributor will act as your agent in buying the
shares. However, we recommend that you discuss your investment
first with a financial advisor, to be sure it is appropriate for
you.
Buying Shares Through OppenheimerFunds AccountLink. You
can use AccountLink to link your Fund account with an account at a
U.S. bank or other financial institution that is an Automated
Clearing House (ACH) member, to transmit funds electronically to
purchase shares, to have the Transfer Agent send redemption
proceeds, or to transmit dividends and distributions to your bank
account.
Shares are purchased for your account on AccountLink on the
regular business day the Distributor is instructed by you to
initiate the ACH transfer to buy shares. You can provide those
instructions automatically, under an Asset Builder Plan, described
below, or by telephone instructions using OppenheimerFunds
PhoneLink, also described below. You should request AccountLink
privileges on the application or dealer settlement instructions
used to establish your account. Please refer to "AccountLink" below
for more details.
Asset Builder Plans. You may purchase shares of the Fund
(and up to four other Oppenheimer funds) automatically each month
from your account at a bank or other financial institution under an
Asset Builder Plan with AccountLink. Details are in the Statement
of Additional Information.
At What Price Are Shares Sold? Shares are sold at the
public offering price based on the net asset value (and any initial
sales charge that applies) that is next determined after the
Distributor receives the purchase order in Denver, Colorado. In
most cases, to enable you to receive that day's offering price, the
Distributor or its designated agent must receive your order by the
time of day The New York Stock Exchange closes, which is normally
4:00 P.M., New York time, but may be earlier on some days (all
references to time in this Prospectus mean "New York time"). The
net asset value of each class of shares is determined as of that
time on each day The New York Stock Exchange is open (which is a
"regular business day").
If you buy shares through a dealer, the dealer must receive
your order by the regular close of business of the New York Stock
Exchange on a regular business day and transmit it to the
Distributor so that it is received before the Distributor's close
of business that day, which is normally 5:00 P.M. The Distributor,
in its sole discretion, may reject any purchase order for the
Fund's shares.
cial Sales Charge Arrangements for Certain Persons. Appendix A
to this Prospectus sets forth conditions for the waiver of, or
exemption from, sales charges or the special sales charge rates
that apply to shareholders of one of the former Quest for Value
Funds (as defined in that Appendix)including the Fund.
ing Class A Shares. Class A shares are sold at their offering
price, which is normally net asset value plus an initial sales
charge. However, in some cases, described below, purchases are not
subject to an initial sales charge, and the offering price will be
the net asset value. In some cases, reduced sales charges may be
available, as described below. Out of the amount you invest, the
Fund receives the net asset value to invest for your account. The
sales charge varies depending on the amount of your purchase. A
portion of the sales charge may be retained by the Distributor and
allocated to your dealer as commission. The current sales charge
rates and commissions paid to dealers and brokers are as follows:
<TABLE>
<CAPTION> Front-End Sales Charge Commission
As a Percentage of as Percentage
Offering Amount of Offering
Amount of Purchase Price Invested Price
- ------------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
</TABLE>
The Distributor reserves the right to reallow the entire commission
to dealers. If that occurs, the dealer may be considered an
"underwriter" under Federal securities laws.
Class A Contingent Deferred Sales Charge. There is no
initial sales charge on purchases of Class A shares of any one or
more of the Oppenheimer funds in the following cases:
Purchases aggregating $1 million or more.
Purchases by a retirement plan qualified under section
401(a) if the retirement plan has total plan assets of $500,000 or
more.
Purchases by a retirement plan qualified under sections
401(a) or 401(k) of the Internal Revenue Code, by a non-qualified
deferred compensation plan (not including Section 457 plans),
employee benefit plan, group retirement plan (see "How to Buy
Shares - Retirement Plans" in the Statement of Additional
Information for further details), an employee's 403(b)(7) custodial
plan account, SEP IRA, SARSEP, or SIMPLE plan (all of these plans
are collectively referred to as "Retirement Plans"); that: (1) 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.
Purchases by an OppenheimerFunds Rollover IRA if the
purchases are made (1) through a broker, dealer, bank or registered
investment adviser that has made special arrangements with the
Distributor for these purchases, or (2) by a direct rollover of a
distribution from a qualified retirement plan if the administrator
of that plan has made special arrangements with the Distributor for
those purchases.
The Distributor pays dealers of record commissions on those
purchases in an amount equal to (i) 1.0% for non-Retirement Plan
accounts, and (ii) for Retirement Plan accounts, 1.0% of the first
$2.5 million, plus 0.50% of the next $2.5 million, plus 0.25% of
purchases over $5 million. That commission will be paid only on
those purchases that were not previously subject to a front-end
sales charge and dealer commission. No sales commission will be
paid to the dealer, broker or financial institution on sales of
Class A shares purchased with the redemption proceeds of shares of
a mutual fund offered as an investment option in a Retirement Plan
in which Oppenheimer funds are also offered as investment options
under a special arrangement with the Distributor if the purchase
occurs more than 30 days after the addition of the Oppenheimer
funds as an investment option to the Retirement Plan.
If you redeem any of those shares within 18 months of the end
of the calendar month of their purchase, a contingent deferred
sales charge (called the "Class A contingent deferred sales
charge") will be deducted from the redemption proceeds. That sales
charge may be equal to 1.0% of the lesser of (1) the aggregate net
asset value of the redeemed shares (not including shares purchased
by reinvestment of dividends or capital gain distributions) or (2)
the original offering price (which is the original net asset value)
of the redeemed shares. However, the Class A contingent deferred
sales charge will not exceed the aggregate amount of the
commissions the Distributor paid to your dealer on all Class A
shares of all Oppenheimer funds you purchased subject to the Class
A contingent deferred sales charge. 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, the contingent deferred sales charge will
apply.
Special Arrangements With Dealers. The Distributor may
advance up to 13 months' commissions to dealers that have
established special arrangements with the Distributor for Asset
Builder Plans for their clients.
Reduced Sales Charges for Class A Share Purchases. You may be
eligible to buy Class A shares at reduced sales charge rates in one
or more of the following ways:
Right of Accumulation. To qualify for the lower sales
charge rates that apply to larger purchases of Class A shares, you
and your spouse can add together Class A and Class B shares you
purchase for your individual accounts, or jointly, or for trust or
custodial accounts on behalf of your children who are minors. A
fiduciary can count all shares purchased for a trust, estate or
other fiduciary account (including one or more employee benefit
plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class
A and Class B shares of the Fund and other Oppenheimer funds to
reduce the sales charge rate that applies to current purchases of
Class A shares. You can also count Class A and Class B shares of
Oppenheimer funds you previously purchased subject to an initial or
contingent deferred sales charge to reduce the sales charge rate
for current purchases of Class A shares, provided that you still
hold your investment in one of the Oppenheimer funds. The value of
those shares will be based on the greater of the amount you paid
for the shares or their current value (at offering price). The
Oppenheimer funds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from
the Transfer Agent. The reduced sales charge will apply only to
current purchases and must be requested when you buy your shares.
Letter of Intent. Under a Letter of Intent, if you purchase
Class A shares or Class A and Class B shares of the Fund and other
Oppenheimer funds during a 13-month period, you can reduce the
sales charge rate that applies to your purchases of Class A shares.
The total amount of your intended purchases of both Class A and
Class B shares will determine the reduced sales charge rate for the
Class A shares purchased during that period. This can include
purchases made up to 90 days before the date of the Letter. More
information is contained in the Application and in "Reduced Sales
Charges" in the Statement of Additional Information.
Waivers of Class A Sales Charges. The Class A sales charges
are not imposed in the circumstances described below. There is an
explanation of this policy in "Reduced Sales Charges" in the
Statement of Additional Information.
Waivers of Initial and Contingent Deferred Sales Charges for
Certain Purchasers. Class A shares purchased by the following
investors are not subject to any Class A sales charges:
the Manager or its affiliates;
present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced
Sales Charges" in the Statement of Additional Information) of the
Fund, the Manager and its affiliates, and retirement plans
established by them for their employees;
registered management investment companies, or separate
accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose;
dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
employees and registered representatives (and their spouses)
of dealers or brokers described above or financial institutions
that have entered into sales arrangements with such dealers or
brokers (and are identified to the Distributor) or with the
Distributor; the purchaser must certify to the Distributor at the
time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor
children);
dealers, brokers, banks or registered investment advisers
that have entered into an agreement with the Distributor providing
specifically for the use of shares of the Fund in particular
investment products made available to their clients (those clients
may be charged a transaction fee by their dealer, broker or adviser
for the purchase or sale of Fund shares);
(1) investment advisors and financial planners who charge an
advisory, consulting or other fee for their services and buy shares
for their own accounts or the accounts of their clients, (2)
Retirement Plans and deferred compensation plans and trusts used to
fund those Plans (including, for example, plans qualified or
created under sections 401(a), 403(b) or 457 of the Internal
Revenue Code), and "rabbi trusts" that buy shares for their own
accounts, in each case if those purchases are made through a broker
or agent or other financial intermediary that has made special
arrangements with the Distributor for those purchases; and (3)
clients of such investment advisors or financial planners who buy
shares for their own accounts may also purchase shares without
sales charge but only if their accounts are linked to a master
account of their investment advisor or financial planner on the
books and records of the broker, agent or financial intermediary
with which the Distributor has made such special arrangements (each
of these investors may be charged a fee by the broker, agent or
financial intermediary for purchasing shares).
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;
employee benefit plans purchasing shares through a
shareholder servicing agent which the Distributor has appointed as
agent to accept those purchase orders;
accounts for which Oppenheimer Capital is the investment
adviser (the Distributor must be advised of this arrangement) and
persons who are directors or trustees of the company or trust which
is the beneficial owner of such accounts;
any unit investment trust that has entered into an
appropriate agreement with the Distributor;
a TRAC-2000 401(k) plan (sponsored by the former Quest for
Value Advisors) whose Class B or Class C shares of a Former Quest
for Value Fund were exchanged for Class A shares of that Fund due
to the termination of the Class B and Class C TRAC-2000 program on
November 24, 1995; or
qualified retirement plans that had agreed with the former
Quest for Value Advisors to purchase shares of any of the Former
Quest for Value Funds at net asset value, with such shares to be
held through DCXchange, a sub-transfer agency mutual fund
clearinghouse, provided that such arrangements are consummated and
share purchases commence by December 31, 1996.
Waivers of Initial and Contingent Deferred Sales Charges in
Certain Transactions. Class A shares issued or purchased in the
following transactions are not subject to Class A sales charges:
shares issued in plans of reorganization, such as mergers,
asset acquisitions and exchange offers, to which the Fund is a
party;
shares purchased by the reinvestment of loan repayments by
a participant in a retirement plan for which the Manager or its
affiliates acts as sponsor;
shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds
(other than Oppenheimer Cash Reserves) or unit investment trusts
for which reinvestment arrangements have been made with the
Distributor;
shares purchased and paid for with the proceeds of shares
redeemed in the past 12 months from a mutual fund (other than a
fund managed by the Manager or any of its subsidiaries) on which an
initial sales charge or contingent deferred sales charge was paid
(this waiver also applies to shares purchased by exchange of shares
of Oppenheimer Money Market Fund, Inc. that were purchased and paid
for in this manner); this waiver must be requested when the
purchase order is placed for your shares of the Fund, and the
Distributor may require evidence of your qualification for this
waiver; or
shares purchased with the proceeds of maturing principal of
units of any Qualified Unit Investment Liquid Trust Series.
Waivers of the Class A Contingent Deferred Sales Charge for
Certain Redemptions. The Class A contingent deferred sales charge
is also waived if shares that would otherwise be subject to the
contingent deferred sales charge are redeemed in the following
cases:
to make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the original account value;
involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see "Shareholder Account
Rules and Policies," below);
if, at the time a purchase order is placed for Class A
shares that would otherwise be subject to the Class A contingent
deferred sales charge, the dealer agrees in writing to accept the
dealer's portion of the commission payable on the sale in
installments of 1/18th of the commission per month (and no further
commission will be payable if the shares are redeemed within 18
months of purchase);
for distributions from a TRAC-2000 401(k) plan sponsored by
the Distributor due to the termination of the TRAC-2000 program.
for distributions from Retirement Plans, deferred
compensation plans or other employee benefit plans for any of the
following purposes: (1) following the death or disability (as
defined in the Internal Revenue Code) of the participant or
beneficiary (the death or disability must occur after the
participant's account was established); (2) to return excess
contributions; (3) to return contributions made due to a mistake of
fact; (4) hardship withdrawals, as defined in the plan; (5) under
a Qualified Domestic Relations Order, as defined in the Internal
Revenue Code; (6) to meet the minimum distribution requirements of
the Internal Revenue Code; (7) to establish "substantially equal
periodic payments" as described in Section 72(t) of the Internal
Revenue Code; (8) for retirement distributions or loans to
participants or beneficiaries; (9) separation from service; (10)
participant-directed redemptions to purchase shares of a mutual
fund (other than a fund managed by the Manager or its subsidiary)
offered as an investment option in a Retirement Plan in which
Oppenheimer funds are also offered as investment options under a
special arrangement with the Distributor; or (11) plan termination
or "in-service distributions", if the redemption proceeds are
rolled over directly to an OppenheimerFunds IRA.
Distribution and Service Plan for Class A Shares. The Fund
has adopted a Distribution and Service Plan for Class A shares to
reimburse the Distributor for a portion of its costs incurred in
connection with the personal service and maintenance of shareholder
accounts that hold Class A shares. Under the Plan, the Fund pays
an annual asset-based sales charge to the Distributor at an annual
rate of 0.25% of the average annual net assets of the class. The
Fund also pays a service fee to the Distributor at an annual rate
of 0.25% of the average annual net assets of the class. 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. Effective August 1, 1996, the
Distributor voluntarily waived all fees payable to it 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.
ing Class B Shares. Class B shares are sold at net asset value
per share without an initial sales charge. However, if Class B
shares are redeemed within 6 years of their purchase, a contingent
deferred sales charge will be deducted from the redemption
proceeds. That sales charge will not apply to shares purchased by
the reinvestment of dividends or capital gains distributions. The
contingent deferred sales charge will be based on the lesser of the
net asset value of the redeemed shares at the time of redemption or
the original offering price (which is the original net asset
value). The contingent deferred sales charge is not imposed on the
amount of your account value represented by the increase in net
asset value over the initial purchase price. The Class B contingent
deferred sales charge is paid to the Distributor to reimburse its
expenses of providing distribution-related services to the Fund in
connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 6 years, and (3)
shares held the longest during the 6-year period. The contingent
deferred sales charge is not imposed in the circumstances described
in "Waivers of Class B and Class C Sales Charges" below.
The amount of the contingent deferred sales charge will depend
on the number of years since you invested and the dollar amount
being redeemed, according to the following schedule:
Years Since Beginning Contingent Deferred Sales Charge
of Month In Which Purchase on Redemptions in that Year
Order was Accepted (As % of Amount Subject to Charge)
0 - 1 5.0%
1 - 2 4.0%
2 - 3 3.0%
3 - 4 3.0%
4 - 5 2.0%
5 - 6 1.0%
6 and following None
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of
the month in which the purchase was made.
Automatic Conversion of Class B Shares. 72 months after you
purchase Class B shares, those shares will automatically convert to
Class A shares. This conversion feature relieves Class B
shareholders of the asset-based sales charge that applies to Class
B shares under the Class B Distribution and Service Plan, described
below. The conversion is based on the relative net asset value of
the two classes, and no sales load or other charge is imposed. When
Class B shares convert, any other Class B shares that were acquired
by the reinvestment of dividends and distributions on the converted
shares will also convert to Class A shares. The conversion feature
is subject to the continued availability of a tax ruling described
in "Alternative Sales Arrangements - Class A, Class B and Class C
Shares" in the Statement of Additional Information.
Distribution and Service Plan for Class B Shares. The Fund
has adopted a Distribution and Service Plan for Class B shares to
compensate the Distributor for distributing Class B shares and
servicing accounts. This Plan is described below under "Buying
Class C Shares - Distribution and Service Plans for Class B and
Class C shares."<PAGE>
Waivers of Class B Sales Charges. The Class B contingent
deferred sales charge will not apply to shares purchased in certain
types of transactions, nor will it apply to shares redeemed in
certain circumstances, as described below under "Buying Class C
Shares Waivers of Class B and Class C Sales Charges."
ing Class C Shares. Class C shares are sold at net asset value
per share without an initial sales charge. However, if Class C
shares are redeemed within 12 months of their purchase, a
contingent deferred sales charge of 1.0% will be deducted from the
redemption proceeds. That sales charge will not apply to shares
purchased by the reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge will be based
on the lesser of the net asset value of the redeemed shares at the
time of redemption or the original offering price (which is the
original net asset value). The contingent deferred sales charge is
not imposed on the amount of your account value represented by the
increase in net asset value over the initial purchase price. The
Class C contingent deferred sales charge is paid to compensate the
Distributor for its expenses of providing distribution-related
services to the Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 12 months, and (3)
shares held the longest during the 12-month period.
Distribution and Service Plans for Class B and Class C
Shares. The Fund has adopted Distribution and Service Plans for
Class B and Class C shares to compensate the Distributor for its
services and costs in distributing Class B and Class C shares and
servicing accounts. Under the Plans, the Fund pays the Distributor
an annual "asset-based sales charge" of 0.75% per year on Class B
shares that are outstanding for 6 years or less and on Class C
shares. The Distributor also receives a service fee of 0.25% per
year under each Plan.
Under each Plan, both fees are computed on the average of the
net asset value of shares in the respective class, determined as of
the close of each regular business day during the period. The
asset-based sales charge and service fees increase Class B and
Class C expenses by up to 1.00% of the net assets per year of the
respective class.
The Distributor uses the service fees to compensate dealers
for providing personal services for accounts that hold Class B or
Class C shares. Those services are similar to those provided under
the Class A Service Plan, described above. The Distributor pays
the 0.25% service fees to dealers in advance for the first year
after Class B or Class C shares have been sold by the dealer and
retains the service fee paid by the Fund in that year. After the
shares have been held for a year, the Distributor pays the service
fees to dealers on a quarterly basis.
The asset-based sales charge allows investors to buy Class B
or Class C shares without a front-end sales charge while allowing
the Distributor to compensate dealers that sell those shares. The
Fund pays the asset-based sales charges to the Distributor for its
services rendered in distributing Class B and Class C shares.
Those payments are at a fixed rate that is not related to the
Distributor's expenses. The services rendered by the Distributor
include paying and financing the payment of sales commissions,
service fees and other costs of distributing and selling Class B
and Class C shares.
The Distributor currently pays sales commissions of 3.75% of
the purchase price of Class B shares to dealers from its own
resources at the time of sale. Including the advance of the
service fee, the total amount paid by the Distributor to the dealer
at the time of sale of Class B shares is therefore 4.00% of the
purchase price. The Distributor retains the Class B asset-based
sales charge.
The Distributor currently pays sales commissions of 0.75% of
the purchase price of Class C shares to dealers from its own
resources at the time of sale. Including the advance of the
service fee, the total amount paid by the Distributor to the dealer
at the time of sale of Class C shares is therefore 1.00% of the
purchase price. The Distributor retains the asset-based sales
charge during the first year Class C shares are outstanding to
recoup sales commissions it has paid, the advances of service fee
payments it has made, and its financing costs and other expenses.
The Distributor plans to pay the asset-based sales charge as an
ongoing commission to the dealer on Class C shares that have been
outstanding for a year or more.
The Distributor's actual expenses in selling Class B and Class
C shares may be more than the payments it receives from contingent
deferred sales charges collected on redeemed shares and from the
Fund under the Distribution and Service Plans for Class B and Class
C shares. If either Plan is terminated by the Fund, the Board of
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 or Class C shares, as appropriate, 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 at redemption:
distributions to participants or beneficiaries from
Retirement Plans, if the distributions are made (a) under an
Automatic Withdrawal Plan after the participant reaches age 59-1/2,
as long as the payments are no more than 10% of the account value
annually (measured from the date the Transfer Agent receives the
request), or (b) following the death or disability (as defined in
the Internal Revenue Code ("IRC")) of the participant or
beneficiary (the death or disability must have occurred after the
account was established);
redemptions from accounts other than Retirement Plans
following the death or disability of the last surviving
shareholder, including a trustee of a "grantor" trust or revocable
living trust for which the trustee is also the sole beneficiary
(the death or disability must have occurred after the account was
established, and for disability you must provide evidence of a
determination of disability by the Social Security Administration);
returns of excess contributions to Retirement Plans;
distributions from retirement plans to make "substantially
equal periodic payments" under Section 72(t) of the Internal
Revenue Code provided the distributions do not exceed 10% of the
account value annually, measured from the date the Transfer Agent
receives the request;
shares redeemed involuntarily, as described in "Shareholder
Account Rules and Policies," below; or
distributions from OppenheimerFunds prototype 401(k) plans:
(1) for hardship withdrawals; (2) under a Qualified Domestic
Relations Order, as defined in the Internal Revenue Code; (3) to
meet minimum distribution requirements as defined in the Internal
Revenue Code; (4) to make "substantially equal periodic payments"
as described in Section 72(t) of the Internal Revenue Code; (5)
for separation from service.
Waivers for Shares Sold or Issued in Certain Transactions.
The contingent deferred sales charge is also waived on Class B and
Class C shares sold or issued in the following cases:
shares sold to the Manager or its affiliates;
shares sold to registered management investment companies or
separate accounts of insurance companies having an agreement with
the Manager or the Distributor for that purpose; or
shares issued in plans of reorganization to which the Fund
is a party.
Special Investor Services
ountLink. OppenheimerFunds AccountLink links your Fund account
to your account at your bank or other financial institution to
enable you to send money electronically between those accounts to
perform a number of types of account transactions. These include
purchases of shares by telephone (either through a service
representative or by PhoneLink, described below), automatic
investments under Asset Builder Plans, and sending dividends and
distributions or Automatic Withdrawal Plan payments directly to
your bank account. Please call the Transfer Agent for more
information.
AccountLink privileges should be requested on your dealer's
settlement instructions if you buy your shares through your dealer.
After your account is established, you can request AccountLink
privileges by sending signature-guaranteed instructions to the
Transfer Agent. AccountLink privileges will apply to each
shareholder listed in the registration on your account as well as
to your dealer representative of record unless and until the
Transfer Agent receives written instructions terminating or
changing those privileges. After you establish AccountLink for your
account, any change of bank account information must be made by
signature-guaranteed instructions to the Transfer Agent signed by
all shareholders who own the account.
Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase
shares in amounts up to $250,000 through a telephone
representative, call the Distributor at 1-800-852-8457. The
purchase payment will be debited from your bank account.
PhoneLink. PhoneLink is the OppenheimerFunds automated
telephone system that enables shareholders to perform a number of
account transactions automatically using a touch-tone phone.
PhoneLink may be used on already-established Fund accounts after
you obtain a Personal Identification Number (PIN), by calling the
special PhoneLink number: 1-800-533-3310.
Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have
established AccountLink privileges to link your bank account with
the Fund, to pay for these purchases.
Exchanging Shares. With the OppenheimerFunds exchange
privilege, described below, you can exchange shares automatically
by phone from your Fund account to another Oppenheimer funds
account you have already established by calling the special
PhoneLink number. Please refer to "How to Exchange Shares," below,
for details.
Selling Shares. You can redeem shares by telephone
automatically by calling the PhoneLink number and the Fund will
send the proceeds directly to your AccountLink bank account.
Please refer to "How to Sell Shares," below, for details.
omatic Withdrawal and Exchange Plans. The Fund has several plans
that enable you to sell shares automatically or exchange them to
another Oppenheimer funds account on a regular basis:
Automatic Withdrawal Plans. If your Fund account is worth
$5,000 or more, you can establish an Automatic Withdrawal Plan to
receive payments of at least $50 on a monthly, quarterly, semi-
annual or annual basis. The checks may be sent to you or sent
automatically to your bank account on AccountLink. You may even set
up certain types of withdrawals of up to $1,500 per month by
telephone. You should consult the Statement of Additional
Information for more details.
Automatic Exchange Plans. You can authorize the Transfer
Agent to exchange an amount you establish in advance automatically
for shares of up to five other Oppenheimer funds on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange
Plan. The minimum purchase for each other Oppenheimer funds
account is $25. These exchanges are subject to the terms of the
exchange privilege, described below.
nvestment Privilege. If you redeem some or all of your Class A
or Class B shares of the Fund, you have up to 6 months to reinvest
all or part of the redemption proceeds in Class A shares of the
Fund or other Oppenheimer funds without paying a sales charge.
This privilege applies to Class A shares that you purchased subject
to an initial sales charge and to Class A or Class B shares on
which you paid a contingent deferred sales charge when you redeemed
them. This privilege does not apply to Class C shares. You must
be sure to ask the Distributor for this privilege when you send
your payment. Please consult the Statement of Additional
Information for more details.
Retirement Plans. Fund shares are available as an investment for
your retirement plans. If you participate in a plan sponsored by
your employer, the plan trustee or administrator must make the
purchase of shares for your retirement plan account. The
Distributor offers a number of different retirement plans that can
be used by individuals and employers:
Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
403(b)(7) Custodial Plans for employees of eligible tax-
exempt organizations, such as schools, hospitals and charitable
organizations
SEP-IRAs (Simplified Employee Pension Plans) for small
business owners or people with income from self-employment,
including SAR/SEP IRAs
Pension and Profit-Sharing Plans for self-employed persons
and small business owners
401(k) prototype retirement plans for businesses
Please call the Distributor for the OppenheimerFunds plan
documents, which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account by selling
(redeeming) some or all of your shares on any regular business day.
Your shares will be sold at the next net asset value calculated
after your order is received and accepted by the Transfer Agent.
The Fund offers you a number of ways to sell your shares: in
writing or by telephone. You can also set up Automatic Withdrawal
Plans to redeem shares on a regular basis, as described above. If
you have questions about any of these procedures, and especially if
you are redeeming shares in a special situation, such as due to the
death of the owner, or from a retirement plan, please call the
Transfer Agent first, at 1-800-525-7048, for assistance.
Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must
submit a withholding form with your request to avoid delay. If your
retirement plan account is held for you by your employer, you must
arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the
Statement of Additional Information.
Certain Requests Require A Signature Guarantee. To protect
you and the Fund from fraud, certain redemption requests must be in
writing and must include a signature guarantee in the following
situations (there may be other situations also requiring a
signature guarantee):
You wish to redeem more than $50,000 worth of shares and
receive a check
The redemption check is not payable to all shareholders
listed on the account statement
The redemption check is not sent to the address of record on
your account statement
Shares are being transferred to a Fund account with a
different owner or name
Shares are redeemed by someone other than the owners (such
as an Executor)
Where Can I Have My Signature Guaranteed? The Transfer
Agent will accept a guarantee of your signature by a number of
financial institutions, including: a U.S. bank, trust company,
credit union or savings association, or by a foreign bank that has
a U.S. correspondent bank, or by a U.S. registered dealer or broker
in securities, municipal securities or government securities, or by
a U.S. national securities exchange, a registered securities
association or a clearing agency. If you are signing as a fiduciary
or on behalf of a corporation, partnership or other business, you
must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that
includes:
Your name
The Fund's name
Your Fund account number (from your account statement)
The dollar amount or number of shares to be redeemed
Any special payment instructions
Any share certificates for the shares you are selling,
The signatures of all registered owners exactly as the
account is registered, and
Any special requirements or documents requested by the
Transfer Agent to assure proper authorization of the person asking
to sell shares.
Use the following address for Send courier or Express Mail
request by mail: requests to:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Ave.,
Denver, Colorado 80217 Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of
record may also sell your shares by telephone. To receive the
redemption price on a regular business day, your call must be
received by the Transfer Agent by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M. but may be earlier
on some days. Shares held in an OppenheimerFunds retirement plan
or under a share certificate may not be redeemed by telephone.
To redeem shares through a service representative, call 1-
800-852-8457
To redeem shares automatically on PhoneLink, call 1-800-533-
3310
Whichever method you use, you may have a check sent to the
address on the account statement, or, if you have linked your Fund
account to your bank account on AccountLink, you may have the
proceeds wired to that bank account.
Telephone Redemptions Paid by Check. Up to $50,000 may be
redeemed by telephone in any 7-day period. The check must be
payable to all owners of record of the shares and must be sent to
the address on the account statement. This service is not
available within 30 days of changing the address on an account.
Telephone Redemptions Through AccountLink or by Wire. There
are no dollar limits on telephone redemption proceeds sent to a
bank account designated when you establish AccountLink. Normally
the ACH transfer to your bank is initiated on the business day
after the redemption. You do not receive dividends on the proceeds
of the shares you redeemed while they are waiting to be
transferred.
Shareholders may also have the Transfer Agent send redemption
proceeds of $2,500 or more by Federal Funds wire to a designated
commercial bank account. The bank must be a member of the Federal
Reserve wire system. There is a $10 fee for each Federal Funds
wire. To place a wire redemption request, call the Transfer Agent
at 1-800-852-8457. The wire will normally be transmitted on the
next bank business day after the shares are redeemed. There is a
possibility that the wire may be delayed up to seven days to enable
the Fund to sell securities to pay the redemption proceeds. No
dividends are accrued or paid on the proceeds of shares that have
been redeemed and are awaiting transmittal by wire. To establish
wire redemption privileges on an account that is already
established, please contact the Transfer Agent for instructions.
Selling Shares Through Your Dealer. The Distributor has made
arrangements to repurchase Fund shares from dealers and brokers on
behalf of their customers. Brokers or dealers may charge for that
service. Please refer to "Special Arrangements for Repurchase of
Shares from Dealers and Brokers" in the Statement of Additional
Information for more details.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain
Oppenheimer funds at net asset value per share at the time of
exchange, without sales charge. To exchange shares, you must meet
several conditions:
Shares of the fund selected for exchange must be available
for sale in your state of residence
The prospectuses of this Fund and the fund whose shares you
want to buy must offer the exchange privilege
You must hold the shares you buy when you establish your
account for at least 7 days before you can exchange them; after the
account is open 7 days, you can exchange shares every regular
business day
You must meet the minimum purchase requirements for the fund
you purchase by exchange
Before exchanging into a fund, you should obtain and read
its prospectus
Shares of a particular class of the Fund may be exchanged only
for shares of the same class in the other Oppenheimer funds. For
example, you can exchange Class A shares of this Fund only for
Class A shares of another fund. At present, Oppenheimer Money
Market Fund, Inc. offers only one class of shares, which are
considered to be Class A shares for this purpose. In some cases,
sales charges may be imposed on exchange transactions. Please
refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.
Exchanges may be requested in writing or by telephone:
Written Exchange Requests. Submit an OppenheimerFunds
Exchange Request form, signed by all owners of the account. Send
it to the Transfer Agent at the addresses listed in "How to Sell
Shares."
Telephone Exchange Requests. Telephone exchange requests may
be made either by calling a service representative at 1-800-852-
8457 or by using PhoneLink for automated exchanges, by calling 1-
800-533-3310. Telephone exchanges may be made only between accounts
that are registered with the same name(s) and address. Shares held
under certificates may not be exchanged by telephone.
You can find a list of Oppenheimer funds currently available
for exchanges in the Statement of Additional Information or obtain
one by calling a service representative at 1-800-525-7048. That
list can change from time to time.
There are certain exchange policies you should be aware of:
Shares are normally redeemed from one fund and purchased
from the other fund in the exchange transaction on the same regular
business day on which the Transfer Agent receives an exchange
request that is in proper form by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M. but may be earlier
on some days. However, either fund may delay the purchase of
shares of the fund you are exchanging into up to 7 days if it
determines it would be disadvantaged by a same-day transfer of the
proceeds to buy shares. For example, the receipt of multiple
exchange requests from a dealer in a "market-timing" strategy might
require the sale of portfolio securities at a time or price
disadvantageous to the Fund.
Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange
request that will disadvantage it, or to refuse multiple exchange
requests submitted by a shareholder or dealer.
The Fund may amend, suspend or terminate the exchange
privilege at any time. Although the Fund will attempt to provide
you notice whenever it is reasonably able to do so, it may impose
these changes at any time.
For tax purposes, exchanges of shares involve a redemption
of the shares of the Fund you own and a purchase of the shares of
the other fund, which may result in a capital gain or loss. For
more information about the taxes affecting exchanges, please refer
to "How to Exchange Shares" in the Statement of Additional
Information.
If the Transfer Agent cannot exchange all the shares you
request because of a restriction cited above, only the shares
eligible for exchange will be exchanged.
Shareholder Account Rules and Policies
Net Asset Value Per Share is determined for each class of
shares as of the close of The New York Stock Exchange that day,
which is normally 4:00 P.M. but may be earlier on some days, on
each day the Exchange is open by dividing the value of the Fund's
net assets attributable to a class by the number of shares of that
class that are outstanding. The Board of Trustees has established
procedures to value the Fund's securities to determine net asset
value. In general, securities values are based on market value.
There are special procedures for valuing illiquid and restricted
securities and obligations for which market values cannot be
readily obtained. These procedures are described more completely
in the Statement of Additional Information.
The offering of shares may be suspended during any period in
which the determination of net asset value is suspended, and the
offering may be suspended by the Board of 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 Fund
at any time. If an account has more than one owner, the Fund and
the Transfer Agent may rely on the instructions of any one owner.
Telephone privileges apply to each owner of the account and the
dealer representative of record for the account unless and until
the Transfer Agent receives cancellation instructions from an owner
of the account.
The Transfer Agent will record any telephone calls to verify
data concerning transactions and has adopted other procedures to
confirm that telephone instructions are genuine, by requiring
callers to provide tax identification numbers and other account
data or by using PINs, and by confirming such transactions in
writing. If the Transfer Agent does not use reasonable procedures
it may be liable for losses due to unauthorized transactions, but
otherwise neither the Transfer Agent nor the Fund will be liable
for losses or expenses arising out of telephone instructions
reasonably believed to be genuine. If you are unable to reach the
Transfer Agent during periods of unusual market activity, you may
not be able to complete a telephone transaction and should consider
placing your order by mail.
Redemption or transfer requests will not be honored until
the Transfer Agent receives all required documents in proper form.
From time to time, the Transfer Agent in its discretion may waive
certain of the requirements for redemptions stated in this
Prospectus.
Dealers that can perform account transactions for their
clients by participating in NETWORKING through the National
Securities Clearing Corporation are responsible for obtaining their
clients' permission to perform those transactions and are
responsible to their clients who are shareholders of the Fund if
the dealer performs any transaction erroneously or improperly.
The redemption price for shares will vary from day to day
because the value of the securities in the Fund's portfolio
fluctuates, and the redemption price, which is the net asset value
per share, will normally be different for Class A, Class B and
Class C shares. Therefore, the redemption value of your shares may
be more or less than their original cost.
Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the
shareholder under the redemption procedures described above) within
7 days after the Transfer Agent receives redemption instructions in
proper form, except under unusual circumstances determined by the
Securities and Exchange Commission delaying or suspending such
payments. For accounts registered in the name of a broker-dealer,
payment will be forwarded within 3 business days. The Transfer
Agent may delay forwarding a check or processing a payment via
AccountLink for recently purchased shares, but only until the
purchase payment has cleared. That delay may be as much as 10 days
from the date the shares were purchased. That delay may be avoided
if you purchase shares by certified check or arrange to have your
bank to provide telephone or written assurance to the Transfer
Agent that your purchase payment has cleared.
Involuntary redemptions of small accounts may be made by the
Fund if the account value has fallen below $500 for reasons other
than the fact that the market value of shares has dropped, and in
some cases involuntary redemptions may be made to repay the
Distributor for losses from the cancellation of share purchase
orders.
Under unusual circumstances, shares of the Fund may be
redeemed "in kind", which means that the redemption proceeds will
be paid with securities from the Fund's portfolio. Please refer to
"How to Sell Shares" in the Statement of Additional Information for
more details.
"Backup Withholding" of Federal income tax may be applied at
the rate of 31% taxable from dividends, distributions and
redemption proceeds (including exchanges) if you fail to furnish
the Fund a certified Social Security or Employer Identification
Number when you sign your application, or if you violate Internal
Revenue Service regulations on tax reporting of dividends.
The Fund does not charge a redemption fee, but if your
dealer or broker handles your redemption, they may charge a fee.
That fee can be avoided by redeeming your Fund shares directly
through the Transfer Agent. Under the circumstances described in
"How To Buy Shares," you may be subject to a contingent deferred
sales charges when redeeming certain Class A, Class B and Class C
shares.
To avoid sending duplicate copies of materials to
households, the Fund will mail only one copy of each annual and
semi-annual report to shareholders having the same last name and
address on the Fund's records. However, each shareholder may call
the Transfer Agent at 1-800-525-7048 to ask that copies of those
materials be sent personally to that shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class
A, Class B and Class C shares from net investment income on an
annual basis and normally pays those dividends to shareholders
following the end of its fiscal year, which is October 31.
Dividends paid on Class A shares generally are expected to be
higher than for Class B and Class C shares because expenses
allocable to Class B and Class C shares will generally be higher
than for Class A shares. There is no fixed dividend rate and there
can be no assurance as to the payment of any dividends or the
realization of any gains.
ital Gains. The Fund may make distributions annually in December
out of any net short-term or long-term capital gains, and the Fund
may make supplemental distributions of dividends and capital gains
following its fiscal year which ended 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 Long-Term Capital Gains Only. You can elect to
reinvest long-term capital gains in the Fund while receiving
dividends by check or sent to your bank account on AccountLink.
Receive All Distributions in Cash. You can elect to receive
a check for all dividends and long-term capital gains distributions
or have them sent to your bank on AccountLink.
Reinvest Your Distributions in Another Oppenheimer Fund
Account. You can reinvest all distributions in another Oppenheimer
fund account you have established.
es. If your account is not a tax-deferred retirement account,
you should be aware of the following tax implications of investing
in the Fund. Long-term capital gains are taxable as long-term
capital gains when distributed to shareholders. It does not matter
how long you have held your shares. Dividends paid from short-term
capital gains and net investment income are taxable as ordinary
income. Distributions are subject to federal income tax and may be
subject to state or local taxes. Your distributions are taxable
when paid, whether you reinvest them in additional shares or take
them in cash. Every year the Fund will send you and the IRS a
statement showing the amount of each taxable distribution you
received in the previous year.
"Buying a Dividend": When a Fund goes ex-dividend, its
share price is reduced by the amount of the distribution. If you
buy shares on or just before the ex-dividend date, or just before
the Fund declares a capital gains distribution, you will pay the
full price for the shares and then receive a portion of the price
back as a taxable dividend or capital gain.
Taxes on Transactions: Share redemptions, including
redemptions for exchanges, are subject to capital gains tax.
Generally speaking a capital gain or loss is the difference
between the price you paid for the shares and the price you receive
when you sell them.
Returns of Capital: In certain cases distributions made by
the Fund may be considered a non-taxable return of capital to
shareholders. If that occurs, it will be identified in notices to
shareholders. A non-taxable return of capital may reduce your tax
basis in your Fund shares.
This information is only a summary of certain federal tax
information about your investment. More information is contained
in the Statement of Additional Information, and in addition you
should consult with your tax adviser about the effect of an
investment in the Fund on your particular tax situation.
<PAGE>
APPENDIX A
Special Sales Charge Arrangements for Shareholders of
the Former Quest for Value Funds
The initial and contingent deferred sales charge rates and
waivers for Class A, Class B and Class C shares of the Fund
described elsewhere in this Prospectus are modified as described
below for those shareholders of (i) Oppenheimer Quest Value Fund,
Inc., Oppenheimer Quest Growth & Income Value Fund, Oppenheimer
Quest Opportunity Value Fund, Oppenheimer Quest Small Cap Value
Fund and Oppenheimer Quest Global Value Fund, Inc. on November 24,
1995, when OppenheimerFunds, Inc. became the investment adviser to
those funds, and (ii) Quest for Value U.S. Government Income Fund,
Quest for Value Investment Quality Income Fund, Quest for 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.
<PAGE>
<TABLE>
<CAPTION> 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
<S> <C> <C> <C>
9 or fewer 2.50% 2.56% 2.00%
At least 10 but not
more than 49 2.00% 2.04% 1.60%
</TABLE>
For purchases by Qualified Retirement plans and Associations
having 50 or more eligible employees or members, there is no
initial sales charge on purchases of Class A shares, but those
shares are subject to the Class A contingent deferred sales charge
described on pages __ to __ 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.
Shareholders of the Fund that have continually owned shares
of the Fund prior to November 1, 1988.
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, Class B or Class C
shares of the Fund if those shares were purchased prior to March 6,
1995: in connection with (i) distributions to participants or
beneficiaries of plans qualified under Section 401(a) of the
Internal Revenue Code or from custodial accounts under
Section 403(b)(7) of the Code, Individual Retirement Accounts,
deferred compensation plans under Section 457 of the Code, and
other employee benefit plans, and returns of excess contributions
made to each type of plan, (ii) withdrawals under an automatic
withdrawal plan holding only either Class B or 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, Class B or Class C
shares of the Fund if those shares were purchased on or after March
6, 1995, but prior to November 24, 1995: (1) distributions to
participants or beneficiaries from Individual Retirement Accounts
under Section 408(a) of the Internal Revenue Code or retirement
plans under Section 401(a), 401(k), 403(b) and 457 of the Code, if
those distributions are made either (a) to an individual
participant as a result of separation from service or (b) following
the death or disability (as defined in the Code) of the participant
or beneficiary; (2) returns of excess contributions to such
retirement plans; (3) redemptions other than from retirement plans
following the death or disability of the shareholder(s) (as
evidenced by a determination of total disability by the U.S. Social
Security Administration); (4) withdrawals under an automatic
withdrawal plan (but only for Class B or 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>
Oppenheimer Quest Officers 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
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.#2<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) to 10/31/96; 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 $12,119
10/31/96 $16,686 $14,219
OPPENHEIMER QUEST OFFICERS VALUE FUND
Two World Trade Center, New York, New York 10048
1-800-525-7048
Statement of Additional Information dated February 24, 1997
This Statement of Additional Information of Oppenheimer Quest
Officers Value Fund is not a Prospectus. This document contains
additional information about the Fund and supplements information
in the Prospectus dated February 24, 1997. It should be read
together with the Prospectus, which may be obtained upon written
request to the Fund's Transfer Agent, OppenheimerFunds Services at
P.O. Box 5270, Denver, Colorado 80217, or by calling the Transfer
Agent at the toll-free number shown above.
Contents
Page
About the Fund
Investment Objective and Policies. . . . . . . . . . . . 2
Investment Policies and Strategies . . . . . . . . . . 2
Other Investment Techniques and Strategies . . . . . . 6
Other Investment Restrictions. . . . . . . . . . . . .14
How the Fund is Managed . . . . . . . . . . . . . . . 16
Organization and History . . . . . . . . . . . . . . 16
Trustees and Officers of the Trust . . . . . . . . . .17
The Manager and Its Affiliates . . . . . . . . . . . .20
Brokerage Policies of the Fund . . . . . . . . . . . . .23
Performance of the Fund. . . . . . . . . . . . . . . . .26
Distribution and Service Plans . . . . . . . . . . . . .29
About Your Account
How To Buy Shares. . . . . . . . . . . . . . . . . . . 31
How To Sell Shares . . . . . . . . . . . . . . . . . . 40
How To Exchange Shares . . . . . . . . . . . . . . . . 44
Dividends, Capital Gains and Taxes . . . . . . . . . . 46
Additional Information About the Fund. . . . . . . . . .47
Financial Information About the Fund
Independent Accountants' Report. . . . . . . . . . . . 49
Financial Statements . . . . . . . . . . . . . . . . . .50
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 may invest,
as well as the strategies the Fund may use to try to achieve its
objective. Capitalized terms used in this Statement of Additional
Information have the same meaning as those terms have in the
Prospectus.
Foreign Securities. The Fund may invest in securities
(which may be denominated in U.S. dollars or non-U.S. currencies)
issued or guaranteed by foreign corporations, certain supranational
equities (described below) and foreign governments or their
agencies or instrumentalities, and in securities issued by U.S.
corporations denominated in non-U.S. currencies. All such
securities are referred to as "foreign securities."
Investing in foreign securities offers the Fund potential
benefits not available from investing solely in securities of
domestic issuers, including the opportunity to invest in foreign
issuers that appear to offer growth potential, or in foreign
countries with economic policies or business cycles different from
those of the U.S., or to reduce fluctuations in portfolio value by
taking advantage of foreign stock markets that do not move in a
manner parallel to U.S. markets. If the Fund's portfolio securities
are held abroad, the countries in which such securities may be held
and the sub-custodians or depositories holding them must be
approved by the Trust's Board of Trustees to the extent that
approval is required under applicable rules of the Securities and
Exchange Commission (the "SEC"). In buying foreign securities, the
Fund may convert U.S. dollars into foreign currency, but only to
effect securities transactions on foreign securities exchanges and
not to hold such foreign currency as an investment.
Risks of Foreign Investing. Investing in foreign securities
involves special additional risks and considerations not typically
associated with investing in securities of issuers traded in the
U.S. These include: reduction of income by foreign taxes;
fluctuation in value of foreign portfolio investments due to
changes in currency rates and control regulations (e.g., currency
blockage); transaction charges for currency exchange; lack of
public information about foreign issuers; lack of uniform
accounting, auditing and financial reporting standards comparable
to those applicable to domestic issuers; less volume on foreign
exchanges than on U.S. exchanges; greater volatility and less
liquidity on foreign markets than in the U.S.; less regulation of
foreign issuers, stock exchanges and brokers than in the U.S.;
greater difficulties in commencing lawsuits and obtaining judgments
in foreign courts; higher brokerage commission rates than in the
U.S.; increased risks of delays in settlement of portfolio
transactions or loss of certificates for portfolio securities;
possibilities in some countries of expropriation or nationalization
of assets, confiscatory taxation, political, financial or social
instability or adverse diplomatic developments; and unfavorable
differences between the U.S. economy and foreign economies. In the
past, U.S. Government policies have discouraged certain
investments abroad by U.S. investors, through taxation or other
restrictions, and it is possible that such restrictions could be
re-imposed.
Emerging Market Countries: Certain developing countries may
have relatively unstable governments, economies based on only a few
industries that are dependent upon international trade, and reduced
secondary market countries is restricted or controlled in varying
degrees. In the past, securities in these countries have
experienced greater price movement, both positive and negative,
than securities of companies located in developed countries.
Lower-rated high-yielding emerging market securities may be
considered to have speculative elements.
U.S. Government Securities. Obligations of U.S. Government
agencies or instrumentalities (including mortgage-backed
securities) may or may not be guaranteed or supported by the "full
faith and credit" of the United States. Some are backed by the
right of the issuer to borrow from the U.S. Treasury; others, by
discretionary authority of the U.S. Government to purchase the
agencies' obligations; while others are supported only by the
credit of the instrumentality. All U.S. Treasury obligations are
backed by the full faith and credit of the United States. If the
securities are not backed by the full faith and credit of the
United States, the owner of the securities must look principally to
the agency issuing the obligation for repayment and may not be able
to assert a claim against the United States in the event that the
agency or instrumentality does not meet its commitment. The Fund
will invest in U.S. Government Securities of such agencies and
instrumentalities only when the Manager is satisfied that the
credit risk with respect to such instrumentality is minimal.
Money Market Securities. As stated in the Prospectus, the
Fund typically invests a part of its assets in money market
securities, and may invest up to 100% of its total assets in money
market securities for temporary defensive purposes. Money market
securities in which the Fund may invest include the following:
Time Deposits and Variable Rate Notes. The Fund may invest
in fixed time deposits, whether or not subject to withdrawal
penalties. However, investment in such deposits which are subject
to withdrawal penalties, other than overnight deposits, are subject
to the 15% limit on illiquid investments set forth in the
Prospectus for the Fund.
The commercial paper obligations which the Fund may buy are
unsecured and may include variable rate notes. The nature and
terms of a variable rate note (i.e., a "Master Note") permit the
Fund to invest fluctuating amounts at varying rates of interest
pursuant to a direct arrangement between the Fund as lender, and
the issuer, as borrower. It permits daily changes in the amounts
borrowed. The Fund has the right at any time to increase, up to
the full amount stated in the note agreement, or to decrease the
amount outstanding under the note. The issuer may prepay at any
time and without penalty any part or the full amount of the note.
The note may or may not be backed by one or more bank letters of
credit. Because these notes are direct lending arrangements
between the Fund and the issuer, it is not generally contemplated
that they will be traded; moreover, there is currently no secondary
market for them. Except as specifically provided in the Prospectus
for the Fund, there is no limitation on the type of issuer from
whom these notes will be purchased. However, in connection with
such purchase and on an ongoing basis, OpCap Advisors (the "Sub-
Adviser") will consider the earning power, cash flow and other
liquidity ratios of the issuer, and its ability to pay principal
and interest on demand, including a situation in which all holders
of such notes made demand simultaneously. The Fund will not invest
more than 5% of its total assets in variable rate notes. Variable
rate notes are subject to the Fund's investment restriction on
illiquid securities unless such notes can be put back to the issuer
on demand within seven days.
Insured Bank Obligations. The Federal Deposit Insurance
Corporation ("FDIC") insures the deposits of federally insured
banks and savings and loan associations (collectively referred to
as "banks") up to $100,000. The Fund may, within the limits set
forth in the Prospectus, purchase bank obligations which are fully
insured as to principal by the FDIC. Currently, to remain fully
insured as to principal, these investments must be limited to
$100,000 per bank. If the principal amount and accrued interest
together exceed $100,000, the excess principal and accrued interest
will not be insured. Insured bank obligations may have limited
marketability. Unless the Board of 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 as set forth in the Investment
Company Act including the proposed borrowing and amounts covering
the Fund's obligations under "forward roll" transactions. If the
value of the Fund's assets so computed should fail to meet the 300%
asset coverage requirement, the Fund is required within three days
to reduce its bank debt to the extent necessary to meet such
requirement and may have to sell a portion of its investments at a
time when independent investment judgment would not dictate such
sale. Borrowing for investment increases both investment
opportunity and risk. Since substantially all of the Fund's assets
fluctuate in value, but borrowing obligations are fixed, when the
Fund has outstanding borrowings, its net asset value per share
correspondingly will tend to increase and decrease more when
portfolio assets fluctuate in value than otherwise would be the
case.
Other Investment Techniques and Strategies
When-Issued Securities. The Fund may take advantage of
offerings of eligible portfolio securities on a "when-issued" basis
where delivery of and payment for such securities takes place
sometime after the transaction date on terms established on such
date. Normally, settlement on U.S. Government securities takes
place within ten days. The Fund only will make when-issued
commitments on eligible securities with the intention of actually
acquiring the securities. If the Fund chooses to dispose of the
right to acquire a when-issued security prior to its acquisition,
it could, as with the disposition of any other portfolio
obligation, incur a gain or loss due to market fluctuation. When-
issued commitments will not be made if, as a result, more than 15%
of the net assets of the Fund would be so committed.
Repurchase Agreements. The Fund may acquire securities
subject to repurchase agreements for liquidity purposes to meet
redemptions, or pending the investment of the proceeds from sales
of Fund shares, or pending the settlement of purchases of portfolio
securities.
In a repurchase transaction, the Fund purchases a security
from, and simultaneously resells it to, an approved vendor (a U.S.
commercial bank or the U.S. branch of a foreign bank having total
domestic assets of at least $1 billion or a broker-dealer with a
net worth of at least $50 million and which 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
for delivery on an agreed-on future date. The resale price exceeds
the purchase price by an amount that reflects an agreed-upon
interest rate effective for the period during which the repurchase
agreement is in effect. The majority of these transactions run
from day to day, and delivery pursuant to the resale typically will
occur within one to five days of the purchase. Repurchase
agreements are considered "loans" under the Investment Company Act,
collateralized by the underlying security. The Fund's repurchase
agreements require that at all times while the repurchase agreement
is in effect, the value of the collateral must equal or exceed the
repurchase price to fully collateralize the repayment obligation.
Additionally, the Manager will impose creditworthiness requirements
to confirm that the vendor is financially sound and will
continuously monitor the collateral's value.
The Fund may enter into reverse repurchase agreements. Under
a reverse repurchase agreement, the Fund sells securities and
agrees to repurchase them at a mutually agreed upon date and price.
At the time the Fund enters into a reverse repurchase agreement, it
will establish and maintain a segregated account with an approved
custodian containing liquid assets of any type including equity and
debt securities of any grade having a value not less than the
repurchase price (including accrued interest). Reverse repurchase
agreements involve the risk that the market value of the securities
retained in lieu of sale by the Fund may decline more than or
appreciate less than the securities the Fund has sold but is
obligated to repurchase. In the event the buyer of securities
under a reverse repurchase agreement files for bankruptcy or
becomes insolvent, such buyer or its trustee or receiver may
receive an extension of time to determine whether to enforce the
Fund's obligation to repurchase the securities and the Fund's use
of the proceeds of the reverse repurchase agreements may
effectively be restricted pending such decisions. Reverse
repurchase agreements create leverage, a speculative factor, and
will be considered borrowings for purposes of the Fund's limitation
on borrowing.
Illiquid and Restricted Securities. To enable the Fund to
sell restricted securities not registered under the Securities Act
of 1933, the Fund may have to cause those securities to be
registered. The expenses of registration of restricted securities
may be negotiated by the Fund with the issuer at the time such
securities are purchased by the Fund, if such registration is
required before such securities may be sold publicly. When
registration must be arranged because the Fund wishes to sell the
security, a considerable period may elapse between the time the
decision is made to sell the securities and the time the Fund would
be permitted to sell them. The Fund would bear the risks of any
downward price fluctuation during that period. The Fund may also
acquire, through private placements, securities having contractual
restrictions on their resale, which might limit the Fund's ability
to dispose of such securities and might lower the amount realizable
upon the sale of such securities.
The Fund has percentage limitations that apply to purchases of
restricted securities, as stated in the Prospectus. Those
percentage restrictions do not limit purchases of restricted
securities that are eligible for sale to qualified institutional
purchasers pursuant to Rule 144A under the Securities Act of 1933,
provided that those securities have been determined to be liquid by
the Board of Trustees of the Trust or by the Sub-Adviser under
Board-approved guidelines. Those guidelines take into account the
trading activity for such securities and the availability of
reliable pricing information, among other factors. If there is a
lack of trading interest in a particular Rule 144A security, the
Fund's holding of that security may be deemed to be illiquid.
Loans of Portfolio Securities. The Fund may lend its
portfolio securities subject to the restrictions stated in the
Prospectus. 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,
under the Rule must limit its aggregate initial futures margins and
related options premiums to 5% or less of the Fund's total assets
for hedging strategies that are considered bona fide hedging
strategies under the Rule. Under the Rule the Fund also must use
short future and options on futures positions solely for bona fide
hedging purposes within the meaning and intent of applicable
provisions of the Commodity Exchange Act.
Transactions in options by the Fund are subject to limitations
established by option exchanges governing the maximum number of
options that may be written or held by a single investor or group
of investors acting in concert, regardless of whether the options
were written or purchased on the same or different exchanges or are
held in one or more accounts or through one or more different
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.
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. 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 Trust'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.
In addition to the Trust (including its other portfolios
Oppenheimer Quest Growth & Income Value Fund, Oppenheimer Quest
Opportunity Value Fund and Oppenheimer Quest Small Cap Value Fund)
all of the Trustees are also trustees or directors of Oppenheimer
Quest Global Value Fund, Inc. and Oppenheimer Quest Value Fund,
Inc. (collectively with the Fund and the Trust's other portfolios,
"Oppenheimer Quest Funds") and Rochester Fund Municipals, Rochester
Portfolio Series - Limited-Term New York Municipal Fund and
Rochester Bond Series - Oppenheimer Bond Fund for Growth
(collectively, the "Oppenheimer Rochester Funds"). As of February
3, 1997, 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 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 Directors and
President*; Age: 48.
President, Chief Executive Officer and a Director of the Manager
and HarbourView Asset Management Corporation ("HarbourView"), a
subsidiary of the Manager; President and a Director of Oppenheimer
Acquisition Corp. ("OAC"), the Manager's parent holding company,
and Oppenheimer Partnership Holdings, Inc.; Chairman and a Director
of Shareholder Services, Inc. ("SSI"), a transfer agent subsidiary
of the Manager and Shareholder Financial Services, Inc. ("SFSI");
and a director of Oppenheimer Real Asset Management, Inc.
Paul Y. Clinton, Director; Age: 66
39 Blossom Avenue, Osterville, Massachusetts 02655
Principal of Clinton Management Associates, a financial and venture
capital consulting firm; Trustee of Capital Cash Management Trust,
a money-market fund and Narraganssett Tax-Free Fund, a tax-exempt
bond fund; Director of OCC Cash Reserves, Inc. and Trustee of OCC
Accumulation Trust, all of which are open-end investment companies.
Formerly: Director, External Affairs, Kravco Corporation, a
national real estate owner and property management corporation;
President of Essex Management Corporation, a management consulting
company; a general partner of Capital Growth Fund, a venture
capital partnership; a general partner of Essex Limited
Partnership, an investment partnership; President of Geneve Corp.,
a venture capital fund; Chairman of Woodland Capital Corp., a small
business investment company; and Vice President of W.R. Grace & Co.
_________________________
* A Director who is an "interested person" as defined in the
Investment Company Act.
<PAGE>
Thomas W, Courtney, Director; Age: 63
P.O. Box 580, Sewickley, Pennsylvania 15143
Principal of Courtney Associates, Inc. (venture capital firm);
former General Partner of Trivest Venture Fund (private venture
capital fund); former President of Investment Counseling Federated
Investors, Inc.; Trustee of Cash Assets Trust, a money market fund;
Director of OCC Cash Reserves, Inc., and Trustee of OCC
Accumulation Trust, all of which are open-end investment companies;
former President of Boston Company Institutional Investors; Trustee
of Hawaiian Tax-Free Trust and Tax Free Trust of Arizona, tax-
exempt bond funds; Director of several privately owned corpora-
tions; former Director of Financial Analysts Federation.
Lacy B. Herrmann, Director; Age: 67
380 Madison Avenue, Suite 2300, New York, New York 10017
President and Chairman of the Board of Aquila Management
Corporation, the sponsoring organization and Administrator and/or
Sub-Adviser to the following open-end investment companies, and
Chairman of the Board of Trustees and President of each: Churchill
Cash Reserves Trust, Short Term Asset Reserves, Pacific Capital
Cash Assets Trust, Pacific Capital U.S. Treasuries Cash Assets
Trust, Pacific Capital Tax-Free Cash Assets Trust, Prime Cash Fund,
Narragansett Insured Tax-Free Income Fund, Tax-Free Fund For Utah,
Churchill Tax-Free Fund of Kentucky, Tax-Free Fund of Colorado,
Tax-Free Trust of Oregon, Tax-Free Trust of Arizona, Hawaiian Tax-
Free Trust, and Aquila Rocky Mountain Equity Fund; Vice President,
Director, Secretary, and formerly Treasurer of Aquila Distributors,
Inc., distributor of the above funds; President and Chairman of the
Board of Trustees of Capital Cash Management Trust ("CCMT"), and an
Officer and Trustee/Director of its predecessors; President and
Director of STCM Management Company, Inc., sponsor and adviser to
CCMT; Chairman, President and a Director of InCap Management
Corporation, formerly sub-adviser and administrator of Prime Cash
Fund and Short Term Asset Reserves; Director of OCC Cash Reserves,
Inc., and Trustee of OCC Accumulation Trust and The Saratoga
Advantage Trust, each of which is an open-end investment company;
Trustee of Brown University.
George Loft, Director; Age: 82
51 Herrick Road, Sharon, Connecticut 06069
Private Investor; Director of OCC Cash Reserves, Inc., and Trustee
of OCC Accumulation Trust and The Saratoga Advantage Trust, all of
which are open-end investment companies, 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: 42
Executive Vice President and Director of Equity Investments of the
Manager; a Vice President and director of OAC an officer and
Portfolio Manager of other Oppenheimer funds.
Andrew J. Donohue, Secretary; Age: 46
Executive Vice President and General Counsel of the Manager and
OppenheimerFunds Distributor, Inc. (the "Distributor"); President
and a director of Centennial; Executive Vice President, General
Counsel and a director of HarbourView, SFSI, SSI and Oppenheimer
Partnership Holdings Inc.; President and a director of Real Asset
Management, Inc.; General Counsel of OAC; Executive Vice President,
Chief Legal Officer and a director of MultiSource Services, Inc. (a
broker-dealer) 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: 60
6803 South Tucson Way, Englewood, Colorado 80012
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 Shareholder Financial Services, Inc. ("SFSI"), a transfer agent
subsidiary of the Manager; Senior Vice President and Secretary of
SSI, Vice President and Treasurer of Oppenheimer Real Asset
Management, Inc.; Chief Executive Officer, Treasurer and a director
of MultiSource Services, Inc. (a broker-dealer); an officer of
other Oppenheimer funds.
Robert G. Zack, Assistant Secretary; Age: 48
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; an officer of other
Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer; Age: 38
6803 South Tucson Way, Englewood, Colorado 80012
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: 31
6803 South Tucson Way, Englewood, Colorado 80012
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.
<PAGE>
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 remaining Trustees
of the Trust received the total amounts shown below from (i) the
Fund during its fiscal year ended October 31, 1996 and (ii) other
investment companies (or series thereof) managed by the Manager and
the Sub-Adviser paid during the calendar year ended December 31,
1996.
<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(1)
<S> <C> <C> <C> <C>
Paul Y. Clinton $0 None None $90,225
Thomas W. Courtney $0 None None $87,525
Lacy B. Herrmann $0 None None $90,225
George Loft $0 None None $95,700
(1) For the purpose of the chart above, "Fund Complex" includes the
Fund, the other Oppenheimer Quest Funds, the Oppenheimer Rochester
Funds and three other funds advised by the Sub-Adviser (the "Sub-
Adviser Funds"). For these purposes, each series constitutes a
separate fund. Messrs. Clinton, Courtney and Herrmann served as
directors or trustees of two Sub-Adviser Funds, for which they are
to receive $38,550, $35,850 and $38,550, respectively, and Mr. Loft
served as a director of trustee of three Sub-Adviser Funds, for
which he is to receive $44,025.
</TABLE>
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 31, 1997, 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 Oppenheimer Capital
Accumulation Omnibus Plan, Oppenheimer Tower, One World Financial
Center, New York, New York 10281-1003, which owned of record
288,000.988 Class A shares (approximately 37.45% of the Class A
shares then outstanding).
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 obligated to
report to the Manager any violations of the Sub-Adviser's Code of
Ethics relating to the Fund. The Code of Ethics is designed to
detect and prevent improper personal trading by certain employees,
including the Fund's portfolio manager, who is an employee of the
Sub-Adviser, that would compete with or take advantage of the Funds
portfolio transactions. Compliance with the Code of Ethics is
carefully monitored and strictly enforced by the Manager.
The Investment Advisory Agreement. The Manager acts as
investment adviser to the Fund pursuant to the terms of an
Investment Advisory Agreement dated as of November 22, 1995. The
Sub-Adviser previously served as the Fund's investment adviser from
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 the Fund
will pay the Manager an annual fee for calculating the Fund s daily
net asset value at an annual rate of $6,000, plus reimbursement for
out-of-pocket expenses.
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. For the
fiscal period November 24, 1995 (when the Manager became the
investment adviser to the Fund) to October 31, 1996 (the "Fiscal
Period"), the Fund paid to the Manager $58,216 in management fees
and paid or accrued accounting service fees to the Manager in the
amount of $5,633.
The Investment Advisory Agreement contains no expense
limitation. However, because of state regulations limiting fund
expenses that previously applied, the Manager had 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) would
not exceed the most stringent state regulatory limitation
applicable to the Fund. Due to changes in federal securities laws,
such state regulations no longer apply and the Manager s
undertaking is therefore inapplicable and has been withdrawn.
During the Fund s last fiscal year, the Fund s expenses did not
exceed the most stringent state regulatory limit and the voluntary
undertaking was not invoked.
In addition, effective August 1, 1996, the Manager voluntarily
agreed to waive that portion of its management fee equal to what
the Manager would have been required to pay the Sub-Adviser under
the Subadvisory Agreement described below. As a result of this fee
waiver, the effective management fee rate for the Fiscal Period was
.87%.
Pursuant to these undertakings, 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
and fee waiver. The Manager reserves the right to terminate or
amend the undertakings at any time. Any assumption of the Fund's
expenses and waiver of fees under these undertakings would have
lowered the Fund's overall expense ratio and increased its total
return during any period in which the 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 pursuant to a separate Subadvisory
Agreement, dated as of November 22, 1995, with respect to the Fund.
Fees Paid Under the Prior Investment Advisory Agreement. The
Sub-Adviser 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 $28,182 for the fiscal period from November 8, 1994 to
October 31 1995, and $2,324 for the fiscal period November 1, 1995
to November 22, 1995 (the "Interim Period").
No amounts were payable by the Fund for the period from
November 8, 1994 to October 31, 1995 and the Interim Period for
accounting services fees.
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. Effective August 1, 1996, the
Sub-Adviser voluntarily agreed to waive its subadvisory fee.
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 its 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. During the
Fund's fiscal year ended October 31, 1996, the aggregate amount of
sales charges on sales of the Fund's Class A shares was $17,524,
all of which the Distributor and an affiliated broker retained; no
amounts were retained by OCC Distributors, the Fund's Distributor
prior to November 22, 1995 with respect to the Interim Period. 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 Board of Trustees 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 on behalf of the Manager. Soft dollar arrangements
for services may be entered into in order to facilitate an
improvement in performance in respect of the Sub-Adviser's service
to the Manager with respect to the Fund. Pursuant to these
arrangements, the Sub-Adviser will undertake to place brokerage
business with broker-dealers who pay third parties that provide
these services. Any such soft dollar arrangements will be made in
accordance with policies adopted by the Manager and the Board of
the Fund and in compliance with Section 28(e) of the Securities
Exchange Act of 1934, as amended.
Description of Brokerage Practices. Portfolio decisions are based
upon recommendations of the portfolio manager and the judgment of
the portfolio managers. The Fund will pay brokerage commissions on
transactions in listed options and equity securities. Prices of
portfolio securities purchased from underwriters of new issues
include a commission or concession paid by the issuer to the
underwriter, and prices of debt securities purchased from dealers
include a spread between the bid and asked prices.
Transactions may be directed to dealers during the course of
an underwriting in return for their brokerage and research
services, which are intangible and on which no dollar value can be
placed. There is no formula for such allocation. The research
information may or may not be useful to one or more of the Fund
and/or other accounts of the Manager or the Sub-Adviser;
information received in connection with directed orders of other
accounts managed by the Manager or the Sub-Adviser or its
affiliates may or may not be useful to one or more of the Funds.
Such information may be in written or oral form and includes
information on particular companies and industries as well as
market, economic or institutional activity areas. It serves to
broaden the scope and supplement the research activities of the
Manager or the Sub-Adviser, to make available additional views for
consideration and comparison, and to enable the Manager or the Sub-
Adviser to obtain market information for the valuation of
securities held in the Fund's assets.
Sales of shares of the Fund, subject to applicable rules
covering the Distributor's activities in this area, will also be
considered as a factor in the direction of portfolio transactions
to dealers, but only in conformity with the price, execution and
other considerations and practices discussed above. The Fund will
not purchase any securities from or sell any securities to an
affiliated broker-dealer including Oppenheimer & Co., Inc.
("Opco"), an affiliate of the Sub-Adviser, acting as principal for
its own account.
The Sub-Adviser currently serves as investment manager to a
number of clients, including other investment companies, and may in
the future act as investment manager or advisor to others. It is
the practice of the Sub-Adviser to cause purchase or sale
transactions to be allocated among the Fund and others whose assets
it manages in such manner as it deems equitable. In making such
allocations among the Fund and other client accounts, the main
factors considered are the respective investment objectives, the
relative size of portfolio holdings of the same or comparable
securities, the availability of cash for investment, the size of
investment commitments generally held and the opinions of the
persons responsible for managing the portfolios of each Fund and
other client accounts.
When orders to purchase or sell the same security on identical
terms are placed by more than one of the funds and/or other
advisory accounts managed by the Sub-Adviser or its affiliates, the
transactions are generally executed as received, although a fund or
advisory account that does not direct trades to a specific broker
("free trades") usually will have its order executed first.
Purchases are combined where possible for the purpose of
negotiating brokerage commissions, which in some cases might have
a detrimental effect on the price or volume of the security in a
particular transaction as far as the Fund is concerned. Orders
placed by accounts that direct trades to a specific broker will
generally be executed after the free trades. All orders placed on
behalf of the Fund are considered free trades. However, having an
order placed first in the market does not necessarily guarantee the
most favorable price.
The following table presents information as to the
allocation of brokerage commissions paid by the Fund for the fiscal
period from November 8, 1994 (commencement of operations) to
October 31, 1995 and the fiscal year ended October 31, 1996:
<TABLE>
<CAPTION>
Total Amount of
Total Transactions Where
For the Fiscal Brokerage Brokerage Commissions Brokerage Commissions
Period/Year Commissions Paid to Opco Paid to Opco
Ended October 31 Paid Dollar Amount % Dollar Amount %
<S> <C> <C> <C> <C> <C>
1995 $11,593 $ 4,461 38.5% $2,153,416 39.8%
1996 $34,368 $13,921 40.5% $8,359,426 34.3%
</TABLE>
During the Fund's fiscal year ended October 31, 1996, $3,126
was paid by the Fund to brokers as commissions in return for
research services; the aggregate dollar amount of those
transactions was $1,255,051.
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 advertised class of shares of the Fund for the 1, 5, and 10-
year periods (or the life of the class, if less) ending as of the
most recently-ended calendar quarter prior to the publication of
the advertisement. This enables an investor to compare the Fund's
performance to the performance of other funds for the same periods.
However, a number of factors should be considered before using such
information as a basis for comparison with other investments. An
investment in the Fund is not insured; its returns and share prices
are not guaranteed and normally will fluctuate on a daily basis.
When redeemed, an investor's shares may be worth more or less than
their original cost. Returns for any given past period are not a
prediction or representation by the Fund of future returns. The
returns of Class A, Class B and Class C shares of the Fund are
affected by portfolio quality, the type of investments the Fund
holds and its operating expenses allocated to the particular class.
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, 1996 and the one year
period ended October 31, 1996 reflect the waiver of management fees
and distribution expenses as described herein. Without such
waivers, the total returns for the Fund for such periods would have
been lower. These waivers became effective on August 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 )
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, 1996 and for the period from November
8, 1994 (commencement of operations) to October 31, 1996 were
27.40% and 25.68%, 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 8, 1994 (commencement of operations) to October 31,
1996 was 57.26%.
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, 1996 was 66.86%. The average annual
total returns at net asset value for Class A shares for the one
year period ended October 31, 1996 and for the period from November
8, 1994 through October 31, 1996 were 35.17% and 29.50%,
respectively
Other Performance Comparisons. From time to time the Fund may
publish the ranking of its Class A, Class B or Class C shares by
Lipper Analytical Services, Inc. ("Lipper"), a widely-recognized
independent mutual fund monitoring service. Lipper monitors the
performance of regulated investment companies, including the Fund,
and ranks their performance for various periods based on categories
relating to investment objectives. The performance of the Fund is
ranked against (i) all other funds and (ii) all other flexible
portfolio funds. The Lipper performance rankings are based on
total returns that include the reinvestment of capital gain
distributions and income dividends but do not take sales charges or
taxes into consideration.
From time to time the Fund may publish the star ranking of the
performance of its Class A, Class B or Class C shares by
Morningstar, Inc., an independent mutual fund monitoring service.
Morningstar ranks mutual funds in broad investment categories
(domestic stock, international stock, taxable bond, municipal bond
and hybrid) based on risk-adjusted total investment return. The
Fund is ranked among growth funds. Investment return measures a
fund's or class's three, five and ten-year average annual total
returns (depending on the inception of the fund or class) in excess
of 90-day U.S. Treasury bill returns after considering a fund's
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%).
The current star rankings is the fund's or class's 3-year ranking
or its combined 3 and 5-year ranking (weighted 60%/40%
respectively, or its combined 3-,5-and 10-year ranking (weighted
40%, 30% and 30%, respectively) depending on the inception of the
fund or class. Rankings are subject to change monthly.
The Fund may also compare its performance to that of other
funds in its Morningstar Category. In addition to its star
rankings, Morningstar also categorizes and compares a fund's 3-year
performance on Morningstar's classification of the fund's
investments and investment style, rather than how a fund defines
its investment objective. Morningstar's four broad categories
(domestic equity, international equity, municipal bond and taxable
bond) are each further subdivided into categories based on types of
investments and investment styles. Those comparison by Morningstar
are based on the same risk and return measurements as its star
rankings but do not consider the effect of sales charges.
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 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.
Total return information, may be useful to investors in
reviewing the performance of the Fund's Class A, Class B or Class
C shares. However, when comparing total return of an investment in
Class A, Class B and Class C shares of the Fund, a number of
factors should be considered before using such information as a
basis for comparison with other investments. For example, an
investor may also wish to compare the Fund's Class A, Class B or
Class C return to the returns on fixed income investments available
from banks and thrift institutions, such as certificates of
deposit, ordinary interest-paying checking and savings accounts,
and other forms of fixed or variable time deposits, and various
other instruments such as Treasury bills. However, the Fund's
returns and share price are not guaranteed or insured by the FDIC
or any other agency and will fluctuate daily, while bank depository
obligations may be insured by the FDIC and may provide fixed rates
of return, and Treasury bills are guaranteed as to principal and
interest by the U.S. government.
From time to time, the Fund's Manager may publish rankings or
ratings of the Manager (or Transfer Agent) or the investor services
provided by them to shareholders of the Oppenheimer funds, other
than performance rankings of the Oppenheimer funds themselves.
Those ratings or rankings of shareholder/investor services by third
parties may compare the Oppenheimer funds' services to those of
other mutual fund families selected by the rating or ranking
services and may be based upon the opinions of the rating or
ranking service itself, based on its research or judgment, or based
upon surveys of investors, brokers, shareholders or others.
Distribution and Service Plans
The 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 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 (i) 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") and (ii) the holders of a "majority" (as
defined in the Investment Company Act) of the shares of such class.
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 at no cost to the fund. The
Distributor and the Manager may, in their sole discretion, increase
or decrease the amount of payments they make from their own
resources to Recipients. Effective August 1, 1996, the Distributor
voluntarily agreed to waive all fees payable to it under the Class
A Plan.
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 by a Securities and Exchange Commission rule to obtain
the approval of Class B as well as Class A shareholders for a
proposed material amendment to the Class A Plan that would
materially increase payments under the Plan. Such approval must be
by a "majority" of the Class A and Class B shares (as defined in
the Investment Company Act), voting separately by class. All
material amendments must be approved by the Board of 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
the 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 Conduct Rules of the National Association of Securities
Dealers, Inc. on payments of asset-based sales charges and service
fees.
<PAGE>
For the Fiscal Period, payments under the Plan for Class A
shares totaled $19,597, of which $5,422 was retained by the
Distributor and $9 was paid to an affiliate of the Distributor.
The Plans provide for the Distributor to be compensated at a flat
rate, whether the Distributor's expenses are more or less than the
amounts paid by the Fund during that period. The asset-based sales
charges paid to the Distributor by the Fund under the Plans are
intended to allow the Distributor to recoup the cost of sales
commissions paid to authorized brokers and dealers at the time of
sale, plus financing costs, as described in the Prospectus. Such
payments may also be used to pay for the following expenses in
connection with the distribution of shares: (i) financing the
advance of the service fee payment to Recipients under the Plans,
(ii) compensation and expenses of personnel employed by the
Distributor to support distribution of shares, and (iii) costs of
sales literature, advertising and prospectuses (other than those
furnished to current shareholders).
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 shares pursuant to a plan adopted under the Investment
Company Act (the "Prior Plan"). No distribution fees were accrued
or paid by Class A shares of the Fund under the Prior Plan for the
Interim Period.
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A, Class B and Class C
Shares. The Fund is authorized to issue three different classes of
shares. As stated in the Prospectus, currently the only class of
shares offered to investors is Class A shares, and such Class A
shares are only offered to certain individuals and entities. The
availability of three classes of shares permits the individual
investor to choose the method of purchasing shares that is more
beneficial to the investor depending on the amount of the purchase,
the length of time the investor expects to hold shares and other
relevant circumstances. Investors should understand that the
purpose and function of the deferred sales charge and asset-based
sales charge with respect to Class B and Class C shares are the
same as those of the initial sales charge with respect to Class A
shares. Any salesperson or other person entitled to receive
compensation for selling Fund shares may receive different
compensation with respect to one class of shares than another. The
Distributor will generally not accept any order for $500,000 or
more of Class B shares or $1 million or more of Class C shares, on
behalf of a single investor (not including dealer "street name" or
omnibus accounts) because generally it will be more advantageous
for that investor to purchase Class A shares of the Fund instead.
The three classes of shares each represent an interest in the
same portfolio investments of the Fund. However, each class has
different shareholder privileges and features. The net income
attributable to Class B and Class C shares and the dividends
payable on Class B and Class C shares will be reduced by
incremental expenses borne solely by that class, respectively,
including the asset-based sales charges to which Class B and Class
C shares are subject.
The conversion of Class B shares to Class A shares after six
years is subject to the continuing availability of a private letter
ruling from the Internal Revenue Service, or an opinion of counsel
or tax adviser, to the effect that the conversion of Class B shares
does not constitute a taxable event for the holder under Federal
income tax law. If such a revenue ruling or opinion is no longer
available, the automatic conversion feature may be suspended, in
which event no further conversions of Class B shares would occur
while such suspension remained in effect. Although Class B shares
could then be exchanged for Class A shares on the basis of relative
net asset value of the two classes, without the imposition of a
sales charge or fee, such exchange could constitute a taxable event
for the holder, and absent such exchange, Class B shares might
continue to be subject to the asset-based sales charge for longer
than six years.
The methodology for calculating the net asset value, dividends
and distributions of the Fund's Class A, Class B and Class C shares
recognizes two types of expenses. General expenses that do not
pertain specifically to any class are allocated pro rata to the
shares of each class, based on the percentage of the net assets of
such class to the Fund's total net assets, and then equally to each
outstanding share within a given class. Such general expenses
include (i) management fees, (ii) legal, bookkeeping and audit
fees, (iii) printing and mailing costs of shareholder reports,
Prospectuses, Statements of Additional Information and other
materials for current shareholders, (iv) fees to Independent
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 (a) Distribution Plan fees, (b)
incremental transfer and shareholder servicing agent fees and
expenses, (c) registration fees and (d) shareholder meeting
expenses, to the extent that such expenses pertain to a specific
class rather than to the Fund as a whole.
Determination of Net Asset Values Per Share. The net asset
values per share of Class A, Class B and Class C shares of the Fund
are determined as of the close of business of The New York Stock
Exchange (the "Exchange") on each day that the Exchange is open, by
dividing the value of the Fund's net assets attributable to that
class by the total number of Fund shares of that class outstanding.
The Exchange normally closes at 4:00 P.M. New York time, but may
close earlier on some other days (for example, in case of weather
emergencies or on days falling before a holiday). The Exchange's
most recent annual announcement (which is subject to change) states
that it will close on New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. It may also close on other days. The Fund may
invest a substantial portion of its assets in foreign securities
primarily listed on foreign exchanges which may trade on Saturdays
or customary U.S. business holidays on which the Exchange is
closed. Because the Fund's net asset values will not be calculated
on those days, the Fund's net asset value per share may be
significantly affected on such days when shareholders may not
purchase or redeem shares.
The 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 U.S. securities exchange or on the
Automated Quotation System ("NASDAQ") of the Nasdaq Stock Market,
Inc. for which last sale information is regularly reported are
valued at the last reported sale price on their primary exchange or
NASDAQ that day (or, in the absence of sales that day, at values
based on the last sale prices of the preceding trading day, or
closing bid prices that day); (ii) securities traded on a foreign
securities exchange are valued generally at the last sale 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; or at the mean between "bid" and
"asked" prices obtained from the principal exchange or two active
market makers in the security on the basis of reasonable inquiry;
(iii) long-term debt securities having a remaining maturity in
excess of 60 days are valued based on the mean between the "bid"
and "asked" prices determined by a portfolio pricing service
approved by the Trust's Board of Trustees or obtained by the
Manager from two active market makers in the security on the basis
of reasonable inquiry; (iv) debt instruments having a maturity of
more than 397 days when issued, and non-money market type
instruments having a maturity of 397 days or less when issued,
which have a remaining maturity of 60 days or less are valued at
the mean between the "bid" and "asked" prices determined by a
pricing service approved by the Trust's Board of Trustees or
obtained from active market makers in the security on the basis of
reasonable inquiry; (v) money market debt securities that had a
maturity of less than 397 days when issued that have a remaining
maturity of 60 days or less are valued at cost, adjusted for
amortization of premiums and accretion of discounts; and (vi)
securities (including restricted securities) not having readily-
available market quotations are valued at fair value determined
under the Board's procedures. If the Manager is unable to locate
two market makers willing to give quotes (see (ii), (iii) and (iv)
above), the security may be priced at the mean between the "bid"
and "asked" prices provided by a single active market maker (which
in certain cases may be the bid price if no ask price is
available).
In the case of U.S. Government securities and mortgage-backed
securities, where last sale information is not generally available,
such pricing procedures may include "matrix" comparisons to the
prices for comparable instruments on the basis of quality, yield,
maturity and other special factors involved. The Manager may use
pricing services approved by the Board of Trustees to price any of
the types of securities described above to price U.S. Government
securities, mortgage-backed securities, foreign government
securities and corporate bonds. The Manager will monitor the
accuracy of such pricing services, which may include comparing
prices used for portfolio evaluation to actual prices of selected
securities.
Trading in securities on European and Asian exchanges and
over-the-counter markets is normally completed before the close of
the Exchange. Events affecting the values of foreign securities
traded in such securities markets that occur between the time their
prices are determined and the close of the Exchange will not be
reflected in the Fund's calculation of its net asset value unless
the Board of Trustees or the Manager, under procedures established
by the Board, determines that the particular event is likely to
effect a material change in the value of such security. Foreign
currency, including forward contracts, will be valued at the
closing price in the London foreign exchange market that day as
provided by a reliable bank, dealer or pricing service. The values
of securities denominated in foreign currency will be converted to
U.S. dollars at the closing price in the London foreign exchange
market that day as provided by a reliable bank, dealer or pricing
service.
The values of securities denominated in foreign currency will
be converted to U.S. dollars at the closing price in the London
foreign exchange market that day as provided by a reliable bank,
dealer or pricing service. In the case of U.S. government
securities and corporate bonds, where last sale information is not
generally available, such pricing procedures may include "matrix"
comparisons to the prices for comparable instruments on the basis
of quality, yield, maturity and other special factors involved.
The 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 sale price on
the principal exchanges on which they are traded or on NASDAQ, as
applicable, as determined by a pricing service approved by the
Board of Trustees or by the Manager. If there were no sales that
day, value shall be the last sale price on the preceding trading
day if it is within the spread of the closing bid and asked prices
on the principal exchange or on NASDAQ on the valuation date, or,
if not, value shall be the closing bid price on the principal
exchange or on NASDAQ on the valuation date. If the put, call or
future is not traded on an exchange or on NASDAQ, it shall be
valued at the mean between bid and asked prices obtained by the
Manager from two active market makers (which in certain cases may
be the bid price if no asked price is available).
When the Fund writes an option, an amount equal to the premium
received is included in the Fund's Statement of Assets and
Liabilities as an asset, and an equivalent credit is included in
the liability section. Credit is adjusted ("marked-to-market") to
reflect the current market value of the option. In determining the
Fund's gain on investments, if a call or put written by the Fund is
exercised, the proceeds are increased by the premium received. If
a call or put written by the Fund expires, the Fund has a gain in
the amount of the premium; if the Fund enters into a closing
purchase transaction, it will have a gain or loss depending on
whether the premium received was more or less than the cost of the
closing transaction. If the Fund exercises a put it holds, the
amount the Fund receives on its sale of the underlying investment
is reduced by the amount of premium paid by the Fund.
AccountLink. When shares are purchased through AccountLink, each
purchase must be at least $25.00. Shares will be purchased on the
regular business day the Distributor is instructed to initiate the
Automated Clearing House ("ACH") transfer to buy the shares.
Dividends will begin to accrue on shares purchased by the proceeds
of ACH transfers on the business day the Fund receives Federal
Funds for the purchase through the ACH system before the close of
The New York Stock Exchange. The Exchange normally closes at 4:00
P.M., but may close earlier on certain days. If Federal Funds are
received on a business day after the close of the Exchange, the
shares will be purchased and dividends will begin to accrue on the
next regular business day. The proceeds of ACH transfers are
normally received by the Fund 3 days after the transfers are
initiated. The Distributor and the Fund are not responsible for
any delays in purchasing shares resulting from delays in ACH
transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a
reduced sales charge rate may be obtained for Class A shares under
Rights of Accumulation and Letters of Intent because of the
economies of sales efforts and reduction in expenses realized by
the Distributor, dealers and brokers making such sales. No sales
charge is imposed in certain other circumstances described in the
Prospectus because the Distributor or dealer or broker incurs
little or no selling expenses. The term "immediate family" refers
to one's spouse, children, grandchildren, parents, grandparents,
parents-in-law, sons- and daughters-in-law, aunt, uncle, niece,
nephew, siblings, a sibling's spouse and a spouse's siblings.
The Oppenheimer Funds. The Oppenheimer funds are those
mutual funds for which the Distributor acts as the distributor or
the sub-distributor and include the following:
Oppenheimer Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer California Municipal Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer Insured Municipal Fund
Oppenheimer Main Street California Municipal Fund
Oppenheimer Florida Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Multiple Strategies Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion Income Fund
Oppenheimer Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer International Bond Fund
Oppenheimer Enterprise Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Bond Fund Series - Oppenheimer Bond Fund For Growth
Rochester Portfolio Series - Limited Term New York Municipal
Fund*
Rochester Fund Municipals*
Oppenheimer Disciplined Value Fund
Oppenheimer Disciplined Allocation Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Income Fund
Oppenheimer LifeSpan Growth Fund
Oppenheimer International Growth Fund
Oppenheimer Developing Markets Fund
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
________
* Shares of the Fund are not presently exchangeable for shares
of these funds.
There is an initial sales charge on the purchase of Class A
shares of each of the Oppenheimer funds except Money Market Funds
(under certain circumstances described herein, redemption proceeds
of Money Market Fund shares may be subject to a contingent
deferred sales charge).
Letters of Intent. A Letter of Intent ("Letter") is an
investor's statement in writing to the Distributor of the intention
to purchase Class A shares or Class A and Class B shares (or shares
of either class) of the Fund (and other eligible Oppenheimer funds)
during the 13-month period from the investor's first purchase
pursuant to the Letter (the "Letter of Intent period"), which may,
at the investor's request, include purchases made up to 90 days
prior to the date of the Letter. The Letter states the investor's
intention to make the aggregate amount of purchases (excluding any
purchases made by reinvestment of dividends or distributions or
purchases made at net asset value without sales charge), which
together with the investor's holdings of such funds (calculated at
their respective public offering prices calculated on the date of
the Letter) will equal or exceed the amount specified in the
Letter. This enables the investor to count the shares to be
purchased under the Letter of Intent to obtain the reduced sales
charge rate on purchases of Class A shares of the Fund (and other
Oppenheimer funds) that applies under the Right of Accumulation to
current purchases of Class A shares. Each purchase of Class A
shares under the Letter will be made at the public offering price
(including the sales charge) that applies to a single lump-sum
purchase of shares in the amount intended to be purchased under the
Letter.
In submitting a Letter, the investor makes no commitment to
purchase shares, but if the investor's purchases of shares within
the Letter of Intent period, when added to the value (at offering
price) of the investor's holdings of shares on the last day of that
period, do not equal or exceed the intended purchase amount, the
investor agrees to pay the additional amount of sales charge
applicable to such purchases, as set forth in "Terms of Escrow,"
below (as those terms may be amended from time to time). The
investor agrees that shares equal in value to 5% of the intended
purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be
bound by the terms of the Prospectus, this Statement of Additional
Information and the Application used for such Letter of Intent, and
if such terms are amended, as they may be from time to time by the
Fund, that those amendments will apply automatically to existing
Letters of Intent.
For purchases of shares of the Fund and other Oppenheimer
funds by OppenheimerFunds prototype 401(k) plans under a Letter of
Intent, the Transfer Agent will not hold shares in escrow. If the
intended purchase amount under the Letter entered into by an
OppenheimerFunds prototype 401(k) plan is not purchased by the plan
by the end of the Letter of Intent period, there will be no
adjustment of commissions paid to the broker-dealer or financial
institution of record for accounts held in the name of that plan.
If the total eligible purchases made during the Letter of
Intent period do not equal or exceed the intended purchase amount,
the commissions previously paid to the dealer of record for the
account and the amount of sales charge retained by the Distributor
will be adjusted to the rates applicable to actual total purchases.
If total eligible purchases during the Letter of Intent period
exceed the intended purchase amount and exceed the amount needed to
qualify for the next sales charge rate reduction set forth in the
applicable prospectus, the sales charges paid will be adjusted to
the lower rate, but only if and when the dealer returns to the
Distributor the excess of the amount of commissions allowed or paid
to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the
Distributor will be used to purchase additional shares for the
investor's account at the net asset value per share in effect on
the date of such purchase, promptly after the Distributor's receipt
thereof.
In determining the total amount of purchases made under a
Letter, shares redeemed by the investor prior to the termination of
the Letter of Intent period will be deducted. It is the
responsibility of the dealer of record and/or the investor to
advise the Distributor about the Letter in placing any purchase
orders for the investor during the Letter of Intent period. All
of such purchases must be made through the Distributor.
Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in
value up to 5% of the intended purchase amount specified in the
Letter shall be held in escrow by the Transfer Agent. For example,
if the intended purchase amount is $50,000, the escrow shall be
shares valued in the amount of $2,500 (computed at the public
offering price adjusted for a $50,000 purchase). Any dividends and
capital gains distributions on the escrowed shares will be credited
to the investor's account.
2. If the total minimum investment purchase amount specified
under the Letter is completed within the thirteen-month Letter of
Intent period, the escrowed shares will be promptly released to the
investor.
3. If, at the end of the thirteen-month Letter of Intent
period the total purchases pursuant to the Letter are less than the
intended purchase amount specified in the Letter, the investor must
remit to the Distributor an amount equal to the difference between
the dollar amount of sales charges actually paid and the amount of
sales charges which would have been paid if the total amount
purchased had been made at a single time. Such sales charge
adjustment will apply to any shares redeemed prior to the
completion of the Letter. If such difference in sales charges is
not paid within twenty days after a request from the Distributor or
the dealer, the Distributor will, within sixty days of the
expiration of the Letter, redeem the number of escrowed shares
necessary to realize such difference in sales charges. Full and
fractional shares remaining after such redemption will be released
from escrow. If a request is received to redeem escrowed shares
prior to the payment of such additional sales charge, the sales
charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably
constitutes and appoints the Transfer Agent as attorney-in-fact to
surrender for redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the
holding of which may be counted toward completion of a Letter)
include (a) Class A shares sold with a front-end sales charge or
subject to a Class A contingent deferred sales charge, (b) Class B
shares of other Oppenheimer funds acquired subject to a contingent
deferred sales charge, and (c) Class A or Class B shares acquired
in exchange for either (i) Class A shares of one of the other
Oppenheimer funds that were acquired subject to a Class A initial
or contingent deferred sales charge or (ii) Class B shares of one
of the other Oppenheimer funds that were acquired subject to a
contingent deferred sales charge.
6. Shares held in escrow hereunder will automatically be
exchanged for shares of another fund to which an exchange is
requested, as described in the section of the Prospectus entitled
"How to Exchange Shares," and the escrow will be transferred to
that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a
bank account, a check (minimum $25) for the initial purchase must
accompany the application. Shares purchased by Asset Builder Plan
payments from bank accounts are subject to the redemption
restrictions for recent purchases described in "Shareholder Account
Rules and Policies," in the Prospectus. Asset Builder Plans also
enable shareholders of Oppenheimer Cash Reserves to use those
accounts for monthly automatic purchases of shares of up to four
other Oppenheimer funds. If you make payments from your bank
account to purchase shares of the Fund, your bank account will be
automatically debited normally four to five business days prior to
the investment dates selected in the Account Application. Neither
the Distributor, the Transfer Agent nor the Fund shall be
responsible for any delays in purchasing shares resulting from
delays in ACH transmission.
There is a front-end sales charge on the purchase of certain
Oppenheimer funds, or a contingent deferred sales charge may apply
to shares purchased by Asset Builder payments. An application
should be obtained from the Distributor, completed and returned,
and a prospectus of the selected fund(s) should be obtained from
the Distributor or your financial advisor before initiating Asset
Builder payments. The amount of the Asset Builder investment may
be changed or the automatic investments may be terminated at any
time by writing to the Transfer Agent. A reasonable period
(approximately 15 days) is required after the Transfer Agent's
receipt of such instructions to implement them. The Fund reserves
the right to amend, suspend, or discontinue offering such plans at
any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders
for the Fund's shares (for example, when a purchase check is
returned to the Fund unpaid) causes a loss to be incurred when the
net asset value of the Fund's shares on the cancellation date is
less than on the purchase date. That loss is equal to the amount
of the decline in the net asset value per share multiplied by the
number of shares in the purchase order. The investor is
responsible for that loss. If the investor fails to compensate the
Fund for the loss, the Distributor will do so. The Fund may
reimburse the Distributor for that amount by redeeming shares from
any account registered in that investor's name, or the Fund or the
Distributor may seek other redress.
Retirement Plans. In describing certain types of employee
benefit plans that may purchase Class A shares without being
subject to the Class A contingent differed sales charge, the term
"employee benefit plan" means any plan or arrangement, whether or
not "qualified" under the Internal Revenue Code, including, medical
savings accounts, payroll deduction plans or similar plans in which
Class A shares are purchased by a fiduciary or other person for the
account of participants who are employees of a single employer or
of affiliated employers, if the Fund account is registered in the
name of the fiduciary or other person for the benefit of
participants in the plan.
The term "group retirement plan" means any qualified or non-
qualified retirement plan (including 457 plans, SEPs, SARSEPs,
403(b) plans, and SIMPLE plans) for employees of a corporation or
a sole proprietorship, members and employees of a partnership or
association or other organized group of persons (the members of
which may include other groups), if the group has made special
arrangements with the Distributor and all members of the group
participating in the plan purchase Class A shares of the Fund
through a single investment dealer, broker or other financial
institution designated by the group.
How To Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and
conditions for redemptions set forth in the Prospectus.
Involuntary Redemptions. The Fund's Board of 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 $500 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 that you purchased subject to an initial sales
charge or Class A contingent deferred sales charge, or (ii) Class
B shares on which you paid a contingent deferred sales charge when
you redeemed them. This privilege does not apply to Class C
shares. The reinvestment may be made without sales charge only in
Class A shares of the Fund or any of the other Oppenheimer funds
into which shares of the Fund are exchangeable as described in "How
to Exchange Shares" below, at the net asset value next computed
after the Transfer Agent receives the reinvestment order. The
shareholder must ask the Distributor for that privilege at the time
of reinvestment. Any capital gain that was realized when the
shares were redeemed is taxable, and reinvestment will not alter
any capital gains tax payable on that gain. If there has been a
capital loss on the redemption, some or all of the loss may not be
tax deductible, depending on the timing and amount of the
reinvestment. Under the Internal Revenue Code, if the redemption
proceeds of Fund shares on which a sales charge was paid are
reinvested in shares of the Fund or another of the Oppenheimer
funds within 90 days of payment of the sales charge, the
shareholder's basis in the shares of the Fund that were redeemed
may not include the amount of the sales charge paid. That would
reduce the loss or increase the gain recognized from the
redemption. However, in that case the sales charge would be added
to the basis of the shares acquired by the reinvestment of the
redemption proceeds. The Fund may amend, suspend or cease offering
this reinvestment privilege at any time as to shares redeemed after
the date of such amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of any class at the time of
transfer to the name of another person or entity (whether the
transfer occurs by absolute assignment, gift or bequest, not
involving, directly or indirectly, a public sale). The transferred
shares will remain subject to the contingent deferred sales charge,
calculated as if the transferee shareholder had acquired the
transferred shares in the same manner and at the same time as the
transferring shareholder. If less than all shares held in an
account are transferred, and some but not all shares in the account
would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus
under "How to Buy Shares" for the imposition of the Class B or
Class C contingent deferred sales charge will be followed in
determining the order in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions
from OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans,
401(k) plans, or pension or profit-sharing plans should be
addressed to "Trustee, OppenheimerFunds Retirement Plans," c/o the
Transfer Agent at its address listed in "How To Sell Shares" in the
Prospectus or on the back cover of the Statement of Additional
Information. The request must: (i) state the reason for the
distribution; (ii) state the owner's awareness of tax penalties if
the distribution is premature; and (iii) conform to the
requirements of the plan and the Fund's other redemption
requirements. Participants, other than self-employed persons
maintaining a plan account in their own name, in OppenheimerFunds-
sponsored prototype pension or profit-sharing or 401(k) plans may
not directly redeem or exchange shares held for their account under
those plans. The employer or plan administrator must sign the
request. Distributions from pension plans, 401(k) profit sharing
plans are subject to special requirements under the Internal
Revenue Code and certain documents (available from the Transfer
Agent) must be completed before the distribution may be made.
Distributions from retirement plans are subject to withholding
requirements under the Internal Revenue Code, and IRS Form W-4P
(available from the Transfer Agent) must be submitted to the
Transfer Agent with the distribution request, or the distribution
may be delayed. Unless the shareholder has provided the Transfer
Agent with a certified tax identification number, the Internal
Revenue Code requires that tax be withheld from any distribution
even if the shareholder elects not to have tax withheld. The Fund,
the Manager, the Distributor, the Trustee and the Transfer Agent
assume no responsibility to determine whether a distribution
satisfies the conditions of applicable tax laws and will not be
responsible for any tax penalties assessed in connection with a
distribution.
Special Arrangements for Repurchase of Shares from Dealers and
Brokers. The Distributor is the Fund's agent to repurchase its
shares from authorized dealers or brokers on behalf of their
customers. The shareholder should contact the broker or dealer to
arrange this type of redemption. The repurchase price per share
will be the net asset value next computed after the Distributor
receives the order placed by the dealer or broker, except that if
the Distributor receives a repurchase order from the dealer or
broker after the close of The New York Stock Exchange on a regular
business day, it will be processed at that day's net asset value,
if the order was received by the dealer or broker from its customer
prior to the time the Exchange closes (normally, that is 4:00 P.M.,
but may be earlier on some days) and the order was transmitted to
and received by the Distributor prior to its close of business that
day (normally 5:00 P.M.). Ordinarily, for accounts redeemed by a
broker-dealer under this procedure, payment will be made within
three business days after the shares have been redeemed upon the
Distributor's receipt of the required redemption documents in
proper form, with the signature(s) of the registered owners
guaranteed on the redemption document as described in the
Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning
shares of the Fund valued at $5,000 or more can authorize the
Transfer Agent to redeem shares (minimum $50) automatically on a
monthly, quarterly, semi-annual or annual basis under an Automatic
Withdrawal Plan. Shares will be redeemed three business days prior
to the date requested by the shareholder for receipt of the
payment. Automatic withdrawals of up to $1,500 per month may be
requested by telephone if payments are to be made by check payable
to all shareholders of record and sent to the address of record for
the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on
this basis. Payments are normally made by check, but shareholders
having AccountLink privileges (see "How To Buy Shares") may arrange
to have Automatic Withdrawal Plan payments transferred to the bank
account designated on the OppenheimerFunds New Account Application
or signature-guaranteed instructions. Shares are normally redeemed
pursuant to an Automatic Withdrawal Plan three business days before
the date you select in the Account Application. If a contingent
deferred sales charge applies to the redemption, the amount of the
check or payment will be reduced accordingly. The Fund cannot
guarantee receipt of a payment on the date requested and reserves
the right to amend, suspend or discontinue offering such plans at
any time without prior notice. Because of the sales charge
assessed on Class A share purchases, shareholders should not make
regular additional Class A share purchases while participating in
an Automatic Withdrawal Plan. Class B and Class C shareholders
should not establish withdrawal plans because of the imposition of
the contingent deferred sales charges on such withdrawals (except
where the Class B and Class C contingent deferred sales charges are
waived as described in the Prospectus under "Waivers of Class B and
Class C Sales Charges").
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such
plans, as stated below as well as the Prospectus. These provisions
may be amended from time to time by the Fund and/or the
Distributor. When adopted, such amendments will automatically
apply to existing Plans.
Automatic Exchange Plans. Shareholders can authorize the
Transfer Agent (on the OppenheimerFunds Application or signature-
guaranteed instructions) to exchange a pre-determined amount of
shares of the Fund for shares (of the same class) of other
Oppenheimer funds automatically on a monthly, quarterly, semi-
annual or annual basis under an Automatic Exchange Plan. The
minimum amount that may be exchanged to each other fund account is
$25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "How to
Exchange Shares" in the Prospectus and below in this Statement of
Additional Information.
Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a
sales charge will be redeemed first and shares acquired with
reinvested dividends and capital gains distributions will be
redeemed next, followed by shares acquired with a sales charge, to
the extent necessary to make withdrawal payments. Depending upon
the amount withdrawn, the investor's principal may be depleted.
Payments made under withdrawal plans should not be considered as a
yield or income on your investment. It may not be desirable to
purchase additional Class A shares while making automatic
withdrawals because of the sales charges that apply to purchases
when made. Accordingly, a shareholder normally may not maintain an
Automatic Withdrawal Plan while simultaneously making regular
purchases of Class A shares.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the
"Planholder") who executed the Plan authorization and application
submitted to the Transfer Agent. Neither the Transfer Agent nor
the Fund shall incur any liability to the Planholder for any action
taken or omitted by the Transfer Agent in good faith to administer
the Plan. Certificates will not be issued for shares of the Fund
purchased for and held under the Plan, but the Transfer Agent will
credit all such shares to the account of the Planholder on the
records of the Fund. Any share certificates held by a Planholder
may be surrendered unendorsed to the Transfer Agent with the Plan
application so that the shares represented by the certificate may
be held under the Plan.
For accounts subject to Automatic Withdrawal Plans,
distributions of capital gains must be reinvested in shares of the
Fund, which will be done at net asset value without a sales charge.
Dividends on shares held in the account may be paid in cash or
reinvested.
Redemptions of shares needed to make withdrawal payments will
be made at the net asset value per share determined on the
redemption date. Checks or ACH transfer payments of the proceeds
of Plan withdrawals will normally be transmitted three business
days prior to the date selected for receipt of the payment (receipt
of payment on the date selected cannot be guaranteed), according to
the choice specified in writing by the Planholder.
The amount and the interval of disbursement payments and the
address to which checks are to be mailed or AccountLink payments
are to be sent may be changed at any time by the Planholder by
writing to the Transfer Agent. The Planholder should allow at
least two weeks' time in mailing such notification for the
requested change to be put in effect. The Planholder may, at any
time, instruct the Transfer Agent by written notice (in proper form
in accordance with the requirements of the then-current Prospectus
of the Fund) to redeem all, or any part of, the shares held under
the Plan. In that case, the Transfer Agent will redeem the number
of shares requested at the net asset value per share in effect in
accordance with the Fund's usual redemption procedures and will
mail a check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by
writing to the Transfer Agent. A Plan may also be terminated at
any time by the Transfer Agent upon receiving directions to that
effect from the Fund. The Transfer Agent will also terminate a
Plan upon receipt of evidence satisfactory to it of the death or
legal incapacity of the Planholder. Upon termination of a Plan by
the Transfer Agent or the Fund, shares that have not been redeemed
from the account will be held in uncertificated form in the name of
the Planholder, and the account will continue as a dividend-
reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder or his or her
executor or guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt,
the Planholder may request issuance of a portion of the shares in
certificated form. Upon written request from the Planholder, the
Transfer Agent will determine the number of shares for which a
certificate may be issued without causing the withdrawal checks to
stop because of exhaustion of uncertificated shares needed to
continue payments. However, should such uncertificated shares
become exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the
Fund, the Planholder will be deemed to have appointed any successor
transfer agent to act as agent in administering the Plan.
How To Exchange Shares
As stated in the Prospectus, shares of a particular class of
Oppenheimer funds having more than one class of shares may be
exchanged only for shares of the same class of other Oppenheimer
funds. Shares of the Oppenheimer funds that have a single class
without a class designation are deemed "Class A" shares for this
purpose. All of the Oppenheimer funds offer Class A, 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 Money Market Trust, Centennial America
Fund, L.P., and Daily Cash Accumulation Fund, Inc., which only
offer Class A shares, and Oppenheimer Main Street California
Municipal Fund which only offers Class A and Class B shares (Class
B and Class C shares of Oppenheimer Cash Reserves are generally
available only by exchange from the same class of shares of other
Oppenheimer funds or through OppenheimerFunds sponsored 401(k)
plans). A current list showing which funds offer which classes can
be obtained by calling the distributor at 1-800-525-7048.
For accounts established on or before March 8, 1996 holding
Class M shares of Oppenheimer Bond Fund for Growth, Class M shares
can be exchanged only for Class A shares of other Oppenheimer
funds, including Rochester Fund Municipals and Limited Term New
York Municipal Fund. Class A shares of Rochester Fund Municipals
or Limited Term New York Municipal Fund acquired on the exchange of
Class M shares of Oppenheimer Bond Fund for Growth may be exchanged
for Class M shares of that fund. For accounts of Oppenheimer Bond
Fund for Growth established after March 8, 1996, Class M shares may
be exchanged for Class A shares of other Oppenheimer funds except
Rochester Fund Municipals and Limited-Term New York Municipals.
Exchanges to Class M shares of Oppenheimer Bond Fund for Growth are
permitted from Class A shares of Oppenheimer Money Market Fund,
Inc. or Oppenheimer Cash Reserves that were acquired by exchange
from Class M shares. Otherwise no exchanges of any class of any
Oppenheimer fund into Class M shares are permitted.
Class A shares of Oppenheimer funds may be exchanged at net
asset value for shares of any Money Market Fund. Shares of any
Money Market Fund purchased without a sales charge may be exchanged
for shares of Oppenheimer funds offered with a sales charge upon
payment of the sales charge (or, if applicable, may be used to
purchase shares of Oppenheimer funds subject to a contingent
deferred sales charge). However, shares of Oppenheimer Money
Market Fund, Inc. purchased with the redemption proceeds of shares
of other mutual funds (other than funds managed by the Manager or
its subsidiaries) redeemed within the 12 months prior to that
purchase may subsequently be exchanged for shares of other
Oppenheimer funds without being subject to an initial or contingent
deferred sales charge, whichever is applicable. To qualify for
that privilege, the investor or the investor's dealer must notify
the Distributor of eligibility for this privilege at the time the
shares of Oppenheimer Money Market Fund, Inc. are purchased, and,
if requested, must supply proof of entitlement to this privilege.
Shares of the Fund acquired by reinvestment of dividends or
distributions from any other of the Oppenheimer funds (except
Oppenheimer Cash Reserves) or from any unit investment trust for
which reinvestment arrangements have been made with the Distributor
may be exchanged at net asset value for shares of any of the
Oppenheimer funds. No contingent deferred sales charge is imposed
on exchanges of shares of any class purchased subject to a
contingent deferred sales charge. However, when Class A shares
acquired by exchange of Class A shares of other Oppenheimer funds
purchased subject to a Class A contingent deferred sales charge are
redeemed within 18 months of the end of the calendar month of the
initial purchase of the exchanged Class A shares, the Class A
contingent deferred sales charge is imposed on the redeemed shares
(see "Class A Contingent Deferred Sales Charge" in the Prospectus).
The Class B contingent deferred sales charge is imposed on Class B
shares acquired by exchange if they are redeemed within six years
of the initial purchase of the exchanged Class B shares. The Class
C contingent deferred sales charge is imposed on Class C shares
acquired by exchange if they are redeemed within 12 months of the
initial purchase of the exchanged Class C shares.
When Class B or Class C shares are redeemed to effect an
exchange, the priorities described in "How To Buy Shares" in the
Prospectus for the imposition of the Class B and Class C contingent
deferred sales charges will be followed in determining the order in
which the shares are exchanged. Shareholders should take into
account the effect of any exchange on the applicability and rate of
any contingent deferred sales charge that might be imposed in the
subsequent redemption of remaining shares. Shareholders owning
shares of more than one class must specify whether they intend to
exchange Class A, Class B or Class C shares.
The Fund reserves the right to reject telephone or written
exchange requests submitted in bulk by anyone on behalf of more
than one account. The Fund may accept requests for exchanges of up
to 50 accounts per day from representatives of authorized dealers
that qualify for this privilege. In connection with any exchange
request, the number of shares exchanged may be less than the number
requested if the exchange or the number requested would include
shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information or would include shares covered
by a share certificate that is not tendered with the request. In
those cases, only the shares available for exchange without
restriction will be exchanged.
When exchanging shares by telephone, a shareholder must either
have an existing account in, or obtain and acknowledge receipt of
a prospectus of, the fund to which the exchange is to be made. For
full or partial exchanges of an account made by telephone, any
special account features such as Asset Builder Plans, Automatic
Withdrawal Plans and retirement plan contributions will be switched
to the new account unless the Transfer Agent is instructed
otherwise. If all telephone lines are busy (which might occur, for
example, during periods of substantial market fluctuations),
shareholders might not be able to request exchanges by telephone
and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business
day the Transfer Agent receives an exchange request in proper form
(the "Redemption Date"). Normally, shares of the fund to be
acquired are purchased on the Redemption Date, but such purchases
may be delayed by either fund up to five business days if it
determines that it would be disadvantaged by an immediate transfer
of the redemption proceeds. The Fund reserves the right, in its
discretion, to refuse any exchange request that may disadvantage it
(for example, if the receipt of multiple exchange requests from a
dealer might require the disposition of portfolio securities at a
time or at a price that might be disadvantageous to the Fund).
The different Oppenheimer funds available for exchange have
different investment objectives, policies and risks, and a
shareholder should assure that the Fund selected is appropriate for
his or her investment and should be aware of the tax consequences
of an exchange. For federal income tax purposes, an exchange
transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. "Reinvestment Privilege," above,
discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and
the Transfer Agent are unable to provide investment, tax or legal
advice to a shareholder in connection with an exchange request or
any other investment transaction.
Dividends, Capital Gains and Taxes
Tax Status of the Fund's Dividends and Distributions. The Federal
tax treatment of the Fund's dividends and capital gains
distributions is explained in the Prospectus under the caption
"Dividends, Capital Gains and Taxes." Special provisions of the
Internal Revenue Code govern the eligibility of the Fund's
dividends for the dividends-received deduction for corporate
shareholders. Long-term capital gains distributions are not
eligible for the deduction. In addition, the amount of dividends
paid by the Fund which may qualify for the deduction is limited to
the aggregate amount of qualifying dividends that the Fund derives
from its portfolio investments that the Fund has held for a minimum
period, usually 46 days. A corporate shareholder will not be
eligible for the deduction on dividends paid on Fund shares held
for 45 days or less. To the extent the Fund's dividends are
derived from gross income from option premiums, interest income or
short-term gains from the sale of securities or dividends from
foreign corporations, those dividends will not qualify for the
deduction.
Under the Internal Revenue Code, by December 31 each year, the
Fund must distribute 98% of its taxable investment income earned
from January 1 through December 31 of that year and 98% of its
capital gains realized in the period from November 1 of the prior
year through October 31 of the current year, or else the Fund must
pay an excise tax on the amounts not distributed. While it is
presently anticipated that the Fund will meet those requirements,
the Board of 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 distributions.
The Fund qualified during its last fiscal year, and intends to
qualify in current and future years, but reserves the right not to
do so. The Internal Revenue Code contains a number of complex
tests to determine whether the Fund will qualify, and the Fund
might not meet those tests in a particular year. For example, if
the Fund derives 30% or more of its gross income from the sale of
securities held less than three months, it may fail to qualify (see
"Tax Aspects of Covered Calls and Hedging Instruments," above). If
it did not so qualify, the Fund would be treated for tax purposes
as an ordinary corporation and receive no tax deduction for
payments made to shareholders.
The amount of a class's distributions may vary from time to
time depending on market conditions, the composition of the Fund's
portfolio, and expenses borne by the Fund or borne separately by a
class, as described in "Alternative Sales Arrangements -- Class A,
Class B and Class C Shares," above. Dividends are calculated in
the same manner, at the same time and on the same day for shares of
each class. However, dividends on Class B and Class C shares are
expected to be lower as a result of the asset-based sales charge on
Class B and Class C shares, and Class B and Class C dividends will
also differ in amount as a consequence of any difference in net
asset value between the classes.
Dividends, distributions and the proceeds of the redemption of
Fund shares represented by checks returned to the Transfer Agent by
the Postal Service as undeliverable will be invested in shares of
Oppenheimer Money Market Fund, Inc., as promptly as possible after
the return of such checks to the Transfer Agent, to enable the
investor to earn a return on otherwise idle funds.
Dividend Reinvestment in Another Fund. Shareholders of the Fund
may elect to reinvest all dividends and/or capital gains
distributions in shares of the same class of any of the other
Oppenheimer funds listed in "Reduced Sales Charges," above, at net
asset value without sales charge. To elect this option, a
shareholder must notify the Transfer Agent in writing and either
must have an existing account in the fund selected for reinvestment
or must obtain a prospectus for that fund and an application from
the Distributor to establish an account. The investment will be
made at the net asset value per share in effect at the close of
business on the payable date of the dividend or distribution.
Dividends and/or distributions from certain of the Oppenheimer
funds may be invested in shares of this Fund on the same basis.
Additional Information About the Fund
The Custodian. State Street Bank and Trust Company acts as
custodian of the assets of the 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 serves as the
Fund's independent accountants. Their services include examining
the annual financial statements of the Fund as well as other
related services.
Oppenheimer Quest Officers Value Fund
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Oppenheimer Quest Officers Value Fund
To the Board of Trustees and Shareholders of
Oppenheimer Quest Officers Value Fund
In our opinion, the accompanying statement of assets and liabilities,
including the statement 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
Oppenheimer Quest Officers Value Fund (formerly Quest for Value Officers
Fund, one of the portfolios constituting Oppenheimer Quest for Value Funds,
formerly Quest for Value Family of Funds, hereafter referred to as the
Fund) at October 31, 1996, the results of its operations, the changes in
its net assets and the financial highlights for the year then ended, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as financial
statements) are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based
on our audit. We conducted our audit 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 audit, which included
confirmation of securities at October 31, 1996 by correspondence with the
custodian and the application of alternative auditing procedures for
unsettled security transactions, provides a reasonable basis for the
opinion expressed above. The financial statements of the Fund for the
period ended October 31, 1995 were audited by other independent accountants
whose report dated December 20, 1995 expressed an unqualified opinion on
those statements.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Denver, Colorado
November 21, 1996
3 Oppenheimer Quest Officers Value Fund
<PAGE>
<TABLE>
<CAPTION>
=========================================
STATEMENT OF INVESTMENTS OCTOBER 31, 1996
FACE
MARKET VALUE
AMOUNT
SEE NOTE 1
================================================================================================================
==============
<S> <C> <C>
<C>
SHORT-TERM NOTES - 3.2%
- ----------------------------------------------------------------------------------------------------------------
- --------------
Federal Home Loan Mortgage Corp., 5.22%, 11/13/96(1) $ 206,000
$ 205,648
- -------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., 5.50%, 11/1/96(1) 159,000
159,000
- ------------
Total Short-Term Notes (Cost $364,648)
364,648
================================================================================================================
==============
U.S. GOVERNMENT OBLIGATIONS - 8.9%
- ----------------------------------------------------------------------------------------------------------------
- --------------
U.S. Treasury Bonds, 6.75%, 8/15/26 (Cost $996,569) 1,000,000
1,012,187
SHARES
================================================================================================================
==============
COMMON STOCKS - 85.9%
- ----------------------------------------------------------------------------------------------------------------
- --------------
AEROSPACE/DEFENSE - 4.5%
- -------------------------------------------------------------------------------------------------------------------
Tracor, Inc.(2) 22,500
511,875
- ----------------------------------------------------------------------------------------------------------------
- --------------
AUTOS & HOUSING - 8.5%
- -------------------------------------------------------------------------------------------------------------------
Borg-Warner Automotive, Inc. 12,200
468,175
- -------------------------------------------------------------------------------------------------------------------
Team Rental Group, Inc.(2) 27,000
506,250
- ----------------------------------------------------------------------------------------------------------------
- --------------
COMPUTER HARDWARE - 4.5%
- -------------------------------------------------------------------------------------------------------------------
Wang Laboratories, Inc.(2) 22,000
514,250
- ----------------------------------------------------------------------------------------------------------------
- --------------
DIVERSIFIED FINANCIAL - 4.5%
- -------------------------------------------------------------------------------------------------------------------
Countrywide Credit Industries, Inc. 18,000
513,000
- ----------------------------------------------------------------------------------------------------------------
- --------------
HEALTHCARE/SUPPLIES & SERVICES - 2.0%
- -------------------------------------------------------------------------------------------------------------------
Paracelsus Healthcare Corp.(2) 53,400
233,625
- ----------------------------------------------------------------------------------------------------------------
- --------------
INSURANCE - 20.3%
- -------------------------------------------------------------------------------------------------------------------
ACE Ltd. 15,900
870,525
- -------------------------------------------------------------------------------------------------------------------
Delphi Financial Group, Inc., Cl. A 18,600
520,800
- -------------------------------------------------------------------------------------------------------------------
EXEL Ltd. 12,000
456,000
- -------------------------------------------------------------------------------------------------------------------
Mid Ocean Ltd. 10,000
470,000
- ------------
2,317,325
- ----------------------------------------------------------------------------------------------------------------
- --------------
LEISURE & ENTERTAINMENT - 2.7%
- -------------------------------------------------------------------------------------------------------------------
Trump Hotels & Casino Resorts, Inc.(2) 19,500
309,562
- ----------------------------------------------------------------------------------------------------------------
- --------------
MANUFACTURING - 4.0%
- -------------------------------------------------------------------------------------------------------------------
LucasVarity plc, ADR(2) 11,454
461,024
- ----------------------------------------------------------------------------------------------------------------
- --------------
MEDIA - 4.6%
- -------------------------------------------------------------------------------------------------------------------
Hollinger International, Inc. 42,000
525,000
- ----------------------------------------------------------------------------------------------------------------
- --------------
METALS - 4.4%
- -------------------------------------------------------------------------------------------------------------------
UCAR International, Inc.(2) 12,800
500,800
- ----------------------------------------------------------------------------------------------------------------
- --------------
OIL-INTEGRATED - 3.5%
- -------------------------------------------------------------------------------------------------------------------
Triton Energy Corp.(2) 8,900
397,162
- ----------------------------------------------------------------------------------------------------------------
- --------------
RETAIL: SPECIALTY - 4.2%
- -------------------------------------------------------------------------------------------------------------------
Nu-Kote Holding, Inc., Cl. A(2) 50,800
482,600
- ----------------------------------------------------------------------------------------------------------------
- --------------
TELECOMMUNICATIONS-TECHNOLOGY - 9.8%
- -------------------------------------------------------------------------------------------------------------------
WorldCom, Inc.(2) 45,700
1,113,938
- ----------------------------------------------------------------------------------------------------------------
- --------------
TRANSPORTATION - 8.4%
- -------------------------------------------------------------------------------------------------------------------
Canadian Pacific Ltd. (New) 38,200
964,550
- ------------
Total Common Stocks (Cost $8,969,890)
9,819,136
- -------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $10,331,107) 98.0%
11,195,971
- -------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 2.0
233,331
------
- ------------
NET ASSETS 100.0%
$11,429,302
======
============
</TABLE>
1. Short-term notes are generally traded on a discount basis; the
interest rate is the discount rate received by the Fund at the time
of purchase.
2. Non-income producing security.
See accompanying Notes to Financial Statements.
4 Oppenheimer Quest Officers Value Fund
<PAGE>
<TABLE>
====================================================
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1996
================================================================================================================
==============
<S> <C>
<C>
ASSETS Investments, at value (cost $10,331,107) - see accompanying statement
$11,195,971
- ----------------------------------------------------------------------------------------------------
Receivables:
Investments sold
224,088
Interest
16,137
Shares of beneficial interest sold
15,585
- ----------------------------------------------------------------------------------------------------
Deferred organization costs - Note 1
4,567
- ----------------------------------------------------------------------------------------------------
Other
693
- ------------
Total assets
11,457,041
================================================================================================================
==============
LIABILITIES Bank overdraft
5,995
- ----------------------------------------------------------------------------------------------------
Payables and other liabilities:
Legal and auditing fees
8,225
Shareholder reports
6,435
Registration and filing fees
2,174
Custodian fees
1,485
Shares of beneficial interest redeemed
1,200
Transfer agent and accounting service fees
839
Other
1,386
- ------------
Total liabilities
27,739
================================================================================================================
==============
NET ASSETS
$11,429,302
============
================================================================================================================
==============
COMPOSITION OF Par value of shares of beneficial interest
$7,488
NET ASSETS
- ----------------------------------------------------------------------------------------------------
Additional paid-in capital
9,515,737
- ----------------------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions
1,041,213
- ----------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments - Note 3
864,864
- ------------
Net assets - applicable to 748,785 shares of beneficial
interest outstanding
$11,429,302
============
================================================================================================================
==============
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE
$15.26
=======
</TABLE>
See accompanying Notes to Financial Statements.
5 Oppenheimer Quest Officers Value Fund
<PAGE>
<TABLE>
<CAPTION>
===========================================================
STATEMENT OF OPERATIONS FOR THE YEAR ENDED OCTOBER 31, 1996
================================================================================================================
==============
<S> <C>
<C>
INVESTMENT INCOME Dividends (net of foreign withholding taxes of $2,183)
$ 62,089
- ----------------------------------------------------------------------------------------------------
Interest
42,672
- ------------
Total income
104,761
================================================================================================================
==============
EXPENSES Management fees - Note 4
60,540
- ----------------------------------------------------------------------------------------------------
Distribution and service plan fees - Note 4
19,597
- ----------------------------------------------------------------------------------------------------
Legal and auditing fees
25,307
- ----------------------------------------------------------------------------------------------------
Registration and filing fees
17,469
- ----------------------------------------------------------------------------------------------------
Shareholder reports
13,720
- ----------------------------------------------------------------------------------------------------
Transfer agent and accounting service fees - Note 4
9,987
- ----------------------------------------------------------------------------------------------------
Custodian fees and expenses
5,985
- ----------------------------------------------------------------------------------------------------
Other
3,483
- ------------
Total expenses
156,088
- ------------
Less reimbursement of expenses by OppenheimerFunds, Inc. - Note 4
(22,269)
- ------------
Net expenses
133,819
================================================================================================================
==============
NET INVESTMENT LOSS
(29,058)
================================================================================================================
==============
REALIZED AND Net realized gain on investments
1,103,769
UNREALIZED GAIN
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments
570,237
- ------------
Net realized and unrealized gain
1,674,006
================================================================================================================
==============
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$ 1,644,948
============
</TABLE>
<TABLE>
<CAPTION>
===================================
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED
PERIOD ENDED
OCTOBER 31, 1996
OCTOBER 31,
1995(1)
================================================================================================================
==============
<S> <C> <C>
<C>
OPERATIONS Net investment income (loss) $ (29,058)
$68,846
- ----------------------------------------------------------------------------------------------------
Net realized gain 1,103,769
257,638
- --------------------------------
Net change in unrealized appreciation or depreciation 570,237
294,627
- --------------------------------
Net increase in net assets resulting
from operations 1,644,948
621,111
================================================================================================================
==============
DIVIDENDS AND Dividends from net investment income (84,879)
(7,466)
DISTRIBUTIONS
- ----------------------------------------------------------------------------------------------------
TO SHAREHOLDERS Distributions from net realized gain (267,637)
--
================================================================================================================
==============
BENEFICIAL INTEREST Net increase in net assets resulting from
TRANSACTIONS beneficial interest transactions - Note 2 6,490,302
3,032,923
================================================================================================================
==============
NET ASSETS Total increase 7,782,734
3,646,568
- ----------------------------------------------------------------------------------------------------
Beginning of period 3,646,568
--
------------
- ------------
End of period (including undistributed net investment
income $61,380 for 1995) $11,429,302
$ 3,646,568
============
============
</TABLE>
1. For the period November 8, 1994 (commencement of
operations) to October 31, 1995.
See accompanying Notes to Financial Statements.
6 Oppenheimer Quest Officers Value Fund
<PAGE>
<TABLE>
<CAPTION>
====================
FINANCIAL HIGHLIGHTS
YEAR ENDED OCTOBER 31,
1996(2) 1995(1)
===============================================================================================
PER SHARE OPERATING DATA:
<S> <C> <C>
Net asset value, beginning of period $12.30 $10.00
- -----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (.01) .24
Net realized and unrealized gain 4.06 2.10
- -----------------------------------------------------------------------------------------------
Total income from investment
operations 4.05 2.34
- -----------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.26) (.04)
Distributions from net realized gain (.83) --
--------------------------------------
Total dividends and distributions
to shareholders (1.09) (.04)
- -----------------------------------------------------------------------------------------------
Net asset value, end of period $15.26 $12.30
======================================
===============================================================================================
TOTAL RETURN, AT NET ASSET VALUE(3) 35.17% 23.44%
===============================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $11,429 $3,647
- -----------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 6,973 $2,873
- -----------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (0.42)%(6) 2.44%(4)(5)
Expenses 1.92% (6) 0.00%(4)
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 137.4% 108.0%
Average brokerage commission rate(8) $0.0501 --
</TABLE>
1. For the period from November 8, 1994 (commencement of operations) to October
31, 1995.
2. On November 22, 1995, OppenheimerFunds, Inc. became the investment adviser to
the Fund.
3. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions reinvested
in additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Sales charges
are not reflected in the total returns. Total returns are not annualized for
periods of less than one full year.
4. During the period noted above, the former Manager 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 net
expenses to average daily net assets would have been 0.47% and 1.97%,
respectively.
5. Annualized.
6. The ratio of net investment income to average daily net assets and the ratio
of net expenses to average net assets would have been (0.74)% and 2.24%,
respectively, absent the voluntary reimbursement by both the former Manager and
the current Manager.
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, 1996 were $15,705,162 and $8,679,712, respectively.
8. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold.
See accompanying Notes to Financial Statements.
7 Oppenheimer Quest Officers Value Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Quest Officers Value Fund (the Fund), formerly named Quest for
Value Officers Fund, a series of Oppenheimer Quest for Value Funds, is a
non-diversified open-end management investment company registered under the
Investment Company Act of 1940, as amended. The Fund's investment objective
is to seek capital appreciation primarily through investment in equity
securities. 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
OppenheimerFunds, Inc. (the Manager), which resulted in the sale to the
Manager of certain mutual fund assets of OCC Distributors and OpCap
Advisors including the transfer of Quest for Value Funds and the use of the
name "Quest for Value." As part of the transaction, the Fund has entered
into an investment advisory agreement with the Manager and the Manager has
entered into a sub-advisory agreement with OpCap Advisors (the former
Manager). The Fund is authorized to issue Class A, Class B and Class C
shares. Initially, only shares of Class A will be offered to officers,
trustees and employees of the Fund, the Manager and its affiliates, their
relatives or any trust, pension, profit sharing or other benefit plan for
any of them. Class B and Class C shares may be subject to a contingent
deferred sales charge. All three classes of shares have identical rights to
earnings, assets and voting privileges, except that each class has its own
distribution and/or service plan, expenses directly attributable to a
particular class and exclusive voting rights with respect to matters
affecting a single class. Class B shares will automatically convert to
Class A shares six years after the date of purchase. The following is a
summary of significant accounting policies consistently followed by the
Fund.
INVESTMENT VALUATION. Portfolio securities are valued at the close of the
New York Stock Exchange on each trading day. Listed and unlisted securities
for which such information is regularly reported are valued at the last
sale price of the day or, in the absence of sales, at values based on the
closing bid or the last sale price on the prior trading day. Long-term and
short-term "non-money market" debt securities are valued by a portfolio
pricing service approved by the Board of Trustees. Such securities which
cannot be valued by the approved portfolio pricing service are valued using
dealer-supplied valuations provided the Manager is satisfied that the firm
rendering the quotes is reliable and that the quotes reflect current market
value, or are valued under consistently applied procedures established by
the Board of Trustees to determine fair value in good faith. Short-term
"money market type" debt securities having a remaining maturity of 60 days
or less are valued at cost (or last determined market value) adjusted for
amortization to maturity of any premium or discount.
FEDERAL TAXES. The Fund intends to continue to comply with provisions of
the Internal Revenue Code applicable to regulated investment companies and
to distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required.
ORGANIZATION COSTS. The former Manager advanced $7,600 for organization and
start-up costs of the Fund. Such expenses are being amortized over a five
year period from the date operations commenced.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders
are recorded on the ex-dividend date.
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income
(loss) and net realized gain (loss) may differ for financial statement and
tax purposes. The character of the distributions made during the year from
net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts are distributed
may differ from the year that the income or realized gain (loss) was
recorded by the Fund.
During the year ended October 31, 1996, the Fund adjusted the
classifications of net investment income and capital gain (loss) to
shareholders to reflect the differences between financial statement amounts
and distributions determined in accordance with income tax regulations.
Accordingly, during the year ended October 31, 1996, amounts have been
reclassified to reflect a decrease in accumulated net realized gain on
investments of $52,557. Net investment loss was decreased by the same
amount.
8 Oppenheimer Quest Officers Value Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
OTHER. Investment transactions are accounted for on the date the
investments are purchased or sold (trade date) and dividend income is
recorded on the ex-dividend date. Realized gains and losses on investments
and unrealized appreciation and depreciation are determined on an
identified cost basis, which is the same basis used for federal income tax
purposes.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses during
the reporting period. Actual results could differ from those estimates.
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of $.01 par value shares of
beneficial interest. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED (1)
OCTOBER 31, 1996 OCTOBER 31, 1995
SHARES AMOUNT SHARES AMOUNT
--------------------------- --------------------------
Class A:
<S> <C> <C> <C> <C>
Sold 538,510 $ 7,749,424 339,572 $3,529,359
Dividends and distributions
reinvested 27,528 337,769 713 7,226
Redeemed (113,652) (1,596,891) (43,886) (503,662)
--------- ------------ -------- -----------
Net increase 452,386 $ 6,490,302 296,399 $3,032,923
========= ============ ======== ===========
</TABLE>
1) For the period November 8, 1994 (commencement of operations) to
October 31, 1995.
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At October 31, 1996, net unrealized appreciation on investments of $864,864
was composed of gross appreciation of $1,499,990, and gross depreciation of
$635,126.
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund. Effective August 1, 1996, the fee was
reduced from 1.00% of average annual net assets to 0.60% of the first $4
million of average annual net assets and 0.70% of net assets in excess of $4
million. Prior to November 22, 1995, management fees were paid to the former
Manager at an annual rate of 1.00% of the Fund's average net assets. The
Manager has agreed to reimburse the Fund if aggregate expenses (with
specified exceptions) exceed the most stringent applicable regulatory limit
on Fund expenses. For the period November 1, 1995 to November 21, 1995, the
former Manager voluntarily waived its investment advisory fee and reimbursed
the Fund for all other operating expenses for a combined total of $8,962.
From November 22, 1995 to February 1, 1996, the Manager voluntarily
reimbursed the Fund for all operating expenses totaling $13,307. The Manager
acts as the accounting agent for the Fund at an annual fee of $6,000, plus
out-of-pocket costs and expenses reasonably incurred. Prior to November 22,
1995, accounting service fees were paid monthly to the former Manager.
From November 22, 1995 to July 31, 1996, the Manager paid OpCap Advisors
(the Sub-Adviser) $11,796 based on the fee schedule set forth in the
Prospectus. Effective August 1, 1996, the Sub-Adviser waived all fees under
the agreement.
For the year ended October 31, 1996, commissions (sales charges paid by
investors) on sales of Class A shares totaled $17,524, which was retained by
OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the Manager, as
general distributor, and by affiliated broker/dealers.
OppenheimerFunds Services (OFS), a division of the Manager, is the transfer
and shareholder servicing agent for the Fund, and for other registered
investment companies. The Fund pays OFS an annual maintenance fee of $14.85
for each Fund shareholder account and reimburses OFS for its out-of-pocket
expenses. During the period ended October 31, 1996, the Fund paid OFS
$4,162.
9 Oppenheimer Quest Officers Value Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED)
Prior to August 1, 1996, the Fund adopted a Distribution and Service Plan
for Class A shares to compensate OppenheimerFunds Distributor, Inc. (OFDI)
for a portion of its costs incurred in connection with the personal service
and maintenance of accounts that hold Class A shares. Under the Plan, the
Fund paid an annual asset-based sales charge to OFDI of 0.25% per year on
Class A shares. The Fund also paid a service fee to OFDI of 0.25% per year.
Both fees were computed on the average annual net assets of Class A shares
of the Fund, determined as of the close of each regular business day. OFDI
used all of the service fee and a portion of the asset-based sales charge to
compensate brokers, dealers, banks and other financial institutions
quarterly for providing personal service and maintenance of accounts of
their customers that hold Class A shares. OFDI retained the balance of the
asset-based sales charge to reimburse itself for its other expenditures
under the Plan. Effective August 1, 1996, the Distribution and Service Plan
for Class A was discontinued.
<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
<PAGE>
Food
Gas Transmission*
Gas Utilities*
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking<PAGE>
_________________
* For purposes of the Fund's investment policy not to concentrate in
securities of issuers in the same industry, gas utilities and gas
transmission utilities each will be considered a separate industry.
<PAGE>
Oppenheimer Quest Officers 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
950 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
<PAGE>
OPPENHEIMER QUEST FOR VALUE FUNDS
Part C
Other Information
ITEM 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements
--------------------
(1) Financial Highlights
(i) for Oppenheimer Quest Small Cap Value Fund("Small Cap
Fund") - Filed herewith.
(ii) for Oppenheimer Quest Growth & Income Value Fund ("Growth
& Income Fund") - Filed herewith.
(iii)for Oppenheimer Quest Opportunity Value Fund
("Opportunity Fund") - *
(iv) for Oppenheimer Quest Officers Value Fund ("Officers
Fund") - Filed herewith.
(2) Report of Independent Accountants
(i) for Small Cap Fund - Filed herewith.
(ii) for Growth & Income Fund - Filed herewith.
(iii)for Opportunity Fund - *
(iv) for Officers Fund - Filed herewith.
(3) Statement of Investments
(i) for Small Cap Fund - Filed herewith.
(ii) for Growth & Income Fund - Filed herewith.
(iii)for Opportunity Fund - *
(iv) for Officers Fund - Filed herewith.
(4) Statement of Assets and Liabilities
(i) for Small Cap Fund - Filed herewith.
(ii) for Growth & Income Fund - Filed herewith.
(iii)for Opportunity Fund - *
(iv) for Officers Fund - Filed herewith.
(5) Statement of Operations
(i) for Small Cap Fund - Filed herewith.
(ii) for Growth & Income Fund - Filed herewith.
(iii)for Opportunity Fund - *
(iv) for Officers Fund - Filed herewith.
(6) Statement of Changes in Net Assets
(i) for Small Cap Fund - Filed herewith.
(ii) for Growth & Income Fund - Filed herewith.
(iii)for Opportunity Fund - *
(iv) for Officers Fund - Filed herewith.
(7) Notes to Financial Statements
(i) for Small Cap Fund - Filed herewith.
(ii) for Growth & Income Fund - Filed herewith.
(iii)for Opportunity Fund - *
(iv) for Officers Fund - Filed herewith.
(8) Consent of Independent Accountants - For Small Cap Fund,
Growth & Income Fund and Officers Fund - Filed herewith.
For Opportunity Fund, filed with Registrant's Post-
Effective Amendment No. 38, 12/13/96, and incorporated
herein by reference.
[/R]* Filed with Registrant's Post-Effective Amendment No. 38, 12/13/96, and
incorporated herein by reference.
[/R]
(b) Exhibits:
--------
(1) (a)Declaration of Trust made 3/13/87, dated 4/17/87, as
amended: Filed with Post-Effective Amendment No. 33, 6/23/95 and refiled with
Post-Effective Amendment No. 36, 2/9/96, pursuant to Item 102 of Regulation
S-T, and incorporated herein by reference.
(b) Amendment to Declaration of Trust: Filed with Post-
Effective Amendment No. 37, 10/16/96, and incorporated herein by reference.
(2) By-laws of Registrant: Filed with Post-Effective Amendment No.
33, 6/23/95, and incorporated herein by reference.
(3) Not Applicable.
(4) (a)Small Cap Fund Specimen Class A Share Certificate - Filed
with Post-Effective Amendment No. 37, 10/16/96, and incorporated herein by
reference.
(b) Small Cap Fund Specimen Class B Share Certificate - Filed with
Post-Effective Amendment No. 37, 10/16/96, and incorporated herein by
reference.
(c) Small Cap Fund Specimen Class C Share Certificate - Filed with
Post-Effective Amendment No. 37, 10/16/96, and incorporated herein by
reference.
(d)Growth & Income Fund Specimen Class A Share Certificate - Filed
with Post-Effective Amendment No. 37, 10/16/96, and incorporated herein by
reference.
(e) Growth & Income Fund Specimen Class B Share Certificate -
Filed with Post-Effective Amendment No. 37, 10/16/96, and incorporated herein
by reference.
(f) Growth & Income Fund Specimen Class C Share Certificate - Filed
with Post-Effective Amendment No. 37, 10/16/96, and incorporated herein by
reference.
(g)Opportunity Fund Specimen Class A Share Certificate - Filed with
Post-Effective Amendment No. 37, 10/16/96, and incorporated herein by
reference.
(h)Opportunity Fund Specimen Class B Share Certificate - Filed with
Post-Effective Amendment No. 37, 10/16/96, and incorporated herein by
reference.
(i) Opportunity Fund Specimen Class C Share Certificate - Filed
with Post-Effective Amendment No. 37, 10/16/96, and incorporated herein by
reference.
(j) Opportunity Fund Specimen Class Y Share Certificate - Filed
with Post-Effective Amendment No. 37, 10/16/96, and incorporated herein by
reference.
(k)Officers Fund Specimen Class A Share Certificate - Filed with
Post-Effective Amendment No. 37, 10/16/96, and incorporated herein by
reference.
(l) Officers Fund Specimen Class B Share Certificate -
Filed with Post-Effective Amendment No. 37, 10/16/96, and incorporated herein
by reference.
(m) Officers Fund Specimen Class C Share Certificate - Filed with
Post-Effective Amendment No. 37, 10/16/96, and incorporated herein by
reference.
(5) (a) Investment Advisory Agreement dated 11/22/95: Filed with
Post-Effective Amendment No. 36, 2/9/96, and incorporated herein by
reference.
(b) (1) Subadvisory Agreement with respect to the Small Cap
Fund dated 11/22/95: Filed with Post-Effective Amendment No. 36, 2/9/96, and
incorporated herein by reference.
(2) Subadvisory Agreement with respect to the Growth &
Income Fund dated 11/22/95: Filed with Post-Effective Amendment No. 36,
2/9/96, and incorporated herein by reference.
(3) Subadvisory Agreement with respect to the
Opportunity Fund dated 11/22/95: Filed with Post-Effective Amendment No. 36,
2/9/96, and incorporated herein by reference.
(4) Subadvisory Agreement with respect to the Officers
Fund dated 11/22/95: Filed with Post-Effective Amendment No. 36, 2/9/96, and
incorporated herein by reference.
(6) (a) General Distributor s Agreement dated 11/22/95: Filed with
Post-Effective Amendment No. 36, 2/9/96, and incorporated herein by
reference.
(b) (1) Form of Dealer Agreement of OppenheimerFunds
Distributor, Inc.: Filed with Post-Effective Amendment No. 14 of Oppenheimer
Main Street Funds, Inc. (Reg. No. 33-17850), 9/30/94, and incorporated herein
by reference.
(2) Form of OppenheimerFunds Distributor, Inc. Broker
Agreement: Filed with Post-Effective Amendment No. 14 of Oppenheimer Main
Street Funds, Inc. (Reg. No. 33-17850), 9/30/94, and incorporated herein by
reference.
(3) Form of OppenheimerFunds Distributor, Inc. Agency
Agreement: Filed with Post-Effective Amendment No. 14 of Oppenheimer Main
Street Funds, Inc. (Reg. No. 33-17850), 9/30/94, and incorporated herein by
reference.
(4) Broker Agreement between OppenheimerFunds
Distributor, Inc. and Newbridge Securities dated 10/1/86: Filed with Post-
Effective Amendment No. 25 of Oppenheimer Special Fund (Reg. No. 2-45272),
11/1/86, refiled with Post-Effective Amendment No. 45 of Oppenheimer Special
Fund (Reg. No. 2-45272), 8/22/94, pursuant to Item 102 of Regulation S-T, and
incorporated herein by reference.
(7) Not Applicable.
(8) Custody Agreement dated 10/19/89: Previously filed as Exhibit
8 to Post-Effective Amendment No. 6, and refiled with Post-Effective
Amendment No. 36, 2/9/96, pursuant to Item 102 of Regulation S-T, and
incorporated herein by reference.
(9) Not Applicable.
(10) Opinion and consent of counsel dated 7/12/91 as to the
legality of the securities being registered, indicating whether they will
when sold be legally issued, fully paid and non-assessable: Filed with Post-
Effective Amendment No. 33, 6/23/95, and incorporated herein by reference.
(11) Not Applicable.
(12) Not Applicable.
(13) Agreement relating to initial capital dated 10/13/87: Filed
with Post-Effective Amendment No. 33, 6/23/95, and incorporated herein by
reference.
(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.
(15) (a)(1) Amended and Restated Distribution and Service Plan and
Agreement with respect to Class A shares of the Growth & Income Fund: Filed
with Post-Effective Amendment No. 36, 2/9/96, and incorporated herein by
reference.
(2)Amended and Restated Distribution and Service Plan and
Agreement with respect to Class A shares of the Opportunity Fund: Filed with
Post-Effective Amendment No. 36, 2/9/96, and incorporated herein by
reference.
(3)Amended and Restated Distribution and Service Plan and
Agreement with respect to Class A shares of the Small Cap Fund: Filed with
Post-Effective Amendment No. 36, 2/9/96, and incorporated herein by
reference.
(4)Amended and Restated Distribution and Service Plan and
Agreement with respect to Class A shares of the Officers Fund: Filed with
Post-Effective Amendment No. 36, 2/9/96, and incorporated herein by
reference.
(b)(1) Amended and Restated Distribution and Service Plan and
Agreement with respect to Class B shares of the Growth & Income Fund: Filed
with Post-Effective Amendment No. 36, 2/9/96, and incorporated herein by
reference.
(2)Amended and Restated Distribution and Service Plan and
Agreement with respect to Class B shares of the Opportunity Fund: Filed with
Post-Effective Amendment No. 36, 2/9/96, and incorporated herein by
reference.
(3)Amended and Restated Distribution and Service Plan and
Agreement with respect to Class B shares of the Small Cap Fund: Filed with
Post-Effective Amendment No. 36, 2/9/96, and incorporated herein by
reference.
(4)Amended and Restated Distribution and Service Plan and
Agreement with respect to Class B shares of the Officers Fund: Filed with
Post-Effective Amendment No. 36, 2/9/96, and incorporated herein by
reference.
(c)(1) Amended and Restated Distribution and Service Plan and
Agreement with respect to Class C shares of the Growth & Income Fund: Filed
with Post-Effective Amendment No. 36, 2/9/96, and incorporated herein by
reference.
(2)Amended and Restated Distribution and Service Plan and
Agreement with respect to Class C shares of the Opportunity Fund: Filed with
Post-Effective Amendment No. 36, 2/9/96, and incorporated herein by
reference.
(3)Amended and Restated Distribution and Service Plan and
Agreement with respect to Class C shares of the Small Cap Fund: Filed with
Post-Effective Amendment No. 36, 2/9/96, and incorporated herein by
reference.
(4)Amended and Restated Distribution and Service Plan and
Agreement with respect to Class C shares of the Officers Fund: Filed with
Post-Effective Amendment No. 36, 2/9/96, and incorporated herein by
reference.
(16) (1) Performance Computation Schedule of Growth & Income
Fund: Filed herewith.
(2)Performance Computation Schedule of Opportunity Fund: Filed
with Registrant's Post-Effective Amendment No. 38, 12/13/96, and incorporated
herein by reference.
(3)Performance Computation Schedule of Small Cap Fund: Filed
herewith.
(4)Performance Computation Schedule of Officers Fund: Filed
herewith.
(17) (1)Financial Data Schedule for Class A shares of Growth &
Income Fund: Filed herewith.
(2)Financial Data Schedule for Class B shares of Growth &
Income Fund: Filed herewith.
(3) Financial Data Schedule for Class C shares of Growth &
Income Fund: Filed herewith.
(4) Financial Data Schedule for Class A shares of
Opportunity Fund: Filed with Registrant's Post-Effective Amendment No. 38,
12/13/96, and incorporated herein by reference.
(5) Financial Data Schedule for Class B shares of
Opportunity Fund: Filed with Registrant's Post-Effective Amendment No. 38,
12/13/96, and incorporated herein by reference.
(6) Financial Data Schedule for Class C shares of
Opportunity Fund: Filed with Registrant's Post-Effective Amendment No. 38,
12/13/96, and incorporated herein by reference.
(7) Financial Data Schedule for Class Y shares of
Opportunity Fund: Not Applicable.
(8) Financial Data Schedule for Class A shares of Small Cap
Fund: Filed herewith.
(9) Financial Data Schedule for Class B shares of Small Cap
Fund: Filed herewith.
(10) Financial Data Schedule for Class C shares of Small Cap
Fund: Filed herewith.
(11) Financial Data Schedule for Class A shares of Officers
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: Filed with 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 31, 1997
- -------------- -----------------
Shares of Beneficial Interest
Opportunity Value Fund - Class A 54,366
Opportunity Value Fund - Class B 68,246
Opportunity Value Fund - Class C 13,381
Opportunity Value Fund - Class Y 1
Small Cap Value Fund - Class A 6,594
Small Cap Value Fund - Class B 3,897
Small Cap Value Fund - Class C 1,113
Growth & Income Value Fund - Class A 1,368
Growth & Income Value Fund - Class B 1,187
Growth & Income Value Fund - Class C 249
Officers Value Fund - Class A 319
Item 27. Indemnification
- ------- ---------------
Reference is made to Article Fifth (5.3) of Registrant's Declaration of Trust
filed as Exhibit 24(b)(1) to this Registration Statement and incorporated
herein by reference.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers and controlling persons of
Registrant pursuant to the foregoing provisions or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person,
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933 and will be governed
by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
- -------- ----------------------------------------------------
(a) OppenheimerFunds, Inc. is the investment adviser of the
Registrant; it and certain subsidiaries and affiliates act in the same
capacity to other registered investment companies as described in Parts A
and B hereof and listed in Item 28(b) below.
(a1) 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.
Name & Current
Position with Other Business Connections
OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- ---------------------------
Mark J.P. Anson,
Vice President Vice President of Oppenheimer Real Asset
Management, Inc. ("ORAMI"); formerly Vice
President of Equity Derivatives at Salomon
Brothers, Inc.
<PAGE>
Peter M. Antos,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; a Chartered
Financial Analyst; Senior Vice President of
HarbourView; prior to March, 1996 he was
the senior equity portfolio manager for the
Panorama Series Fund, Inc. (the "Company")
and other mutual funds and pension funds
managed by G.R. Phelps & Co. Inc. ("G.R.
Phelps"), the Company's former investment
adviser, which was a subsidiary of
Connecticut Mutual Life Insurance Company;
was also responsible for managing the
common stock department and common stock
investments of Connecticut Mutual Life
Insurance Co.
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
Bruce Bartlett,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; formerly a Vice
President and Senior Portfolio Manager at
First of America Investment Corp.
Ellen Batt,
Assistant Vice President None
Kathleen Beichert,
Assistant Vice President Formerly employed by Smith Barney, Inc.
David Bernard,
Vice President Previously a Regional Sales Director for
Retirement Plan Services at Charles Schwab
& Co., Inc.
Rajeev Bhaman,
Assistant Vice President Formerly, Vice President of Asian
Equities for Barclays de Zoete
Wedd, Inc.
Robert J. Bishop,
Vice President Assistant Treasurer of the Oppenheimer
Funds (listed below); previously a Fund
Controller for OppenheimerFunds, Inc. (the
"Manager").
George Bowen,
Senior Vice President & Treasurer Treasurer of the New York-based
Oppenheimer Funds; Vice President,
Assistant Secretary and Treasurer of
the Denver-based Oppenheimer Funds.
Vice President and Treasurer of
OppenheimerFunds Distributor, Inc.
(the "Distributor") and HarbourView
Asset Management Corporation
("HarbourView"), an investment
adviser subsidiary of the Manager;
Senior Vice President, Treasurer,
Assistant Secretary and a director of
Centennial Asset Management
Corporation ("Centennial"), an
investment adviser subsidiary of the
Manager; Vice President, Treasurer
and Secretary of Shareholder
Services, Inc. ("SSI") and
Shareholder Financial Services, Inc.
("SFSI"), transfer agent subsidiaries
of the Manager; Director, Treasurer
and Chief Executive Officer of
MultiSource Services, Inc.; Vice
President and Treasurer of
Oppenheimer Real Asset Management,
Inc.; President, Treasurer and
Director of Centennial Capital
Corporation; Vice President and
Treasurer of Main Street Advisers.
Scott Brooks,
Assistant Vice President None.
Susan Burton,
Assistant Vice President Previously a Director of Educational
Services for H.D. Vest Investment
Securities, Inc.
Michael A. Carbuto,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice President
of Centennial.
Ruxandra Chivu,
Assistant Vice President None.
O. Leonard Darling,
Executive Vice President Formerly Co-Director of Fixed Income for
State Street Research & Management Co.
Robert A. Densen,
Senior Vice President None.
Sheri Devereux,
Assistant Vice President None.
Robert Doll, Jr.,
Executive Vice President and
Director An officer and/or portfolio manager of
certain Oppenheimer funds.
John Doney,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Andrew J. Donohue,
Executive Vice President,
General Counsel and Director Secretary of the New York-based Oppenheimer
Funds; Vice President and Secretary of the
Denver-based Oppenheimer Funds; Secretary
of the Oppenheimer Quest and Oppenheimer
Rochester Funds; Executive Vice President,
Director and General Counsel of the
Distributor; President and a Director of
Centennial; Chief Legal Officer and a
Director of MultiSource Services, Inc.;
President and a Director of Oppenheimer
Real Asset Management, Inc.; Executive Vice
President, General Counsel and Director of
SFSI and SSI; formerly Senior Vice
President and Associate General Counsel of
the Manager and the Distributor.
George Evans,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Leslie A. Falconio,
Assistant Vice President None.
Scott Farrar,
Vice President Assistant Treasurer of the New York-based
and Denver-based Oppenheimer funds.
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary of
OppenheimerFunds Distributor, Inc.;
Secretary of HarbourView Asset Management
Corporation, MultiSource Services, Inc. and
Centennial Asset Management Corporation;
Secretary, Vice President and Director of
Centennial Capital Corporation; Vice
President and Secretary of ORAMI.
Ronald H. Fielding,
Senior Vice President; Chairman:
Rochester Division An officer, Director and/or portfolio
manager of certain Oppenheimer funds.
Formerly Chairman of the Board and Director
of Rochester Fund Distributors, Inc.
("RFD"), President and Director of Fielding
Management Company, Inc. ("FMC"), President
and Director of Rochester Capital Advisors,
Inc. ("RCAI"), Managing Partner of
Rochester Capital Advisors, L.P., President
and Director of Rochester Fund Services,
Inc. ("RFS"), President and Director of
Rochester Tax Managed Fund, Inc.
John Fortuna,
Vice President None.
Patricia Foster,
Vice President Formerly she held the following positions:
An officer of certain Oppenheimer funds;
Secretary and General Counsel of Rochester
Capital Advisors, L.P. and Secretary of
Rochester Tax Managed Fund, Inc.
Jennifer Foxson,
Assistant Vice President None.
Robert G. Galli,
Vice Chairman Trustee of the New York-based Oppenheimer
Funds; Vice President and Counsel of OAC;
formerly he held the following positions:
Vice President and a director of
HarbourView and Centennial, a director of
SFSI and SSI, an officer of other
Oppenheimer Funds.
Linda Gardner,
Assistant Vice President None.
Jill Glazerman, None.
Assistant Vice President
Ginger Gonzalez,
Vice President, Director of
Marketing Communications Formerly 1st Vice President / Director of
Graphic and Print Communications for
Shearson Lehman Brothers.
Mildred Gottlieb,
Assistant Vice President Formerly served as a Strategy Consultant
for the Private Client Division of Merrill
Lynch.
Caryn Halbrecht,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; formerly Vice
President of Fixed Income Portfolio
Management at Bankers Trust.
Glenna Hale,
Director of Investor Marketing Formerly Vice President (1994-
1997) of Retirement Plans
Services for OppenheimerFunds
Services.
Barbara Hennigar,
Executive Vice President and
President and Chief Executive
Officer of OppenheimerFunds
Services, a division of
the Manager President and Director of SFSI; President
and Chief Executive Officer of SSI.
Dorothy Hirshman,
Assistant Vice President None.
Alan Hoden,
Vice President None.
Merryl Hoffman,
Vice President None.
Scott T. Huebl,
Assistant Vice President None.
Richard Hymes,
Assistant Vice President None.
Jane Ingalls,
Assistant Vice President Formerly a Senior Associate with Robinson,
Lake/Sawyer Miller.
Ronald Jamison,
Vice President Formerly Vice President and Associate
General Counsel at
Prudential Securities, Inc.
Frank Jennings,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds. Formerly a
Managing Director of Global Equities at
Paine Webber's Mitchell Hutchins division.
Heidi Kagan,
Assistant Vice President None.
Thomas W. Keffer,
Vice President Formerly Senior Managing Director of Van
Eck Global.
Avram Kornberg,
Vice President Formerly a Vice President with Bankers
Trust.
Joseph Krist,
Assistant Vice President None.
Paul LaRocco,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds. Formerly a
Securities Analyst for Columbus Circle
Investors.
Michael Levine,
Assistant Vice President None.
Shanquan Li,
Assistant Vice President Director of Board (since 2/96),
Chinese Finance Society; formerly
Chairman (11/94-2/96), Chinese
Finance Society; and Director
(6/94-6/95), Greater China
Business Networks.
Stephen F. Libera,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; a Chartered
Financial Analyst; a Vice President of
HarbourView; prior to March, 1996 he was
the senior bond portfolio manager for
Panorama Series Fund, Inc., other mutual
funds and pension accounts managed by G.R.
Phelps; was also responsible for managing
the public fixed-income securities
department at Connecticut Mutual Life
Insurance Co.
Mitchell J. Lindauer,
Vice President None.
David Mabry,
Assistant Vice President None.
Loretta McCarthy,
Executive Vice President None.
Bridget Macaskill,
President, Chief Executive
Officer and Director President, Director and Trustee of the New
York-based and the Denver-based Oppenheimer
funds; President and a Director of OAC,
HarbourView and Oppenheimer Partnership
Holdings, Inc.; Director of ORAMI; Chairman
and Director of SSI; a Director of
Oppenheimer Real Asset Management, Inc.
Timothy Martin,
Assistant Vice President Formerly Vice President, Mortgage Trading,
at S.N. Phelps & Co.,Salomon Brothers, and
Kidder Peabody.
Sally Marzouk,
Vice President None.
Michelle McCann,
Assistant Vice President Formerly, Vice President, Quest
for Value Distributors,
Oppenheimer Capital Corporation.
Lisa Migan,
Assistant Vice President, None.
Robert J. Milnamow,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds. Formerly a
Portfolio Manager with Phoenix Securities
Group.
Denis R. Molleur,
Vice President None.
Linda Moore,
Vice President Formerly, Marketing Manager
(July, 1995 - November, 1996) for
Chase Investment Services Corp.
Kenneth Nadler,
Vice President None.
David Negri,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Barbara Niederbrach,
Assistant Vice President None.
Robert A. Nowaczyk,
Vice President None.
Gina M. Palmieri,
Assistant Vice President None.
Robert E. Patterson,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
John Pirie,
Assistant Vice President Formerly a Vice President with Cohane
Rafferty Securities, Inc.
Tilghman G. Pitts III,
Executive Vice President Chairman and Director of the Distributor.
Jane Putnam,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds. Formerly Senior
Investment Officer and Portfolio Manager
with Chemical Bank.
Russell Read,
Vice President Consultant for Prudential Insurance on
behalf of the General Motors Pension Plan.
Thomas Reedy,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds. Formerly a
Securities Analyst for the Manager.
David Robertson,
Vice President None.
Adam Rochlin,
Vice President Formerly a Product Manager for Metropolitan
Life Insurance Company.
Michael S. Rosen
Vice President; President:
Rochester Division An officer and/or portfolio manager of
certain Oppenheimer funds. Formerly Vice
President of RFS, President and Director of
RFD, Vice President and Director of FMC,
Vice President and director of RCAI,
General Partner of RCA, an officer and/or
portfolio manager of certain Oppenheimer
funds.
David Rosenberg,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Richard H. Rubinstein,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; formerly Vice
President and Portfolio Manager/Security
Analyst for Oppenheimer Capital Corp., an
investment adviser.
Lawrence Rudnick,
Assistant Vice President Formerly Vice President of Dollar Dry Dock
Bank.
James Ruff,
Executive Vice President None.
Valerie Sanders,
Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Stephanie Seminara,
Vice President Formerly Vice President of Citicorp
Investment Services.
Diane Sobin,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; formerly a Vice
President and Senior Portfolio Manager for
Dean Witter InterCapital, Inc.
Richard A. Soper, None.
Assistant Vice President
Nancy Sperte,
Executive Vice President None.
Donald W. Spiro,
Chairman Emeritus Vice Chairman and Trustee of the New York-
based Oppenheimer Funds; formerly Chairman
of the Manager and the Distributor.
Arthur Steinmetz,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Ralph Stellmacher,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
John Stoma,
Senior Vice President,
Director Retirement Plans Formerly Vice President of U.S. Group
Pension Strategy and Marketing for Manulife
Financial.
Michael C. Strathearn,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; a Chartered
Financial Analyst; a Vice President of
HarbourView; prior to March, 1996 he was an
equity portfolio manager for Panorama
Series Fund, Inc. and other mutual funds
and pension accounts managed by G.R.
Phelps.
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee, Director or
Managing Partner of the Denver-based
Oppenheimer Funds; President and a Director
of Centennial; formerly President and
Director of OAMC, and Chairman of the Board
of SSI.
James Tobin,
Vice President None.
Jay Tracey,
Vice President Vice President of the Manager; Vice
President and Portfolio Manager of
Oppenheimer Discovery Fund, Oppenheimer
Global Emerging Growth Fund and Oppenheimer
Enterprise Fund. Formerly Managing
Director of Buckingham Capital Management.
Gary Tyc,
Vice President, Assistant
Secretary and Assistant
Treasurer Assistant Treasurer of the Distributor and
SFSI.
Ashwin Vasan,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Dorothy Warmack,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Jerry A. Webman,
Senior Vice President Director of New York-based tax-
exempt fixed income Oppenheimer
Funds; Formerly
Managing Director and Chief
Fixed Income Strategist at
Prudential Mutual Funds.
Christine Wells,
Vice President None.
Kenneth B. White,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; a Chartered
Financial Analyst; Vice President of
HarbourView; prior to March, 1996 he was an
equity portfolio manager for Panorama
Series Fund, Inc. and other mutual funds
and pension funds managed by G.R. Phelps.
William L. Wilby,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice President
of HarbourView.
Carol Wolf,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice President
of Centennial; Vice President, Finance and
Accounting and member of the Board of
Directors of the Junior League of Denver,
Inc.
Robert G. Zack,
Senior Vice President and
Assistant Secretary Associate General Counsel of the Manager;
Assistant Secretary of the Oppenheimer
Funds; Assistant Secretary of SSI, SFSI; an
officer of other Oppenheimer Funds.
Arthur J. Zimmer,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice President
of Centennial.
The Oppenheimer Funds include the New York-based Oppenheimer Funds, the
Denver-based Oppenheimer Funds, and the Quest/Rochester Funds, set forth
below:
New York-based Oppenheimer Funds
- --------------------------------
nheimer Multiple Strategies Fund
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Municipal Trust
Oppenheimer New York Municipal Fund
Oppenheimer Fund
Oppenheimer Series Fund, Inc.
Oppenheimer Municipal Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer World Bond Fund
Oppenheimer Developing Markets Fund
Denver-based Oppenheimer Funds
- ------------------------------
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Municipal Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Quest/Rochester Funds
- ---------------------------------
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest for Value Funds
Bond Fund Series - Oppenheimer Bond Fund For Growth
Rochester Fund Municipals
Limited-Term New York Municipal Fund
The address of OppenheimerFunds, Inc., the New York-based
Oppenheimer Funds, Quest funds, OppenheimerFunds Distributor, Inc.,
HarbourView Asset Management Corp., Oppenheimer Partnership Holdings, Inc.,
and Oppenheimer Acquisition Corp. is Two World Trade Center, New York, New
York 10048-0203.
The address of the Denver-based Oppenheimer Funds, Shareholder
Financial Services, Inc., Shareholder Services, Inc., OppenheimerFunds
Services, Centennial Asset Management Corporation, Centennial Capital
Corp., and Oppenheimer Real Asset Management, Inc. is 6803 South Tuscon
Way, Englewood, Colorado 80112.
The address of MultiSource Services, Inc. is 1700 Lincoln Street,
Denver, Colorado 80203.
The address of is Bond Fund Series - Oppenheimer Bond Fund For
Growth, Rochester Fund Municipals and Limited Term New York Municipal Fund
350 Linden Oaks, Rochester, New York 14625-2807.
Name & Current Position Other Business
with Connections During
OpCap Advisors the Past Two Years
- ------------------------ ---------------------------
Robert J. Bluestone,
Director of Fixed Income
Management Managing Director of Oppenheimer Capital;
Director of Oppenheimer Capital Trust
Company.
Pierre Dariron,
Portfolio Manager President, Oppenheimer Capital
International Division.
Thomas E. Duggan,
General Counsel & Secretary Managing Director & General Counsel of
Oppenheimer Capital; Assistant Secretary of
Oppenheimer Financial Corp; General Counsel
of Oppenheimer Capital Limited.
Linda S. Ferrante,
Portfolio Manager Managing Director of Oppenheimer Capital.
Bernard H. Garil,
President Senior Vice President of Oppenheimer
Capital and Oppenheimer & Co., Inc;
Director of Oppenheimer Capital Trust
Company.
John Giusio,
Portfolio Manager Vice President of Oppenheimer Capital.
Richard J. Glasebrook, II,
Portfolio Manager Managing Director of Oppenheimer Capital.
Colin Glinsman,
Portfolio Manager Senior Vice President of Oppenheimer
Capital.
Louis Goldstein,
Assistant Portfolio Manager Senior Vice President of Oppen-heimer
Capital.
Matthew Greenwald,
Portfolio Manager Vice President of Oppenheimer Capital.
Vikki Y. Hanges,
Portfolio Manager Vice President of Oppenheimer Capital.
Joseph M. LaMotta,
Chairman Chairman and Chief Executive Officer of
Oppenheimer Capital; Director & Executive
Vice President of Oppenheimer Financial
Corp. and Oppenheimer Group, Inc.; General
Partner of Oppenheimer & Co., L.P.;
Director of Oppenheimer Capital Trust
Company; Director and President of
Oppenheimer Capital Limited.
George A. Long,
Chief Investment Officer President of Oppenheimer Capital.
Elisa A. Mazen,
Portfolio Manager Vice President of Oppenheimer Capital
International Division.
Timothy McCormack,
Portfolio Manager Vice President of Oppenheimer Capital;
formerly Assistant Vice President of
Oppenheimer Capital.
Susan Murphy,
President of an affiliate President of OCC Cash Management Services
Division and Oppenheimer Capital Trust
Company; Senior Vice President of
Oppenheimer Capital.
Eileen Rominger,
Portfolio Manager Managing Director of Oppenheimer Capital.
<PAGE>
Sheldon M. Siegel,
Treasurer and Chief Financial
Officer Managing Director/Treasurer/Chief Financial
Officer of Oppenheimer Capital; Director of
Oppenheimer Capital Trust Company;
Treasurer and Chief Financial Officer of
Oppenheimer Capital Limited.
Jeffrey Whittington,
Portfolio Manager Senior Vice President of Oppenheimer
Capital.
The address of OpCap Advisors is 200 Liberty Street, New York,
New York 10281.
For information as to the business, profession, vocation or
employment of a substantial nature of the officers of Oppenheimer
Capital, reference is made to Form ADV filed by OpCap Advisors,
under the Investment Advisers Act of 1940, which is incorporated
herein by reference.
Item 29. Principal Underwriter
- -------- ---------------------
(a) OppenheimerFunds Distributor, Inc. is the Distributor of
Registrant's shares. It is also the Distributor of each of the other
registered open-end investment companies for which OppenheimerFunds, Inc.
is the investment adviser, as described in Part A and B of this
Registration Statement and listed in Item 28(b) above.
(b) The directors and officers of the Registrant's principal
underwriter are:
<TABLE>
<CAPTION>
Name & Principal Positions
Business Address & Officers
Registrant with Underwriter Offices
- ---------------- ------------------- --------
<S> <C> <C>
George Clarence Bowen+ Vice President
& Treasurer Vice President and Treasurer
of the NY-based Oppenheimer
funds / Vice President,
Secretary and Treasurer of the
Denver-based Oppenheimer funds
Julie Bowers Vice President None
21 Dreamwold Road
Scituate, MA 02066
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Maryann Bruce* Senior Vice None
President
Director - Financial
Institution Div.
Robert Coli Vice President None
12 White Tail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce DeLeon Ave.
Decatur, GA 30030
Bill Coughlin Vice President None
34251/2 Irving Avenue So.
Minneapolis, MN 55408
Mary Crooks+ Senior Vice President None
E. Drew Devereaux ++ Assistant Vice None
President
Andrew John Donohue* Executive Vice Secretary of
President, General the New York-
Counsel and Director based Oppenheimer funds / Vice
President of the Denver-based
Oppenheimer funds
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
Katherine P. Feld* Vice President &
Secretary None
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding++ Vice President;
Chairman
Rochester Division None
Reed F. Finley Vice President - None
320 E. Maple, Ste. 254 Financial Institution
Birmingham, MI 48009 Inv.
Wendy Fishler* Vice President - None
Financial Institution
Div.
Ronald R. Foster Senior Vice President None
139 Avant Lane
Cincinatti, OH 45249
Patricia Gadecki Vice President None
3906 Americana Drive
Tampa, FL 3334
Luiggino Galletto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President - None
5506 Bryn Mawr Financial Institution
Dallas, TX 75209 Div.
Ralph Grant* Vice None
President/National
Sales Manager -
Financial
Institution Div.
Sharon Hamilton Vice President None
720 N. Juanita Ave. - #1
Redondo Beach, CA 90277
Mark D. Johnson Vice President None
7512 Cromwell Dr. Apt 1
Clayton, MO 63105
Michael Keogh* Vice President None
Richard Klein Vice President None
4820 Fremont Avenue So.
Minneapolis, MN 55409
Ilene Kutno* Vice President - None
Director - Regional
Sales
Wayne A. LeBlang Senior Vice President None
23 Fox Trail Director Eastern Div.
Lincolnshire, IL 60069
Dawn Lind Vice President - None
7 Maize Court Financial Institution
Melville, NY 11747 Div.
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
John McDonough Vice President None
P.O. Box 760
50 Riverview Road
New Castle, NH 03854
Laura Mulhall* Senior Vice President None
Director of Key
Accounts
Charles Murray Vice President None
50 Deerwood Drive
Littleton, CO 80127
Wendy Murray Vice President None
114-B Larchmont Acres West
Larchmont, NY 10538
Joseph Norton Vice President None
2518 Fillmore Street
Apt. 1
San Francisco, CA 94115
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Kevin Parchinski Vice President None
1105 Harney St., #310
Omaha, NE 68102
Randall Payne Vice President - None
1307 Wandering Way Dr. Financial Institution
Charlotte, NC 28226 Div.
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice President None
1777 Larimer St. #807
Denver, CO 80202
Tilghman G. Pitts, III* Chairman & Director None
Elaine Puleo* Vice President - None
Financial Institution
Div., Director -
Key Accounts
Minnie Ra Vice President - None
0895 Thirty-First Ave. Financial Institution
Apt. 4 Div.
San Francisco, CA 94121
Michael Raso Vice President None
30 Hommocks Road
Apt. 30
Larchmont, NY 10538
John C. Reinhardt ++ Vice President None
Ian Robertson Vice President None
4204 Summit Way
Marietta, GA 30066
Michael S. Rosen++ Vice President, None
President:
Rochester Division
Kenneth Rosenson Vice President None
3802 Knickerbocker Place
Apt. 3D
Indianapolis, IN 46240
James Ruff* President None
Timothy Schoeffler Vice President None
1717 Fox Hall Road
Wasington, DC 20007
Michael Sciortino Vice President None
3114 Hickory Run
Sugarland, TX 77479
Robert Shore Vice President - None
26 Baroness Lane Financial Institution
Laguna Niguel, CA 92677 Div.
Peggy Spilker ++ Vice President None
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
David G. Thomas Vice President - None
111 South Joliet Circle Financial Institution
#304 Div.
Aurora, CO 80112
Philip Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Gary Paul Tyc+ Assistant Treasurer None
Mark Stephen Vandehey+ Vice President None
* Two World Trade Center, New York, NY 10048-0203
+ 6803 South Tuscon Way, Englewood, CO 80112
++ 350 Linden Oaks, Rochester, NY 14625-2807 (the "Rochester
Division")
(c) Not applicable.
Item 30. Location of Accounts and Records
- -------- --------------------------------
The accounts, books and other documents required to be
maintained by Registrant pursuant to Section 31(a) of the
Investment Company Act of 1940 and rules promulgated thereunder
are in the possession of both OppenheimerFunds, Inc. at its
offices at 6803 South Tucson Way, Englewood, Colorado 80012 and
Two World Trade Center, New York, New York 10048-0203.
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 19th day of
February, 1997.
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>
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Bridget A Macaskill* Chairman of the Board, February 19, 1997
- ----------------------- President (Principal
Bridget A. Macaskill Executive Officer) and
Trustee
/s/ George C. Bowen* Treasurer (Principal February 19, 1997
- ----------------------- Financial and Accounting
George Bowen Officer)
/s/ Paul Y. Clinton* Trustee February 19, 1997
- -----------------------
Paul Y. Clinton
/s/ Thomas W. Courtney* Trustee February 19, 1997
- -----------------------
Thomas W. Courtney
/s/ Lacy B. Herrmann* Trustee February 19, 1997
- -----------------------
Lacy B. Herrmann
/s/ George Loft* Trustee February 19, 1997
- -----------------------
George Loft
*By /s/ Robert G. Zack
_______________________
Robert G. Zack, Attorney-in-fact
<PAGE>
OPPENHEIMER QUEST FOR VALUE FUNDS
Registration No. 33-15489
Post-Effective Amendment No. 40
Index to Exhibits
Exhibit
Number Description
- ------- -----------
24(a)(8) Consent of Independent Accountants
24(b)(16)(1) Performance Computation Schedule for Growth &
Income Fund
24(b)(16(3) Performance Computation Schedule for Small Cap
Fund
24(b)(16)(4) Performance Computation Schedule for Officers
Fund
24(b)(17)(1) Financial Data Schedule for Class A shares of
Growth & Income Fund
24(b)(17)(2) Financial Data Schedule for Class B shares of
Growth & Income Fund
24(b)(17)(3) Financial Data Schedule for Class C shares of
Growth & Income Fund
24(b)(17)(8) Financial Data Schedule for Class A shares of
Small Cap Fund
24(b)(17)(9) Financial Data Schedule for Class B shares of
Small Cap Fund
24(b)(17)(10) Financial Data Schedule for Class C shares of
Small Cap Fund
24(b)(17)(11) Financial Data Schedule for Class A shares of
Officers Fund
</TABLE>
Consent of Independent Accountants
We hereby consent to the use in the Statements of Additional
Information constituting parts of this Post-Effective Amendment No.
40 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated November 21, 1996, relating to the
financial statements and financial highlights of Oppenheimer Quest
Small Cap Value Fund, Oppenheimer Quest Growth & Income Value Fund
and Oppenheimer Quest Officers Value Fund (three of the portfolios
of 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 17, 1997
PROSP\QUESTCON.297
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 0.0400000 0.0000000 10.340
03/31/92 0.0600000 0.0000000 10.280
06/30/92 0.0850000 0.0000000 10.590
09/30/92 0.0900000 0.0000000 10.800
12/18/92 0.0600000 0.3330000 10.680
12/31/92 0.0090000 0.0000000 10.650
03/31/93 0.0600000 0.0000000 10.860
06/30/93 0.0650000 0.0000000 11.010
09/30/93 0.0700000 0.0000000 11.050
12/13/93 0.0000000 1.6991000 9.900
12/31/93 0.1113000 0.0000000 9.870
03/31/94 0.0591000 0.0000000 9.590
06/30/94 0.0788000 0.0000000 9.750
09/30/94 0.0701000 0.0000000 9.980
12/05/94 0.0000000 0.4215000 9.400
12/30/94 0.0826000 0.0000000 9.270
03/31/95 0.0998000 0.0000000 9.910
06/30/95 0.0694000 0.0000000 10.830
09/29/95 0.0370000 0.0000000 11.330
12/20/95 0.0380000 0.5023000 10.890
03/25/96 0.0750000 0.0000000 11.460
06/14/96 0.0500000 0.0000000 11.880
09/13/96 0.0600000 0.0000000 12.240
Class B Shares
09/30/93 0.0700000 0.0000000 11.050
12/13/93 0.0000000 1.6991000 9.880
12/31/93 0.1011000 0.0000000 9.850
03/31/94 0.0397000 0.0000000 9.580
06/30/94 0.0657000 0.0000000 9.740
09/30/94 0.0586000 0.0000000 9.960
12/05/94 0.0000000 0.4215000 9.380
12/30/94 0.0706000 0.0000000 9.250
03/31/95 0.0910000 0.0000000 9.890
06/30/95 0.0571000 0.0000000 10.800
09/29/95 0.0236000 0.0000000 11.300
12/20/95 0.0210000 0.5023000 10.850
03/25/96 0.0600000 0.0000000 11.420
06/14/96 0.0340000 0.0000000 11.840
09/13/96 0.0440000 0.0000000 12.200
Class C Shares
09/30/93 0.0700000 0.0000000 11.050
12/13/93 0.0000000 1.6991000 9.880
Oppenheimer Quest Growth & Income Value Fund
Page 2
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class C Shares
12/31/93 0.0952000 0.0000000 9.860
03/31/94 0.0429000 0.0000000 9.590
06/30/94 0.0653000 0.0000000 9.750
09/30/94 0.0571000 0.0000000 9.980
12/05/94 0.0000000 0.4215000 9.380
12/30/94 0.0544000 0.0000000 9.260
03/31/95 0.0872000 0.0000000 9.900
06/30/95 0.0501000 0.0000000 10.810
09/29/95 0.0174000 0.0000000 11.310
12/20/95 0.0140000 0.5023000 10.870
03/25/96 0.0600000 0.0000000 11.430
06/14/96 0.0340000 0.0000000 11.850
09/13/96 0.0440000 0.0000000 12.210
1. Average Annual Total Returns for the Periods Ended 10/31/96:
The formula for calculating average annual total return is as follows:
1 ERV n
--------------- = n (---) - 1 = average annual total return
number of years P
Where: ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Inception
$1,148.38 1 $1,768.67 .2
(---------) - 1 = 14.84% (---------) - 1 = 12.08%
$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
$1,160.69 1 $1,493.98 .3158
(---------) - 1 = 16.07% (---------) - 1 = 13.52%
$1,000 $1,000
Oppenheimer Quest Growth & Income Value Fund
Page 3
1. Average Annual Total Returns for the Periods Ended 10/31/96 (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
$1,199.67 1 $1,518.34 .3158
(---------) - 1 = 19.97% (---------) - 1 = 14.10%
$1,000 $1,000
Examples at NAV:
Class A Shares
One Year Inception
$1,218.43 1 $1,876.53 .2000
(---------) - 1 = 21.84% (---------) - 1 = 13.42%
$1,000 $1,000
Class B Shares
One Year Inception
$1,210.69 1 $1,523.97 .3158
(---------) - 1 = 21.07% (---------) - 1 = 14.23%
$1,000 $1,000
Class C Shares
One Year Inception
$1,209.68 1 $1,518.34 .3158
(---------) - 1 = 20.97% (---------) - 1 = 14.10%
$1,000 $1,000
Oppenheimer Quest Growth & Income Value Fund
Page 4
2. Cumulative Total Returns for the Periods Ended 10/31/96:
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
$1,148.38 - $1,000 $1,768.67 - $1,000
------------------ = 14.84% ------------------ = 76.87%
$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
$1,160.69 - $1,000 $1,493.98 - $1,000
------------------ = 16.07% ------------------ = 49.40%
$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
$1,199.67 - $1,000 $1,518.34 - $1,000
------------------ = 19.97% ------------------ = 51.83%
$1,000 $1,000
Oppenheimer Quest Growth & Income Value Fund
Page 5
2. Cumulative Total Returns for the Periods Ended 10/31/96 (Continued):
Examples at NAV:
Class A Shares
One Year Inception
$1,218.43 - $1,000 $1,876.53 - $1,000
------------------ = 21.84% ------------------ = 87.65%
$1,000 $1,000
Class B Shares
One Year Inception
$1,210.69 - $1,000 $1,523.97 - $1,000
------------------ = 21.07% ------------------ = 52.40%
$1,000 $1,000
Class C Shares
One Year Inception
$1,209.68 - $1,000 $1,518.34 - $1,000
------------------ = 20.97% ------------------ = 51.83%
$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 0.0810000 0.0570000 10.970
12/28/90 0.0840000 0.0000000 9.410
12/17/91 0.0000000 0.4230000 12.660
12/18/92 0.0000000 1.1370000 15.100
11/15/93 0.0000000 1.3310000 16.020
12/05/94 0.0000000 0.4154000 15.640
12/20/95 0.1140000 0.9933000 16.840
Class B Shares
11/15/93 0.0000000 1.3310000 16.000
12/05/94 0.0000000 0.4154000 15.540
12/20/95 0.0330000 0.9933000 16.700
Class C Shares
11/15/93 0.0000000 1.3310000 16.000
12/05/94 0.0000000 0.4154000 15.540
12/20/95 0.0570000 0.9933000 16.670
1. Average Annual Total Returns for the Periods Ended 10/31/96.
The formula for calculating average annual total return is as follows:
1 ERV n
--------------- = n (---) - 1 = average annual total return
number of years P
Where: ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year
$1,104.27 1 $1,746.82 .2
(---------) - 1 = 10.43% (---------) - 1 = 11.80%
$1,000 $1,000
Inception
$2,412.78 .1278
(---------) - 1 = 11.91%
$1,000
Oppenheimer Quest Small Capital Value Fund
Page 2
1. Average Annual Total Returns for the Periods Ended 10/31/96 (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
$1,115.66 1 $1,260.36 .3158
(---------) - 1 = 11.57% (---------) - 1 = 7.58%
$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
$1,155.50 1 $1,290.18 .3158
(---------) - 1 = 15.55% (---------) - 1 = 8.38%
$1,000 $1,000
Examples at NAV:
Class A Shares
One Year Five Year
$1,171.64 1 $1,853.41 .2
(---------) - 1 = 17.16% (---------) - 1 = 13.13%
$1,000 $1,000
Inception
$2,559.95 .1278
(---------) - 1 = 12.76%
$1,000
Class B Shares
One Year Inception
$1,165.66 1 $1,290.37 .3158
(---------) - 1 = 16.57% (---------) - 1 = 8.38%
$1,000 $1,000
Class C Shares
One Year Inception
$1,165.50 1 $1,290.18 .3158
(---------) - 1 = 16.55% (---------) - 1 = 8.38%
$1,000 $1,000
Oppenheimer Quest Small Capital Value Fund
Page 3
2. Cumulative Total Returns for the Periods Ended 10/31/96:
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
$1,104.27 - $1,000 $1,746.82 - $1,000
------------------ = 10.43% ------------------ = 74.68%
$1,000 $1,000
Inception
$2,412.78 - $1,000
------------------ = 141.28%
$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
$1,115.66 - $1,000 $1,260.36 - $1,000
------------------ = 11.57% ------------------ = 26.04%
$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
$1,155.50 - $1,000 $1,290.18 - $1,000
------------------ = 11.55% ------------------ = 29.02%
$1,000 $1,000
Oppenheimer Quest Small Capital Value Fund
Page 4
2. Cumulative Total Returns for the Periods Ended 10/31/96 (Continued):
Examples at NAV:
Class A Shares
One Year Five Year
$1,171.64 - $1,000 $1,853.41 - $1,000
------------------ = 17.16% ------------------ = 85.34%
$1,000 $1,000
Inception
$2,559.95 - $1,000
------------------ = 156.00%
$1,000
Class B Shares
One Year Inception
$1,165.66 - $1,000 $1,290.37 - $1,000
------------------ = 16.57% ------------------ = 29.04%
$1,000 $1,000
Class C Shares
One Year Inception
$1,165.50 - $1,000 $1,290.18 - $1,000
------------------ = 16.55% ------------------ = 29.02%
$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 0.0366000 0.0000000 10.130
12/27/95 0.2644000 0.8337000 12.270
1. Average Annual Total Returns for the Periods Ended 10/31/96:
The formula for calculating average annual total return is as follows:
1 ERV n
--------------- = n (---) - 1 = average annual total return
number of years P
Where: ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Examples, assuming a maximum sales charge of 0.00%:
One Year Inception
$1,351.69 1 $1,668.57 0.5049
(---------) - 1 = 35.17% (---------) - 1 = 29.50%
$1,000 $1,000
Examples at NAV:
One Year Inception
$1,351.69 1 $1,668.57 0.5049
(---------) - 1 = 35.17% (---------) - 1 = 29.50%
$1,000 $1,000
Oppenheimer Quest Officers Value Fund
Page 2
2. Cumulative Total Returns for the Periods Ended 10/31/96:
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%:
One Year Inception
$1,351.69 - $1,000 $1,668.57 - $1,000
------------------ = 35.17% ------------------ =
66.86% $1,000 $1,000
Examples at NAV:
One Year Inception
$1,351.69 - $1,000 $1,668.57 - $1,000
------------------ = 35.17% ------------------ = 66.86%
$1,000 $1,000
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 817982
<NAME> Oppenheimer Quest Growth & Income Value Fund-A
<SERIES>
<NUMBER> 9
<NAME> Oppenheimer Quest for Value Funds
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 58,557,251
<INVESTMENTS-AT-VALUE> 64,463,374
<RECEIVABLES> 1,136,407
<ASSETS-OTHER> 6,725
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 65,606,506
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 300,325
<TOTAL-LIABILITIES> 300,325
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 52,779,400
<SHARES-COMMON-STOCK> 3,952,924
<SHARES-COMMON-PRIOR> 3,395,059
<ACCUMULATED-NII-CURRENT> 120,291
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,500,367
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,906,123
<NET-ASSETS> 49,322,380
<DIVIDEND-INCOME> 574,115
<INTEREST-INCOME> 1,602,402
<OTHER-INCOME> 0
<EXPENSES-NET> 1,120,558
<NET-INVESTMENT-INCOME> 1,055,959
<REALIZED-GAINS-CURRENT> 6,454,155
<APPREC-INCREASE-CURRENT> 3,175,436
<NET-CHANGE-FROM-OPS> 10,685,550
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 830,842
<DISTRIBUTIONS-OF-GAINS> 1,723,234
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 966,147
<NUMBER-OF-SHARES-REDEEMED> 627,593
<SHARES-REINVESTED> 219,311
<NET-CHANGE-IN-ASSETS> 18,772,822
<ACCUMULATED-NII-PRIOR> 62,229
<ACCUMULATED-GAINS-PRIOR> 2,211,414
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 472,835
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,134,043
<AVERAGE-NET-ASSETS> 43,428,000
<PER-SHARE-NAV-BEGIN> 10.92
<PER-SHARE-NII> 0.23
<PER-SHARE-GAIN-APPREC> 2.05
<PER-SHARE-DIVIDEND> 0.22
<PER-SHARE-DISTRIBUTIONS> 0.50
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.48
<EXPENSE-RATIO> 1.90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 817982
<NAME> Oppenheimer Quest Growth & Income Value Fund-B
<SERIES>
<NUMBER> 9
<NAME> Oppenheimer Quest for Value Funds
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 58,557,251
<INVESTMENTS-AT-VALUE> 64,463,374
<RECEIVABLES> 1,136,407
<ASSETS-OTHER> 6,725
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 65,606,506
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 300,325
<TOTAL-LIABILITIES> 300,325
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 52,779,400
<SHARES-COMMON-STOCK> 1,060,887
<SHARES-COMMON-PRIOR> 700,417
<ACCUMULATED-NII-CURRENT> 120,291
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,500,367
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,906,123
<NET-ASSETS> 13,174,945
<DIVIDEND-INCOME> 574,115
<INTEREST-INCOME> 1,602,402
<OTHER-INCOME> 0
<EXPENSES-NET> 1,120,558
<NET-INVESTMENT-INCOME> 1,055,959
<REALIZED-GAINS-CURRENT> 6,454,155
<APPREC-INCREASE-CURRENT> 3,175,436
<NET-CHANGE-FROM-OPS> 10,685,550
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 138,167
<DISTRIBUTIONS-OF-GAINS> 359,598
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 482,330
<NUMBER-OF-SHARES-REDEEMED> 164,144
<SHARES-REINVESTED> 42,284
<NET-CHANGE-IN-ASSETS> 18,772,822
<ACCUMULATED-NII-PRIOR> 62,229
<ACCUMULATED-GAINS-PRIOR> 2,211,414
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 472,835
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,134,043
<AVERAGE-NET-ASSETS> 10,097,000
<PER-SHARE-NAV-BEGIN> 10.88
<PER-SHARE-NII> 0.17
<PER-SHARE-GAIN-APPREC> 2.03
<PER-SHARE-DIVIDEND> 0.16
<PER-SHARE-DISTRIBUTIONS> 0.50
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.42
<EXPENSE-RATIO> 2.53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 817982
<NAME> Oppenheimer Quest Growth & Income Value Fund-C
<SERIES>
<NUMBER> 9
<NAME> Oppenheimer Quest for Value Funds
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 58,557,251
<INVESTMENTS-AT-VALUE> 64,463,374
<RECEIVABLES> 1,136,407
<ASSETS-OTHER> 6,725
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 65,606,506
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 300,325
<TOTAL-LIABILITIES> 300,325
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 52,779,400
<SHARES-COMMON-STOCK> 225,974
<SHARES-COMMON-PRIOR> 167,833
<ACCUMULATED-NII-CURRENT> 120,291
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,500,367
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,906,123
<NET-ASSETS> 2,808,857
<DIVIDEND-INCOME> 574,115
<INTEREST-INCOME> 1,602,402
<OTHER-INCOME> 0
<EXPENSES-NET> 1,120,558
<NET-INVESTMENT-INCOME> 1,055,959
<REALIZED-GAINS-CURRENT> 6,454,155
<APPREC-INCREASE-CURRENT> 3,175,436
<NET-CHANGE-FROM-OPS> 10,685,550
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 28,888
<DISTRIBUTIONS-OF-GAINS> 82,370
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 96,190
<NUMBER-OF-SHARES-REDEEMED> 47,618
<SHARES-REINVESTED> 9,569
<NET-CHANGE-IN-ASSETS> 18,772,822
<ACCUMULATED-NII-PRIOR> 62,229
<ACCUMULATED-GAINS-PRIOR> 2,211,414
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 472,835
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,134,043
<AVERAGE-NET-ASSETS> 2,200,000
<PER-SHARE-NAV-BEGIN> 10.89
<PER-SHARE-NII> 0.17
<PER-SHARE-GAIN-APPREC> 2.02
<PER-SHARE-DIVIDEND> 0.15
<PER-SHARE-DISTRIBUTIONS> 0.50
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.43
<EXPENSE-RATIO> 2.53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 817982
<NAME> Oppenheimer Quest Small Cap Value Fund-A
<SERIES>
<NUMBER> 2
<NAME> Oppenheimer Quest for Value Funds
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 136,827,772
<INVESTMENTS-AT-VALUE> 150,252,358
<RECEIVABLES> 2,023,074
<ASSETS-OTHER> 9,200
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 152,284,632
<PAYABLE-FOR-SECURITIES> 4,134,293
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,457,128
<TOTAL-LIABILITIES> 5,591,421
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 114,692,877
<SHARES-COMMON-STOCK> 5,398,787
<SHARES-COMMON-PRIOR> 6,717,417
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 18,575,748
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 13,424,586
<NET-ASSETS> 102,746,109
<DIVIDEND-INCOME> 1,867,796
<INTEREST-INCOME> 1,256,038
<OTHER-INCOME> 0
<EXPENSES-NET> 3,139,845
<NET-INVESTMENT-INCOME> (16,011)
<REALIZED-GAINS-CURRENT> 19,244,292
<APPREC-INCREASE-CURRENT> 4,837,245
<NET-CHANGE-FROM-OPS> 24,065,526
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 758,969
<DISTRIBUTIONS-OF-GAINS> 6,609,655
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,937,231
<NUMBER-OF-SHARES-REDEEMED> 3,676,057
<SHARES-REINVESTED> 420,196
<NET-CHANGE-IN-ASSETS> (2,121,787)
<ACCUMULATED-NII-PRIOR> 817,130
<ACCUMULATED-GAINS-PRIOR> 7,814,746
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,558,482
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,139,845
<AVERAGE-NET-ASSETS> 117,765,000
<PER-SHARE-NAV-BEGIN> 17.31
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 2.79
<PER-SHARE-DIVIDEND> 0.11
<PER-SHARE-DISTRIBUTIONS> 0.99
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 19.03
<EXPENSE-RATIO> 1.90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 817982
<NAME> Oppenheimer Quest Small Cap Value Fund-B
<SERIES>
<NUMBER> 2
<NAME> Oppenheimer Quest for Value Funds
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 136,827,772
<INVESTMENTS-AT-VALUE> 150,252,358
<RECEIVABLES> 2,023,074
<ASSETS-OTHER> 9,200
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 152,284,632
<PAYABLE-FOR-SECURITIES> 4,134,293
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,457,128
<TOTAL-LIABILITIES> 5,591,421
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 114,692,877
<SHARES-COMMON-STOCK> 1,637,492
<SHARES-COMMON-PRIOR> 1,369,612
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 18,575,748
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 13,424,586
<NET-ASSETS> 30,765,729
<DIVIDEND-INCOME> 1,867,796
<INTEREST-INCOME> 1,256,038
<OTHER-INCOME> 0
<EXPENSES-NET> 3,139,845
<NET-INVESTMENT-INCOME> (16,011)
<REALIZED-GAINS-CURRENT> 19,244,292
<APPREC-INCREASE-CURRENT> 4,837,245
<NET-CHANGE-FROM-OPS> 24,065,526
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 44,363
<DISTRIBUTIONS-OF-GAINS> 1,335,461
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 551,514
<NUMBER-OF-SHARES-REDEEMED> 362,432
<SHARES-REINVESTED> 78,798
<NET-CHANGE-IN-ASSETS> (2,121,787)
<ACCUMULATED-NII-PRIOR> 817,130
<ACCUMULATED-GAINS-PRIOR> 7,814,746
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,558,482
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,139,845
<AVERAGE-NET-ASSETS> 26,478,000
<PER-SHARE-NAV-BEGIN> 17.11
<PER-SHARE-NII> (0.06)
<PER-SHARE-GAIN-APPREC> 2.76
<PER-SHARE-DIVIDEND> 0.03
<PER-SHARE-DISTRIBUTIONS> 0.99
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 18.79
<EXPENSE-RATIO> 2.38
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 817982
<NAME> Oppenheimer Quest Small Cap Value Fund-C
<SERIES>
<NUMBER> 2
<NAME> Oppenheimer Quest for Value Funds
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 136,827,772
<INVESTMENTS-AT-VALUE> 150,252,358
<RECEIVABLES> 2,023,074
<ASSETS-OTHER> 9,200
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 152,284,632
<PAYABLE-FOR-SECURITIES> 4,134,293
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,457,128
<TOTAL-LIABILITIES> 5,591,421
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 114,692,877
<SHARES-COMMON-STOCK> 702,671
<SHARES-COMMON-PRIOR> 529,946
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 18,575,748
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 13,424,586
<NET-ASSETS> 13,181,373
<DIVIDEND-INCOME> 1,867,796
<INTEREST-INCOME> 1,256,038
<OTHER-INCOME> 0
<EXPENSES-NET> 3,139,845
<NET-INVESTMENT-INCOME> (16,011)
<REALIZED-GAINS-CURRENT> 19,244,292
<APPREC-INCREASE-CURRENT> 4,837,245
<NET-CHANGE-FROM-OPS> 24,065,526
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 29,083
<DISTRIBUTIONS-OF-GAINS> 506,878
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 389,343
<NUMBER-OF-SHARES-REDEEMED> 247,719
<SHARES-REINVESTED> 31,101
<NET-CHANGE-IN-ASSETS> (2,121,787)
<ACCUMULATED-NII-PRIOR> 817,130
<ACCUMULATED-GAINS-PRIOR> 7,814,746
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,558,482
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,139,845
<AVERAGE-NET-ASSETS> 11,501,000
<PER-SHARE-NAV-BEGIN> 17.11
<PER-SHARE-NII> (0.05)
<PER-SHARE-GAIN-APPREC> 2.75
<PER-SHARE-DIVIDEND> 0.06
<PER-SHARE-DISTRIBUTIONS> 0.99
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 18.76
<EXPENSE-RATIO> 2.40
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 817982
<NAME> Oppenheimer Quest Officers Value Fund
<SERIES>
<NUMBER> 10
<NAME> Oppenheimer Quest For Value Funds
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 10,331,107
<INVESTMENTS-AT-VALUE> 11,195,971
<RECEIVABLES> 255,810
<ASSETS-OTHER> 693
<OTHER-ITEMS-ASSETS> 4,567
<TOTAL-ASSETS> 11,457,041
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 27,739
<TOTAL-LIABILITIES> 27,739
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 9,523,225
<SHARES-COMMON-STOCK> 748,785
<SHARES-COMMON-PRIOR> 296,399
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,041,213
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 864,864
<NET-ASSETS> 11,429,302
<DIVIDEND-INCOME> 62,089
<INTEREST-INCOME> 42,672
<OTHER-INCOME> 0
<EXPENSES-NET> 133,819
<NET-INVESTMENT-INCOME> (29,058)
<REALIZED-GAINS-CURRENT> 1,103,769
<APPREC-INCREASE-CURRENT> 570,237
<NET-CHANGE-FROM-OPS> 1,644,948
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 84,879
<DISTRIBUTIONS-OF-GAINS> 267,637
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 538,510
<NUMBER-OF-SHARES-REDEEMED> 113,652
<SHARES-REINVESTED> 27,528
<NET-CHANGE-IN-ASSETS> 7,782,734
<ACCUMULATED-NII-PRIOR> 61,380
<ACCUMULATED-GAINS-PRIOR> 257,638
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 60,540
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 156,088
<AVERAGE-NET-ASSETS> 6,973,000
<PER-SHARE-NAV-BEGIN> 12.30
<PER-SHARE-NII> (0.01)
<PER-SHARE-GAIN-APPREC> 4.06
<PER-SHARE-DIVIDEND> 0.26
<PER-SHARE-DISTRIBUTIONS> 0.83
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.26
<EXPENSE-RATIO> 1.92
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
