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. 41 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 /X/
Amendment No. 43 /X/
OPPENHEIMER QUEST FOR VALUE FUNDS
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(Exact Name of Registrant as Specified in Charter)
Two World Trade Center, New York, New York 10048-0203
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(Address of Principal Executive Offices)
(212) 323-0200
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(Registrant's Telephone Number)
Andrew J. Donohue
OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
/ / Immediately upon filing pursuant to paragraph (b)
/ / On _________________ pursuant to paragraph
(b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/X/ On January 26, 1998 pursuant to paragraph
(a)(1)
/ / 75 days after filing pursuant to paragraph (a) (2)
/ / On _________, pursuant to paragraph (a)(2)
of Rule 485.
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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,
1997, will be filed on
or about December 26, 1997.
<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
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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
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* 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
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* 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
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* 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.
Prosp\quest# 5.n1a
<PAGE>
Oppenheimer
Quest Small Cap Value Fund
Prospectus dated January 26, 1998
Oppenheimer Quest Small Cap Value Fund is a mutual fund that seeks capital
appreciation as its investment objective. The Fund seeks its investment
objective 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 January
26, 1998 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 NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-1-
<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
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<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, 1997.
o 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.
Class A Class B Class C
Shares Shares Shares
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Maximum Sales 5.75% None None
Charge on Purchases
(as a % of offering price)
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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)
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Maximum Sales Charge on None None None
Reinvested Dividends
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Exchange Fee None None None
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Redemption Fee None(3) None(3) None(3)
(1)If you invest $1 million or more ($500,000 or more for purchases by
"Retirement Plans," as defined in "Class A Contingent Deferred Sales Charge" on
page _____) in Class A shares, you may have to pay a sales charge of up to 1% if
you sell your shares within 12 calendar months (18 months for shares purchased
prior to May 1, 1997)from the end of the calendar month during which you
purchased those 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.
o 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)
Class A Class B Class C
Shares Shares Shares
Management Fees % % %
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12b-1 Distribution
Plan Fees % % %
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Other Expenses % % %
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Total Fund
Operating Expenses % % %
The numbers in the chart above are based upon the Fund's expenses in its
last fiscal year ended October 31, 1997. 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.
o 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*
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Class A Shares $ $ $ $
Class B Shares $ $ $ $
Class C Shares $ $ $ $
If you did not redeem your investment, it would incur the following
expenses:
1 year 3 years 5 years 10 years*
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Class A Shares $ $ $ $
Class B Shares $ $ $ $
Class C Shares $ $ $ $
*In the first example, expenses include the Class A initial sales charge and the
applicable Class B or Class C contingent deferred sales charge. In the second
example, Class A expenses include the initial sales charge, but Class B and
Class C expenses do not include contingent deferred sales charges. The Class B
expenses in years 7 through 10 are based on the Class A expenses shown above,
because the Fund automatically converts your Class B shares into Class A shares
after 6 years. Because of the effect of the higher asset-based sales charge and
the contingent deferred sales charge imposed on Class B and Class C shares,
long-term holders of Class B and Class C shares could pay the economic
equivalent of more than the maximum front-end sales charge allowed under
applicable regulations. For Class B shareholders, the automatic conversion of
Class B shares to Class A shares is designed to minimize the likelihood that
this will occur. Please refer to "How to Buy Shares - Buying Class B Shares" for
more information.
These examples show the effect of expenses on an investment, but are not
meant to state or predict actual or expected costs or investment returns of the
Fund, all of which may be more or less than those shown.
-3-
<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.
o What is the Fund's Investment Objective? The Fund's investment objective
is to seek capital appreciation .
o What Does the Fund Invest In? The Fund seeks its investment objective
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. The Fund emphasizes investments in
equity securities of companies believed to have favorable stock prices in
relation to their book values and/or sales, and in equity securities of
companies believed to 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
securities. These investments are more fully explained in "Investment Policies
and Strategies," starting on page __.
o Who Manages the Fund? The Manager, OppenheimerFunds, Inc., supervises the
Fund's investment program and handles its day-to-day business. The Manager
(including subsidiaries) manages investment company portfolios having over $__
billion in assets as of December 31, 1997. 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, Timothy McCormack, Timothy Curro and Gavin Albert, 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 managers. Please refer to "How
the Fund is Managed" starting on page __ for more information about the Manager,
the Sub- Adviser and their fees.
o 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.
o 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.
o Will I Pay a Sales Charge to Buy Shares? The Fund has three classes of
shares. Each class of shares has the same investment portfolio but has 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 purchase.
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.
o 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 __.
o 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, 1997, is included in the
Statement of Additional Information.
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<PAGE>
Investment Objective and Policies
Objective. The Fund seeks capital appreciation .
Investment Policies and Strategies. The Fund seeks its investment objective
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. The Fund's investment approach
will attempt to identify securities of companies the Sub-Adviser 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").
For temporary defensive
purposes, the Fund may invest up to 100% of its assets in such U.S. Government
securities and money market instruments.
o Can the Fund's Investment Objective and Policies Change? The Fund has an
investment objective, which is described above, as well as investment policies
it follows to try to achieve its objective. Additionally, the Fund uses certain
investment techniques and strategies in carrying out those investment policies.
The Fund's investment policies and practices in are not "fundamental" unless
this Prospectus or the Statement of Additional Information states that a
particular policy is "fundamental." The Fund's investment objective is a
fundamental policy.
Fundamental policies are those that cannot be changed without the approval
of a "majority" of the Fund's outstanding voting shares. The term "majority" is
defined in the Investment Company Act of 1940 to be a particular percentage of
outstanding voting shares (and this term is explained in the Statement of
Additional Information). The Board of 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.
o 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.
o Investment in Bonds. The Fund may invest up to 5% of its total assets in
time"lower-grade" debt securities. These 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. or lower than "BBB"
by Standard & Poor's Corporation, 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. Such securities
often have speculative characteristics and special risks that make them riskier
investments than investment grade securities. The Fund does not intend to invest
in debt securities that are in default.
o 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.
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 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 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.
o 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.
-5-
<PAGE>
o 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.
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.
o Special Risks of Hedging Instruments . 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.
o 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 U.S. Government securities
and money market instruments of the type identified on page __ under "Investment
Policies and Strategies." At any time that the Fund invests in such instruments
for temporary defensive purposes, to the extent of such investments, it is not
pursuing its investment objective.
o 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.
o Investing In Small, Unseasoned Companies. The Fund may invest up to 5% of
its total assets in securities of small, unseasoned companies. These are
companies that have been in operation less than three years, including 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 price of these securities may be
volatile.
o Investment in Other Investment Companies. The Fund generally may invest
up to 10% of its total assets in the aggregate in shares of other investment
companies and up to 5% of its total assets in any one investment company, as
long as each investment does not represent more than 3% of the outstanding
voting securities of the acquired investment company. These limitations do not
apply in the case of investment company securities which may be purchased as
part of a plan of merger, consolidation, reorganization or acquisition.
Investment in other investment companies may involve the payment of substantial
premiums above the value of such investment companies' portfolio securities, and
is subject to limitations under the Investment Company Act and market
availability. The Fund does not intend to invest in such investment companies
unless, in the judgment of the Manager, the potential benefits of such
investment justify the payment of any applicable premiums or sales charge. As a
shareholder in an investment company, the Fund would bear its ratable share of
that investment company's expenses, including its advisory and administration
fees. At the same time, the Fund would continue to pay its own management fees
and other expenses.
o 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.
o 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 that cannot be sold publicly until it is registered under the
Securities Act of 1933.
The Fund may not invest more than 15% of its net assets in illiquid and
restricted securities, including repurchase agreements that have a maturity of
longer than seven days and certain over-the-counter options. The Fund's
percentage limitation on these investments does not apply to certain restricted
securities that are eligible for resale to "qualified institutional buyers". The
Manager monitors holdings of illiquid securities on an ongoing basis to
determine whether to sell any holdings to maintain adequate liquidity.
o 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. Each loan must be
collateralized in accordance with applicable regulatory requirements. After any
loan, the value of the securities loaned is not expected to exceed 10% of the
Fund's total assets. 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.
o Warrants and Rights. Warrants generally are options to purchase stock at
set prices that are valid for a limited period of time. Rights are similar to
warrants but normally have a short duration and are distributed directly by the
issuer to its shareholders. The Fund may invest up to 5% of its total assets in
warrants and rights.
o 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.
o Futures. The Fund may buy and sell futures contracts that relate to (1)
broadly-based stock indices (these are referred to as Stock Index Futures) , (2)
foreign currencies (these are called Forward Contracts) and (3) commodities
(these are referred to as commodity futures). 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.
o Put and Call Options. The Fund may buy and sell exchange-traded and
over-the-counter put and call options, including index options, securities
options, currency options, commodities options, and options on the other types
of futures described in "Futures," above. A call or put may be purchased only
if, after the purchase, the value of all call and put options held by the Fund
will not exceed 5% of the Fund's total assets.
If the Fund sells (that is, writes) a call option, it must be "covered." That
means the Fund must own the security subject to the call while the call is
outstanding, or, for other types of written calls, the Fund must segregate
liquid assets to enable it to satisfy its obligations if the call is exercised.
The Fund may buy puts whether or not it holds the underlying investment in the
portfolio. If the Fund writes a put, the put must be
covered by segregated liquid assets. 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.
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:
o 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.
o 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.
o Concentrate its investments in any particular industry, but if deemed
appropriate for attaining its investment objective, the Fund may invest less
than 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).
o 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.
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.
-6-
<PAGE>
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 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 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.
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 subsidiaries) currently manages investment companies, including other
Oppenheimer funds, with assets of more than billion as of December 31, 1997, 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.
On November 4, 1997, PIMCO Advisors L.P. ("PIMCO Advisors"), a registered
investment adviser with $125 billion in assets under management through various
subsidiaries, acquired control of Oppenheimer Capital and the Sub-Adviser. On
November 5, 1997, a new sub-advisory agreement between the Sub-Adviser and the
Manager, on terms identical to the prior sub-advisory agreement, became
effective. The new sub-advisory agreement had been approved by shareholders of
the Fund on May 27, 1997. Value Advisors LLC, a limited liability company and a
wholly-owned subsidiary of PIMCO Advisors, holds a one-third managing general
partner interest in Oppenheimer Capital and a 1.0% general partner interest in
the Sub-Adviser. Oppenheimer Capital L.P., a Delaware limited partnership whose
units are traded on The New York Stock Exchange, owns the remaining two-thirds
interest in Oppenheimer Capital. PIMCO Partners G.P., general partner of PIMCO
Advisors, holds the sole general partner interest in Oppenheimer Capital, L.P.
o Portfolio Managers. The Fund's portfolio managers ,
Timothy McCormack, Timothy Curro and Gavin Albert, are employed by the
Sub-Adviser and are primarily responsible for the
selection of the Fund's portfolio securities. 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 . 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 and a graduate
student at the Vanderbilt University Business School from September 1992 to May
1994 .
The Sub-Adviser's equity investment policy is overseen by George Long, who
is Chairman, Chief Executive Officer and Chief Investment Officer for
Oppenheimer Capital. Mr. Long has been with Oppenheimer Capital since 1981.
o 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. The
Fund's management fee for its last fiscal year was ___% of average annual net
assets for its Class A, Class B and Class C shares, which may be higher than the
rate paid by some other mutual funds.
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.
Information about the Fund's brokerage policies and practices is set forth
in "Brokerage Policies of the Fund" in the Statement of Additional Information.
That section discusses how brokers and dealers are selected for the Fund's
portfolio transactions. When deciding which broker to use, the Manager and the
Sub-Adviser are permitted by the Investment Advisory Agreement to consider
whether brokers have sold shares of the Fund or any other funds for which the
Manager serves as investment adviser.
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
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 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.
o 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
considering the effect of the sales charge, and those returns would be less if
sales charges were deducted.
How Has the Fund Performed? Below is a discussion by the Manager of the Fund's
performance during its last fiscal year ended October 31, 1997, followed by a
graphical comparison of the Fund's performance to an appropriate broad-based
market index.
o Management's Discussion of Performance. [During the Fund's fiscal year
ended October 31, 1997 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 holdings, allocations and strategies are subject to change.]
o 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, 1997. 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. Class A Shares Comparison of Change in
Value of $10,000 Hypothetical Investment In: Oppenheimer Quest Small Cap Value
Fund (Class A) and the Russell Index
[Graph]
Average Annual Total Returns of
Class A Shares of the Fund at 10/31/971
1 Year 5 Years Life of Class
% % %
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investment In:
Oppenheimer Quest Small Cap Value Fund (Class B) and the Russell 2000 Index
[Graph]
Average Annual Total Returns of Class B Shares of the Fund at 10/31/972
1 Year Life of Class
% %
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investment In:
Oppenheimer Quest Small Cap Value Fund (Class C) and the Russell 2000 Index
[Graph]
Average Annual Total Returns of Class C Shares of the Fund at 10/31/973
1 Year Life of Class
% %
Total returns and ending account values in the graphs show change in share value
and include reinvestment of all dividends and capital gains distributions. The
performance information for the Russell 2000 Index begins on 12/31/88 for Class
A shares and 8/31/93 for Class B and Class C shares. 1The inception date of the
Fund (Class A shares) was 1/3/89. Class A returns are shown net of the
applicable 5.75% maximum initial sales charge.
2Class B shares of the Fund were first publicly offered on 9/1/93. Returns are
shown net of the applicable 5% and 2% contingent deferred sales charges,
respectively, for the one year period and the life-of -class. The ending account
value for Class B shares in the graph is net of the applicable 2% contingent
deferred sales charge. 3Class 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. Past performance is not predictive of future performance.
Graphs are not drawn to same scale.
-7-
<PAGE>
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.
o 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 12 months of buying them (18 months if the shares were purchased
prior to May 1, 1997), 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.
o 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.
o Class C Shares. If you buy Class C shares, you pay no sales charge at
the time of purchase, but if you sell your shares within 12 months of buying
them, you will normally pay a contingent deferred sales charge of 1% as
described in "Buying Class C Shares" below.
Which Class of Shares Should You Choose? Once you decide that the Fund is an
appropriate investment for you, the decision as to which class of shares is
better suited to your needs depends on a number of factors which you should
discuss with your financial advisor. The Fund's operating costs that apply to a
class of shares and the effect of the different types of sales charges on your
investment will vary your investment results over time. The most important
factors to consider are how much you plan to invest and how long you plan to
hold your investment. If your goals and objectives change over time and you plan
to purchase additional shares, you should re-evaluate those factors to see if
you should consider another class of shares.
In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund. We used the sales
charge rates that apply to each class, and considered the effect of the higher
annual 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.
o 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.
o 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.
o 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.
o 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.
o 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. The Distributor may pay additional periodic compensation from
its own resources to securities dealers or financial institutions based upon the
value of shares of the Fund owned by the dealer or financial institution for its
own account or for its customers.
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:
o 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.
o Under pension, profit-sharing and 401(k) plans and Individual
Retirement Accounts (IRAs), you can make an initial investment of as little as
$250 (if your IRA is established under an Asset Builder Plan, the $25 minimum
applies), and subsequent investments may be as little as $25.
There is no minimum investment requirement if you are buying shares by
reinvesting dividends or distributions 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.
o 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.
o Buying Shares Through Your Dealer. Your dealer will place your
order with the Distributor on your behalf.
o 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.
Payment by Federal Funds Wire: Shares may be purchased by Federal Funds wire.
The minimum investment is $2,500. You must first call the Distributor's Wire
Department at 1-800-525-7041 to notify the Distributor of the wire, and receive
further instructions.
o 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.
o 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.
o 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, or the order is received and transmitted to the Distributor by
an entity authorized by the Fund to accept purchase or redemption orders. The
Fund has authorized the Distributor, certain broker-dealers and agents or
intermediaries designated by the Distributor or those broker-dealers to accept
orders. In most cases, to enable you to receive that day's offering price, the
Distributor or an authorized entity 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, normally your order
must be transmitted 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:
Front-End Sales Charge Commission
As a Percentage of as Percentage
Offering Amount of Offering
Amount of Purchase Price Invested Price
- --------------------------------------------------------------------------------
Less than $25,000 5.75% 6.10% 4.75%
- --------------------------------------------------------------------------------
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
- --------------------------------------------------------------------------------
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
- --------------------------------------------------------------------------------
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
- --------------------------------------------------------------------------------
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
- --------------------------------------------------------------------------------
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
The Distributor reserves the right to reallow the entire commission to dealers.
If that occurs, the dealer may be considered an "underwriter" under Federal
securities laws.
-8-
<PAGE>
o 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:
o Purchases by a retirement plan qualified under section 401(a) of the
Internal Revenue Code if the retirement plan has total plan assets of $500,000
or more.
o Purchases aggregating $1 million or more.
o 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,
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.
o 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, and calculated on a
calendar year basis. 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 purchased prior to May 1, 1997 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. A Class A contingent deferred sales
charge may be deducted from the redemption proceeds of any of those shares
purchased on or after May 1, 1997 that are redeemed within 12 months of the end
of the calendar month of their purchase. That sales charge may be equal to 1.0%
of the lesser of (1) the aggregate net asset value of the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original offering price (which is the original net
asset value) of the redeemed shares. However, the Class A contingent deferred
sales charge will not exceed the aggregate amount of the commissions the
Distributor paid to your dealer on all Class A shares of all Oppenheimer funds
you purchased subject to the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is payable, the
Fund will first redeem shares that are not subject to the sales charge,
including shares purchased by reinvestment of dividends and capital gains, and
then will redeem other shares in the order that you purchased them. The Class A
contingent deferred sales charge is waived in certain cases described in
"Waivers of Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges of
shares under the Fund's exchange privilege (described below). However, if the
shares acquired by exchange are redeemed within 18 months of the end of the
calendar month of the purchase of the exchanged shares, the contingent deferred
sales charge will apply.
o 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:
o 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 Distributor will add the value,
at current offering price, of the shares you previously purchased and currently
own to the value of current purchases to determine the sales charge rate that
applies. 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.
o 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.
o 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. In
order to receive a waiver of the Class A contingent deferred sales charge, you
must notify the Transfer Agent as to which conditions apply.
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:
o the Manager or its affiliates;
o 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;
o registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the Distributor for
that purpose;
o 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;
o 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);
o 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);
o (1) investment advisers and financial planners who have entered into an
agreement for this purpose with the Distributor and 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 investment advisers or financial
planners (that have entered into an agreement for this purpose with the
Distributor) 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 adviser 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)
o 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;
o employee benefit plans purchasing shares through a shareholder servicing
agent which the Distributor has appointed as agent to accept those purchase
orders;
o 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;
o any unit investment trust that has entered into an appropriate
agreement with the Distributor;
o 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
o 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 commenced 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:
o shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party;
o 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;
o 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;
o shares purchased and paid for with the proceeds of shares redeemed in
the prior 30 days 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
o 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:
o to make Automatic Withdrawal Plan payments that are limited annually to
no more than 12% of the original account value;
o involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (see "Shareholder Account Rules and Policies,"
below);
o if, at the time of purchase of shares (prior to May 1, 1997) the dealer
agreed in writing to accept the dealer's portion of the sales commission 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);
o if, at the time of purchase of shares (on or after May 1, 1997) the
dealer agrees in writing to accept the dealer's portion of the sales commission
in installments of 1/12th of the commission per month (and no further commission
will be payable if the shares are redeemed within 12 months of purchase);
o for distributions from a TRAC-2000 401(k) plan sponsored by the
Distributor due to the termination of the TRAC-2000 program;
o 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
subsidiaries) 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;
o for distributions from Retirement Plans having 500 or more eligible
participants, except distributions due to termination of all of the Oppenheimer
funds as an investment option under the Plan; and
o for distributions from 401(k) plans sponsored by broker-dealers that
have entered into a special agreement with the Distributor allowing this waiver.
o Distribution and Service Plan for Class A Shares. The Fund has adopted a
Distribution and Service Plan for Class A shares to compensate the Distributor
for its services in connection with the distribution of shares and 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 compensate
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 and (2) 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. Class B shares held for a period greater than 6 years
automatically convert to Class A shares.
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.
o 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.
o 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."
o 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.
o 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 may pay the Class B service fee and the asset-based sales charge
to the dealer quarterly in lieu of paying the sales commission and service fee
advance at the time of purchase.
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 may pay the Class C service fee and
asset-based sales charge to the dealer quarterly in lieu of paying the sales
commission and service fee advance at the time of purchase.
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. At
October 31, 1997, the end of the Class B Plan year, the Distributor had incurred
unreimbursed expenses in connection with sales of Class B shares of $ (equal to
% of the Fund's net assets represented by Class B shares on that date). At
October 31, 1997, the end of the Class C Plan year, the Distributor had incurred
unreimbursed expenses in connection with sales of Class C shares of $ (equal to
% of the Fund's net assets represented by Class C shares on that date).
o 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. In order to receive a waiver of the Class B or Class C contingent
deferred sales charge, you must notify the Transfer Agent as to which conditions
apply.
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 :
o 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);
o 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);
o returns of excess contributions to Retirement Plans;
o distributions from retirement plans to make "substantially equal
periodic payments" as permitted in 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);
o shares redeemed involuntarily, as described in "Shareholder Account
Rules and Policies," below; or
o distributions from OppenheimerFunds prototype 401(k) plans and from
certain Massachusetts Mutual Life Insurance Company 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; or (6) for loans to participants.
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:
o shares sold to the Manager or its affiliates;
o 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;
o shares issued in plans of reorganization to which the Fund is a
party; or
o distributions from 401(k) plans sponsored by broker-dealers that have
entered into a special agreement with the Distributor allowing this waiver.
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.
o 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.
o 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.
o 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.
o 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.
o 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.
Shareholder Transactions by Fax. Requests for certain account transactions may
be sent to the Transfer Agent by fax (telecopier). Please call 1-800-525-7048
for information about which transactions are included. Transaction requests
submitted by fax are subject to the same rules and restrictions as written and
telephone requests described in this Prospectus.
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:
o 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.
o 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:
o Individual Retirement Accounts including rollover IRAs, for individuals
and their spouses and SIMPLE IRAs offered by employers
o 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
o SEP-IRAs (Simplified Employee Pension Plans) for small business owners
or people with income from self-employment, including SAR/SEP IRAs
o Pension and Profit-Sharing Plans for self-employed persons and
other employers
o 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.
o 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.
o 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):
o You wish to redeem more than $50,000 worth of shares and receive a
check
o The redemption check is not payable to all shareholders listed on the
account statement
o The redemption check is not sent to the address of record on your
account statement
o Shares are being transferred to a Fund account with a different owner
or name
o Shares are redeemed by someone other than the owners (such as an
Executor)
o 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:
o Your name
o The Fund's name
o Your Fund account number (from your account statement) o The dollar
amount or number of shares to be redeemed o Any special payment
instructions o Any share certificates for the shares you are selling o The
signatures of all registered owners exactly as the account is
registered, and
o 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 Service 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.
o To redeem shares through a service representative, call 1-800-852-8457 o
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.
o 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.
o 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 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:
o Shares of the fund selected for exchange must be available for sale
in your state of residence
o The prospectuses of this Fund and the fund whose shares you want to
buy must offer the exchange privilege
o 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
o You must meet the minimum purchase requirements for the fund you
purchase by exchange
o 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:
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<PAGE>
o 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."
o 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:
o 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.
o 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.
o 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.
o 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.
o 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
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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 federal funds wire, certified check or arrange to have your
bank provide telephone or written assurance to the Transfer Agent that your
purchase payment has cleared.
o 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.
o 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.
o "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 correct and properly certified
Social Security or Employer Identification Number when you sign your
application, or if you under report your income to the Internal Revenue Service
.
o 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.
o 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:
o 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.
o 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.
o 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.
o Reinvest Your Distributions in Another Oppenheimer Fund Account. You
can reinvest all distributions in the same class of shares of 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. So that the Fund will
not have to pay taxes on the amounts it distributes to shareholders as dividends
and capital gains, the Fund intends to manage its investments so that it will
qualify as a "regulated investment company" under the Internal Revenue Code,
although it reserves the right not to qualify in a particular year.
o "Buying a Dividend". 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.
o 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.
o 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.
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<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
o Reduced Class A Initial Sales Charge Rates for Certain Former Quest
Shareholders
o Purchases by Groups, Associations and Certain Qualified Retirement Plans. The
following table sets forth the initial sales charge rates for Class A shares
purchased by a "Qualified Retirement Plan" through a single broker, dealer or
financial institution, or by members of "Associations" formed for any purpose
other than the purchase of securities if that Qualified Retirement Plan or that
Association purchased shares of any of the Former Quest for Value Funds or
received a proposal to purchase such shares from OCC Distributors prior to
November 24, 1995. For this purpose only, a "Qualified Retirement Plan" includes
any 401(k) plan, 403(b) plan, and SEP/IRA or IRA plan for employees of a single
employer.
Front-End Front-End
Sales Sales Commission
Charge Charge as
as a as a Percentage
Number of Percentage Percentage of
Eligible Employees of Offering of Amount Offering
or Members Price Invested Price
- --------------------------------------------------------------------------
9 or fewer 2.50% 2.56% 2.00%
- --------------------------------------------------------------------------
At least 10 but not
more than 49 2.00% 2.04% 1.60%
For purchases by Qualified Retirement plans and Associations having 50 or
more eligible employees or members, there is no initial sales charge on
purchases of Class A shares, but those shares are subject to the Class A
contingent deferred sales charge described on pages __ 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.
o 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:
o 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.
o 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.
o 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:
o 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.
o 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
o 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 Class 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.
o 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 Class 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, Class B or Class 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.
A-1
<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 10/31/97, 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 10/31/97. The graph will compare such values with hypothetical
$10,000 investments over the time periods indicated below in the Russell 2000
Index. Set forth below are the relevant data points that will appear on the
linear graph. Additional information with respect to the foregoing, including a
description of the and Russell 2000 Index, is set forth in the Prospectus under
"Performance of the Fund - Comparing the Fund's Performance to the Market."
Oppenheimer
Fiscal Quest Small Cap Russell
Period Ended Fund A 2000 Index
- ------------ --------------- ----------
01/03/89 $ 9,425 $10,000(1)
10/31/89 $10,283 $11,505
10/31/90 $ 8,398 $ 8,365
10/31/91 $13,018 $13,267
10/31/92 $14,528 $14,525
10/31/93 $18,917 $19,232
10/31/94 $18,925 $19,173
10/31/95 $20,593 $22,686
10/31/96 $24,128 $26,466
10/31/97 $ $
Oppenheimer
Fiscal Quest Small Cap Russell
Period Ended Fund B 2000 Index
- ------------ --------------- ----------
09/01/93 $10,000 $10,000(2)
10/31/93 $10,273 $10,547
10/31/94 $10,233 $10,515
10/31/95 $11,069 $12,441
10/31/96 $12,604 $14,514
10/31/97 $ $
Oppenheimer
Fiscal Quest Small Cap Russell
Period Ended Fund C 2000 Index
_____________ ______________ __________
09/01/93 $10,000 $10,000(2)
10/31/93 $10,279 $10,547
10/31/94 $10,227 $10,515
10/31/95 $11,069 $12,441
10/31/96 $12,901 $14,514
10/31/97 $ $
- ---------------------
(1) Performance information for the Russell 2000 Index begins on 12/31/88 for
Class A shares (2) Performance information for the Russell 2000 Index begins on
8/31/93 Class B and Class C shares
.
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
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 0298 Printed on recycled paper
prosp\251psp.# 2
B-2
<PAGE>
OPPENHEIMER QUEST SMALL CAP VALUE FUND
Two World Trade Center, New York, New York 10048
1-800-525-7048
Statement of Additional Information dated January 26, 1998
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 January 26, 1998.
It should be read together with the Prospectus, which may be obtained upon
written request to the Fund's Transfer Agent, OppenheimerFunds Services at P.O.
Box 5270, Denver, Colorado 80217, or by calling the Transfer Agent at the
toll-free number shown above.
Contents
Page
About the Fund
Investment Objective and Policies......................................
Investment Policies and Strategies.................................
Other Investment Techniques and Strategies.........................
Other Investment Restrictions......................................
How the Fund is Managed ...............................................
Organization and History...........................................
Trustees and Officers of the Trust.................................
The Manager and Its Affiliates.....................................
Brokerage Policies of the Fund.........................................
Performance of the Fund................................................
Distribution and Service Plans.........................................
About Your Account
How To Buy Shares..................................................
How To Sell Shares....................................................
How To Exchange Shares................................................
Dividends, Capital Gains and Taxes....................................
Additional Information About the Fund.................................
Financial Information About the Fund
Report of Independent Accountants......................................
Financial Statements...................................................
Appendix A: Description of Ratings..................................... A-1
Appendix B: Corporate Industry Classifications......................... B-1
-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.
o 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 (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.
o 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.
o 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.
o U.S. Government Obligations. 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.
|X| 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:
o 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.
o 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 deter
mines 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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. Illiquid securities include repurchase agreements
maturing in more than seven days, or certain participation interests other than
those with puts exercisable within seven days.
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.
o 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.
o 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 sell them and can reduce the price the Fund might
be able to obtain for them. If other investors holding the same securities as
the Fund sell them 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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 unless the option is subject
to a buy back agreement by the executing broker. The 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.
o 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).
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.
o 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:
o invest in physical commodities or physical commodity contracts ;
however, the Fund may: (i) buy and sell hedging instruments to the extent
specified in its Prospectus from time to time, and (ii) buy and sell options,
futures, securities or other instruments backed by, or the investment return
from which is linked to, changes in the price of physical commodities;
o 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;
o 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 ;
o 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;
o 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;
o invest for the purpose of exercising control or management of another
company;
o 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
o 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.
Non-Fundamental Investment Restrictions. The following operating policies of the
Fund are not fundamental policies and, as such, may be changed by vote of a
majority of the Fund's Board of Trustees without shareholder approval. These
additional restrictions provide that the Fund cannot:
o 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 (collateral arrangements in connection with transactions in futures
and options are not deemed to be margin transactions);
o 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 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. The percentage
restrictions described above and in the Prospectus apply only at the time of
investment and require no action by the Fund as a result of subsequent changes
in relative values.
How the Fund is Managed
Organization and History. The Fund is one of four portfolios of the Trust, a
Massachusetts business trust named Oppenheimer Quest For Value Funds . 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 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. All of the Trustees are directors or trustees of Oppenheimer Quest For
Value Funds (Oppenheimer Quest Opportunity Value Fund, Oppenheimer Quest Growth
& Income Value Fund, Oppenheimer Quest Small Cap Value Fund and Oppenheimer
Quest Officers Value Fund), Oppenheimer Quest Value Fund, Inc., Oppenheimer
Quest Global Value Fund, Inc. and Oppenheimer Quest Capital Value Fund, Inc.
(collectively, the "Oppenheimer Quest Funds") , 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") and Oppenheimer MidCap Fund. As of January __, 1998, 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 officers of the Fund
listed below.
Bridget A. Macaskill, Chairman of the Board of Trustees and President; Age: 49
President (since June 1991), Chief Executive Officer (since September 1995) and
a Director (since December 1994) of the Manager ; President and director (since
June 1991) of HarbourView Asset Management Corporation ("HarbourView"), a
subsidiary of the Manager; Chairman and a director of Shareholder Services, Inc.
("SSI") (since August 1994) and Shareholder Financial Services, Inc. ("SFSI")
(September 1995), transfer agent subsidiaries of the Manager; President (since
September 1995) and a director (since October 1990) of Oppenheimer Acquisition
Corp. ("OAC"), the Manager's parent holding company; President (since September
1995) and a director (since November 1989) of Oppenheimer Partnership Holdings,
Inc., a holding company subsidiary of the Manager; a director of Oppenheimer
Real Asset Management, Inc. (since July 1996); President and a director (since
October 1997) of OppenheimerFunds International Ltd. ("OFIL"), an offshore fund
manager subsidiary of the Manager and Oppenheimer Millennium Funds plc (since
October 1997); President and a director of other Oppenheimer funds; a director
of the NASDAQ Stock Market, Inc. and of Hillsdown Holdings plc (a U.K. food
company); formerly an Executive Vice President of the Manager.
Paul Y. Clinton, Trustee; Age: 67 39 Blossom Avenue, Osterville, Massachusetts
02655 Principal of Clinton Management Associates (financial and venture capital
consulting firm); Trustee of Capital Cash Management Trust (money-market fund)
and Narraganssett Tax-Free Fund (tax- exempt bond fund); Director of OCC Cash
Reserves, Inc. and Trustee of OCC Accumulation Trust, (both open-end investment
companies). Formerly: Director,
External Affairs, Kravco Corporation,
( national real estate owner and property management corporation); President of
Essex Management Corporation (management consulting company); a general partner
of Capital Growth Fund (venture capital partnership); a general partner of Essex
Limited Partnership ( investment partnership); President of Geneve Corp.
(venture capital fund); Chairman of Woodland Capital Corp. (small business
investment company); and Vice President of W.R. Grace & Co.
Thomas W. Courtney, Trustee; Age: 64
833 Wyndemere Way, Naples, Florida 34105
Principal of Courtney Associates, Inc. (venture capital firm); former General
Partner of Trivest Venture Fund (private venture capital fund); Trustee of Cash
Assets Trust, (money market fund); Director of OCC Cash Reserves, Inc., and
Trustee of OCC Accumulation Trust, both open-end investment companies ); Trustee
of Hawaiian Tax-Free Trust and Tax Free Trust of Arizona, (both tax-exempt bond
funds); Director of several privately owned . Formerly President of Investment
Counseling Federated Investors, Inc.; former President of Boston Company
Institutional Investors; Director of Financial Analysts Federation.
- --------
1Trustee who is an "interested person" (as defined in the Investment Company
Act) of the Fund and the Trust.
Lacy B. Herrmann, Trustee; Age: 68
380 Madison Avenue, Suite 2300, New York, New York 10017
Chairman and Chief Executive Officer of Aquila Management Corporation
(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, Aquila Cascadia Equity Fund,
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 (both open-end investment companies;);
Trustee Emeritus of Brown University.
George Loft, Trustee; Age: 83
51 Herrick Road, Sharon, Connecticut 06069
Private Investor; Director of OCC Cash Reserves, Inc. and Trustee of OCC
Accumulation Trust (both open-end investment companies).
Robert C. Doll, Jr., Vice President; Age: 43
Executive Vice President and Director of the Manager (since January 1993) ;
Executive Vice President of HarbourView (since January 1993); Vice President and
a director of OAC (since September 1995); an officer of other Oppenheimer funds.
Gavin Albert, Portfolio Manager; Age 29 One World Financial Center, 200 Liberty
Street, New York, New York 10281 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 38
One World Financial Center, 200 Liberty Street, New York, New York 10281 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 33
One World Financial Center, 200
Liberty Street, New York, New York 10281 Vice President of Oppenheimer Capital;
previously a securities analyst with U. S. Trust Company, and prior thereto a
securities analyst with Gabelli & Company.
Andrew J. Donohue, Secretary; Age: 47
Executive Vice President (since January
1993), General Counsel (since October 1991) and a Director (since September
1995) of the Manager; Executive Vice President (since September 1993), and a
director (since January 1992) of OppenheimerFunds Distributor, Inc. (the
"Distributor"); Executive Vice President, General Counsel and a director of
HarbourView, SSI, SFSI and Oppenheimer Partnership Holdings, Inc. since
(September 1995) and MultiSource Services, Inc. (a broker-dealer) (since
December 1995); President and a director of Centennial Asset Management
Corporation ("Centennial") (since September 1995); President and a director of
Oppenheimer Real Asset Management, Inc. (since July 1996); General Counsel
(since May 1996) and Secretary (since April 1997) of OAC; Vice President of OFIL
and Oppenheimer Millennium Funds plc (since October 1997); an officer of other
Oppenheimer funds.
George C. Bowen, Treasurer; Age: 61
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President (since September 1987) and Treasurer (since March 1985) of
the Manager; Vice President (since June 1983) and Treasurer (since March 1985)
of the Distributor; Vice President (since October 1989) and Treasurer (since
April 1986) of HarbourView; Senior Vice President (since February 1992),
Treasurer (since July 1991) and a director (since December 1991) of Centennial;
President, Treasurer and a director of Centennial Capital Corporation (since
June 1989); Vice President and Treasurer (since August 1978) and Secretary
(since April 1981) of SSI; Vice President, Treasurer and Secretary of SFSI
(since November 1989); Treasurer of OAC (since June 1990); Treasurer of
Oppenheimer Partnership Holdings, Inc. (since November 1989); Vice President and
Treasurer of Oppenheimer Real Asset Management, Inc. (since July 1996); Chief
Executive Officer, Treasurer and a director of MultiSource Services, Inc., a
broker-dealer (since December 1995); an officer of other Oppenheimer funds.
Robert Bishop, Assistant Treasurer; Age: 39
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); an
officer of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for
the Manager.
Scott T. Farrar, Assistant Treasurer; Age: 32
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996);
Assistant Treasurer of Oppenheimer Millennium Funds plc (since October 1997);
an officer of other Oppenheimer funds;formerly an Assistant Vice President
of the Manager/Mutual Fund Accounting
(April 1994-May 1996), and a Fund Controller for the Manager.
Robert G. Zack, Assistant Secretary; Age: 49
Senior Vice President (since May 1985) and Associate General Counsel (since May
1981) of the Manager, Assistant Secretary of SSI (since May 1985), and SFSI
(since November 1989); Assistant Secretary of Oppenheimer Millennium Funds plc
(since October 1997); an officer of other Oppenheimer funds.
o 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, 1997 and
(ii) other investment companies (or series thereof) managed by the Manager
and/or the Sub-Adviser paid during the calendar year ended December 31, 1997.
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)
Paul Y. Clinton $ None None $
Thomas W. Courtney $ None None $
Lacy B. Herrmann $ None None $
George Loft $ None None $
(1) For the purpose of the chart above, "Fund Complex" includes the Oppenheimer
Quest Funds (including the fund), the Oppenheimer Rochester Funds, Oppenheimer
MidCap Fund and three other funds advised by the Sub-Adviser (the "Sub-Adviser
Funds"). For these purposes, each series constitutes a separate fund. Messrs.
Clinton and Courtney served as directors or trustees of two Sub- Adviser Funds,
for which they are to receive $______ and $______, respectively, and Messrs.
Herrmann and Loft served as a directors or trustees of three Sub-Adviser Funds,
for which they are to receive $_______ and $_______, respectively. Effective
April 1997, Messrs. Herrmann and Loft resigned as trustees from the third
Sub-Adviser fund.
Deferred Compensation Plan. The Board of Trustees has adopted a Deferred
Compensation plan for disinterested trustees that enables them to elect to defer
receipt of all or a portion of the annual fees they are entitled to receive from
the Fund. Under the plan, the compensation deferred by a Trustee is periodically
adjusted as though an equivalent amount had been invested in shares of one or
more Oppenheimer funds selected by the Trustee. The amount paid to the Trustee
under the plan will be determined based upon the performance of the selected
funds. Deferral of Trustees' fees under the plan will not materially affect the
Fund's assets, liabilities and net income per share. The plan will not obligate
the Fund to retain the services of any Trustee or to pay any particular level of
compensation to any Trustee. Pursuant to an order issued by the SEC, the Fund
may invest in the funds selected by the Trustee under the plan for the limited
purpose of determining the value of the Trustee's deferred fee account.
o Major Shareholders. As of January __, 1998, 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
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 Trust and one of whom (Ms. Macaskill) also
serves as an officer and a Trustee of the Trust.
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.
o Portfolio Management. The Portfolio Managers of the Fund are
Timothy McCormack, Timothy Curro and Gavin Albert, who are principally
responsible for the day-to-day
management of the Fund's portfolio. Their backgrounds are described in the
Prospectus under
"Portfolio Managers".
o The Investment Advisory Agreement. The Manager acts as investment
adviser to the Fund pursuant to the terms of an Investment Advisory Agreement
dated May 27, 1997, as amended on October 22, 1997, which replaced the
Investment Advisory Agreement dated as of November 22, 1995. The Investment
Advisory 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 agreement on February 4, 1997 and by the shareholders of the Fund at a
meeting held for that purpose on May 27, 1997. 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 22, 1995 (when the Manager became the investment adviser to the Fund)
to October 31, 1996 (the "Fiscal Period") and the fiscal year ended October 31,
1997, the Fund paid to the Manager $1,467,707 and $________, respectively, in
management fees. During the Fiscal Period and the fiscal year ended October 31,
1997, the Fund also paid or accrued accounting service fees to the Manager in
the amounts of $51,634 and $______, respectively.
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" or "Quest For Value" in
connection with its other investment companies for which it may act as an
investment adviser or general distributor. If the Manager shall no longer act as
investment adviser to a Fund, the right of the Fund to use
"Oppenheimer" or "Quest For Value" as part of its name may be withdrawn.
The Investment Advisory Agreement provides that the Manager may enter
into sub-advisory agreements with other affiliated or unaffiliated registered
investment advisers in order to obtain specialized services for the Funds
provided that the Fund is not required to pay any additional fees for such
services. The Manager has retained the Sub-Adviser pursuant to a separate
Subadvisory Agreement dated as of November 5, 1997 with respect to the Fund,
described below, which replaced the Subadvisory Agreement dated as of November
22, 1995.
o 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 $1,456,594 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 year ended October 31, 1995 and for the Interim Period, the
Fund paid or accrued accounting services fees to the Sub-Adviser in the amounts
of $53,951, and $2,292, respectively. During such time periods, the Trust
retained the services of State Street Bank and Trust Company 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 year ended
October 31, 1995 in the amount of $55,000 ; no fees were accrued or paid with
respect to the Interim Period.
o 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 agreement on
February 28, 1997 and by the shareholders of the Fund at a meeting held for that
purpose on May 27, 1997.
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 November 22, 1995 (the
"Base Amount") plus 30% of the investment advisory fee collected by the Manager
based on the total net assets of the Fund that exceed the Base Amount.
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 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. On November 4, 1997, PIMCO
Advisors L.P. ("PIMCO Advisors"), a registered investment adviser with $125
billion in assets under management through various subsidiaries, acquired
control of Oppenheimer Capital and the Sub-Adviser. Value Advisors LLC, a
limited liability company and a wholly-owned subsidiary of PIMCO Advisors, holds
a one-third managing general partner interest in Oppenheimer Capital and a 1.0%
general partner interest in the Sub-Adviser. Oppenheimer Capital L.P., a
Delaware limited partnership whose units are traded on The New York Stock
Exchange, owns the remaining two-thirds interest in Oppenheimer Capital. PIMCO
Partners G.P., general partner of PIMCO Advisors, holds the sole general partner
interest in Oppenheimer Capital, L.P.
PIMCO Partners, G.P. ("PIMCO GP") owns approximately 42.83% and 66.37%,
respectively, of the total outstanding Class A and Class B units of limited
partnership interest ("Units") of PIMCO Advisors' sole general partner. PIMCO GP
is a California general partnership with two general partners. The first of
these is Pacific Investment Management Company, which is a California
corporation and is wholly-owned by Pacific Financial Asset Management Company, a
direct subsidiary of Pacific Life Insurance Company ("Pacific Life").
The managing general partner of PIMCO GP is PIMCO Partners L.L.C.
("PPLLC"), a California limited liability company. PPLLC's members are the
Managing Directors (the "PIMCO Managers") of Pacific Investment Management
Company, a subsidiary of PIMCO Advisors (the "PIMCO Subpartnership"). The PIMCO
Managers are: William H. Gross, Dean S. Meiling, James F. Muzzy, William F.
Podlich, III, Frank B. Rabinovitch, Brent R. Harris, John L. Hague, William S.
Thompson Jr., William C. Powers, David H. Edington, Benjamin Trosky, William R.
Benz, II and Lee R. Thomas, III.
PIMCO Advisors is governed by an Operating Board and an Equity Board.
Because of its power to appoint (directly or indirectly ) seven of the twelve
members of the Operating Board, the PIMCO Subpartnership may be deemed to
control PIMCO Advisors. Because of direct or indirect power to appoint 25% of
the members of the Equity Board, (i) Pacific Life and (ii) the PIMCO Managers
and/or the PIMCO Subpartnership may each be deemed, under applicable provisions
of the investment Company Act, to control PIMCO Advisors. Pacific Life, the
PIMCO Subpartnership and the PIMCO Managers disclaim such control.
o 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, 1997,
the aggregate amount of sales charges on sales of the Fund's Class A shares was
$_______, of which the Distributor and affiliated brokers retained $_______.
During the fiscal year ended October 31, 1997, the Distributor received
contingent deferred sales charges of $______ upon redemption of Class B shares,
and received contingent deferred sales charges of $_____ upon redemption of
Class C shares. For additional information about distribution of the Fund's
shares and the expenses connected with such activities, please refer to
"Distribution and Service Plans" below.
o The Transfer Agent. OppenheimerFunds Services acts as the Fund's
Transfer Agent pursuant to a Transfer Agency and Service 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.
o 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.
-2-
<PAGE>
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory and Subadvisory Agreement. The
Investment Advisory Agreement contains provisions relating to the selection of
broker-dealers ("brokers") for the Fund's portfolio transactions. The Manager
and the Sub-Adviser may use such brokers as may, in their best judgment based on
all relevant factors, implement the policy of the Fund to achieve best execution
of portfolio transactions. While the Manager need not seek advance competitive
bidding or base its selection on posted rates, it is expected to be aware of the
current rates of most eligible brokers and to minimize the commissions paid to
the extent consistent with the interests and policies of the Fund as established
by its Board and the provisions of the Investment Advisory Agreement.
The Investment Advisory Agreement also provides that, consistent with
obtaining the best execution of the Fund's portfolio transactions, the Manager
and the Sub-Adviser, in the interest of the Fund, may select brokers other than
affiliated brokers, because they provide brokerage and/or research services to
the Fund and/or other accounts of the Manager or the Sub-Adviser. The
commissions paid to such brokers may be higher than another qualified broker
would have charged if a good faith determination is made by the Manager or the
Sub-Adviser that the commissions are reasonable in relation to the services
provided, viewed either in terms of that transaction or the Manager's or the
Sub-Adviser's overall responsibilities to all its accounts. No specific dollar
value need be put on the services, some of which may or may not be used by the
Manager or the Sub-Adviser for the benefit of the Fund or other of its advisory
clients. To show that the determinations were made in good faith, the Manager or
any Sub-Adviser must be prepared to show that the amount of such commissions
paid over a representative period selected by the Board was reasonable in
relation to the benefits to the Fund. The Investment Advisory Agreement
recognizes that an affiliated broker-dealer may act as one of the regular
brokers for the Fund provided that any commissions paid to such broker are
calculated in accordance with procedures adopted by the Trust's Board under
applicable rules of the ("SEC") SEC.
In addition, the Subadvisory Agreement permits the Sub-Adviser to enter
into "soft dollar" arrangements through the agency of third parties to obtain
services for the Fund. Pursuant to these arrangements, the Sub-Adviser will
undertake to place brokerage business with broker-dealers who pay third parties
that provide services. Any such "soft dollar" arrangements will be made in
accordance with policies adopted by the Board of the Trust and in compliance
with applicable law.
Description of Brokerage Practices. Portfolio decisions are based upon
recommendations of the portfolio manager and the judgment of the portfolio
managers. The Fund will pay brokerage commissions on transactions in listed
options and equity securities. Prices of portfolio securities purchased from
underwriters of new issues include a commission or concession paid by the issuer
to the underwriter, and prices of debt securities purchased from dealers include
a spread between the bid and asked prices.
Transactions may be directed to dealers during the course of an
underwriting in return for their brokerage and research services, which are
intangible and on which no dollar value can be placed. There is no formula for
such allocation. The research information may or may not be useful to one or
more of the Fund and/or other accounts of the Manager or the Sub-Adviser;
information received in connection with directed orders of other accounts
managed by the Manager or the Sub- Adviser or its affiliates may or may not be
useful to one or more of the Funds. Such information may be in written or oral
form and includes information on particular companies and industries as well as
market, economic or institutional activity areas. It serves to broaden the scope
and supplement the research activities of the Manager or the Sub-Adviser, to
make available additional views for consid eration 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 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, 1995, 1996
and 1997. Prior to November 3, 1997, Oppenheimer & Co., Inc. ("OpCo"), a
broker-dealer, was an affiliate of the Sub-Adviser.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
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 %
- ----------- ----------- ------- - ------- -
1995 $400,477 $161,399 40.3% $52,738,643 36.6%
1996 $362,454 $147,765 40.8% $61,029,692 29.1%
1997 $ $ % $ %
</TABLE>
During the Fund's fiscal year ended October 31, 1997, $______ was paid by
the Fund to brokers as commissions in return for research services; the
aggregate dollar amount of those transactions was $___________. Performance of
the Fund
Total Return Information. As described in the Prospectus, from time to time the
"average annual total return," "cumulative total return" and "total return at
net asset value" of an investment in a class of shares of the Fund may be
advertised. An explanation of how these total returns are calculated for each
class and the components of those calculations is set forth below.
The Fund's advertisements of its performance data must, under applicable
SEC rules, include the average annual total returns for each class 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.
o 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, 1997 and for the period from January 3, 1989 (commencement of
operations) to October 31, 1997 were _____%, ______% and _______%, respectively.
The average annual total returns on Class B shares for the one-year period
ended October 31, 1997 and for the period September 1, 1993 (commencement of the
public offering of the class) through October 31, 1997 were _____% and ____%,
respectively.
The average annual total returns on Class C shares for the one-year period
ended October 31, 1997 and for the period September 1, 1993 (commencement of the
public offering of the class) through October 31, 1997 were _____% and ____%,
respectively.
o 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 (5.0% for the first year, 4.0% for the second
year, 3.0% for the third and fourth years, 2% for the fifth year, 1.0% 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, 1997 was ______%.
The cumulative total return on Class B shares for the period from September 1,
1993 (commencement of the public offering of the class) through October 31, 1997
was _____%. The cumulative total return on Class C shares for the period from
September 1, 1993 (commencement of the public offering of the class) through
October 31, 1997 was _______%.
o 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, 1997 and for the
period from January 1, 1989 (commencement of operations) to October 31, 1997
were 13.13%_____%, _____% and _____%, respectively. The cumulative total return
at net asset value on the Fund's Class A shares for the period January 1, 1989
through October 31, 1997 was ___%.
The average annual total returns at net asset value on the Fund's Class B
shares for the one year period ended October 31, 1997 and for the period from
September 1, 1993 (commencement of the public offering of the class) through
October 31, 1997 were 16.57%_____% and ____%, respectively. The cumulative total
return at net asset value on the Fund's Class B shares for the period September
1, 1993 through October 31, 1997 was _______%.
The average annual total returns at net asset value on the Fund's Class C
shares for the one-year period ended October 31, 7 and for the period September
1, 1993 (commencement of the public offering of the class) through October 31,
1997 were _____% and ____%, respectively. The cumulative total return at net
asset value on the Fund's Class C shares for the period September 1, 1993
through October 31, 1997 was ______%.
Other Performance Comparisons. From time to time the Fund may publish the
ranking of its Class A, Class B and/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. ("Morningstar"),
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 investment
returns. The Fund is ranked among domestic equity funds. Investment return
measures 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. From time to time, the Fund may include
in its advertisements and sales literature performance information about the
Fund cited in newspapers and other periodicals, such as The New York Times,
which may include performance quotations from other sources including Lipper.
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 and Agreements, each dated November 22, 1996, for Class A, Class B
and Class C shares of the Fund under Rule 12b-1 of the Investment Company Act
pursuant to which the Fund will compensate the Distributor for all or a portion
of its costs incurred in connection with the distribution and/or servicing of
the shares of that class, as described in the Prospectus. Each Plan has been
approved by a vote of (i) the Board of 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 February 4, 1997 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 May 27, 1997. The Plans replace the amended and restated
distribution and service plans and agreements dated November 22, 1995.
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.
-3-
<PAGE>
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 an SEC 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
detailing services rendered in connection with the distribution of shares, the
amount of all payments made pursuant to each Plan, and the purpose for which the
payments were made . The reports shall also include the distribution costs for
that quarter, and such costs for previous fiscal periods that are carried
forward, as explained in the Prospectus and below. Those reports, including the
allocations on which they are based, will be subject to the review and approval
of the Independent Trustees in the exercise of their fiduciary duty. Each Plan
further provides that while it is in effect, the selection and nomination of
those Trustees of the Trust who are not "interested persons" of the Trust is
committed to the discretion of the Independent Trustees. This does not prevent
the involvement of others in such selection and nomination if the final decision
on any such selection or nomination is approved by a majority of the Independent
Trustees.
Under the Plans, no payment will be made to any Recipient in any quarter
if the aggregate net asset value of all Fund shares held by the Recipient for
itself and its customers did not exceed a minimum amount, if any, that may be
determined from time to time by a majority of the Trust's Independent Trustees.
Initially, the Board of Trustees has set the fee at the maximum rate and set no
requirement for a minimum amount.
The Plans allow the service fee payments to be paid by the Distributor to
Recipients in advance for the first year shares are outstanding, and thereafter
on a quarterly basis, as described in the Prospectus. The advance payment is
based on the net assets of shares of that class sold. An exchange of shares does
not entitle the Recipient to an advance service fee payment. In the event shares
are redeemed during the first year such shares are outstanding, the Recipient
will be obligated to repay a pro rata portion of such advance payment to the
Distributor.
Although the Plans permit the Distributor to retain both the asset-based
sales charge and the service fee, or to pay Recipients the service fee on a
quarterly basis, without payment in advance, the Distributor presently intends
to pay the service fee to Recipients in the manner described above. A minimum
holding period may be established from time to time under the Plans by the
Board. Initially, the Board has set no minimum holding period. All payments
under the Plans are subject to the limitations imposed by the Conduct Rules of
the National Association of Securities Dealers, Inc. on payments of asset-based
sales charges and service fees.
For the fiscal year ended October 31, 1997 (i) payments made under the
Class A Plan totaled $_______, of which $_______ was retained by the Distributor
and $_____ was paid to a dealer affiliated with the Distributor, (ii) payments
made under the Class B Plan totaled $_______, of which $_______ was retained by
the Distributor and $__ was paid to a dealer affiliated with the Distributor and
(iii) payments made under the Class C Plan totaled $_______, of which $______
was retained by the Distributor and $__ 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).
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, Martin Luther
King 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-type debt
securities held by a non-money market fund that had a maturity of less than 397
days when issued that have a remaining maturity of 60 days or less , and debt
instruments held by a money market fund that have a remaining maturity of 397
days or less, shall be 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 U.S. Government securities or mortgage-backed securities for which last
sale information is not generally available. 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 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 a 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.
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 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. Relations by virtue of a remarriage
(step-children, step-parents, etc.) are included.
o 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 Discovery Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income 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 Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer International Bond Fund
Oppenheimer International Growth Fund
Oppenheimer Enterprise Fund
Oppenheimer Quest Capital Value 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 Oppenheimer Real Asset Fund
Oppenheimer International Small Company Fund
Oppenheimer MidCap 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).
o Letters of Intent. A Letter of Intent ("Letter") is the investor's
statement in writing to the Distributor of the intention to purchase Class A
shares or Class A and Class B shares (or shares of either class) of the Fund
(and other eligible Oppenheimer funds) during the 13-month period from the
investor's first purchase pursuant to the Letter (the "Letter of Intent
period"), which may, at the investor's request, include purchases made up to 90
days prior to the date of the Letter. The Letter states the investor's intention
to make the aggregate amount of purchases (excluding any purchases made by
reinvestment of dividends or distributions or purchases made at net asset value
without sales charge), which together with the investor's holdings of such funds
(calculated at their respective public offering prices calculated on the date of
the Letter) will equal or exceed the amount specified in the Letter. This
enables the investor to count the shares to be purchased under the Letter of
Intent to obtain the reduced sales charge rate on purchases of Class A shares of
the Fund (and other Oppenheimer funds) that applies under the Right of
Accumulation to current purchases of Class A shares. Each purchase of Class A
shares under the Letter will be made at the public offering price (including the
sales charge) that applies to a single lump-sum purchase of shares in the amount
intended to be purchased under the Letter.
In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of Intent
period, when added to the value (at offering price) of the investor's holdings
of shares on the last day of that period, do not equal or exceed the intended
purchase amount, the investor agrees to pay the additional amount of sales
charge applicable to such purchases, as set forth in "Terms of Escrow," below
(as those terms may be amended from time to time). The investor agrees that
shares equal in value to 5% of the intended purchase amount will be held in
escrow by the Transfer Agent subject to the Terms of Escrow. Also, the investor
agrees to be bound by the terms of the Prospectus, this Statement of Additional
Information and the Application used for such Letter of Intent, and if such
terms are amended, as they may be from time to time by the Fund, that those
amendments will apply automatically to existing Letters of Intent.
For purchases of shares of the Fund and other Oppenheimer funds by
OppenheimerFunds prototype 401(k) plans under a Letter of Intent, the Transfer
Agent will not hold shares in escrow. If the intended purchase amount under the
Letter entered into by an OppenheimerFunds prototype 401(k) plan is not
purchased by the plan by the end of the Letter of Intent period, there will be
no adjustment of commissions paid to the broker-dealer or financial institution
of record for accounts held in the name of that plan.
If the total eligible purchases made during the Letter of Intent period do
not equal or exceed the intended purchase amount, the commissions previously
paid to the dealer of record for the account and the amount of sales charge
retained by the Distributor will be adjusted to the rates applicable to actual
total purchases. If total eligible purchases during the Letter of Intent period
exceed the intended purchase amount and exceed the amount needed to qualify for
the next sales charge rate reduction set forth in the applicable prospectus, the
sales charges paid will be adjusted to the lower rate, but only if and when the
dealer returns to the Distributor the excess of the amount of commissions
allowed or paid to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the Distributor
will be used to purchase additional shares for the investor's account at the net
asset value per share in effect on the date of such purchase, promptly after the
Distributor's receipt thereof.
In determining the total amount of purchases made under a Letter, shares
redeemed by the investor prior to the termination of the Letter of Intent period
will be deducted. It is the responsibility of the dealer of record and/or the
investor to advise the Distributor about the Letter in placing any purchase
orders for the investor during the Letter of Intent period. All of such
purchases must be made through the Distributor.
o 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 sold with a front-end sales
charge or Class B 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 Policies,"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 "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 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 other than
public school 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 or association has made special arrangements with the
Distributor and all members of the group or association participating in or who
are eligible to participate in the plan(s) purchase Class A shares of the Fund
through a single investment dealer, broker, or other financial institution
designated by the group. "Group retirement plan" also includes qualified
retirement plans and non-qualified deferred compensation plans and IRAs that
purchase Class A shares of the Fund through a single investment dealer, broker,
or other financial institution, if that broker-dealer has made special
arrangements with the Distributor enabling those plans to purchase Class A
shares of the Fund at net asset value but subject to a contingent deferred sales
charge.
In addition to the discussion in the Prospectus relating to the ability of
Retirement Plans to purchase Class A shares at net asset value in certain
circumstances, there is no initial sales charge on purchases of Class A shares
of any one or more of the Oppenheimer funds by a Retirement Plan in the
following cases: (i) the recordkeeping for the Retirement Plan is performed on a
daily valuation basis by Merrill Lynch Pierce Fenner & Smith, Inc. ("Merrill
Lynch") and, on the date the plan sponsor signs the Merrill Lynch recordkeeping
service agreement, the Retirement Plan has $3 million or more in assets invested
in mutual funds other than those advised or managed by Merrill Lynch Asset
Management, L.P. ("MLAM") that are made available pursuant to a Service
Agreement between Merrill Lynch and the mutual fund's principal underwriter or
distributor and in funds advised or managed by MLAM (collectively, the
"Applicable Investments"); or (ii) the recordkeeping for the Retirement Plan is
performed on a daily valuation basis by an independent record keeper whose
services are provided under a contract or arrangement between the Retirement
Plan and Merrill Lynch. On the date the plan sponsor signs the Merrill Lynch
record keeping service agreement, the Plan must have $3 million or more in
assets, excluding assets held in money market funds, invested in Applicable
Investments; or (iii) the Plan has 500 or more eligible employees, as determined
by the Merrill Lynch plan conversion manager on the date the plan sponsor signs
the Merrill Lynch record keeping service agreement.
If a Retirement Plan's records are maintained on a daily valuation basis
by Merrill Lynch or an independent record keeper under a contract or alliance
arrangement with Merrill Lynch, and if on the date the plan sponsor signs the
Merrill Lynch record keeping service agreement the Retirement Plan has less than
$3 million in assets, excluding money market funds, invested in Applicable
Investments, then the Retirement Plan may purchase only Class B shares of one or
more of the Oppenheimer funds. Otherwise, the Retirement Plan will be permitted
to purchase Class A shares of one or more of the Oppenheimer funds. Any of those
Retirement Plans that currently invest in Class B shares of the Fund will have
their Class B shares be converted to Class A shares of the Fund once the Plan's
Applicable Investments have reached $5 million.
Any redemptions of shares of the Fund held by Retirement Plans whose
records are maintained on a daily valuation basis by Merrill Lynch or an
independent record keeper under a contract with Merrill Lynch that are currently
invested in Class B shares of the Fund shall not be subject to the Class B CDSC.
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.
o 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 that were
subject to the Class B 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.
o 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.
o 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 . 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 12 months of the end of the calendar
month of the initial purchase of the exchanged Class A shares (18 months if the
shares were initially purchased prior to May 1, 1997), 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.
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.
-4-
<PAGE>
Appendix A
DESCRIPTION OF RATINGS
Bond Ratings
o 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.
o 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.
o 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.
o 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.
o 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+").
o 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.
o 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.
o 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.
o 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".
A-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
Food
Gas
Utilities
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Information Technology
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
Wireless Services
B-1
A-2
<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
prosp\251sai.# 2
A-3
<PAGE>
Oppenheimer
Quest Growth & Income Value Fund
Prospectus dated January 26, 1998
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. The Fund seeks its investment objective
through investments 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 January
26, 1998 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 NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-1-
<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
-2-
<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, 1997.
o 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.
Class A Class B Class C
Shares Shares Shares
- ------------------------------------------------------------------------------
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 ear, declining shares are
original offering price or to 1% in the redeemed
redemption proceeds) sixth year and within 12
eliminated months of
hereafter(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)
(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 12 calendar months (18 months for shares purchased
prior to May 1, 1997)from the end of the calendar month during which you
purchased those 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.
o 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)
Class A Class B Class C
Shares Shares Shares
- ------------------------------------------------------------------------------
Management Fees % % %
- ------------------------------------------------------------------------------
12b-1 Distribution
Plan Fees % % %
- ------------------------------------------------------------------------------
Other Expenses % % %
- ------------------------------------------------------------------------------
Total Fund
Operating Expenses % % %
- ------------------------------------------------------------------------------
The numbers in the chart above are based upon the Fund's expenses in its
last fiscal year ended October 31, 1997. 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 the 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.
o 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 $ $ $ $
Class B Shares $ $ $ $
Class C Shares $ $ $ $
If you did not redeem your investment, it would incur the following
expenses:
1 year 3 years 5 years 10 years*
- ------------------------------------------------------------------------------
Class A Shares $ $ $ $
Class B Shares $ $ $ $
Class C Shares $ $ $ $
*In the first example, expenses include the Class A initial sales charge and the
applicable Class B or Class C contingent deferred sales charge. In the second
example, Class A expenses include the initial sales charge, but Class B and
Class C expenses do not include contingent deferred sales charges. The Class B
expenses in years 7 through 10 are based on the Class A expenses shown above,
because the Fund automatically converts your Class B shares into Class A shares
after 6 years. Because of the effect of the higher asset-based sales charge and
the contingent deferred sales charge imposed on Class B and Class C shares,
long-term holders of Class B and Class C shares could pay the economic
equivalent of more than the maximum front-end sales charge allowed under
applicable regulations. For Class B shareholders, the automatic conversion of
Class B shares to Class A shares is designed to minimize the likelihood that
this will occur. Please refer to "How to Buy Shares - Buying Class B Shares" for
more information.
These examples show the effect of expenses on an investment, but are not
meant to state or predict actual or expected costs or investment returns of the
Fund, all of which may be more or less than those shown.
-3-
<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.
o 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 value.
o What Does the Fund Invest In? The Fund seeks its investment objective
by investing in securities that are believed to be undervalued in the
marketplace and to offer the possibility of increased value. 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 securities. These investments are more fully
explained in "Investment Policies and Strategies," starting on page ___.
o Who Manages the Fund? The Manager, OppenheimerFunds, Inc., supervises the
Fund's investment program and handles its day-to-day business. The Manager
(including subsidiaries) manages investment company portfolios having over $__
billion in assets as of December 31, 1997. 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, Colin Glinsman, 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.
o 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.
o 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.
o Will I Pay a Sales Charge to Buy Shares? The Fund has three classes of
shares. Each class of shares has the same investment portfolio but has 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 purchase.
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.
o 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 __.
o 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, 1997, is included in
the Statement of Additional Information.
-4-
<PAGE>
Investment Objective and Policies
Objective. The Fund seeks to achieve a combination of growth of capital and
investment income with growth of capital as the primary objective value.
Investment Policies and Strategies. The Fund seeks its investment objective by
investing in securities that are believed to be undervalued in the marketplace
and to offer the possibility of increased value. 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.
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 such U.S. Government securities and money market instruments.
o Can the Fund's Investment Objective and Policies Change? The Fund has
an investment objective, which is described above, as well as investment
policies it follows to try to achieve its objective. Additionally, the Fund uses
certain investment techniques and strategies in carrying out those investment
policies. The Fund's investment policies and practices in are not fundamental
unless this Prospectus or the Statement of Additional Information states that a
particular policy is "fundamental". The Fund's investment objective is a
fundamental policy.
Fundamental policies are those that cannot be changed without the
approval of a "majority" of the Fund's outstanding voting shares. The term
"majority" is defined in the Investment Company Act of 1940 to be a particular
percentage of outstanding voting shares (and this term is explained in the
Statement of Additional Information). The Board of 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.
o Investment in Bonds and Convertible Securities. The Fund may invest
in bonds, debentures and other debt securities. The Fund may invest up to 25% of
its total assets in debt securities that are rated below "investment grade"
(commonly known as "junk bonds"). Such securities have a rating lower than "Baa"
by Moody's Investors Services, Inc. ("Moody's") or lower than "BBB" by Standard
& Poor's Corporation ("S&P") or similar ratings by other rating organizations,
or if unrated, are determined by the Sub-Adviser to be of comparable quality to
debt securities rated below investment grade. Appendix B to this Prospectus
describes these rating categories. 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. "Lower- grade"
debt securities are subject to special risks as described in "Investment Risks"
below.
Convertible fixed-income securities in which the Fund invests are bonds,
debentures or notes that may be converted into or exchanged for a prescribed
amount of company stock of the same or a different issue within a particular
period of time at a specified price or formula. The Fund considers convertible
securities to be "equity equivalents" because of the conversion feature and the
security's rating has less impact on the investment decision than in the case of
non-convertible securities.
o U.S. Government Obligations, including Mortgage-Backed Securities. U.S.
Government obligations are obligations supported by any of the following: (a)
the full faith and credit of the U.S. Government, such as obligations of
Government National Mortgage Association ("Ginnie Mae"), (b) the right of the
issuer to borrow an amount limited to a specific line of credit from the U.S.
Government, such as obligations of Federal National Mortgage Association
("Fannie Mae"), and (c) the credit of 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.
o 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.
o 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.
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.
o 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.
o 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.
|X| Special Risks of Lower-Grade Securities. The Fund may invest up to
25% of its total assets in lower-grade, high-yield debt securities commonly
known as "junk bonds" as described above in "Investment Policies and
Strategies". Lower-grade, high-yield debt 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.
oForeign 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. Emerging market 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.
o Special Risks of Hedging Instruments. 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.
o 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 U.S. Government securities
and money market instruments of the type identified on page __ under "Investment
Policies and Strategies." At any time that the Fund invests for temporary
defensive purposes, to the extent of such investments, it is not pursuing its
investment objective.
o 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.
o Repurchase Agreements. The Fund may enter into repurchase agreements
primarily 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.
o Warrants and Rights. Warrants generally are options to
purchase stock at set prices that are valid for a limited period of time.
Rights are similar to warrants but normally have a short
duration and are distributed directly by the issuer to its shareholders. The
Fund may invest up to 5% of its total assets in warrants and rights.
o 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 that cannot be sold publicly until it is registered under the
Securities Act of 1933.
The Fund may not invest more than 15% of its net assets in illiquid and
restricted securities, including repurchase agreements that have a maturity of
longer than seven days and certain over-the-counter options. The Fund's
percentage limitation on these investments does not apply to certain restricted
securities that are eligible for resale to "qualified institutional buyers". The
Manager monitors holdings of illiquid securities on an ongoing basis to
determine whether to sell some holdings to maintain adequate liquidity.
o 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. Each loan must be collateralized in accordance with
applicable regulatory requirements. After any loan, the value of the securities
loaned is not expected to exceed 33-1/3% of the Fund's total assets. There are
some risks in connection with securities lending. The Fund might experience a
delay in receiving additional collateral to secure a loan or a delay in recovery
of the loaned securities.
o 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.
o Futures. The Fund may buy and sell futures contracts that relate to (1)
broadly-based stock indices (these are referred to as Stock Index Futures) , (2)
foreign currencies (these are called Forward Contracts) and (3) commodities
(these are referred to as commodity futures). 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.
o Put and Call Options. The Fund may buy and sell exchange-traded and
over-the-counter put and call options, including index options, securities
options, currency options, commodities options, and options on the other types
of futures described in "Futures," above. A call or put may be purchased only
if, after the purchase, the value of all call and put options held by the Fund
will not exceed 5% of the Fund's total assets.
If the Fund sells (that is, writes) a call option, it must be "covered." That
means the Fund must own the security subject to the call while the call is
outstanding, or, for other types of written calls, the Fund must segregate
liquid assets to enable it to satisfy its obligations if the call is exercised.
The Fund may buy puts whether or not it holds the underlying investment in the
portfolio. If the Fund writes a put, the put must be
covered by segregated liquid assets. 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.
o 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.
o Investing In Small, Unseasoned Companies. The Fund may invest up to
5% of its total assets in securities of small, unseasoned companies. These
are companies that have been in operation
less than three years, including 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.
o Investment in Other Investment Companies. The Fund generally may invest
up to 10% of its total assets in the aggregate in shareof other investment
companies and up to 5% of its total assets in any one investment company, as
long as each investment does not represent more than 3% of the outstanding
voting securities of the acquired investment company. These limitations do not
apply in the case of investment company securities which may be purchased as
part of a plan of merger, consolidation, reorganization or acquisition.
Investment in other investment companies may involve the payment of substantial
premiums above the value of such investment companies' portfolio securities, and
is subject to limitations under the Investment Company Act and market
availability. The Fund does not intend to invest in such investment companies
unless, in the judgment of the Manager, the potential benefits of such
investment justify the payment of any applicable premiums or sales charge. As a
shareholder in an investment company, the Fund would bear its ratable share of
that investment company's expenses, including its advisory and administration
fees. At the same time, the Fund would continue to pay its own management fees
and other expenses.
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:
o 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.
o 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).
o Concentrate its investments in any particular industry, but if deemed
appropriate for attaining its investment objective, the Fund may invest less
than 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).
o 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.
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 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 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.
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 subsidiaries) currently manages investment companies, including other
Oppenheimer funds, with assets of more than $__ billion as of December 31, 1997,
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.
On November 4, 1997, PIMCO Advisors L.P. ("PIMCO Advisors"), a registered
investment adviser with $125 billion in assets under management through various
subsidiaries, acquired control of Oppenheimer Capital and the Sub-Adviser. On
November 5, 1997, a new sub-advisory agreement between the Sub-Adviser and the
Manager, on terms identical to the prior sub-advisory agreement, became
effective. The new sub-advisory agreement had been approved by shareholders of
the Fund on May 19, 1997. Value Advisors LLC, a limited liability company and a
wholly-owned subsidiary of PIMCO Advisors, holds a one-third managing general
partner interest in Oppenheimer Capital and a 1.0% general partner interest in
the Sub-Adviser. Oppenheimer Capital L.P., a Delaware limited partnership whose
units are traded on The New York Stock Exchange , owns the remaining two-thirds
interest in Oppenheimer Capital. PIMCO Partners G.P., general partner of PIMCO
Advisors, holds the sole general partner interest in Oppenheimer Capital, L.P.
o 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 portfolio 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,
who is Chairman, Chief Executive Officer and Chief Investment Officer for
Oppenheimer Capital.
Mr. Long has been with Oppenheimer Capital since 1981.
o 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. The Fund's management fee for its last
fiscal year was ___% of average annual net assets for its Class A, Class B and
Class C shares, which may be higher than the rate paid by some other mutual
funds.
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, they 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.
Information about the Fund's brokerage policies and practices is set
forth in "Brokerage Policies of the Fund" in the Statement of Additional
Information. That section discusses how brokers and dealers are selected for the
Fund's portfolio transactions. When deciding which broker to use, the Manager
and the Sub-Adviser are permitted by the Investment Advisory Agreement to
consider whether brokers have sold shares of the Fund or any other funds for
which the Manager serves as investment adviser.
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
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.
o 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
considering the effect of the sales charge, and those returns would be less if
sales charges were deducted.
How Has the Fund Performed? Below is a discussion by the Manager of the Fund's
performance during its last fiscal year ended October 31, 1997, followed by a
graphical comparison of the Fund's performance to an appropriate broad-based
market index.
o Management's Discussion of Performance. During the past fiscal year
ended October 31, 1997, 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 holdings, allocations and
strategies are subject to change.
o 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, 1997. 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.
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical
Investment In:
Oppenheimer Quest Growth & Income Value Fund (Class A) and the S & P 500
Index
[Graph]
Average Annual Total Returns of
Class A Shares of the Fund at 10/31/971
1 Year 5 Years Life of Class
% % %
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investment In:
Oppenheimer Quest Growth & Income Value Fund (Class B) and the S & P 500 Index
[Graph]
Average Annual Total Returns of Class B Shares of the Fund at 10/31/972
1 Year Life of Class
% %
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investment In:
Oppenheimer Quest Growth & Income Value Fund (Class C) and the S & P 500 Index
[Graph]
Average Annual Total Returns of Class C Shares of the Fund at 10/31/973
1 Year Life of Class
% %
Total returns and ending account values in the graphs show change in share value
and include reinvestment of all dividends and capital gains distributions. The
performance information for the S & P 500 Index begins on 10/31/91 for Class A
shares and 8/31/93 for Class B and Class C shares. 1The inception date of the
Fund (Class A shares) was 11/1/91. Class A returns Returns are shown net of the
applicable 5.75% maximum initial sales charge. 2Class B shares of the Fund were
first publicly offered on 9/1/93. Returns are shown net of the applicable 5% and
2% contingent deferred sales charges, respectively, for the one year period and
the life-of -class. The ending account value for Class B shares in the graph is
net of the applicable 2% contingent deferred sales charge. 3Class 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. Past performance is not
predictive of future performance. Graphs are not drawn to same scale.
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.
o 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 12 months of buying them (18 months if the shares were purchased
prior to May 1, 1997), 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.
o 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.
o Class C Shares. If you buy Class C shares, you pay no sales charge at
the time of purchase, but if you sell your shares within 12 months of buying
them, you will normally pay a contingent deferred sales charge of 1% as
described in "Buying Class C Shares" below.
Which Class of Shares Should You Choose? Once you decide that the Fund is an
appropriate investment for you, the decision as to which class of shares is
better suited to your needs depends on a number of factors which you should
discuss with your financial advisor. The Fund's operating costs that apply to a
class of shares and the effect of the different types of sales charges on your
investment will vary your investment results over time. The most important
factors to consider are how much you plan to invest and how long you plan to
hold your investment. If your goals and objectives change over time and you plan
to purchase additional shares, you should re-evaluate those factors to see if
you should consider another class of shares.
In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund. We used the sales
charge rates that apply to each class, and considered the effect of the higher
annual 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.
o 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.
oInvesting 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.
o 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.
o 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.
o 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. The Distributor may pay additional periodic compensation from
its own resources to securities dealers or financial institutions based upon the
value of shares of the Fund owned by the dealer or financial institution for its
own account or for its customers.
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:
o 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.
o Under pension, profit-sharing and 401(k) plans and Individual
Retirement Accounts (IRAs), you can make an initial investment of as little as
$250 (if your IRA is established under an Asset Builder Plan, the $25 minimum
applies), and subsequent investments may be as little as $25.
There is no minimum investment requirement if you are buying shares by
reinvesting dividends or distributions 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.
o 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.
o Buying Shares Through Your Dealer. Your dealer will place your
order with the Distributor on your behalf.
o 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.
Payment by Federal Funds Wire: Shares may be purchased by Federal Funds wire.
The minimum investment is $2,500. You must first call the Distributor's Wire
Department at 1-800-525-7041 to notify the Distributor of the wire, and receive
further instructions.
o 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.
o 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.
o 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, or the order is received and transmitted to the Distributor by
an entity authorized by the Fund to accept purchase or redemption orders. The
Fund has authorized the Distributor, certain broker-dealers and agents or
intermediaries designated by the Distributor or those broker-dealers to accept
orders. In most cases, to enable you to receive that day's offering price, the
Distributor or an authorized entity 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, normally your order
must be transmitted 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:
- ----------------------------------------------------------------
Front-End Sales Charge Commission
As a Percentage of as Percentage
Offering Amount of Offering
Amount of Purchase Price Invested Price
- ----------------------------------------------------------------
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
The Distributor reserves the right to reallow the entire commission to dealers.
If that occurs, the dealer may be considered an "underwriter" under Federal
securities laws.
o 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:
o Purchases by a retirement plan qualified under section 401(a) of
the Internal Revenue Code if the retirement plan has total plan assets of
$500,000 or more.
o Purchases aggregating $1 million or more.
o 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,
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.
o 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, and calculated on a
calendar year basis. 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 purchased prior to May 1, 1997 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. A Class A contingent deferred sales
charge may be deducted from the redemption proceeds of any of those shares
purchased on or after May 1, 1997 that are redeemed within 12 months of the end
of the calendar month of their purchase. That sales charge may be equal to 1.0%
of the lesser of (1) the aggregate net asset value of the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original offering price (which is the original net
asset value) of the redeemed shares. However, the Class A contingent deferred
sales charge will not exceed the aggregate amount of the commissions the
Distributor paid to your dealer on all Class A shares of all Oppenheimer funds
you purchased subject to the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is payable, the
Fund will first redeem shares that are not subject to the sales charge,
including shares purchased by reinvestment of dividends and capital gains, and
then will redeem other shares in the order that you purchased them. The Class A
contingent deferred sales charge is waived in certain cases described in
"Waivers of Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges of
shares under the Fund's exchange privilege (described below). However, if the
shares acquired by exchange are redeemed within 18 months of the end of the
calendar month of the purchase of the exchanged shares, the contingent deferred
sales charge will apply.
o 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:
o 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 Distributor will add the value,
at current offering price, of the shares you previously purchased and currently
own to the value of current purchases to determine the sales charge rate that
applies. 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.
o 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.
o 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. In
order to receive a waiver of the Class A contingent deferred sales charge, you
must notify the Transfer Agent as to which conditions apply.
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:
o the Manager or its affiliates;
o 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;
o registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the Distributor for
that purpose;
o 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;
o 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);
o 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);
o (1) investment advisers and financial planners who have entered into an
agreement for this purpose with the Distributor and 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 investment advisers or financial
planners (that have entered into an agreement for this purpose with the
Distributor) 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 adviser 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);
o 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;
o employee benefit plans purchasing shares through a shareholder servicing
agent which the Distributor has appointed as agent to accept those purchase
orders;
o 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;
o any unit investment trust that has entered into an appropriate
agreement with the Distributor;
o 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
o 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 commenced 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:
o shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party;
o 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;
o 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;
o shares purchased and paid for with the proceeds of shares redeemed in
the prior 30 days 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
o 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:
o to make Automatic Withdrawal Plan payments that are limited annually to
no more than 12% of the original account value;
o involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (see "Shareholder Account Rules and Policies,"
below);
o if, at the time of purchase of shares (prior to May 1, 1997) the dealer
agreed in writing to accept the dealer's portion of the sales commission 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);
o if, at the time of purchase of shares (on or after May 1, 1997) the
dealer agrees in writing to accept the dealer's portion of the sales commission
in installments of 1/12th of the commission per month (and no further commission
will be payable if the shares are redeemed within 12 months of purchase);
o for distributions from a TRAC-2000 401(k) plan sponsored by the
Distributor due to the termination of the TRAC-2000 program; or
o 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
subsidiaries) 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;
o for distributions from Retirement Plans having 500 or more eligible
participants, except distributions due to termination of all of the Oppenheimer
funds as an investment option under the Plan; and
o for distributions from 401(k) plans sponsored by broker-dealers that
have entered into a special agreement with the Distributor allowing this waiver.
o Distribution and Service Plan for Class A Shares. The Fund has adopted a
Distribution and Service Plan for Class A shares to compensate the Distributor
for its services in connection with the distribution of shares and 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
compensate 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 and (2)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. Class B shares held for a period greater than six years
automatically convert to Class A shares.
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.
o 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.
o 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."
o 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.
o 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 may pay the Class B service fee and the asset-based sales charge
to the dealer quarterly in lieu of paying the sales commission and service fee
advance at the time of purchase.
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 may pay the Class C service fee and
asset-based sales charge to the dealer quarterly in lieu of paying the sales
commission and service fee advance at the time of purchase.
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. At October 31, 1997, the end of
the Class B Plan year, the Distributor had incurred unreimbursed expenses in
connection with sales of Class B shares of $ (equal to % of the Fund's net
assets represented by Class B shares on that date). At October 31, 1997, the end
of the Class C Plan year, the Distributor had incurred unreimbursed expenses in
connection with sales of Class C shares of $ (equal to % of the Fund's net
assets represented by Class C shares on that date).
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.
o 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. In order to receive a waiver of the Class B or Class C contingent
deferred sales charge, you must notify the Transfer Agent as to which conditions
apply.
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 :
o 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);
o 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);
o returns of excess contributions to Retirement Plans;
o distributions from retirement plans to make "substantially equal
periodic payments" as permitted in 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;
o shares redeemed involuntarily, as described in "Shareholder Account
Rules and Policies," below; or
o distributions from OppenheimerFunds prototype 401(k) plans and from
certain Massachusetts Mutual Life Insurance company 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; or (6) for loans to participants.
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:
o shares sold to the Manager or its affiliates;
o 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;
o shares issued in plans of reorganization to which the Fund is a
party; or
o distributions from 401(k) plans sponsored by broker-dealers that have
entered into a special agreement with the Distributor allowing this waiver.
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.
o 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.
o 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.
o 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.
o 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.
o 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.
Shareholder Transactions by Fax. Requests for certain account transactions may
be sent to the Transfer Agent by fax (telecopier). Please call 1-800-525-7048
for information about which transactions are included. Transaction requests
submitted by fax are subject to the same rules and restrictions as written and
telephone requests described in this Prospectus.
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:
o 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.
o 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 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:
o Individual Retirement Accounts including rollover IRAs, for individuals
and their spouses and SIMPLE IRAs offered by employers
o 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
o SEP-IRAs (Simplified Employee Pension Plans) for small business owners
or people with income from self-employment, including SAR/SEP IRAs
o Pension and Profit-Sharing Plans for self-employed persons and
other employers
o 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.
o 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.
o 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):
o You wish to redeem more than $50,000 worth of shares and receive a
check
o The redemption check is not payable to all shareholders listed on the
account statement
o The redemption check is not sent to the address of record on your
account statement
o Shares are being transferred to a Fund account with a different owner
or name
o Shares are redeemed by someone other than the owners (such as an
Executor)
o 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:
o Your name
o The Fund's name
o Your Fund account number (from your account statement) o The dollar
amount or number of shares to be redeemed o Any special payment
instructions o Any share certificates for the shares you are selling o The
signatures of all registered owners exactly as the account is
registered, and
o 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 Service 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.
o To redeem shares through a service representative, call 1-800-852-8457 o
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.
o 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.
o 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 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:
o Shares of the fund selected for exchange must be available for sale
in your state of residence
o The prospectuses of this Fund and the fund whose shares you want to
buy must offer the exchange privilege
o 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
o You must meet the minimum purchase requirements for the fund you
purchase by exchange
o 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:
o 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."
o 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:
o 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.
o 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.
o 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.
o 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.
o 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
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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 federal funds wire, certified check or arrange to have your
bank provide telephone or written assurance to the Transfer Agent that your
purchase payment has cleared.
o 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.
o 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" in the Statement
of Additional Information for more details.
o "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 correct and properly certified
Social Security or Employer Identification Number when you sign your
application, or if you under report your income to the Internal Revenue Service
.
o 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.
o 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:
o 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.
o 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.
o 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.
o Reinvest Your Distributions in Another Oppenheimer Fund Account. You
can reinvest all distributions in the same class of shares of 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. So that the Fund will
not have to pay taxes on the amounts it distributes to shareholders as dividends
and capital gains, the Fund intends to manage its investments so that it will
qualify as a "regulated investment company" under the Internal Revenue Code,
although it reserves the right not to qualify in a particular year.
o "Buying a Dividend". 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.
o 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.
o 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.
-5-
<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
o Reduced Class A Initial Sales Charge Rates for Certain Former Quest
Shareholders
o Purchases by Groups, Associations and Certain Qualified Retirement Plans. The
following table sets forth the initial sales charge rates for Class A shares
purchased by a "Qualified Retirement Plan" through a single broker, dealer or
financial institution, or by members of "Associations" formed for any purpose
other than the purchase of securities if that Qualified Retirement Plan or that
Association purchased shares of any of the Former Quest for Value Funds or
received a proposal to purchase such shares from OCC Distributors prior to
November 24, 1995. For this purpose only, a "Qualified Retirement Plan" includes
any 401(k) plan, 403(b) plan, and SEP/IRA or IRA plan for employees of a single
employer.
Front-End Front-End
Sales Sales Commission
Charge Charge as
as a as a Percentage
Number of Percentage Percentage of
Eligible Employees of Offering of Amount Offering
or Members Price Invested Price
- ------------------------------------------------------------------------------
9 or fewer 2.50% 2.56% 2.00%
- ------------------------------------------------------------------------------
At least 10 but not
more than 49 2.00% 2.04% 1.60%
For purchases by Qualified Retirement plans and Associations having 50 or
more eligible employees or members, there is no initial sales charge on
purchases of Class A shares, but those shares are subject to the Class A
contingent deferred sales charge described on pages __ 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.
o 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:
o 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.
o 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.
o 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:
o 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.
o 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
o 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 Class 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.
o 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 Class 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, Class B
or Class 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.
A-1
<PAGE>
Appendix B
Description of Ratings
Bond Ratings
o 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.
o 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.
o 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.
o 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.
o 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+").
o 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.
o 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.
o 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.
o 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".
B-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 10/31/97, 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 10/31/97. The graph will compare such values with hypothetical $10,000
investments over the time periods indicated below 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
10/31/97 $ $
Oppenheimer Quest
Fiscal Growth & Income S&P 500
Period Ended Fund B Index
- ------------ ----------------- -------
9/01/93 $10000 $10000(2)
10/31/93 $10081 $10128
10/31/94 $10884 $10519
10/31/95 $12588 $13297
10/31/96 $14940 $16499
10/31/97 $ $
B-2
<PAGE>
Oppenheimer Quest
Fiscal Growth & Income S&P 500
Period Ended Fund C Index
- ------------ ----------------- -------
9/01/93(2) $10000 $10000(2)
10/31/93 $10081 $10128
10/31/94 $10879 $10519
10/31/95 $12552 $13297
10/31/96 $15183 $16499
10/31/97 $ $
- ---------------------
(1) Performance information for the S&P 500 Index begins on 10/31/91 for Class A
shares
(2) Performance information for the S&P 500 Index begins on 8/31/93 for Class B
and Class C shares .
B-3
<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.
PR0257.001.0198 Printed on recylced paper
prosp\257psp.# 2
B-4
<PAGE>
OPPENHEIMER QUEST GROWTH & INCOME VALUE FUND
Two World Trade Center, New York, New York 10048
1-800-525-7048
Statement of Additional Information dated January 26, 1998
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 January 26,
1998. It should be read together with the Prospectus, which may be obtained upon
written request to the Fund's Transfer Agent, OppenheimerFunds Services at P.O.
Box 5270, Denver, Colorado 80217, or by calling the Transfer Agent at the
toll-free number shown above.
Contents
Page
About the Fund
Investment Objective and Policies.....................................
Investment Policies and Strategies................................
Other Investment Techniques and Strategies........................
Other Investment Restrictions....................................
How the Fund is Managed .............................................
Organization and History.........................................
Trustees and Officers of the Trust...............................
The Manager and Its Affiliates...................................
Brokerage Policies of the Fund.......................................
Performance of the Fund..............................................
Distribution and Service Plans.......................................
About Your Account
How To Buy Shares....................................................
How To Sell Shares...................................................
How To Exchange Shares...............................................
Dividends, Capital Gains and Taxes...................................
Additional Information About the Fund................................
Financial Information About the Fund
Report of Independent Accountants.................................
Financial Statements...............................................
Appendix A: Corporate Industry Classifications......................A-1
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ABOUT THE FUND
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and policies of the
Fund are described in the Prospectus. The Fund is one of four portfolios of
Oppenheimer Quest For Value Funds (the "Trust"). Set forth below is supplemental
information about those policies and the types of securities in which the Fund
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.
o 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 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 (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.
o 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.
o 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.
o U.S. Government Obligations. 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.
o 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.
o 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:
o 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.
o 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 deter
mines 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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. Illiquid securities include repurchase agreements
maturing in more than seven days, or certain participation interests other than
those with puts exercisable within seven days.
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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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 unless subject to a buy-back
agreement with the executing broker. The 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.
o 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).
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.
o 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.
-2-
<PAGE>
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:
o invest in physical commodities or physical commodity contracts ;
however, the Fund may: (i) buy and sell hedging instruments to the extent
specified in its Prospectus from time to time, and (ii) buy and sell options,
futures, securities or other instruments backed by, or the investment return
from which is linked to changes in the price of, physical commodities;
o 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;
o 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 ;
o 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;
o 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;
o invest for the purpose of exercising control or management of another
company;
o 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
o 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.
Non-Fundamental Investment Restrictions. The following operating policies of the
Fund are not fundamental policies and, as such, may be changed by vote of a
majority of the Board of Trustees without shareholder approval. These additional
restrictions provide that the Fund cannot:
o 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 (collateral arrangements in connection with
transactions in futures and options are not deemed to be margin transactions).
o 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 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. The percentage
restrictions described above and in the Prospectus apply only at the time of
investment and require no action by the Fund as a result of subsequent changes
in relative values.
How the Fund is Managed
Organization and History. The Fund is one of four portfolios of the Trust, a
Massachusetts business trust named Oppenheimer Quest For Value Funds . 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. All of the Trustees are directors or trustees of Oppenheimer Quest For
Value Funds (Oppenheimer Quest Growth & Income Value Fund), Oppenheimer Quest
Small Cap Value Fund, Oppenheimer Quest Opportunity Value Fund, and Oppenheimer
Quest Officers Value Fund) , Oppenheimer Quest Value Fund, Inc., Oppenheimer
Quest Capital Value Fund, Inc. and Oppenheimer Quest Global Value Fund, Inc.
(collectively, the "Oppenheimer Quest Funds"), 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") and Oppenheimer MidCap Fund. As of January __,
1998, 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: 49
President (since June 1991), Chief Executive Officer (since September 1995) and
a Director (since December 1994) of the Manager ; President and director (since
June 1991) of HarbourView Asset Management Corporation ("HarbourView"), a
subsidiary of the Manager; Chairman and a director of Shareholder Services, Inc.
("SSI") (since August 1994) and Shareholder Financial Services, Inc. ("SFSI")
(September 1995), transfer agent subsidiaries of the Manager; President (since
September 1995) and a director (since October 1990) of Oppenheimer Acquisition
Corp. ("OAC"), the Manager's parent holding company; President (since September
1995) and a director (since November 1989) of Oppenheimer Partnership Holdings,
Inc., a holding company subsidiary of the Manager; a director of Oppenheimer
Real Asset Management, Inc. (since July 1996); President and a director (since
October 1997) of OppenheimerFunds International Ltd. ("OFIL"), an offshore fund
manager subsidiary of the Manager and Oppenheimer Millennium Funds plc (since
October 1997); President and a director of other Oppenheimer funds; a director
of the NASDAQ Stock Market, Inc. and of Hillsdown Holdings plc (a U.K. food
company); formerly an Executive Vice President of the Manager.
Paul Y. Clinton, Trustee; Age: 67
39 Blossom Avenue,
Osterville, Massachusetts 02655
Principal of Clinton Management Associates (financial and venture capital
consulting firm); Trustee of Capital Cash Management Trust (money-market fund)
and Narraganssett Tax-Free Fund (tax- exempt bond fund); Director of OCC Cash
Reserves, Inc. and Trustee of OCC Accumulation Trust, (both open-end investment
companies). Formerly: Director,
External Affairs, Kravco Corporation,
( national real estate owner and property management corporation); President of
Essex Management Corporation (management consulting company); a general partner
of Capital Growth Fund (venture capital partnership); a general partner of Essex
Limited Partnership ( investment partnership); President of Geneve Corp.
(venture capital fund); Chairman of Woodland Capital Corp. (small business
investment company); and Vice President of W.R. Grace & Co.
Thomas W. Courtney, Trustee; Age: 64
833 Wyndemere Way, Naples, Florida 34105
Principal of Courtney Associates, Inc. (venture capital firm); former General
Partner of Trivest Venture Fund (private venture capital fund ); Trustee of Cash
Assets Trust, (money market fund );
Director of OCC Cash Reserves, Inc., and Trustee of OCC Accumulation Trust, both
open-end investment companies ); Trustee of Hawaiian Tax-Free Trust and Tax Free
Trust of Arizona, (both tax-exempt bond funds); Director of several privately
owned . Formerly President of Investment Counseling Federated Investors, Inc.;
former President of Boston Company Institutional Investors; Director of
Financial Analysts Federation.
Lacy B. Herrmann, Trustee; Age: 68
380 Madison Avenue, Suite 2300, New York, New York 10017
Chairman and Chief Executive Officer of Aquila Management Corporation
(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, Aquila Cascadia Equity Fund,
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 (both open-end investment companies);
Trustee Emeritus of Brown University.
- ----------------------
1Trustee who is an "interested person" (as defined in the Investment
Company Act) of the Fund and the Trust.
-3-
<PAGE>
George Loft, Trustee; Age: 83
51 Herrick Road, Sharon, Connecticut 06069
Private Investor; Director of OCC Cash Reserves, Inc. and Trustee of OCC
Accumulation Trust (both open-end investment companies).
Robert C. Doll, Jr., Vice President; Age: 43
Executive Vice President and Director of the Manager (since January 1993) ;
Executive Vice President of HarbourView (since January 1993); Vice President and
a director of OAC (since September 1995); an officer of other Oppenheimer funds.
Colin Glinsman, Portfolio Manager; Age 40
One World Financial Center, 200 Liberty Street, New York, New York 10281 Senior
Vice President of Oppenheimer Capital.
Andrew J. Donohue, Secretary; Age: 47
Executive Vice President (since January 1993), General Counsel (since October
1991) and a Director (since September 1995) of the Manager; Executive Vice
President (since September 1993), and a director (since January 1992) of
OppenheimerFunds Distributor, Inc. (the "Distributor"); Executive Vice
President, General Counsel and a director of HarbourView, SSI, SFSI and
Oppenheimer Partnership Holdings, Inc. since (September 1995) and MultiSource
Services, Inc. (a broker-dealer) (since December 1995); President and a director
of Centennial Asset Management Corporation ("Centennial") (since September
1995); President and a director of Oppenheimer Real Asset Management, Inc.
(since July 1996); General Counsel (since May 1996) and Secretary (since April
1997) of OAC; Vice President of OFIL and Oppenheimer Millennium Funds plc (since
October 1997); an officer of other Oppenheimer funds.
George C. Bowen, Treasurer; Age: 61
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President (since September 1987) and Treasurer (since March 1985) of
the Manager; Vice President (since June 1983) and Treasurer (since March 1985)
of the Distributor ; Vice President (since October 1989) and Treasurer (since
April 1986) of HarbourView; Senior Vice President (since February 1992),
Treasurer (since July 1991) and a director (since December 1991) of Centennial;
President, Treasurer and a director of Centennial Capital Corporation (since
June 1989); Vice President and Treasurer (since August 1978) and Secretary
(since April 1981) of SSI; Vice President, Treasurer and Secretary of SFSI
(since November 1989); Treasurer of OAC (since June 1990); Treasurer of
Oppenheimer Partnership Holdings, Inc. (since November 1989); Vice President and
Treasurer of Oppenheimer Real Asset Management, Inc. (since July 1996); Chief
Executive Officer, Treasurer and a director of MultiSource Services, Inc., a
broker-dealer (since December 1995); an officer of other Oppenheimer funds.
Robert Bishop, Assistant Treasurer; Age: 39
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); an
officer of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for
the Manager.
Scott T. Farrar, Assistant Treasurer; Age: 32
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996);
Assistant Treasurer of Oppenheimer Millennium Funds plc (since October 1997);
an officer of other Oppenheimer funds;
formerly an Assistant Vice President of the Manager/Mutual Fund Accounting
(April 1994-May 1996), and a Fund Controller for the Manager.
Robert G. Zack, Assistant Secretary; Age: 49
Senior Vice President (since May 1985) and Associate General Counsel (since May
1981) of the Manager, Assistant Secretary of SSI (since May 1985), and SFSI
(since November 1989); Assistant Secretary of Oppenheimer Millennium Funds plc
(since October 1997); an officer of other Oppenheimer funds.
o 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, 1997 and
(ii) other investment companies (or series thereof) managed by the Manager
and/or the Sub-Adviser paid during the calendar year ended December 31, 1997.
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)
Paul Y. Clinton $ None None $
Thomas W. Courtney $ None None $
Lacy B. Herrmann $ None None $
George Loft $ None None $
(1) For the purpose of the chart above, "Fund Complex" includes the Oppenheimer
Quest Funds (including the Fund), the Oppenheimer Rochester Funds, the
Oppenheimer MidCap Fund, and three funds advised by the Sub-Adviser (the
"Sub-Adviser Funds"). For these purposes, each series constitutes a separate
fund. Messrs. Clinton and Courtney served as directors or trustees of two Sub-
Adviser Funds, for which they are to receive $______ and $______, respectively,
and Messrs. Herrmann and Loft served as directors or trustees of three
Sub-Adviser Funds, for which they are to receive $_______ , $____ and $_____,
respectively. Effective April, 1997, Messrs. Herrmann and Loft resigned as
trustees from the third Sub-Adviser Fund.
Deferred Compensation Plan. The Board of Trustees has adopted a Deferred
Compensation plan for disinterested trustees that enables them to elect to defer
receipt of all or a portion of the annual fees they are entitled to receive from
the Fund. Under the plan, the compensation deferred by a Trustee is periodically
adjusted as though an equivalent amount had been invested in shares of one or
more Oppenheimer funds selected by the Trustee. The amount paid to the Trustee
under the plan will be determined based upon the performance of the selected
funds. Deferral of Trustees' fees under the plan will not materially affect the
Fund's assets, liabilities and net income per share. The plan will not obligate
the Fund to retain the services of any Trustee or to pay any particular level of
compensation to any Trustee. Pursuant to an order issued by the SEC, the Fund
may invest in the funds selected by the Trustee under the plan for the limited
purpose of determining the value of the Trustee's deferred fee account.
o Major Shareholders. As of January __, 1998, 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:
__________________________________________________________________.
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 Trust and one of whom (Ms. Macaskill) also
serves as an officer and a Trustee of the Trust.
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 Fund's
portfolio transactions. Compliance with the Code of Ethics is carefully
monitored and strictly enforced by the Manager.
o Portfolio Management. The Portfolio Manager of the Fund is Colin
Glinsman, who is principally responsible for the day-to-day management of the
Fund's portfolio. Mr. Glinsman's background is described in the Prospectus under
"Portfolio Manager."
o The Investment Advisory Agreement. The Manager acts as investment
adviser to the Fund pursuant to the terms of an Investment Advisory Agreement
dated May 27, 1997, as amended on October 22, 1997, which replaced the
investment advisory agreement dated as of November 22, 1995. The Investment
Advisory 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 agreement on February 4, 1997 and by the shareholders of the Fund at a
meeting held for that purpose on May 19, 1997. The 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 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 November 22,
1995 (when the Manager became the investment adviser to the Fund) to October 31,
1996 (the "Fiscal Period") and the fiscal year ended October 31, 1997, the Fund
paid to the Manager $448,353 and $ ________, respectively, in management fees.
During the Fiscal Period and the fiscal year ended October 31, 1997, the Fund
also paid or accrued accounting service fees to the Manager in the amounts of
$51,630 and $_____, respectively.
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" or "Quest For Value" in
connection with its other investment companies for which it may act as an
investment adviser or general distributor. If the Manager shall no longer act as
investment adviser to a Fund, the right of the Fund to use "Oppenheimer" or
"Quest For Value" as part of its name may be withdrawn.
The Investment Advisory Agreement provides that the Manager may enter
into sub-advisory agreements with other affiliated or unaffiliated registered
investment advisers in order to obtain specialized services for the Funds
provided that the Fund is not required to pay any additional fees for such
services. The Manager has retained the Sub-Adviser pursuant to a separate
Subadvisory Agreement dated as of November 5, 1997 with respect to the Fund,
described below, which replaced the Subadvisory Agreement dated as of November
22, 1995.
o 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 $333,289
for the fiscal year ended October 31, 1995, of which $8,286 was waived by the
Sub-Adviser , and $24,482 for the fiscal period November 1, 1995 to November 22,
1995 (the "Interim Period") .
For the fiscal year ended October 31, 1995 and for the Interim Period, the
Fund paid or accrued accounting services fees to the Sub-Adviser in the amounts
of $57,800 and $2,291, respectively. During such time periods the Trust had
retained the services of State Street Bank and Trust Company 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 year ended
October 31, 1995 in the amount of $55,000 ; no fees were accrued or paid by the
Fund for the Interim Period.
o 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 agreement on February 28, 1997 and by the
shareholders of the Fund at a meeting held for that purpose on May 19, 1997.
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 November 22, 1995 (the
"Base Amount") plus 30% of the investment advisory fee collected by the Manager
based on the total net assets of the Fund that exceed the Base Amount.
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 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. On November 4, 1997, PIMCO
Advisors L.P. ("PIMCO Advisors"), a registered investment adviser with $125
billion in assets under management through various subsidiaries, acquired
control of Oppenheimer Capital and the Sub-Adviser. Value Advisors LLC, a
limited liability company and a wholly-owned subsidiary of PIMCO Advisors, holds
a one-third managing general partner interest in Oppenheimer Capital and a 1.0%
general partner interest in the Sub-Adviser. Oppenheimer Capital L.P., a
Delaware limited partnership whose units are traded on The New York Stock
Exchange, owns the remaining two-thirds interest in Oppenheimer Capital. PIMCO
Partners G.P., general partner of PIMCO Advisors, holds the sole general partner
interest in Oppenheimer Capital, L.P.
PIMCO Partners, G.P. ("PIMCO GP") owns approximately 42.83% and 66.37%,
respectively, of the total outstanding Class A and Class B units of limited
partnership interest ("Units") of PIMCO Advisors' sole general partner. PIMCO GP
is a California general partnership with two general partners. The first of
these is Pacific Investment Management Company, which is a California
corporation and is wholly-owned by Pacific Financial Asset Management Company, a
direct subsidiary of Pacific Life Insurance Company ("Pacific Life").
The managing general partner of PIMCO GP is PIMCO Partners L.L.C.
("PPLLC"), a California limited liability company. PPLLC's members are the
Managing Directors (the "PIMCO Managers") of Pacific Investment Management
Company, a subsidiary of PIMCO Advisors (the "PIMCO Subpartnership"). The PIMCO
Managers are: William H. Gross, Dean S. Meiling, James F. Muzzy, William F.
Podlich, III, Frank B. Rabinovitch, Brent R. Harris, John L. Hague, William S.
Thompson Jr., William C. Powers, David H. Edington, Benjamin Trosky, William R.
Benz, II and Lee R. Thomas, III.
PIMCO Advisors is governed by an Operating Board and an Equity Board.
Because of its power to appoint (directly or indirectly ) seven of the twelve
members of the Operating Board, the PIMCO Subpartnership may be deemed to
control PIMCO Advisors. Because of direct or indirect power to appoint 25% of
the members of the Equity Board, (i) Pacific Life and (ii) the PIMCO Managers
and/or the PIMCO Subpartnership may each be deemed, under applicable provisions
of the investment Company Act, to control PIMCO Advisors. Pacific Life, the
PIMCO Subpartnership and the PIMCO Managers disclaim such control.
o 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, 1997, the aggregate amount of sales charges on sales of the Fund's
Class A shares was $_______, of which the Distributor and affiliated brokers
retained $______. During the fiscal year ended October 31, 1997, the Distributor
received contingent deferred sales charges of $______ upon redemption of Class B
shares, and received contingent deferred sales charges of $_____ upon redemption
of Class C shares. For additional information about distribution of the Fund's
shares and the expenses connected with such activities, please refer to
"Distribution and Service Plans" below.
o The Transfer Agent. OppenheimerFunds Services acts as the Fund's
Transfer Agent pursuant to a Transfer Agency and Service 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.
o Shareholder Servicing Agent for Certain Shareholders. Unified
Management Corporation (1-800-346-4601) is the shareholder servicing agent of
the Fund for former shareholders of the AMA Family of Funds and clients of AMA
Investment Advisers, Inc. (which had been the investment adviser of AMA Family
of Funds) who acquire shares of any Oppenheimer Quest Fund, and for (i) former
shareholders of the Unified Funds and Liquid Green Trusts, (ii) accounts which
participated or participate in a retirement plan for which Unified Investment
Advisers, Inc. or an affiliate acts as custodian or trustee, (iii) accounts
which have a Money Manager brokerage account, and (iv) other accounts for which
Unified Management Corporation is the dealer of record.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory and Subadvisory Agreement. The
Investment Advisory Agreement contains provisions relating to the selection of
broker-dealers ("brokers") for the Fund's portfolio transactions. The Manager
and the Sub-Adviser may use such brokers as may, in their best judgment based on
all relevant factors, implement the policy of the Fund to achieve best execution
of portfolio transactions. While the Manager need not seek advance competitive
bidding or base its selection on posted rates, it is expected to be aware of the
current rates of most eligible brokers and to minimize the commissions paid to
the extent consistent with the interests and policies of the Fund as established
by its Board and the provisions of the Investment Advisory Agreement.
The Investment Advisory Agreement also provides that, consistent with
obtaining the best execution of the Fund's portfolio transactions, the Manager
and the Sub-Adviser, in the interest of the Fund, may select brokers other than
affiliated brokers, because they provide brokerage and/or research services to
the Fund and/or other accounts of the Manager or the Sub-Adviser. The
commissions paid to such brokers may be higher than another qualified broker
would have charged if a good faith determination is made by the Manager or the
Sub-Adviser that the commissions are reasonable in relation to the services
provided, viewed either in terms of that transaction or the Manager's or the
Sub-Adviser's overall responsibilities to all its accounts. No specific dollar
value need be put on the services, some of which may or may not be used by the
Manager or the Sub-Adviser for the benefit of the Fund or other of its advisory
clients. To show that the determinations were made in good faith, the Manager or
any Sub-Adviser must be prepared to show that the amount of such commissions
paid over a representative period selected by the Board was reasonable in
relation to the benefits to the Fund. The Investment Advisory Agreement
recognizes that an affiliated broker-dealer may act as one of the regular
brokers for the Fund provided that any commissions paid to such broker are
calculated in accordance with procedures adopted by the Trust's Board under
applicable rules of the ("SEC") SEC.
In addition, the Subadvisory Agreement permits the Sub-Adviser to enter
into "soft dollar" arrangements through the agency of third parties to obtain
services for the Fund. Pursuant to these arrangements, the Sub-Adviser will
undertake to place brokerage business with broker-dealers who pay third parties
that provide services. Any such "soft dollar" arrangements will be made in
accordance with policies adopted by the Board of the Trust and in compliance
with applicable law.
Description of Brokerage Practices. Portfolio decisions are based upon
recommendations of the portfolio manager and the judgment of the portfolio
managers. The Fund will pay brokerage commissions on transactions in listed
options and equity securities. Prices of portfolio securities purchased from
underwriters of new issues include a commission or concession paid by the issuer
to the underwriter, and prices of debt securities purchased from dealers include
a spread between the bid and asked prices.
Transactions may be directed to dealers during the course of an
underwriting in return for their brokerage and research services, which are
intangible and on which no dollar value can be placed. There is no formula for
such allocation. The research information may or may not be useful to one or
more of the Fund and/or other accounts of the Manager or the Sub-Adviser;
information received in connection with directed orders of other accounts
managed by the Manager or the Sub- Adviser or its affiliates may or may not be
useful to one or more of the Funds. Such information may be in written or oral
form and includes information on particular companies and industries as well as
market, economic or institutional activity areas. It serves to broaden the scope
and supplement the research activities of the Manager or the Sub-Adviser, to
make available additional views for consid eration 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 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, 1995,
1996 and 1997. Prior to November 3, 1997,
Oppenheimer & Co., Inc. ("OpCo"), a broker-dealer, was an affiliate of the
Sub-Adviser.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
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 %
- ----------- ----------- ------- - ------- -
1995 $112,411 $54,131 48.2% $29,045,570
48.9% 1996 $100,216 $46,979 46.8% $36,417,627
27.4%
1997 $ $ % $ %
</TABLE>
During the Fund's fiscal year ended October 31, 1997, $_____ was paid by
the Fund to brokers as commissions in return for research services; the
aggregate dollar amount of those transactions was $___________. Performance of
the Fund
Total Return Information. As described in the Prospectus, from time to time the
"average annual total return," "cumulative total return" and "total return at
net asset value" of an investment in a class of shares of the Fund may be
advertised. An explanation of how these total returns are calculated for each
class and the components of those calculations is set forth below.
The Fund's advertisements of its performance data must, under applicable
SEC rules, include the average annual total returns for each 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.
o 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, 1997 and for the period from November 1, 1991 (commencement of
operations) to October 31, 1997 were -----%, ----% and _____%, respectively.
The average annual total returns on Class B shares for the one-year period
ended October 31, 1997 and for the period September 1, 1993 (commencement of the
public offering of the class) through October 31, 1997 were _____% and _____%,
respectively.
The average annual total returns on Class C shares for the one-year period
ended October 31, 1997 and for the period September 1, 1993 (commencement of the
public offering of the class) through October 31, 1997 were _____% and _____%,
respectively.
o 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 (5.0% for the first year, 4.0% for the second
year, 3.0% for the third and fourth years, 2.0% for the fifth year, 1.0% 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, 1997 was _____%.
The cumulative total return on Class B shares for the period from September 1,
1993 (commencement of the public offering of the class) through October 31, 1997
was ______%. The cumulative total return on Class C shares for the period from
September 1, 1993 (commencement of the public offering of the class) through
October 31, 1997 was _____%.
o 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, 1997 and for the
period from November 1, 1991 to October 31, 1997 (commencement of operations)
were _____% and ___%, 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, 1997 was _____%.
The average annual total returns at net asset value on the Fund's Class B
shares for the one year period ended October 31, 1997 and for the period from
September 1, 1993 (commencement of the public offering of the class) through
October 31, 1997 were 21.07%______% and ______%, respectively. The cumulative
total return at net asset value on the Fund's Class B shares for the period
September 1, 1993 through October 31, 1997 was _____%.
The average annual total returns at net asset value on the Fund's Class C
shares for the one-year period ended October 31, 7 and for the from period
September 1, 1993 (commencement of the public offering of the class) through
October 31, 1997 were 20.97%_____% and _____%, respectively. The cumulative
total return at net asset value on the Fund's Class C shares for the period
September 1, 1993 through October 31, 1997 was _____%.
Other Performance Comparisons. From time to time the Fund may publish the
ranking of its Class A, Class B and/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. ("Morningstar"),
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 investment
returns. The Fund is ranked among domestic equity funds. Investment return
measures 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 measures fund 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. From time to time, the Fund may include
in its advertisements and sales literature performance information about the
Fund cited in newspapers and other periodicals, such as The New York Times,
which may include performance quotations from other sources, including Lipper.
The Fund may also compare its performance to that of other funds in its
Morningstar Category. In addition to its star ranking, Morningstar also
categorizes and compares a fund's 3-year performance based 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 are
each further subdivided into categories based on types of investments and
investment styles. Those comparisons 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 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, each dated November 22, 1996, for Class A, Class B
and Class C shares of the Fund under Rule 12b-1 of the Investment Company Act
pursuant to which the Fund will compensate the Distributor for all or a portion
of its costs incurred in connection with the distribution and/or servicing of
the shares of that class, as described in the Prospectus. Each Plan has been
approved by a vote of (i) the Board of 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 February 4, 1997 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 May 19, 1997. The Plans replaced the amended and restated
distribution and service plans and agreements dated November 22, 1995.
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 an SEC 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
detailing services rendered in connection with the distribution of the shares,
the amount of all payments made pursuant to each Plan, and the purpose for which
the payments were made . The reports shall also include the distribution costs
for that quarter, and such costs for previous fiscal periods that are carried
forward, as explained in the Prospectus and below. Those reports, including the
allocations on which they are based, will be subject to the review and approval
of the Independent Trustees in the exercise of their fiduciary duty. Each Plan
further provides that while it is in effect, the selection and nomination of
those Trustees of the Trust who are not "interested persons" of the Trust is
committed to the discretion of the Independent Trustees. This does not prevent
the involvement of others in such selection and nomination if the final decision
on any such selection or nomination is approved by a majority of the Independent
Trustees.
Under the Plans, no payment will be made to any Recipient in any quarter
if the aggregate net asset value of all Fund shares held by the Recipient for
itself and its customers did not exceed a minimum amount, if any, that may be
determined from time to time by a majority of the Trust's Independent Trustees.
Initially, the Board of Trustees has set the fee at the maximum rate and set no
requirement for a minimum amount.
The Plans allow the service fee payments to be paid by the Distributor to
Recipients in advance for the first year shares are outstanding, and thereafter
on a quarterly basis, as described in the Prospectus. The advance payment is
based on the net assets of shares of that class sold. An exchange of shares does
not entitle the Recipient to an advance service fee payment. In the event shares
are redeemed during the first year such shares are outstanding, the Recipient
will be obligated to repay a pro rata portion of such advance payment to the
Distributor.
Although the Plans permit the Distributor to retain both the asset-based
sales charge and the service fee, or to pay Recipients the service fee on a
quarterly basis, without payment in advance, the Distributor presently intends
to pay the service fee to Recipients in the manner described above. A minimum
holding period may be established from time to time under the Plans by the
Board. Initially, the Board has set no minimum holding period. All payments
under the Plans are subject to the limitations imposed by the Conduct Rules of
the National Association of Securities Dealers, Inc. on payments of asset-based
sales charges and service fees.
For the fiscal year ended October 31, 1997, (i) payments made under for
Class A Plan totaled $_______ of which $______ was retained by the Distributor
and $___ was paid to a dealer affiliated with the Distributor, (ii) payments
made under the Class B Plan totaled $_______, of which $______ was retained by
the Distributor and $_ was paid to a dealer affiliated with the Distributor and
(iii) payments made under the Class C Plan totaled $______, of which $______ was
retained by the Distributor and $___ 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).
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 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, Martin Luther
King 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-type debt
securities held by a non-money market fund that had a maturity of less than 397
days when issued that have a remaining maturity of 60 days or less , and debt
instruments held by a money market fund that have a remaining maturity of 397
days or less, shall be 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 " asked" 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 U.S.
Government securities or mortgage-backed securities for which last sale
information is not generally available. 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 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 would 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.
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 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. Relations by virtue of a remarriage
(step-children, step-parents, etc.) are included.
o 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 Discovery Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Multiple Strategies Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer MidCap Fund
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 Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer International Growth Fund
Oppenheimer International Bond Fund
Oppenheimer International Small Company Fund
Oppenheimer Enterprise Fund
Oppenheimer Quest Capital Value Fund, Inc.
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
Oppenheimer Real Asset 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
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).
o 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.
o 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 sold with a front-end sales
charge or Class B 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 "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 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 transmissions.
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 other than
public school 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 or association has made special arrangements with the
Distributor and all members of the group or association participating in or who
are eligible to participate in the plan(s) purchase Class A shares of the Fund
through a single investment dealer, broker, or other financial institution
designated by the group. "Group retirement plan" also includes qualified
retirement plans and non-qualified deferred compensation plans and IRAs that
purchase Class A shares of the Fund through a single investment dealer, broker,
or other financial institution, if that broker-dealer has made special
arrangements with the Distributor enabling those plans to purchase Class A
shares of the Fund at net asset value but subject to a contingent deferred sales
charge.
In addition to the discussion in the Prospectus relating to the ability of
Retirement Plans to purchase Class A shares at net asset value in certain
circumstances, there is no initial sales charge on purchases of Class A shares
of any one or more of the Oppenheimer funds by a Retirement Plan in the
following cases: (i) the recordkeeping for the Retirement Plan is performed on a
daily valuation basis by Merrill Lynch Pierce Fenner & Smith, Inc. ("Merrill
Lynch") and, on the date the plan sponsor signs the Merrill Lynch recordkeeping
service agreement, the Retirement Plan has $3 million or more in assets invested
in mutual funds other than those advised or managed by Merrill Lynch Asset
Management, L.P. ("MLAM") that are made available pursuant to a Service
Agreement between Merrill Lynch and the mutual fund's principal underwriter or
distributor and in funds advised or managed by MLAM (collectively, the
"Applicable Investments"); or (ii) the recordkeeping for the Retirement Plan is
performed on a daily valuation basis by an independent record keeper whose
services are provided under a contract or arrangement between the Retirement
Plan and Merrill Lynch. On the date the plan sponsor signs the Merrill Lynch
record keeping service agreement, the Plan must have $3 million or more in
assets, excluding assets held in money market funds, invested in Applicable
Investments; or (iii) the Plan has 500 or more eligible employees, as determined
by the Merrill Lynch plan conversion manager on the date the plan sponsor signs
the Merrill Lynch record keeping service agreement.
If a Retirement Plan's records are maintained on a daily valuation basis
by Merrill Lynch or an independent record keeper under a contract or alliance
arrangement with Merrill Lynch, and if on the date the plan sponsor signs the
Merrill Lynch record keeping service agreement the Retirement Plan has less than
$3 million in assets, excluding money market funds, invested in Applicable
Investments, then the Retirement Plan may purchase only Class B shares of one or
more of the Oppenheimer funds. Otherwise, the Retirement Plan will be permitted
to purchase Class A shares of one or more of the Oppenheimer funds. Any of those
Retirement Plans that currently invest in Class B shares of the Fund will have
their Class B shares be converted to Class A shares of the Fund once the Plan's
Applicable Investments have reached $5 million.
Any redemptions of shares of the Fund held by Retirement Plans whose
records are maintained on a daily valuation basis by Merrill Lynch or an
independent record keeper under a contract with Merrill Lynch that are currently
invested in Class B shares of the Fund shall not be subject to the Class B CDSC.
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.
o Involuntary Redemptions. The Trust'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.
o Payments "In Kind". The Prospectus states that payment for shares
tendered for redemption is ordinarily made in cash. However, the Board of
Trustees of the Fund may determine that it would be detrimental to the best
interests of the remaining shareholders of the Fund to make payment of a
redemption order wholly or partly in cash. In that case the Fund may pay the
redemption proceeds in whole or in part by a distribution "in kind" of
securities from the portfolio of the Fund, in lieu of cash, in conformity with
applicable rules of the Securities and Exchange Commission. The Fund has elected
to be governed by Rule 18f-1 under the Investment Company Act, pursuant to which
the Fund is obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net assets of the Fund during any 90-day period for any
one shareholder. If shares are redeemed in kind, the redeeming shareholder might
incur brokerage or other costs in selling the securities for cash. The method of
valuing securities used to make redemptions in kind will be the same as the
method the Fund uses to value its portfolio securities described above under the
"Determination of Net Asset Values Per Share" and that valuation will be made as
of the time the redemption price is determined.
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 that were
subject to the Class B 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, 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.
o 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.
o 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 . 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 12 months of the end of the calendar
month of the initial purchase of the exchanged Class A shares (18 months if the
shares were initially purchased prior to May 1, 1997), 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.
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.
-4-
<PAGE>
Appendix A
Corporate Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
Food
Gas Utilities
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming Industrial Services
Information Technology
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
Wireless
Services
A-1
<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
prosp\257sai.# 2
A-2
<PAGE>
Oppenheimer
Quest Opportunity Value Fund
Prospectus dated January 26, 1998
Oppenheimer Quest Opportunity Value Fund is a mutual fund that seeks growth of
capital as its investment objective. The Fund seeks its investment objective
through investments in a diversified portfolio of common stocks, bonds and cash
equivalents, the proportions of which will vary based upon management's
assessment of the relative values of each investment under prevailing market
conditions. In an uncertain investment environment, the Fund may stress
defensive investment methods. Please refer to "Investment 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 January
26, 1998 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 NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-1-
<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
Class Y 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
-2-
<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, 1997.
o 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.
Class Class Class Class
A Shares B Shares C Shares Y Shares
Maximum Sales Charge
on Purchases
(as a % of
offering price) 5.75% None None None
- --------------------------------------------------------------------------------
Maximum Deferred Sales
Charge (as a % of
the lower of the
original offering
price or redemption
proceeds) None(1) 5% in the first 1% if None
year, declining redeemed
to 1% in the within 12
sixth year months of
and eliminated purchase(2)
thereafter(2)
- --------------------------------------------------------------------------------
Maximum Sales Charge
on Reinvested
Dividends None None None None
- --------------------------------------------------------------------------------
Exchange Fee None None None None
- --------------------------------------------------------------------------------
Redemption Fee None(3) None(3) None(3)
None
(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 12 calendar months (18 months for shares purchased
prior to May 1, 1997) from the end of the calendar month during which you
purchased those 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.
o 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)
Class A Class B Class C Class Y
Shares Shares Shares Shares
- --------------------------------------------------------------------------------
Management Fees % % % %
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
12b-1 Distribution
Plan Fees % % %
- --------------------------------------------------------------------------------
Other Expenses % % % %
- -------------------------------------------------------
- ----------------------------------------------------------
Total Fund
Operating Expenses % % % %
The numbers in the chart above are based upon the Fund's expenses in its
last fiscal year ended October 31, 1997. 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 0.25% 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 the 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 the actual value of the Fund's assets represented by each class of
shares. Class Y shares were not publicly offered prior to December 16, 1996.
Therefore, the Annual Fund Operating Expenses shown for Class Y shares are based
on the period from December 16, 1996 until October 31, 1997.
o Examples. To try to show the effect of these expenses on an investment
over time, we have created the hypothetical examples shown below. Assume that
you make a $1,000 investment in each class of shares of the Fund, that the
Fund's annual return is 5%, that its operating expenses for each class are the
ones shown in the Annual Fund Operating Expenses chart above and that Class B
shares automatically convert into Class A shares six years after purchase. If
you were to redeem your shares at the end of each period shown below, your
investment would incur the following expenses by the end of 1, 3, 5 and 10
years:
1 year 3 years 5 years 10 years
*
- --------------------------------------------------------------------------------
Class A Shares $ $ $ $
Class B Shares $ $ $ $
Class C Shares $ $ $ $
Class Y Shares $ $ $ $
If you did not redeem your investment, it would incur the following
expenses:
1 year 3 years 5 years 10 years
*
- --------------------------------------------------------------------------------
Class A Shares $ $ $ $
Class B Shares $ $ $ $
Class C Shares $ $ $ $
Class Y Shares $ $ $ $
* In the first example, expenses include the Class A initial sales charge and
the applicable Class B or Class C contingent deferred sales charge. In the
second example, Class A expenses include the initial sales charge, but Class B
and Class C expenses do not include contingent deferred sales charges. The Class
B expenses in years 7 through 10 are based on the Class A expenses shown above,
because the Fund automatically converts your Class B shares into Class A shares
after 6 years. Because of the effect of the higher asset-based sales charge and
the contingent deferred sales charge imposed on Class B and Class C shares,
long-term holders of Class B and Class C shares could pay the economic
equivalent of more than the maximum front-end sales charge allowed under
applicable regulations. For Class B shareholders, the automatic conversion of
Class B shares to Class A shares is designed to minimize the likelihood that
this will occur. Please refer to "How to Buy Shares - Buying Class B Shares" for
more information.
These examples show the effect of expenses on an investment, but are not
meant to state or predict actual or expected costs or investment returns of the
Fund, all of which may be more or less than those shown.
-3-
<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.
o What is the Fund's Investment Objective? The Fund's investment objective
is to seek growth of capital .
o What Does the Fund Invest In? The Fund seeks its investment objective
through investments in a diversified portfolio of common stocks, bonds and cash
equivalents, the proportions of which will vary based upon management's
assessment of the relative value of each investment under prevailing market
conditions. Under normal market conditions, the Fund will invest at least 50% of
its total assets in common stock and securities convertible into common stock.
During periods when common stocks appear to be overvalued or when value
differentials are such that fixed-income obligations appear to present
meaningful capital growth opportunities relative to common stocks, or pending
investment in securities with capital growth opportunities, the Fund may invest
up to 100% of its total assets in bonds and other fixed-income obligations. To
provide liquidity, the Fund typically invests a part of its assets in various
types of U.S. Government securities and money market instruments. For temporary
defensive purposes, the Fund may invest up to 100% of its assets in such
securities. These investments are more fully explained in "Investment Policies
and Strategies," starting on page __.
o Who Manages the Fund? The Manager, OppenheimerFunds, Inc., supervises the
Fund's investment program and handles its day-to-day business. The Manager
(including subsidiaries) manages investment company portfolios having over $__
billion in assets as of December 31, 1997. 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, Richard J. Glasebrook II, 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.
o 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, or the change in value of particular stocks or bonds because of an
event affecting the issuer. Changes in interest rates can affect stock and bond
prices. These changes affect the value of the Fund's investments and its price
per share. Investments in 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
and by carefully researching securities before they are purchased for the Fund's
portfolio, 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.
o 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.
o Will I Pay a Sales Charge to Buy Shares? The Fund has four classes of
shares. Each class of shares has the same investment portfolio but has 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
purchase. There is also an annual asset-based sales charge which is higher on
Class B and Class C shares. Class Y shares are offered at net asset value
without sales charge only to certain institutional investors. 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.
o 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 __.
o 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, 1997, is included in
the Statement of Additional Information.
-4-
<PAGE>
Investment Objective and Policies
Objective. The Fund seeks growth of capital .
Investment Policies and Strategies. The Fund seeks its investment objective
through investments in a diversified portfolio of common stocks, bonds and cash
equivalents, the proportions of which will vary based upon management's
assessment of the relative values of each investment under prevailing market
conditions. Under normal market conditions, the Fund will invest at least 50% of
its total assets in common stocks and securities convertible into common stock.
During periods when common stocks appear to be overvalued or when value
differentials are such that fixed-income obligations appear to present
meaningful capital growth opportunities relative to common stocks, or pending
investment in securities with capital growth opportunities, the Fund may invest
up to 100% of its total assets in bonds and other fixed-income obligations,
including money market instruments as defined below which do not generate
capital appreciation. The bonds in which the Fund invests will be limited to
U.S. Government obligations, mortgage-backed securities, investment-grade
corporate debt securities and unrated obligations, including those of foreign
issuers, that the Sub-Adviser believes to be of comparable quality.
To provide liquidity for the purchase of new instruments and to effect
redemptions of shares, the Fund typically invests a part of its assets in
various types of U.S. Government securities and high quality, short-term debt
securities with remaining maturities of one year or less, such as government
obligations, certificates of deposit, bankers' acceptances, commercial paper,
short-term corporate securities and repurchase agreements ("money market
instruments"). For temporary defensive purposes, the Fund may invest up to 100%
of its assets in such U.S. Government securities and money market instruments.
o Can the Fund's Investment Objective and Policies Change? The Fund has an
investment objective, which is described above, as well as investment policies
it follows to try to achieve its objective. Additionally, the Fund uses certain
investment techniques and strategies in carrying out those investment policies.
The Fund's investment policies and practices in are not "fundamental" unless
this Prospectus or the Statement of Additional Information states that a
particular policy is "fundamental". The Fund's investment objective is a
fundamental policy.
Fundamental policies are those that cannot be changed without the approval
of a "majority" of the Fund's outstanding voting shares. The term "majority" is
defined in the Investment Company Act of 1940 to be a particular percentage of
outstanding voting shares (and this term is explained in the Statement of
Additional Information). The Board of 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.
o Investments in Bonds and Convertible Securities. The Fund may also
invest in bonds, debentures and other fixed-income securities. The Fund's
investments in corporate debt obligations will be limited to those rated
investment-grade, including those of foreign issuers, or, if unrated, determined
by the Sub-Adviser to be of comparable quality. Investment-grade rated
obligations are those rated at least "BBB" by Standard & Poor's Corporation
("S&P")or at least "Baa" by Moody's Investors Service, Inc. ("Moody's")or
another nationally recognized statistical rating organization. While securities
rated "BBB" by S&P or "Baa" by Moody's are investment-grade, they may be subject
to greater market fluctuations and risks of loss of income and principal than
higher-grade securities and may be considered to have certain speculative
characteristics.
The value of a convertible security is a function of its "investment
value" and its "conversion value." If the "investment value" exceeds the
"conversion value," the security's price will likely increase when interest
rates fall and decrease when interest rates rise, as with a fixed-income
security. If the "conversion value" exceeds the "investment value," the
convertible security will likely sell at a premium over its conversion value and
its price will tend to fluctuate directly with the price of the underlying
security.
o U.S. Government Obligations, including Mortgage-Backed Securities.
U.S. Government obligations are obligations supported by any of the
following: (a) the full faith and credit
of the U.S. Government, such as obligations of Government National Mortgage
Association ("Ginnie Mae"), (b) the right of the issuer to borrow an amount
limited to a specific line of credit from the U.S. Government, such as
obligations of Federal National Mortgage Association ("Fannie Mae"), and (c) the
credit of 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
o 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.
o Portfolio Turnover. A change in the securities held by the Fund is
known as "portfolio turnover." The Fund may engage in short-term trading to
try to achieve its objective. It is anticipated
that the Fund's annual portfolio turnover rate will generally not exceed 100%.
The "Financial Highlights" 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.
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 Sub-Adviser tries to reduce risks by
diversifying investments and by carefully researching securities before they are
purchased, 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.
o 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 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, and changes in government regulations affecting an industry). Not all of
these factors can be predicted.
The Fund attempts to limit market risks by diversifying its investments,
that is, by not holding a substantial amount of the stock of any one company, by
not investing too great a percentage of the Fund's assets in any one company,
and by investing a varying portion of its portfolio in bonds and convertible
securities, as discussed below. Because changes in market prices can occur at
any time, there is no assurance that the Fund will achieve its investment
objective, and when you redeem your shares they may be worth more or less than
what you paid for them.
o 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 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.
o 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.
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.
o 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 U.S. Government securities
and money market instruments of the type identified on page __ under "Investment
Policies and Strategies." At any time that the Fund invests for temporary
defensive purposes, to the extent of such investments it is not pursuing its
investment objective.
o 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.
o Repurchase Agreements. The Fund may enter into repurchase agreements
primarily 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.
o 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 that cannot be sold publicly until it is registered under the
Securities Act of 1933.
The Fund may not invest more than 15% of its net assets in illiquid and
restricted securities, including repurchase agreements that have a maturity of
longer than seven days and certain over-the-counter options. The Fund's
percentage limitation on these investments does not apply to certain restricted
securities that are eligible for resale to "qualified institutional buyers". The
Manager monitors holdings of illiquid securities on an ongoing basis to
determine whether to sell some holdings to maintain adequate liquidity.
o 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. Each loan must be
collateralized in accordance with applicable regulatory requirements. After any
loan, the value of the securities loaned is not expected to exceed 10% of the
Fund's total assets. There are some risks in connection with securities lending.
The Fund might experience a delay in receiving additional collateral to secure a
loan or a delay in recovery of the loaned securities.
o Warrants and Rights. Warrants generally are options to purchase stock at
set prices that are valid for a limited period of time. Rights are similar to
warrants but normally have a short duration and are distributed directly by the
issuer to its shareholders. The Fund may invest up to 5% of its total assets in
warrants. 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.
o Investing In Small, Unseasoned Companies. The Fund may invest up to
5% of its total assets in securities of small, unseasoned companies. These
are companies that have been in operation
less than three years, including 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.
o Investment in Other Investment Companies. The Fund generamay invest up
to 10% of its total assets in the aggregate iof other investment companies and
up to 5% of its total assets in any one investment company, as long as each
investment does not represent more than 3% of the outstanding voting securities
of the acquired investment company. These limitations do not apply in the case
of investment company securities which may be purchased as part of a plan of
merger, consolidation, reorganization or acquisition. Investment in other
investment companies may involve the payment of substantial premiums above the
value of such investment companies' portfolio securities, and is subject to
limitations under the Investment Company Act and market availability. The Fund
does not intend to invest in such investment companies unless, in the judgment
of the Manager, the potential benefits of such investment justify the payment of
any applicable premiums or sales charge. As a shareholder in an investment
company, the Fund would bear its ratable share of that investment company's
expenses, including its advisory and administration fees. At the same time, the
Fund would continue to pay its own management fees and other expenses.
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:
o 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.
o 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.
o Concentrate its investments in any particular industry, but if deemed
appropriate for attaining its investment objective, the Fund may invest less
than 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).
o 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 of 1940.
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 with an unlimited
number of authorized shares of beneficial interest. The Fund is a diversified
investment company.
The Trust 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 officers of the Trust and provides more information about
them. Although the Trust will not normally hold annual meetings, it may hold
shareholder meetings from time to time on important matters, and shareholders
have the right 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 has four classes of shares, Class A, Class B, Class C
and Class Y. Only certain institutional investors may elect to purchase Class Y
shares. 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.
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 subsidiaries) currently manages investment companies, including other
Oppenheimer funds, with assets of more than $__ billion as of December 31, 1997,
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.
On November 4, 1997, PIMCO Advisors L.P. ("PIMCO Advisors"), a registered
investment adviser with $125 billion in assets under management through various
subsidiaries, acquired control of Oppenheimer Capital and the Sub-Adviser. On
November 5, 1997, a new sub-advisory agreement between the Sub-Adviser and the
Manager, on terms identical to the prior sub-advisory agreement, became
effective. The new sub-advisory agreement had been approved by shareholders of
the Fund on May 23, 1997. Value Advisors LLC, a limited liability company and a
wholly-owned subsidiary of PIMCO Advisors, holds a one-third managing general
partner interest in Oppenheimer Capital and a 1.0% general partner interest in
the Sub-Adviser. Oppenheimer Capital L.P., a Delaware limited partnership whose
units are traded on The New York Stock Exchange , owns the remaining two-thirds
interest in Oppenheimer Capital. PIMCO Partners G.P., general partner of PIMCO
Advisors, holds the sole general partner interest in Oppenheimer Capital, L.P.
o Portfolio Manager. The Fund's portfolio manager ,
Richard J. Glasebrook II, is employed by
the Sub-Adviser and is primarily responsible for the selection of the Fund's
portfolio securities.
Mr. Glasebrook, who is also a Manager Director of Oppenheimer Capital,
has been the Fund's
portfolio manager since April, 1991.
The Sub- Adviser's equity investment policy is overseen by George Long, who
is the Chairman, Chief Executive Officer and Chief Investment Officer for
Oppenheimer Capital. Mr. Long has been with Oppenheimer Capital since 1981.
o Fees and Expenses. Under the Investment Advisory Agreement, the Fund
pays the Manager an annual fee based on the Fund's daily net assets. Effective
October 22, 1997, the annual management fee is as follows: 1.00% of the first
$400 million of average annual net assets; 0.90% of the next $400 million of
average annual net assets ; 0.85% of the next $3.2 billion of average annual net
assets; 0.80% of the next $4 billion of average annual net assets; and 0.75% of
average annual net assets over $8 billion. This management fee is higher than
that paid by most other investment companies. Prior to October 22, 1997, the
annual management fee was 1.00% of the first $400 million of average annual net
assets, 0.90% of the next $400 million of average annual net assets, and 0.85%
of average annual net assets over $800 million. The Fund's management fee for
its last fiscal year was ___% of average annual net assets for its Class A,
Class B, Class C and Class Y shares.
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.
Information about the Fund's brokerage policies and practices is set forth
in "Brokerage Policies of the Fund" in the Statement of Additional Information.
That section discusses how brokers and dealers are selected for the Fund's
portfolio transactions. When deciding which broker to use, the Manager and the
Sub-Adviser are permitted by the Investment Advisory Agreement to consider
whether brokers have sold shares of the Fund or any other funds for which the
Manager serves as investment adviser.
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.
-5-
<PAGE>
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.
o 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
considering the effect of the sales charge, and those returns would be less if
sales charges were deducted.
How Has the Fund Performed? Below is a discussion by the Manager of the Fund's
performance during its last fiscal year ended October 31, 1997, followed by a
graphical comparison of the Fund's performance to an appropriate broad-based
market index.
o Management's Discussion of Performance. During the fiscal year ended
October 31, 1997, 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 investments in quality
undervalued stocks and held portfolio securities for potential appreciation in
value. The Fund's performance during the past fiscal year benefited from its
significant holdings of financial service company stocks, one of the market's
strong sectors. During the latter part of the Fund's past fiscal year, the Fund
maintained an above-average cash position resulting from profit taking on
certain stocks, and was positioned to take advantage of attractive buying
opportunities. The Fund's portfolio holdings, allocations and strategies are
subject to change.
o 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 , Class
C and Class Y shares of the Fund held until October 31, 1997. In the case of
Class A shares, performance is measured from the commencement of operations on
January 3, 1989, in the case of Class B and Class C shares, from inception of
those classes on September 1, 1993 and in the case of Class Y shares, from
inception of the class on December 16, 1996.
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.
-6-
<PAGE>
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical
Investment In:
Oppenheimer Quest Opportunity Value Fund (Class A) and the S & P 500 Index
[Graph]
Average Annual Total Returns of
Class A Shares of the Fund at 10/31/971
1 Year 5 Years Life of Class
% % %
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investment In:
Oppenheimer Quest Opportunity Value Fund (Class B) and the S & P 500 Index
[Graph]
Average Annual Total Returns of Class B Shares of the Fund at 10/31/972
1 Year Life of Class
% %
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investment In:
Oppenheimer Quest Opportunity Value Fund (Class C) and the S & P 500 Index
[Graph]
Average Annual Total Returns of Class C Shares of the Fund at 10/31/973
1 Year Life of Class
% %
Class Y Shares
Comparison of Change in Value of $10,000 Hypothetical Investment In:
Oppenheimer Quest Opportunity Value Fund (Class Y) and the S & P 500 Index
[Graph]
Average Annual Total Returns of Class Y Shares of the Fund at 10/31/974
Life of Class
%
Total returns and ending account values in the graphs show change in share value
and include reinvestment of all dividends and capital gains distributions. The
performance information for the S & P 500 Index begins on 12/31/88 for Class A
shares, 8/31/93 for Class B and Class C shares and 1/1/97 for Class Y shares.
1The inception date of the Fund (Class A shares) was 1/3/89. Class A returns are
shown net of the applicable 5.75% maximum initial sales charge. 2Class B shares
of the Fund were first publicly offered on 9/1/93. Returns are shown net of the
applicable 5% and 2% contingent deferred sales charges, respectively, for the
one year period and the life-of -class. The ending account value for Class B
shares in the graph is net of the applicable 2% contingent deferred sales
charge. 3Class 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. 4Class Y shares of the Fund, first publicly offered on 12/16/96, are
currently offered at net asset value without sales charges to certain
institutional investors. Past performance is not predictive of future
performance. Graphs are not drawn to same scale.
-7-
<PAGE>
About Your Account
How to Buy Shares
Classes of Shares. The Fund offers an individual investor three different
classes of shares, Class A, Class B and Class C. Only certain institutional
investors may purchase a fourth class of shares, Class Y 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.
o 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 12 months of buying them, (18 months if the shares were purchased
prior to May 1, 1997), 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.
o 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.
o 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.
o Class Y Shares. Class Y shares are offered only to certain
institutional investors that have special agreements with the
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 assumed you are an
individual investor, and therefore ineligible to purchase Class Y shares. We
used the sales charge rates that apply to Class A, Class B and Class C shares,
and considered the effect of the higher annual 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.
o 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.
o 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.
o 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.
o 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.
o 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. The Distributor may pay additional periodic compensation from
its own resources to securities dealers or financial institutions based upon the
value of shares of the Fund owned by the dealer or financial institution for its
own account or for its customers.
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:
o 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.
o Under pension, profit-sharing and 401(k) plans and Individual
Retirement Accounts (IRAs), you can make an initial investment of as little as
$250 (if your IRA is established under an Asset Builder Plan, the $25 minimum
applies), and subsequent investments may be as little as $25.
There is no minimum investment requirement if you are buying shares by
reinvesting dividends or distributions 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.
o 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.
o Buying Shares Through Your Dealer. Your dealer will place your
order with the Distributor on your behalf.
o 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.
Payment by Federal Funds Wire: Shares may be purchased by Federal Funds wire.
The minimum investment is $2,500. You must first call the Distributor's Wire
Department at 1-800-525-7041 to notify the Distributor of the wire, and receive
further instructions.
o 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.
o 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.
o 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, or the order is received and transmitted to the Distributor by
an entity authorized by the Fund to accept purchase or redemption orders. The
Fund has authorized the Distributor, certain broker-dealers and agents or
intermediaries designated by the Distributor or those broker-dealers to accept
orders. In most cases, to enable you to receive that day's offering price, the
Distributor or an authorized entity 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, normally your order
must be transmitted 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:
Front-End Sales Charge Commission
As a Percentage of as Percentage
Offering Amount of Offering
Amount of Purchase Price Invested Price
- --------------------------------------------------------------------------------
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
The Distributor reserves the right to reallow the entire commission to dealers.
If that occurs, the dealer may be considered an "underwriter" under Federal
securities laws.
o 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:
o Purchases by a retirement plan qualified under Section 401(a) of the
Internal Revenue Code if the retirement plan has total plan assets of $500,000
or more.
o Purchases aggregating $1 million or more.
o 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,
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.
o 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, and calculated on a
calendar year basis. 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 purchased prior to May 1, 1997 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. A Class A contingent deferred sales
charge may be deducted from the redemption proceeds of any of those shares
purchased on or after May 1, 1997 that are redeemed within 12 months of the end
of the calendar month of their purchase. That sales charge may be equal to 1.0%
of the lesser of (1) the aggregate net asset value of the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original offering price (which is the original net
asset value) of the redeemed shares. However, the Class A contingent deferred
sales charge will not exceed the aggregate amount of the commissions the
Distributor paid to your dealer on all Class A shares of all Oppenheimer funds
you purchased subject to the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is payable, the
Fund will first redeem shares that are not subject to the sales charge,
including shares purchased by reinvestment of dividends and capital gains, and
then will redeem other shares in the order that you purchased them. The Class A
contingent deferred sales charge is waived in certain cases described in
"Waivers of Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges of
shares under the Fund's exchange privilege (described below). However, if the
shares acquired by exchange are redeemed within 18 months of the end of the
calendar month of the purchase of the exchanged shares, the contingent deferred
sales charge will apply.
o 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:
o 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 Distributor will add the value,
at current offering price, of
the
shares you previously purchased and currently own to the value of current
purchases to determine the sales charge rate that applies. 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.
o 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.
o 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. In
order to receive a waiver of the Class A contingent deferred sales charge, you
must notify the Transfer Agent as to which conditions apply.
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:
o the Manager or its affiliates;
o 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;
o registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the Distributor for
that purpose;
o 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;
o 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);
o 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);
o (1) investment advisers and financial planners who have entered into an
agreement for this purpose with the Distributor and 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 investment advisers or financial
planners (that have entered into an agreement for this purpose with the
Distributor) 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 adviser 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);
o 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;
o employee benefit plans purchasing shares through a shareholder servicing
agent which the Distributor has appointed as agent to accept those purchase
orders;
o 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;
o any unit investment trust that has entered into an appropriate
agreement with the Distributor;
o 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
o 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 commenced 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:
o shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party;
o 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;
o 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;
o shares purchased and paid for with the proceeds of shares redeemed in
the prior 30 days 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
o 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:
o to make Automatic Withdrawal Plan payments that are limited annually to
no more than 12% of the original account value;
o involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (see "Shareholder Account Rules and Policies,"
below);
o if, at the time of purchase of shares (prior to May 1, 1997) the dealer
agreed in writing to accept the dealer's portion of the sales commission 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);
o if, at the time of purchase of shares (on or after May 1, 1997) the
dealer agrees in writing to accept the dealer's portion of the sales commission
in installments of 1/12th of the commission per month (and no further commission
will be payable if the shares are redeemed within 12 months of purchase);
o for distributions from a TRAC-2000 401(k) plan sponsored by the
Distributor due to the termination of the TRAC-2000 program;
o 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
subsidiaries) 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;
o for distributions from Retirement Plans having 500 or more eligible
participants, except distributions due to termination of all of the Oppenheimer
funds as an investment option under the Plan; and
o for distributions from 401(k) plans sponsored by broker-dealers that
have entered into a special agreement with the Distributor allowing this waiver.
o Distribution and Service Plan for Class A Shares. The Fund has adopted a
Distribution and Service Plan for Class A shares to compensate the Distributor
for its services in connection with the distribution of shares and 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 compensate
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 and (2) 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. Class B shares held for a period greater than 6 years
automatically convert to Class A shares.
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.
o 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.
o 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."
o 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.
o 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 may pay the Class B service fee and the asset-based sales charge
to the dealer quarterly in lieu of paying the sales commission and service fee
advance at the time of purchase.
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 may pay the Class C service fee and
asset-based sales charge to the dealer quarterly in lieu of paying the sales
commission and service fee advance at the time of purchase.
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. At October 31, 1997, the end of
the Class B Plan year, the Distributor had incurred unreimbursed expenses in
connection with sales of Class B shares of $ (equal to % of the Fund's net
assets represented by Class B shares on that date). At October 31, 1997, the end
of the Class C Plan year, the Distributor had incurred unreimbursed expenses in
connection with sales of Class C shares of $ (equal to % of the Fund's net
assets represented by Class C shares on that date).
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.
o 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. In order to receive a waiver of the Class B or Class C contingent
deferred sales charge, you must notify the Transfer Agent as to which conditions
apply.
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 :
o 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);
o 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);
o returns of excess contributions to Retirement Plans;
o distributions from retirement plans to make "substantially equal
periodic payments", as permitted in 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;
o shares redeemed involuntarily, as described in "Shareholder Account
Rules and Policies," below; or
o distributions from OppenheimerFunds prototype 401(k) plans and from
certain Massachusetts Mutual Life Insurance Company 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; or (6) for loans to participants.
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:
o shares sold to the Manager or its affiliates;
o 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;
o shares issued in plans of reorganization to which the Fund is a
party; or
o distributions from 401(k) plans sponsored by broker-dealers that have
entered into a special agreement with the Distributor allowing this waiver.
Buying Class Y Shares. Class Y shares are sold at net asset value per share
without sales charge directly to certain institutional investors, such as
insurance companies, registered investment companies and employee benefit plans,
that have special agreements with the Distributor for this purpose. These
include Massachusetts Mutual Life Insurance Company, an affiliate of the
Manager, which may purchase Class Y shares of the Fund and other Oppenheimer
funds for asset allocation programs, investment companies or separate investment
accounts it sponsors and offers to its customers. Individual investors are not
able to invest in Class Y shares directly.
While Class Y shares are not subject to initial or contingent deferred
sales charges or asset-based sales charges, an institutional investor buying the
shares for its customers' accounts may impose charges on those accounts. The
procedures for purchasing, redeeming, exchanging, or transferring the Fund's
other classes of shares, and the special account features that apply to those
shares described elsewhere in this Prospectus (other than provisions as to the
timing of the Fund's receipt of purchase, redemption and exchange orders) in
general do not apply to Class Y shares.
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.
o 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.
o 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.
o 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.
o 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.
o 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.
Shareholder Transactions by Fax. Requests for certain account transactions may
be sent to the Transfer Agent by fax (telecopier). Please call 1-800-525-7048
for information about which transactions are included. Transaction requests
submitted by fax are subject to the same rules and restrictions as written and
telephone requests described in this Prospectus.
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:
o 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.
o 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:
o Individual Retirement Accounts including rollover IRAs, for individuals
and their spouses and SIMPLE IRAs offered by employers
o 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
o SEP-IRAs (Simplified Employee Pension Plans) for small business owners
or people with income from self-employment, including SAR/SEP IRAs
o Pension and Profit-Sharing Plans for self-employed persons and
other employers
o 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.
o 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.
o 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):
o You wish to redeem more than $50,000 worth of shares and receive a
check
o The redemption check is not payable to all shareholders listed on the
account statement
o The redemption check is not sent to the address of record on your
account statement
o Shares are being transferred to a Fund account with a different owner
or name
o Shares are redeemed by someone other than the owners (such as an
Executor)
o 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:
o Your name
o The Fund's name
o Your Fund account number (from your account statement) o The dollar
amount or number of shares to be redeemed o Any special payment
instructions o Any share certificates for the shares you are selling o The
signatures of all registered owners exactly as the account is
registered, and
o 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 Service 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.
o To redeem shares through a service representative, call 1-800-852-8457 o
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.
o 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.
o 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 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:
o Shares of the fund selected for exchange must be available for sale
in your state of residence
o The prospectuses of this Fund and the fund whose shares you want to
buy must offer the exchange privilege
o 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
o You must meet the minimum purchase requirements for the fund you
purchase by exchange
o 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:
o 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."
o 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:
o 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.
o 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.
o 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.
o 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.
o 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.
The Distributor has entered into agreements with certain dealers and
investment advisers permitting them to exchange their clients' shares by
telephone. These privileges are limited under those agreements and the
Distributor has the right to reject or suspend those privileges. As a result,
those exchanges may be subject to notice requirements, delays and other
limitations that do not apply to shareholders who exchange their shares directly
by calling or writing to the Transfer Agent.
Shareholder Account Rules and Policies
o 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 the 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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, Class C and Class Y shares. Therefore, the redemption value of
your shares may be more or less than their original cost.
o 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 federal funds wire, certified check or arrange to have your
bank provide telephone or written assurance to the Transfer Agent that your
purchase payment has cleared.
o 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.
o 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.
o "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 correct and properly
certified Social Security or Employer Identification Number when you sign your
application, or if you under report your income to the Internal Revenue Service
regulations on tax reporting of dividends.
o 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.
o 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,
Class C and Class Y 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 and Class Y 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 .
There is no fixed dividend rate and there can be no assurance as to the payment
of any dividends or the realization of any gains.
Capital Gains. The Fund may make distributions annually in December out of any
net short-term or long-term capital gains, and the Fund may make supplemental
distributions of dividends and capital gains following its fiscal year which
ended 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:
o 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.
o 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.
o 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.
o Reinvest Your Distributions in Another Oppenheimer Fund Account. You
can reinvest all distributions in the same class of shares of 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. So that the Fund will
not have to pay taxes on the amounts it distributes to shareholders as dividends
and capital gains, the Fund intends to manage its investments so that it will
qualify as a "regulated investment company" under the Internal Revenue Code,
although it reserves the right not to qualify in a particular year.
o "Buying a Dividend". 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.
o 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.
o 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.
-8-
<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
o Reduced Class A Initial Sales Charge Rates for Certain Former Quest
Shareholders
o Purchases by Groups, Associations and Certain Qualified Retirement Plans. The
following table sets forth the initial sales charge rates for Class A shares
purchased by a "Qualified Retirement Plan" through a single broker, dealer or
financial institution, or by members of "Associations" formed for any purpose
other than the purchase of securities if that Qualified Retirement Plan or that
Association purchased shares of any of the Former Quest for Value Funds or
received a proposal to purchase such shares from OCC Distributors prior to
November 24, 1995. For this purpose only, a "Qualified Retirement Plan" includes
any 401(k) plan, 403(b) plan, and SEP/IRA or IRA plan for employees of a single
employer.
Front-End Front-End
Sales Sales Commission
Charge Charge as
Number of as a as a Percentage
Eligible Percentage Percentage of
Employees of Offering of Amount Offering
or Members Price Invested Price
- --------------------------------------------------------------------------------
9 or fewer 2.50% 2.56% 2.00%
- --------------------------------------------------------------------------------
At least 10 but not
more than 49 2.00% 2.04% 1.60%
For purchases by Qualified Retirement plans and Associations having 50 or
more eligible employees or members, there is no initial sales charge on
purchases of Class A shares, but those shares are subject to the Class A
contingent deferred sales charge described on pages ___ and ___ of this
Prospectus.
Purchases made under this arrangement qualify for the lower of the sales
charge rate in the table based on the number of eligible employees in a
Qualified Retirement Plan or members of an Association or the sales charge rate
that applies under the Rights of Accumulation described above in the Prospectus.
In addition, purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they qualified to
purchase shares of any of the Former Quest For Value Funds by virtue of
projected contributions or investments of $1 million or more each year.
Individuals who qualify under this arrangement for reduced sales charge rates as
members of Associations, or as eligible employees in Qualified Retirement Plans
also may purchase shares for their individual or custodial accounts at these
reduced sales charge rates, upon request to the Fund's Distributor.
o 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:
o 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.
o 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.
o 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:
o 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.
o 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
o 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 Class 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.
o 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 Class 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, Class B or Class 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.
A-1
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
Graphic material included in Prospectus of Oppenheimer Quest Opportunity
Value Fund: "Comparison of Total Return of Oppenheimer Quest Opportunity Value
Fund with the S&P 500 Index - Change in Value of $10,000 Hypothetical
Investments in Class A, Class B , Class C and Class Y shares of Oppenheimer
Quest Opportunity Value Fund and the S&P 500 Index."
Linear graphs will be included in the Prospectus of Oppenheimer Quest
Opportunity Value Fund (the "Fund") depicting the initial account value and
subsequent account value of a hypothetical $10,000 investment in the Fund. In
the case of the Fund's Class A shares, that graph will cover the period from
inception (1/3/89) through 10/31/97, in the case of the Fund's Class B and Class
C shares, will cover the period from the inception of those classes (9/1/93)
through 10/31/97 and in the case of Class Y shares, will cover the period from
the inception of the class (12/16/96) through 10/31/97. The graph will compare
such values with hypothetical $10,000 investments over the time periods
indicated below in the S&P 500 Index. Set forth below are the relevant data
points that will appear on the linear graph. Additional information with respect
to the foregoing, including a description of the S&P 500 Index, is set forth in
the Prospectus under "Performance of the Fund -Comparing the Fund's Performance
to the Market."
Oppenheimer Quest
Fiscal Opportunity Value S&P 500
Period Ended Fund A Index
- ------------ ----------------- -------
1/03/89 $9,425 $10,000(1)
10/31/89 $10,924 $12,599
10/31/90 $9,545 $11,657
10/31/91 $14,359 $15,552
10/31/92 $17,509 $17,099
10/31/93 $20,020 $19,648
10/31/94 $21,703 $20,406
10/31/95 $28,189 $25,796
10/31/96 $34,830 $32,007
10/31/97 $ $
Oppenheimer Quest
Fiscal Opportunity Value S&P 500
Period Ended Fund B Index
- ------------ ----------------- -------
09/01/93 $10,000 $10,000(2)
10/31/93 $9,984 $10,128
10/31/94 $10,767 $10,519
10/31/95 $13,909 $13,297
10/31/96 $16,899 $16,499
10/31/97 $ $
Oppenheimer Quest
Fiscal Opportunity Value S&P 500
Period Ended Fund C Index
- ------------ ----------------- -------
9/01/93
) $10,000 $10,000(2)
10/31/93 $9,984 $10,128
10/31/94 $10,761 $10,519
10/31/95 $13,898 $13,297
10/31/96 $17,078 $16,499
10/31/97 $ $
Oppenheimer Quest
Fiscal Opportunity Value S&P 500
Period Ended Fund Y Index
- ------------ ----------------- -------
12/16/96 $ $ (3)
10/31/97 $ $
- ---------------------
(1) Performance information for the S&P 500 Index begins on 12/31/88 for Class A
shares. (2) Performance information for the S&P 500 Index begins on 8/31/93 for
Class B and Class C shares. (3) Performance information for the S&P 500 Index
begins on 1/1/97 for Class Y shares.
<PAGE>
Oppenheimer Quest Opportunity Value Fund
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Sub-Adviser
OpCap Advisors
One World Financial Center
New York, New York 10281
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
State Street Bank and Trust Company
P.O. Box 8505
Boston, Massachusetts 02266-8505
Independent Accountants
Price Waterhouse LLP
950 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, broker, salesperson or any other person has been authorized to give
any information or to make any representations other than those contained in
this Prospectus or the Statement of Additional Information, and if given or
made, such information and representations must not be relied upon as having
been authorized by the Fund, OppenheimerFunds, Inc., OppenheimerFunds
Distributor, Inc. or any affiliate thereof. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any of the securities
offered hereby in any state to any person to whom it is unlawful to make such an
offer in such state.
prosp\236psp.# 5
PR0236.001.0298
OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
Two World Trade Center, New York, New York 10048
1-800-525-7048
Statement of Additional Information dated January 26, 1998
This Statement of Additional Information of Oppenheimer Quest Opportunity Value
Fund is not a Prospectus. This document contains additional information about
the Fund and supplements information in the Prospectus dated January 26, 1998.
It should be read together with the Prospectus, which may be obtained upon
written request to the Fund's Transfer Agent, OppenheimerFunds Services at P.O.
Box 5270, Denver, Colorado 80217, or by calling the Transfer Agent at the
toll-free number shown above.
Contents
Page
About the Fund
Investment Objective and Policies......................................
Investment Policies and Strategies.................................
Other Investment Techniques and Strategies.........................
Other Investment Restrictions......................................
How the Fund is Managed ...............................................
Organization and History...........................................
Trustees and Officers of the Trust.................................
The Manager and Its Affiliates.....................................
Brokerage Policies of the Fund.........................................
Performance of the Fund................................................
Distribution and Service Plans.........................................
About Your Account
How To Buy Shares......................................................
How To Sell Shares.....................................................
How To Exchange Shares.................................................
Dividends, Capital Gains and Taxes.....................................
Additional Information About the Fund..................................
Financial Information About the Fund
Report of Independent Accountants.....................
Financial Statements...................................................
Appendix A: Description of Ratings..................................... A-1
Appendix B: Corporate Industry Classifications......................... B-1
-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.
o 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 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 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.
o 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 of
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.
o 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.
o U.S. Government Obligations. 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.
o 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.
|X| 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:
o 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.
o 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 deter
mines 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.
o 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.
o Investment Risks of Fixed-Income Securities. All fixed-income securities
are subject to two types of risks: credit risk and interest rate risk. Credit
risk relates to the ability of the issuer to meet interest or principal payments
on a security as they become due. Interest rate risk refers to the fluctuations
in value of fixed-income securities resulting solely from the inverse
relationship between price and yield of outstanding fixed-income securities. An
increase in prevailing interest rates will generally reduce the market value of
already-issued fixed-income investments, and a decline in interest rates will
tend to increase their value. In addition, debt securities with longer
maturities, which tend to produce higher yields, are subject to potentially
greater changes in their prices from changes in interest rates than obligations
with shorter maturities. Fluctuations in the market value of fixed-income
securities after the Fund buys them will not affect the interest payable on
those securities, nor the cash income from such securities. However, those price
fluctuations will be reflected in the valuations of these securities and
therefore the Fund's net asset values.
Other Investment Techniques and Strategies.
o 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.
o 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 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.
o 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. Illiquid securities include repurchase agreements
maturing in more than seven days, or certain participation interests other than
those with puts exercisable within seven days.
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.
o 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.
o 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 sell them and can reduce the price the Fund might
be able to obtain for them. If other investors holding the same securities as
the Fund sell them 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.
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:
o invest in physical commodities or physical commodity contracts ;
however, the Fund may: (i) buy and sell hedging instruments to the extent
specified in its Prospectus from time to time, and (ii) buy and sell options,
futures, securities or other instruments backed by, or the investment return
from which is linked to, changes in the price of physical commodities;
o 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;
o 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 ;
o 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;
o 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;
o 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;
o invest for the purpose of exercising control or management of another
company;
o 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
o 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.
Non-Fundamental Investment Restrictions.
The following operating policies of the Fund are not fundamental policies and,
as such, may be changed by vote of a majority of the Board of Trustees without
shareholder approval. These additional restrictions provide that the Fund
cannot:
o 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 (collateral arrangements in connection with
transactions in futures and options are not deemed to be margin transactions);
or
o 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 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. The percentage
restrictions described above and in the Prospectus apply only at the time of
investment and require no action by the Fund as a result of subsequent changes
in relative values.
How the Fund is Managed
Organization and History. The Fund is one of four portfolios of the Trust, a
Massachusetts business trust named Oppenheimer Quest For Value Funds . 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. All of the Trustees are directors or trustees of Oppenheimer Quest For
Value Funds (Oppenheimer Quest Opportunity Value Fund, Oppenheimer Quest Growth
& Income Value Fund, Oppenheimer Quest Small Cap Value Fund and Oppenheimer
Quest Officers Value Fund), Oppenheimer Quest Value Fund, Inc., Oppenheimer
Quest Global Value Fund, Inc. and Oppenheimer Quest Capital Value Fund, Inc.
(collectively, the "Oppenheimer Quest Funds"), 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") and Oppenheimer MidCap Fund. As of January __, 1998, 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 officers of the Fund
listed below.
Bridget A. Macaskill, Chairman of the Board of Trustees and President1; Age: 49
President (since June 1991), Chief Executive Officer (since September 1995) and
a Director (since December 1994) of the Manager ; President and director (since
June 1991) of HarbourView Asset Management Corporation ("HarbourView"), a
subsidiary of the Manager; Chairman and a director of Shareholder Services, Inc.
("SSI") (since August 1994) and Shareholder Financial Services, Inc. ("SFSI")
(September 1995), transfer agent subsidiaries of the Manager; President (since
September 1995) and a director (since October 1990) of Oppenheimer Acquisition
Corp. ("OAC"), the Manager's parent holding company; President (since September
1995) and a director (since November 1989) of Oppenheimer Partnership Holdings,
Inc., a holding company subsidiary of the Manager; a director of Oppenheimer
Real Asset Management, Inc. (since July 1996); President and a director (since
October 1997) of OppenheimerFunds International Ltd. ("OFIL"), an offshore fund
manager subsidiary of the Manager and Oppenheimer Millennium Funds plc (since
October 1997); President and a director of other Oppenheimer funds; a director
of the NASDAQ Stock Market, Inc. and of Hillsdown Holdings plc (a U.K. food
company); formerly an Executive Vice President of the Manager.
Paul Y. Clinton, Trustee; Age: 67
39 Blossom Avenue, Osterville, Massachusetts 02655
Principal of Clinton Management Associates (financial and venture capital
consulting firm); Trustee of Capital Cash Management Trust (money-market fund)
and Narraganssett Tax-Free Fund (tax-exempt bond fund);
Director of OCC Cash Reserves, Inc. and Trustee of OCC Accumulation Trust,
(both open-end investment companies). Formerly: Director,
External Affairs, Kravco Corporation,
( national real estate owner and property management corporation); President of
Essex Management Corporation (management consulting company); a general partner
of Capital Growth Fund (venture capital partnership); a general partner of Essex
Limited Partnership ( investment partnership); President of Geneve Corp.
(venture capital fund); Chairman of Woodland Capital Corp. (small business
investment company); and Vice President of W.R. Grace & Co.
Thomas W. Courtney, Trustee; Age: 64
833 Wyndemere Way, Naples, Florida 34105 Principal of Courtney Associates, Inc.
(venture capital firm); former General Partner of Trivest Venture Fund (private
venture capital fund ); Trustee of Cash Assets Trust, (money market fund );
Director of OCC Cash Reserves, Inc., and Trustee of OCC Accumulation Trust, both
open-end investment companies ); Trustee of Hawaiian Tax-Free Trust and Tax Free
Trust of Arizona, (both tax-exempt bond funds); Director of several privately
owned . Formerly President of Investment Counseling Federated Investors, Inc.;
former President of Boston Company Institutional Investors; Director of
Financial Analysts Federation.
- --------
1Trustee who is an "interested person" (as defined in the Investment
Company Act) of the Fund and the Trust.
Lacy B. Herrmann, Trustee; Age: 68
380 Madison Avenue, Suite 2300, New York, New York 10017
Chairman and Chief Executive Officer of Aquila Management Corporation
(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, Aquila Cascadia Equity Fund,
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 (both open-end investment companies);
Trustee Emeritus of Brown University.
George Loft, Trustee; Age: 83
51 Herrick Road, Sharon, Connecticut 06069
Private Investor; Director of OCC Cash Reserves, Inc. and Trustee of OCC
Accumulation Trust (both open-end investment companies ).
Robert C. Doll, Jr., Vice President; Age: 43
Executive Vice President and Director of the Manager (since January 1993) ;
Executive Vice President of HarbourView (since January 1993); Vice President and
a director of OAC (since September 1995); an officer of other Oppenheimer funds.
Andrew J. Donohue, Secretary; Age: 47
Executive Vice President (since January 1993), General Counsel (since October
1991) and a Director (since September 1995) of the Manager; Executive Vice
President (since September 1993), and a director (since January 1992) of
OppenheimerFunds Distributor, Inc. (the "Distributor"); Executive Vice
President, General Counsel and a director of HarbourView, SSI, SFSI and
Oppenheimer Partnership Holdings, Inc. since (September 1995) and MultiSource
Services, Inc. (a broker-dealer) (since December 1995); President and a director
of Centennial Asset Management Corporation ("Centennial") (since September
1995); President and a director of Oppenheimer Real Asset Management, Inc.
(since July 1996); General Counsel (since May 1996) and Secretary (since April
1997) of OAC; Vice President of OFIL and Oppenheimer Millennium Funds plc (since
October 1997); an officer of other Oppenheimer funds .
George C. Bowen, Treasurer; Age: 61
6803 South Tucson Way, Englewood, Colorado 80112 Senior Vice President (since
September 1987) and Treasurer (since March 1985) of the Manager; Vice President
(since June 1983) and Treasurer (since March 1985) of the Distributor; Vice
President (since October 1989) and Treasurer (since April 1986) of HarbourView;
Senior Vice President (since February 1992), Treasurer (since July 1991) and a
director (since December 1991) of Centennial; President, Treasurer and a
director of Centennial Capital Corporation (since June 1989); Vice President and
Treasurer (since August 1978) and Secretary (since April 1981) of SSI; Vice
President, Treasurer and Secretary of SFSI (since November 1989); Treasurer of
OAC (since June 1990); Treasurer of Oppenheimer Partnership Holdings, Inc.
(since November 1989); Vice President and Treasurer of Oppenheimer Real Asset
Management, Inc. (since July 1996); Chief Executive Officer, Treasurer and a
director of MultiSource Services, Inc., a broker-dealer (since December 1995);
an officer of other Oppenheimer funds.
Richard J. Glasebrook, II, Portfolio Manager; Age : 49
One World Financial Center, 200 Liberty Street, New York, New York 10281
Managing Director of Oppenheimer Capital; previously a partner with Delafield
Asset Management, where he was a portfolio manager and analyst.
Robert Bishop, Assistant Treasurer; Age: 39
6803 South Tucson Way, Englewood, Colorado 80112 Vice President of the
Manager/Mutual Fund Accounting (since May 1996); an officer of other Oppenheimer
funds; formerly an Assistant Vice President of the Manager/Mutual Fund
Accounting (April 1994-May 1996), and a Fund Controller for the Manager .
Scott T. Farrar, Assistant Treasurer; Age: 32
6803 South Tucson Way, Englewood, Colorado 80112 Vice President of the
Manager/Mutual Fund Accounting (since May 1996); Assistant Treasurer of
Oppenheimer Millennium Funds plc (since October 1997); an officer of other
Oppenheimer funds; formerly an Assistant Vice President of the Manager/Mutual
Fund Accounting (April 1994-May 1996), and a Fund Controller for the Manager .
Robert G. Zack, Assistant Secretary; Age: 49
Senior Vice President (since May 1985) and Associate General Counsel (since May
1981) of the Manager, Assistant Secretary of SSI (since May 1985), and SFSI
(since November 1989); Assistant Secretary of Oppenheimer Millennium Funds plc
(since October 1997); an officer of other Oppenheimer funds.
o 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, 1997 and
(ii) other investment companies (or series thereof) managed by the Manager
and/or the Sub-Adviser paid during the calendar year ended December 31, 1997.
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)
Paul Y. Clinton $ None None $
Thomas W. Courtney $ None None $
Lacy B. Herrmann $ None None $
George Loft $ None None $
(1)For the purpose of the chart above, "Fund Complex" includes the Oppenheimer
Quest Funds (including the Fund), the Oppenheimer Rochester Funds, Oppenheimer
MidCap Fund and three funds advised by the Sub-Adviser (the "Sub-Adviser
Funds"). For these purposes, each series constitutes a separate fund. Messrs.
Clinton and Courtney served as directors or trustees of two Sub-Adviser Funds,
for which they are to receive $______ and $______, respectively, and Messrs.
Herrmann and Loft served as directors or trustees of three Sub-Adviser Funds,
for which they are to receive $______ and $__________, respectively. Effective
April 1997, Messrs. Herrmann and Loft resigned as trustees from the third
Sub-Adviser Fund.
Deferred Compensation Plan. The Board of Trustees has adopted a Deferred
Compensation plan for disinterested trustees that enables them to elect to defer
receipt of all or a portion of the annual fees they are entitled to receive from
the Fund. Under the plan, the compensation deferred by a Trustee is periodically
adjusted as though an equivalent amount had been invested in shares of one or
more Oppenheimer funds selected by the Trustee. The amount paid to the Trustee
under the plan will be determined based upon the performance of the selected
funds. Deferral of Trustees' fees under the plan will not materially affect the
Fund's assets, liabilities and net income per share. The plan will not obligate
the Fund to retain the services of any Trustee or to pay any particular level of
compensation to any Trustee. Pursuant to an order issued by the SEC, the Fund
may invest in the funds selected by the Trustee under the plan for the limited
purpose of determining the value of the Trustee's deferred fee account.
o Major Shareholders. As of January __, 1998, 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 , Class C or Class Y
shares
except:_________________________________________________________________
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 Trust and one of whom (Ms. Macaskill) also
serves as an officer and a Trustee of the Trust.
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 Fund's portfolio
transactions. Compliance with the Code of Ethics is carefully monitored and
strictly enforced by the Manager.
o Portfolio Management. The Portfolio Manager of the Fund is Richard J.
Glasebrook, II, who is principally responsible for the day-to-day management of
the Fund's portfolio. Mr. Glasebrook's background is described in the Prospectus
under "Portfolio Manager".
o The Investment Advisory Agreement. The Manager acts as investment
adviser to the Fund pursuant to the terms of an Investment Advisory Agreement
dated May 27, 1997, as amended on October 22, 1997, which replaced the
investment advisory agreement dated as of November 22, 1995. The Investment
Advisory 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 agreement on February 4, 1997 and by the shareholders of the Fund at a
meeting held for that purpose on May 23, 1997. 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 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 November 22,
1995 (when the Manager became the investment adviser to the Fund) to October 31,
1996 (the "Fiscal Period") and the fiscal year ended October 31, 1997, the Fund
paid to the Manager $10,059,240 and $______, respectively, in management fees.
During the Fiscal Period and the fiscal year ended October 31, 1997 the Fund
also paid or accrued accounting service fees to the Manager in the amounts of
$56,691 and $______, respectively.
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" or "Quest For Value" in
connection with its other investment companies for which it may act as an
investment adviser or general distributor. If the Manager shall no longer act as
investment adviser to a Fund, the right of the Fund to use "Oppenheimer" or
"Quest For Value" as part of its name may be withdrawn.
The Investment Advisory Agreement provides that the Manager may enter into
sub-advisory agreements with other affiliated or unaffiliated registered
investment advisers in order to obtain specialized services for the Funds
provided that the Fund is not required to pay any additional fees for such
services. The Manager has retained the Sub-Adviser pursuant to a separate
Subadvisory Agreement dated as of November 5, 1997 with respect to the Fund,
described below, which replaced the Subadvisory Agreement dated as of November
22, 1995.
o 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 $3,923,159
for the fiscal year ended October 31, 1995 and $407,877 for the fiscal period
November 1, 1995 to
November 22, 1995 (the "Interim Period").
For the fiscal year ended October 31, 1995 and for the Interim Period, the
Fund paid or accrued accounting services fees to the Sub-Adviser in the amounts
of $48,747 and $2,978, respectively. During such time periods, the Trust had
retained the services of State Street Bank and Trust Company 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 year
ended October 31, 1995 and the Interim Period in the amounts of $55,000 and
$3,362, respectively.
o 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 agreement on February 28, 1997 and by the
shareholders of the Fund at a meeting held for that purpose on May 23, 1997.
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 November 22, 1995 (the
"Base Amount") plus 30% of the investment advisory fee collected by the Manager
based on the total net assets of the Fund that exceed the Base Amount.
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 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. On November 4, 1997, PIMCO
Advisors L.P. ("PIMCO Advisors"), a registered investment adviser with $125
billion in assets under management through various subsidiaries, acquired
control of Oppenheimer Capital and the Sub-Adviser. Value Advisors LLC, a
limited liability company and a wholly-owned subsidiary of PIMCO Advisors, holds
a one-third managing general partner interest in Oppenheimer Capital and a 1.0%
general partner interest in the Sub-Adviser. Oppenheimer Capital L.P., a
Delaware limited partnership whose units are traded on The New York Stock
Exchange, owns the remaining two-thirds interest in Oppenheimer Capital. PIMCO
Partners G.P., general partner of PIMCO Advisors, holds the sole general partner
interest in Oppenheimer Capital, L.P.
PIMCO Partners, G.P. ("PIMCO GP") owns approximately 42.83% and 66.37%,
respectively, of the total outstanding Class A and Class B units of limited
partnership interest ("Units") of PIMCO Advisors' sole general partner. PIMCO GP
is a California general partnership with two general partners. The first of
these is Pacific Investment Management Company, which is a California
corporation and is wholly-owned by Pacific Financial Asset Management Company, a
direct subsidiary of Pacific Life Insurance Company ("Pacific Life").
The managing general partner of PIMCO GP is PIMCO Partners L.L.C.
("PPLLC"), a California limited liability company. PPLLC's members are the
Managing Directors (the "PIMCO Managers") of Pacific Investment Management
Company, a subsidiary of PIMCO Advisors (the "PIMCO Subpartnership"). The PIMCO
Managers are: William H. Gross, Dean S. Meiling, James F. Muzzy, William F.
Podlich, III, Frank B. Rabinovitch, Brent R. Harris, John L. Hague, William S.
Thompson Jr., William C. Powers, David H. Edington, Benjamin Trosky, William R.
Benz, II and Lee R. Thomas, III.
PIMCO Advisors is governed by an Operating Board and an Equity Board.
Because of its power to appoint (directly or indirectly ) seven of the twelve
members of the Operating Board, the PIMCO Subpartnership may be deemed to
control PIMCO Advisors. Because of direct or indirect power to appoint 25% of
the members of the Equity Board, (i) Pacific Life and (ii) the PIMCO Managers
and/or the PIMCO Subpartnership may each be deemed, under applicable provisions
of the investment Company Act, to control PIMCO Advisors. Pacific Life, the
PIMCO Subpartnership and the PIMCO Managers disclaim such control.
o 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, Class C
and Class Y 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, 1997, the aggregate amount of sales charges on sales of
the Fund's Class A shares was $_______$_________, of which the Distributor and
affiliated brokers retained $_________. During the fiscal year ended October 31,
1997, the Distributor received contingent deferred sales charges of $________
upon redemption of Class B shares, and received contingent deferred sales
charges of $______$____________ upon redemption of Class C shares . For
additional information about distribution of the Fund's shares and the expenses
connected with such activities, please refer to "Distribution and Service Plans"
below.
o The Transfer Agent. OppenheimerFunds Services acts as the Fund's
Transfer Agent pursuant to a Transfer Agency and Service 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.
o Shareholder Servicing Agent for Certain Shareholders. Unified Management
Corporation (1-800-346-4601) is the shareholder servicing agent of the Fund for
former shareholders of the AMA Family of Funds and clients of AMA Investment
Advisers, Inc. (which had been the investment adviser of AMA Family of Funds)
who acquire shares of any Oppenheimer Quest Fund, and for (i) former
shareholders of the Unified Funds and Liquid Green Trusts, (ii) accounts which
participated or participate in a retirement plan for which Unified Investment
Advisers, Inc. or an affiliate acts as custodian or trustee, (iii) accounts
which have a Money Manager brokerage account, and (iv) other accounts for which
Unified Management Corporation is the dealer of record.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory and Subadvisory Agreement. The
Investment Advisory Agreement contains provisions relating to the selection of
broker-dealers ("brokers") for the Fund's portfolio transactions. The Manager
and the Sub-Adviser may use such brokers as may, in their best judgment based on
all relevant factors, implement the policy of the Fund to achieve best execution
of portfolio transactions. While the Manager need not seek advance competitive
bidding or base its selection on posted rates, it is expected to be aware of the
current rates of most eligible brokers and to minimize the commissions paid to
the extent consistent with the interests and policies of the Fund as established
by its Board and the provisions of the Investment Advisory Agreement.
The Investment Advisory Agreement also provides that, consistent with
obtaining the best execution of the Fund's portfolio transactions, the Manager
and the Sub-Adviser, in the interest of the Fund, may select brokers other than
affiliated brokers, because they provide brokerage and/or research services to
the Fund and/or other accounts of the Manager or the Sub-Adviser. The
commissions paid to such brokers may be higher than another qualified broker
would have charged if a good faith determination is made by the Manager or the
Sub-Adviser that the commissions are reasonable in relation to the services
provided, viewed either in terms of that transaction or the Manager's or the
Sub-Adviser's overall responsibilities to all its accounts. No specific dollar
value need be put on the services, some of which may or may not be used by the
Manager or the Sub- Adviser for the benefit of the Fund or other of its advisory
clients. To show that the determinations were made in good faith, the Manager or
any Sub-Adviser must be prepared to show that the amount of such commissions
paid over a representative period selected by the Board was reasonable in
relation to the benefits to the Fund. The Investment Advisory Agreement
recognizes that an affiliated broker-dealer may act as one of the regular
brokers for the Fund provided that any commissions paid to such broker are
calculated in accordance with procedures adopted by the Trust's Board under
applicable rules of the SEC.
In addition, the Subadvisory Agreement permits the Sub-Adviser to enter
into "soft dollar" arrangements through the agency of third parties to obtain
services for the Fund. Pursuant to these arrangements, the Sub-Adviser will
undertake to place brokerage business with broker-dealers who pay third parties
that provide services. Any such "soft dollar" arrangements will be made in
accordance with policies adopted by the Board of the Trust and in compliance
with applicable law.
Description of Brokerage Practices. Portfolio decisions are based upon
recommendations of the portfolio manager and the judgment of the portfolio
managers. The Fund will pay brokerage commissions on transactions in listed
options and equity securities. Prices of portfolio securities purchased from
underwriters of new issues include a commission or concession paid by the issuer
to the underwriter, and prices of debt securities purchased from dealers include
a spread between the bid and asked prices.
Transactions may be directed to dealers during the course of an
underwriting in return for their brokerage and research services, which are
intangible and on which no dollar value can be placed. There is no formula for
such allocation. The research information may or may not be useful to one or
more of the Fund and/or other accounts of the Manager or the Sub-Adviser;
information received in connection with directed orders of other accounts
managed by the Manager or the Sub- Adviser or its affiliates may or may not be
useful to one or more of the Funds. Such information may be in written or oral
form and includes information on particular companies and industries as well as
market, economic or institutional activity areas. It serves to broaden the scope
and supplement the research activities of the Manager or the Sub-Adviser, to
make available additional views for consid eration 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 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, 1995,
1996, and 1997. Prior to November 3,
1997, Oppenheimer & Co., Inc. ("OpCo"), a broker-dealer, was an affiliate of
the Sub-Adviser.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
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 %
1995 $ 647,240 $266,868 41.2% $177,075,785 43.0%
1996 $1,346,575 $396,844 29.5% $363,554,195 30.89%
1997 $ $ % $ %
</TABLE>
During the Fund's fiscal year ended October 31, 1997, $______ was paid by
the Fund to brokers as commissions in return for research services; the
aggregate dollar amount of those transactions was $_________.
Performance of the Fund
Total Return Information. As described in the Prospectus, from time to time the
"average annual total return," "cumulative total return" and "total return at
net asset value" of an investment in a class of shares of the Fund may be
advertised. An explanation of how these total returns are calculated for each
class and the components of those calculations is set forth below.
The Fund's advertisements of its performance data must, under applicable
SEC rules, include the average annual total returns for each 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 ,
Class C and Class Y 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.
o 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)
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, 1997 and for the period from January 3, 1989 (commencement of
operations) to October 31, 1997 were _____%, _____% and _____%, respectively.
The average annual total returns on Class B shares for the one-year period
ended October 31, 1997 and for the period September 1, 1993 (commencement of the
public offering of the class) through October 31, 1997 were _____% and _____%,
respectively.
The average annual total returns on Class C shares for the one-year period
ended October 31, 1997 and for the period September 1, 1993 (commencement of the
public offering of the class) through October 31, 1997 were _____% and _____%,
respectively.
o 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 (5.0% for the first year, 4.0% for the second
year, 3.0% for the third and fourth years, 2.0% for the fifth year, 1.0% 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).
Class Y shares are not subject to a sales charge.
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, 1997 was ______%.
The cumulative total return on Class B shares for the period from September 1,
1993 (commencement of the public offering of the class) through October 31, 1997
was _____%. The cumulative total return on Class C shares for the period from
September 1, 1993 (commencement of the public offering of the class) through
October 31, 1997 was _____%.
o 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, Class C and Class Y 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, 1997 and for the
period from January 3, 1989 (commencement of operations) to October 31, 1997
were ______%, _____% and _____%, respectively. The cumulative total return at
net asset value on the Fund's Class A shares for the period January 3, 1989
through October 31, 1997 was ______%.
The average annual total returns at net asset value on the Fund's Class B
shares for the one year period ended October 31, 1997 and for the period from
September 1, 1993 (commencement of the public offering of the class) through
October 31, 1997 were _____% and _____%, respectively. The cumulative total
return at net asset value on the Fund's Class B shares for the period September
1, 1993 through October 31, 1997 was _____%.
The average annual total returns at net asset value on the Fund's Class C
shares for the one-year period ended October 31, 7 and for the period September
1, 1993 (commencement of the public offering of the class) through October 31,
1997 were _____%______% and ______%, respectively. The cumulative total return
at net asset value on the Fund's Class C shares for the period September 1, 1993
through October 31, 1997 was _____%.
Other Performance Comparisons. From time to time the Fund may publish the
ranking of its Class A, Class B, Class C and/or Class Y 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, Class C or Class Y shares by Morningstar, Inc.
("Morningstar"), an independent mutual fund monitoring service . Morningstar
ranks mutual funds in broad investment categories (domestic stock funds,
international stock funds, taxable bond funds, municipal bond funds) based on
risk-adjusted investment return. The Fund is ranked among domestic equity funds.
Investment return measures 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 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. From time to time, the Fund may
include in its advertisements and sales literature performance information about
the Fund cited in newspapers and other periodicals, such as The New York Times,
which may include performance quotations from other sources, including Lipper.
The Fund may also compare its performance to that of other funds in its
Morningstar category. In addition to its star ranking, Morningstar also
categorizes and compares a fund's 3-year performance based on Morningstar's
classification of the fund's investment objective. Morningstar's four broad
categories are each further subdivided into categories based on types of
investments and investment styles. Those comparisons 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, Class C
or Class Y 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, Class C or Class Y 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 Class C or Class Y shares. However,
when comparing total return of an investment in Class A, Class B, Class C and
Class Y 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 or Class Y 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, each dated November 22, 1996, for Class A, Class B
and Class C shares of the Fund under Rule 12b-1 of the Investment Company Act
pursuant to which the Fund will compensate the Distributor for all or a portion
of its costs incurred in connection with the distribution and/or servicing of
the shares of that class, as described in the Prospectus. No such Plan has been
adopted for Class Y shares. 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 February 4, 1997 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 May 23, 1997. The Plans
replace the amended and restated distribution and service plans and agreements
dated November 22, 1995.
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 SEC 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
detailing services rendered in connection with the distribution of the shares,
the amount of all payments made pursuant to each Plan, and the purpose for which
the payments were made . The reports shall also include the distribution costs
for that quarter, and such costs for previous fiscal periods that are carried
forward, as explained in the Prospectus and below. Those reports, including the
allocations on which they are based, will be subject to the review and approval
of the Independent Trustees in the exercise of their fiduciary duty. Each Plan
further provides that while it is in effect, the selection and nomination of
those Trustees of the Trust who are not "interested persons" of the Trust is
committed to the discretion of the Independent Trustees. This does not prevent
the involvement of others in such selection and nomination if the final decision
on any such selection or nomination is approved by a majority of the Independent
Trustees.
Under the Plans, no payment will be made to any Recipient in any quarter
if the aggregate net asset value of all Fund shares held by the Recipient for
itself and its customers did not exceed a minimum amount, if any, that may be
determined from time to time by a majority of the Trust's Independent Trustees.
Initially, the Board of Trustees has set the fee at the maximum rate and set no
requirement for a minimum amount.
The Plans allow the service fee payments to be paid by the Distributor to
Recipients in advance for the first year shares are outstanding, and thereafter
on a quarterly basis, as described in the Prospectus. The advance payment is
based on the net assets of shares of that class sold. An exchange of shares does
not entitle the Recipient to an advance service fee payment. In the event shares
are redeemed during the first year such shares are outstanding, the Recipient
will be obligated to repay a pro rata portion of such advance payment to the
Distributor.
Although the Plans permit the Distributor to retain both the asset-based
sales charge and the service fee, or to pay Recipients the service fee on a
quarterly basis, without payment in advance, the Distributor presently intends
to pay the service fee to Recipients in the manner described above. A minimum
holding period may be established from time to time under the Plans by the
Board. Initially, the Board has set no minimum holding period. All payments
under the Plans are subject to the limitations imposed by the Conduct Rules of
the National Association of Securities Dealers, Inc. on payments of asset-based
sales charges and service fees.
For the fiscal year ended October 31, 1997 (i) payments made under the
Class A Plan totaled $_________ of which $________ was retained by the
Distributor $_____ was paid to a dealer affiliated with the Distributor, (ii)
payments made under the Class B Plan totaled $_________, of which $_________ was
retained by the Distributor and $_____ was paid to a dealer affiliated with the
Distributor and (iii) payments made under the Class C Plan totaled $_________,
of which $_______ was retained by the Distributor and $____ 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).
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. A fourth class of shares, Class Y shares, may be purchased only by
certain institutional investors at net asset value per share.
The four 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, Class C and Class Y 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, Class C and Class Y 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, Martin Luther King 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-type debt
securities held by a non-money market fund that had a maturity of less than 397
days when issued that have a remaining maturity of 60 days or less are, and debt
instruments held by a money market fund that have a remaining maturity of 397
days or less, shall be 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 U.S.
Government securities or mortgage-backed securities for which last sale
information is not generally available. 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 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 closing
price in the London foreign exchange market that day as provided by a reliable
bank, dealer or pricing service.
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, aunts, uncles, nieces, nephews, siblings, a sibling's spouse
and a spouse's siblings. Relations by virtue of a remarriage (step-children,
step-parents, etc.) are included.
o 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 Discovery Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Multiple Strategies
Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer MidCap 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 Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer International Bond Fund
Oppenheimer International Growth Fund
Oppenheimer International Small Company Fund
Oppenheimer Enterprise Fund
Oppenheimer Quest Capital Value Fund, Inc.
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.
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).
o 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.
o 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 sold with a front-end sales charge or
Class B 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 "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 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
transmissions.
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 other than
public school 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 or association has made special arrangements with the
Distributor and all members of the group or association participating in or who
are eligible to participate in the plan(s) purchase Class A shares of the Fund
through a single investment dealer, broker, or other financial institution
designated by the group. "Group retirement plan" also includes qualified
retirement plans and non-qualified deferred compensation plans and IRAs that
purchase Class A shares of the Fund through a single investment dealer, broker,
or other financial institution, if that broker-dealer has made special
arrangements with the Distributor enabling those plans to purchase Class A
shares of the Fund at net asset value but subject to a contingent deferred sales
charge.
In addition to the discussion in the Prospectus relating to the ability of
Retirement Plans to purchase Class A shares at net asset value in certain
circumstances, there is no initial sales charge on purchases of Class A shares
of any one or more of the Oppenheimer funds by a Retirement Plan in the
following cases: (i) the recordkeeping for the Retirement Plan is performed on a
daily valuation basis by Merrill Lynch Pierce Fenner & Smith, Inc. ("Merrill
Lynch") and, on the date the plan sponsor signs the Merrill Lynch recordkeeping
service agreement, the Retirement Plan has $3 million or more in assets invested
in mutual funds other than those advised or managed by Merrill Lynch Asset
Management, L.P. ("MLAM") that are made available pursuant to a Service
Agreement between Merrill Lynch and the mutual fund's principal underwriter or
distributor and in funds advised or managed by MLAM (collectively, the
"Applicable Investments"); or (ii) the recordkeeping for the Retirement Plan is
performed on a daily valuation basis by an independent record keeper whose
services are provided under a contract or arrangement between the Retirement
Plan and Merrill Lynch. On the date the plan sponsor signs the Merrill Lynch
record keeping service agreement, the Plan must have $3 million or more in
assets, excluding assets held in money market funds, invested in Applicable
Investments; or (iii) the Plan has 500 or more eligible employees, as determined
by the Merrill Lynch plan conversion manager on the date the plan sponsor signs
the Merrill Lynch record keeping service agreement.
If a Retirement Plan's records are maintained on a daily valuation basis
by Merrill Lynch or an independent record keeper under a contract or alliance
arrangement with Merrill Lynch, and if on the date the plan sponsor signs the
Merrill Lynch record keeping service agreement the Retirement Plan has less than
$3 million in assets, excluding money market funds, invested in Applicable
Investments, then the Retirement Plan may purchase only Class B shares of one or
more of the Oppenheimer funds. Otherwise, the Retirement Plan will be permitted
to purchase Class A shares of one or more of the Oppenheimer funds. Any of those
Retirement Plans that currently invest in Class B shares of the Fund will have
their Class B shares be converted to Class A shares of the Fund once the Plan's
Applicable Investments have reached $5 million.
Any redemptions of shares of the Fund held by Retirement Plans whose
records are maintained on a daily valuation basis by Merrill Lynch or an
independent record keeper under a contract with Merrill Lynch that are currently
invested in Class B shares of the Fund shall not be subject to the Class B CDSC.
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.
o Involuntary Redemptions. The Trust'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 that were subject to the Class B contingent
deferred sales charge when you redeemed them. This privilege does not apply to
Class C shares or Class Y 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 or 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.
o 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.
o 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 . 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 12 months of the end of the calendar
month of the initial purchase of the exchanged Class A shares (18 months if the
shares were initially purchased prior to May 1, 1997), 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.
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.
-2-
<PAGE>
Appendix A
DESCRIPTION OF RATINGS
Bond Ratings
o 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.
o 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.
o Fitch Investors Service, Inc.
AAA Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated "AAA." Because bonds rated in the "AAA" and
"AA" categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated "F-1+."
A Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
Plus (+) Minus (-) Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the "DDD," "DD," or "D" categories.
Short-Term Debt Ratings.
o 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.
o 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+").
o 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.
o 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.
o 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.
o 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".
A-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
Food
Gas Utilities
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming Industrial Services
Information Technology
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
Wireless Services
B-1
A-2
<PAGE>
Oppenheimer Quest Opportunity Value Fund
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Sub- Adviser
OpCap Advisors
One World Financial Center
New York, New York 10281
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
State Street Bank and Trust Company
P.O. Box 8505
Boston, Massachusetts 02266-8505
Independent Accountants
Price Waterhouse LLP
950 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
prosp\236sai.# 5
A-3
<PAGE>
Oppenheimer Quest Officers Value Fund
Prospectus dated January 26, 1998
Oppenheimer Quest Officers Value Fund is a mutual fund that seeks capital
appreciation as its investment objective. The Fund seeks its investment
objective through investment in a non-diversified portfolio of securities
(primarily equity securities) of companies believed to be undervalued in the
marketplace in relation to factors such as the companies' assets, earnings,
growth potential and cash flows . The Fund may invest its assets in equity
securities of companies without limit as to market capitalization. The Fund may
invest up to 25% of its net assets in lower-grade, high-yield debt securities.
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 January
26, 1998 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 NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-1-
<PAGE>
Contents
ABOUT THE FUND
Page
Expenses
A Brief Overview of the Fund
Financial Highlights
Investment Objective and Policies
Investment Risk
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
A-1 Appendix A: Special Sales Charge Arrangements for
Shareholders of the Former Quest for Value Funds
B-1 Appendix B: Description of Ratings
-2-
<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, 1997.
o 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.
Class Class Class
A Shares B Shares C Shares
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, decling within 12
the lower of the to 1% in the months of
original offering sixth year purchase(2)
price or redemption and eliminated
proceeds) thereafter(2)
- ------------------------------------------------------------------------------
Maximum Sales Charge
on Reinvested Dividends None None None
- ------------------------------------------------------------------------------
Exchange Fee None None None
- ------------------------------------------------------------------------------
Redemption Fee None(3) None(3) None(3)
(1) If you invest $1 million or more ($500,000 or more for purchases by
"Retirement Plans" as defined in "Class A Contingent Deferred Sales
Charge" on page ___) in Class A shares, you may have to pay a sales charge
of up to 1% if you sell your shares within 12 calendar months (18 months
for shares purchased prior to May 1, 1997)from the end of the calendar
month during which you purchased those 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.
o 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)
Class A
Shares
Management Fees (after waiver) %
12b-1 Distribution
Plan Fees (after waiver) None
Other Expenses %
-----
Total Fund Operating
Expenses (after waivers) %
The numbers in the table above are based upon the Fund's expenses in its
last fiscal year ended October 31, 1997. 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 above.
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) .
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 ___%, ____% and ____%, respectively. The voluntary fee waivers
are described in "How the Fund is Managed - Fees and Expenses" and in 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.
o 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 $ $ $ $
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. 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.
-3-
<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.
o What is the Fund's Investment Objective? The Fund's investment
objective is to seek capital appreciation.
o What Does the Fund Invest In? The Fund seeks its investment objective
through investment in a non-diversified portfolio of 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. Equity securities are
common stocks and preferred stocks; bonds, debentures and notes convertible into
common stock; and depository receipts for such securities. The Fund may invest
up to 25% of its net 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 securities. These investments are more fully explained in
"Investment Policies and Strategies," starting on page __.
o Who Manages the Fund? The Manager, OppenheimerFunds, Inc., supervises the
Fund's investment program and handles its day-to-day business. The Manager
(including subsidiaries) manages investment company portfolios having over $__
billion in assets as of December 31, 1997. 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, Jeffrey C. Whittington, 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.
-4-
<PAGE>
o 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. Lower-grade, high-yield debt securities are 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.
Investment 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 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.
o 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.
o 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 would be
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.
o 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 45. The Fund also offers exchange
privileges to other Oppenheimer funds, described in "How to Exchange Shares" on
page __.
o 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.
-5-
<PAGE>
Financial Highlights
The table on the following page presents selected financial information
about the Fund, including per share data, expense ratios and other data based on
the Fund's average net assets. This information has been audited by Price
Waterhouse LLP, the Fund's independent accountants whose report on the Fund's
financial statements for the fiscal year ended October 31, 1997 is included in
the Statement of Additional Information. The information provided in the table
with respect to the period ended October 31, 1995 and prior thereto was audited
by other independent accountants.
-6-
<PAGE>
Investment Objective and Policies
Objective. The Fund seeks capital appreciation .
Investment Policies and Strategies. The Fund seeks its investment objective
through investment in a non-diversified portfolio of 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. The Fund may invest its assets in equity
securities of companies with no limit as to market capitalization. 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.
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")(such lower- grade, high-yield debt securities are commonly
known as "junk bonds"). To provide liquidity for the purchase of new instruments
and to effect redemptions of shares, the Fund typically invests a part of its
assets in various types of U.S. Government securities and high quality,
short-term debt securities with remaining maturities of one year or less such as
government obligations, certificates of deposit, bankers' acceptances,
commercial paper, short-term corporate securities and repurchase agreements
("money market instruments"). For temporary defensive purposes, the Fund may
invest up to 100% of its assets in such U.S. Government securities and money
market instruments.
o Can the Fund's Investment Objective and Policies Change? The Fund has an
investment objective, which is described above, as well as investment policies
it follows to try to achieve its objective. Additionally, the Fund uses certain
investment techniques and strategies in carrying out those investment policies.
The Fund's investment policies and practices are not "fundamental" unless this
Prospectus or the Statement of Additional Information states that a particular
policy is "fundamental". The Fund's investment objective is a fundamental
policy.
Fundamental policies are those that cannot be changed without the approval
of a "majority" of the Fund's outstanding voting shares. The term "majority" is
defined in the Investment Company Act of 1940 to be a particular percentage of
outstanding voting shares (and this term is explained in the Statement of
Additional Information). The Board of 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.
o Investment in Bonds and Convertible 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. The Fund may invest up to 25%
of its net assets in high-yield, "lower-grade" bonds (commonly known as "junk
bonds"). Such securities are rated below "investment grade," which means they
have a rating lower than "Baa" by Moody's or lower than "BBB" by S&P or similar
ratings by other rating organizations, or if unrated, are determined by the
Sub-Adviser to be of comparable quality to debt securities rated below
investment grade. Appendix B to this Prospectus describes these rating
categories. 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. "Lower-grade"
debt securities are subject to special risks as described in "Investment Risks"
below.
Convertible fixed-income securities in which the Fund invests are bonds,
debentures or notes that may be converted into or exchanged for a prescribed
amount of company stock of the same or a different issue within a particular
period of time at a specified price or formula. The Fund considers convertible
securities to be "equity equivalents" because of the conversion feature and the
security's rating has less impact on the investment decision than in the case of
non-convertible securities.
o 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.
o 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%
eacPortfolio 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. The "Financial Highlights" table above shows the Fund's
portfolio turnover rate during past fiscal years.
-7-
<PAGE>
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 cases by using hedging techniques, changes in overall market prices can
occur at any time, and 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.
o 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.
* 1 moved from here; text not shown
o Risks of Fixed-Income Securities. In addition to credit risks, described
below, debt securities are subject to changes in their value due to changes in
prevailing interest rates. When prevailing interest rates fall, the value of
already-issued debt securities generally rise. When interest rates rise, the
values of already-issued debt securities generally decline. The magnitude of
these fluctuations will often be greater for longer-term debt securities than
shorter-term debt securities. Changes in the value of securities held by the
Fund mean that the Fund's share prices can go up or down when interest rates
change because of the effect of the change on the value of the Fund's portfolio
of debt securities. Credit risk relates to the ability of the issuer to meet
interest or principal payments on a security as they become due. Generally,
higher yielding lower-grade bonds, described below, are subject to credit risks
to a greater extent than lower yielding, investment grade bonds.
o Special Risk of Lower-Grade Securities. The Fund may invest up to 25% of
its net assets in high-yield, "lower-grade" bonds as described above in
"Investment Policies and Strategies". 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.
These risks mean 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. 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.
** 1 o 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.
o Special Risks of Hedging Instruments . 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.
-8-
<PAGE>
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.
o 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 U.S. Government securities
and money market instruments of the type identified on page __ under "Investment
Policies and Strategies." At any time that the Fund invests for temporary
defensive purposes, to the extent of such investments, it is not pursuing its
investment objective.
o Investing in Small, Unseasoned Companies. The Fund may invest up to 5%
of its total assets 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.
o 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.
o Futures. The Fund may buy and sell futures contracts that relate to (1)
broadly-based stock indices (these are referred to as Stock Index Futures) , (2)
foreign currencies (these are called Forward Contracts and are discussed below)
or (3) commodities (these are referred to as commodity futures).
o Put and Call Options. The Fund may buy and sell exchange-traded put and
call options on broadly-based stock indices, foreign currencies or on Stock
Index Futures. A call or put may be purchased only if, after the purchase, the
value of all call and put options held by the Fund will not exceed 5% of the
Fund's total assets.
If the Fund sells (that is, writes) a call option, it must be "covered."
That means the Fund must own the investment subject to the call while the call
is outstanding, or, for other types of written calls, the Fund must segregate
liquid assets to enable it to satisfy its obligations if the call is exercised.
Up to 25% of the Fund's total assets may be subject to calls.
The Fund may buy puts whether or not it holds the underlying investment in
the portfolio. If the Fund writes a put, the put must be covered by segregated
liquid assets. The Fund will not write puts if more than 25% of the Fund's net
assets would have to be segregated to cover put options.
o 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.
o Warrants and Rights. Warrants basically are options to purchase stock at
set prices that are valid for a limited period of time. Rights are similar to
warrants but normally have a short duration and are distributed directly by the
issuer to its shareholders. The Fund may invest up to 5% of its total assets in
warrants or rights. For further details about these investments, please refer to
"Warrants and Rights" in the Statement of Additional Information.
o 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 that cannot be sold publicly until it is registered under the
Securities Act of 1933.
The Fund may not invest more than 15% of its net assets in illiquid and
restricted securities, including repurchase agreements that have a maturity of
longer than seven days and certain over-the-counter options. The Fund's
percentage limitation on these investments does not apply to certain restricted
securities that are eligible for resale to "qualified institutional buyers". The
Manager monitors holdings of illiquid securities on an ongoing basis to
determine whether to sell any holdings to maintain adequate liquidity.
o 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.
o Repurchase Agreements. The Fund may enter into repurchase agreements
primarily 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 also enter into reverse repurchase agreements. Under such
agreements, the Fund sells securities and agrees to repurchase them at a
mutually agreed upon date and price. 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." Additional information about repurchase agreements is set forth in
"Repurchase Agreements" in the Statement of Additional Information.
o "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.
o Investment in Other Investment Companies. The Fund generally may
invest up to 10% of its total assets in the aggregate in shares of other
investment companies and up to 5% of its total
assets in any one investment company, as long as each investment does not
represent more than 3% of the outstanding voting securities of the acquired
investment company. These limitations do not apply in the case of investment
company securities which may be purchased as part of a plan of merger,
consolidation, reorganization or acquisition. Investment in other investment
companies may involve the payment of substantial premiums above the value of
such investment companies' portfolio securities, and is subject to limitations
under the Investment Company Act and market availability. The Fund does not
intend to invest in such investment companies unless, in the judgment of the
Manager, the potential benefits of such investment justify the payment of any
applicable premiums or sales charge. As a shareholder in an investment company,
the Fund would bear its ratable share of that investment company's expenses,
including its advisory and administration fees. At the same time, the Fund would
continue to pay its own management fees and other expenses.
o 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:
o 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).
o 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.
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 with an unlimited
number of authorized shares of beneficial interest. The Fund is a
non-diversified investment company.
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 will not normally hold annual meetings, it may hold
shareholder meetings from time to time on important matters, and shareholders
have the right 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.
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 subsidiaries) currently manages investment companies, including other
Oppenheimer funds, with assets of more than $__ billion as of December 31, 1997,
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.
On November 4, 1997, PIMCO Advisors L.P. ("PIMCO Advisors"), a registered
investment adviser with $125 billion in assets under management through various
subsidiaries, acquired control of Oppenheimer Capital and the Sub-Adviser. On
November 5, 1997, a new sub-advisory agreement between the Sub-Adviser and the
Manager, on terms identical to the prior sub-advisory agreement, became
effective. The new sub-advisory agreement had been approved by shareholders of
the Fund on May 6, 1997. Value Advisors LLC, a limited liability company and a
wholly-owned subsidiary of PIMCO Advisors, holds a one-third managing general
partner interest in Oppenheimer Capital and a 1.0% general partner interest in
the Sub-Adviser. Oppenheimer Capital L.P., a Delaware limited partnership whose
units are traded on The New York Stock Exchange, owns the remaining two-thirds
interest in Oppenheimer Capital. PIMCO Partners G.P., general partner of PIMCO
Advisors, holds the sole general partner interest in Oppenheimer Capital, L.P.
o 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 portfolio 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.
The Sub-Adviser's equity investment policy is overseen by George Long, who
is Chairman, Chief Executive Officer and Chief Investment Officer for
Oppenheimer Capital. Mr. Long has been with Oppenheimer Capital since 1981.
o 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. After giving effect to the voluntary fee waiver, the Fund's management
fee for its last fiscal year was ___% of average annual net assets for its Class
A shares. 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. 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.
Information about the Fund's brokerage policies and practices is set forth
in "Brokerage Policies of the Fund" in the Statement of Additional Information.
That section discusses how brokers and dealers are selected for the Fund's
portfolio transactions. When deciding which broker to use, the Manager and the
Sub-Adviser are permitted by the Investment Advisory Agreement to consider
whether brokers have sold shares of the Fund or any other funds for which the
Manager serves as investment adviser.
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
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.
o 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 considering the effect of the sales charge,
and those returns would be less if sales charges were deducted.
How Has the Fund Performed? Below is a discussion by the Manager of the Fund's
performance during its last fiscal year ended October 31, 1997, followed by a
graphical comparison of the Fund's performance to an appropriate broad-based
market index.
o Management's Discussion of Performance. During the fiscal year ended
October 31, 1997, 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 holdings, allocations and strategies are subject to change.
o 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, 1997. 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
MidCap 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
MidCap 400 index. Moreover, the index performance data does not reflect any
assessment of the risk of the investments included in the index.
-9-
<PAGE>
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investment In:
Oppenheimer Quest Officers Value Fund (Class A)
and the S & P 400 Mid Cap Index
[Graph]
Average Annual Total Returns of Class A Shares of the Fund at
10/31/971
1 Year Life of Class
% %
Total returns and ending account values in the graphs show change in share value
and include reinvestment of all dividends and capital gains distributions. The
performance information for the S & P 400 Mid Cap Index begins on 10/31/94 for
Class A shares. 1Currently , 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 10/31/97 net of
the maximum initial sales charge would have been % and 25.68%% for the one year
and life-of-class, respectively.
-10-
<PAGE>
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes 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.
o 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 32). 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 12 months of buying them (18 months if the shares were purchased
prior to May 1, 1997), 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.
o 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.
o Class C Shares. If you buy Class C shares, you pay no sales charge at
the time of purchase, but if you sell your shares within 12 months of buying
them, you will normally pay a contingent deferred sales charge of 1% as
described in "Buying Class C Shares" below.
Which Class of Shares Should You Choose? Once you decide that the Fund is an
appropriate investment for you, the decision as to which class of shares is
better suited to your needs depends on a number of factors which you should
discuss with your financial advisor. The Fund's operating costs that apply to a
class of shares and the effect of the different types of sales charges on your
investment will vary your investment results over time. The most important
factors to consider are how much you plan to invest and how long you plan to
hold your investment. If your goals and objectives change over time and you plan
to purchase additional shares, you should re-evaluate those factors to see if
you should consider another class of shares.
In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund. We used the sales
charge rates that apply to each class, and considered the effect of the higher
annual 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.
o 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.
o 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.
o 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.
o 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.
o 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. The Distributor may pay additional periodic compensation from
its own resources to securities dealers or financial institutions based upon the
value of shares of the Fund owned by the dealer or financial institution for its
own account or for its customers.
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:
o 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.
o Under pension, profit-sharing and 401(k) plans and Individual
Retirement Accounts (IRAs), you can make an initial investment of as little as
$250 (if your IRA is established under an Asset Builder Plan, the $25 minimum
applies), and subsequent investments may be as little as $25.
There is no minimum investment requirement if you are buying shares by
reinvesting dividends or distributions 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.
o 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.
o Buying Shares Through Your Dealer. Your dealer will place your
order with the Distributor on your behalf.
o 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.
Payment by Federal Funds Wire: Shares may be purchased by Federal Funds wire.
The Minimum investment is $2,500. You must first call the Distributor's Wire
Department at 1-800-525-7041 to notify the Distributor of the wire, and receive
further instructions.
o 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.
o 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.
o 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, or the order is received and transmitted to the Distributor by
an entity authorized by the Fund to accept purchase or redemption orders. The
Fund has authorized the Distributor, certain broker-dealers and agents or
intermediaries designated by the Distributor or those broker-dealers to accept
orders. In most cases, to enable you to receive that day's offering price, the
Distributor or an authorized entity 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, normally your order
must be transmitted 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:
Front-End Sales Charge Commission
As a Percentage of as Percentage
Offering Amount of Offering
Amount of Purchase Price Invested Price
- ------------------------------------------------------------------------------
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
The Distributor reserves the right to reallow the entire commission to dealers.
If that occurs, the dealer may be considered an "underwriter" under Federal
securities laws.
o 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:
o Purchases by a retirement plan qualified under Section 401(a) of the
Internal Revenue Code if the retirement plan has total plan assets of $500,000
or more.
o Purchases aggregating $1 million or more.
o 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,
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.
o 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, and calculated on a
calendar year basis. 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 purchased prior to May 1, 1997 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. A Class A contingent deferred sales
charge may be deducted from the redemption proceeds of any of those shares
purchased on or after May 1, 1997 that are redeemed within 12 months of the end
of the calendar month of their purchase. That sales charge may be equal to 1.0%
of the lesser of (1) the aggregate net asset value of the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original offering price (which is the original net
asset value) of the redeemed shares. However, the Class A contingent deferred
sales charge will not exceed the aggregate amount of the commissions the
Distributor paid to your dealer on all Class A shares of all Oppenheimer funds
you purchased subject to the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is payable, the
Fund will first redeem shares that are not subject to the sales charge,
including shares purchased by reinvestment of dividends and capital gains, and
then will redeem other shares in the order that you purchased them. The Class A
contingent deferred sales charge is waived in certain cases described in
"Waivers of Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges of
shares under the Fund's exchange privilege (described below). However, if the
shares acquired by exchange are redeemed within 18 months of the end of the
calendar month of the purchase of the exchanged shares, the contingent deferred
sales charge will apply.
o 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:
o 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 Distributor will add the value,
at current offering price, of the shares you previously purchased and currently
own to the value of current purchases to determine the sales charge rate that
applies. 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.
o 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.
o 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. In
order to receive a waiver of the Class A contingent deferred sales charge, you
must notify the Transfer Agent as to which conditions apply.
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:
o the Manager or its affiliates;
o 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;
o registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the Distributor for
that purpose;
o 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;
o 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);
o 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);
o (1) investment advisers and financial planners who have entered into an
agreement for this purpose with the Distributor and 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 advisers or financial
planners (that have entered into an agreement for this purpose with the
Distributor) 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 adviser 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)
o 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;
o employee benefit plans purchasing shares through a shareholder servicing
agent which the Distributor has appointed as agent to accept those purchase
orders;
o 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;
o any unit investment trust that has entered into an appropriate
agreement with the Distributor;
o 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
o 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 commenced
and share purchases commenced 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:
o shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party;
o 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;
o 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;
o shares purchased and paid for with the proceeds of shares redeemed in
the prior 30 days 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
o 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:
o to make Automatic Withdrawal Plan payments that are limited annually to
no more than 12% of the original account value;
o involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (see "Shareholder Account Rules and Policies,"
below);
o if, at the time of purchase of shares (prior to May 1, 1997) the dealer
agreed in writing to accept the dealer's portion of the sales commission 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);
o if, at the time of purchase of shares (on or after May 1, 1997) the
dealer agrees in writing to accept the dealer's portion of the sales commission
in installments of 1/12th of the commission per month (and no further commission
will be payable if the shares are redeemed within 12 months of purchase);
o for distributions from a TRAC-2000 401(k) plan sponsored by the
Distributor due to the termination of the TRAC-2000 program;
o 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
subsidiaries) 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;
o for distributions from Retirement Plans having 500 or more eligible
participants, except distributions due to termination of all of the Oppenheimer
funds as an investment option under the Plan; and
o for distributions from 401(k) plans sponsored by broker-dealers that
have entered into a special agreement with the Distributor allowing this waiver.
o Distribution and Service Plan for Class A Shares. The Fund has adopted a
Distribution and Service Plan for Class A shares to compensate the Distributor
for its services in connection with the distribution of shares and 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
compensate itself for its other expenditures under the Plan. The Distributor
currently voluntarily waives 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.
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 and(2) 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. Class B shares held for a period greater than 6 years
automatically convert to Class A shares.
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.
o 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.
o 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."
o 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.
o 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 may pay the Class B service fee and the
asset-based sales charge to the dealer quarterly in lieu of paying the sales
commission and service fee advance at the time of purchase.
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 may pay
the Class C service fee and asset-based sales charge to the dealer quarterly in
lieu of paying the sales commission and service fee advance at the time of
purchase.
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.
o 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. In order to receive a waiver of the Class B or Class C contingent
deferred sales charge, you must notify the Transfer Agent which conditions
apply.
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 :
o 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);
o 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);
o returns of excess contributions to Retirement Plans;
o distributions from retirement plans to make "substantially equal
periodic payments" as permitted in 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;
o shares redeemed involuntarily, as described in "Shareholder Account
Rules and Policies," below;
o distributions from OppenheimerFunds prototype 401(k) plans and from
certain Massachusetts Mutual Life Insurance Company 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; or (6) for loans to participants; or
o distributions from 401(k) plans sponsored by broker-dealers that have
entered into a special agreement with the Distributor allowing this waiver.
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:
o shares sold to the Manager or its affiliates;
o 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
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
Shareholder Transactions by Fax. Requests for certain account transactions may
be sent to the Transfer Agent by fax (telecopier). Please call 1-800-525-7048
for information about which transactions are included. Transaction requests
submitted by fax are subject to the same rules and restrictions as written and
telephone requests described in this Prospectus.
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:
o 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.
o 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:
o Individual Retirement Accounts including rollover IRAs, for individuals
and their spouses and SIMPLE IRAs offered by employers
o 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
o SEP-IRAs (Simplified Employee Pension Plans) for small business owners
or people with income from self-employment, including SAR/SEP IRAs
o Pension and Profit-Sharing Plans for self-employed persons and
other employers
o 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.
o 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.
o 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):
o You wish to redeem more than $50,000 worth of shares and receive a
check
o The redemption check is not payable to all shareholders listed on the
account statement
o The redemption check is not sent to the address of record on your
account statement
o Shares are being transferred to a Fund account with a different owner
or name
o Shares are redeemed by someone other than the owners (such as an
Executor)
o 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:
o Your name
o The Fund's name
o Your Fund account number (from your account statement) o The dollar
amount or number of shares to be redeemed o Any special payment
instructions o Any share certificates for the shares you are selling, o
The signatures of all registered owners exactly as the account is
registered, and
o 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.
o To redeem shares through a service representative, call 1-800-852-8457 o
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.
o 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.
o 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 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:
o Shares of the fund selected for exchange must be available for sale
in your state of residence
o The prospectuses of this Fund and the fund whose shares you want to
buy must offer the exchange privilege
o 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
o You must meet the minimum purchase requirements for the fund you
purchase by exchange
o 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:
o 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."
o 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:
o 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.
o 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.
o 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.
o 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.
o 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
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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 federal funds wire, certified check or arrange to have your
bank to provide telephone or written assurance to the Transfer Agent that your
purchase payment has cleared.
o 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.
o 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.
o "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 correct and properly certified
Social Security or Employer Identification Number when you sign your
application, or if you over report your income to the Internal Revenue Service .
o 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.
o 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 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:
o 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.
o 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.
o 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.
o Reinvest Your Distributions in Another Oppenheimer Fund Account. You
can reinvest all distributions in the same class of shares of 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. So that the Fund will
not have to pay taxes on the amounts it distributes to shareholders as dividends
and capital gains, the Fund intends to manage its investments so that it will
qualify as a "regulated investment company" under the Internal Revenue Code,
although it reserves the right not to qualify in a particular year.
o "Buying a Dividend":
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.
o 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.
o 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.
-11-
<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
o Reduced Class A Initial Sales Charge Rates for Certain Former Quest
Shareholders
o 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.
A-1
<PAGE>
Front-End Front-End
Sales Sales Commission
Charge Charge as
as a as a Percentage
Number of Percentage Percentage of
Eligible Employees of Offering of Amount Offering
or Members Price Invested Price
9 or fewer 2.50% 2.56% 2.00%
- ------------------------------------------------------------------------------
At least 10 but not
more than 49 2.00% 2.04% 1.60%
For purchases by Qualified Retirement plans and Associations having 50 or
more eligible employees or members, there is no initial sales charge on
purchases of Class A shares, but those shares are subject to the Class A
contingent deferred sales charge described on pages 32 to 34 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.
o 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:
o 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.
o 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.
o 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:
o 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.
o 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
o 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.
o 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.
A-2
<PAGE>
Appendix B
DESCRIPTION OF RATINGS
Bond Ratings
o 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.
o 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.
o 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.
o 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.
o 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+").
o 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.
o 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.
o 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.
o 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".
B-1
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER QUEST OFFICERS VALUE FUND
Graphic material included in Prospectus of Oppenheimer Quest Officers
Value Fund: "Comparison of Total Return of Oppenheimer Quest Officers Value Fund
with the S&P 400 Mid-Cap Index - Change in Value of $10,000 Hypothetical
Investment in Class A Shares of Oppenheimer Quest Officers Value Fund and the
S&P 400 Mid-Cap Index"
A linear graph will be included in the Prospectus of Oppenheimer
Quest Value Fund (the "Fund") depicting the initial account value and subsequent
account value of a hypothetical $10,000 investment in the Fund. That graph will
cover the performance of Class A shares of the Fund since inception (November 8,
1994) 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 time period indicated below 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
10/31/97 $ $
(1) Performance information for the S&P 400 Mid Cap Index begins on 10/31/94 for
Class A shares.
B-2
<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 Statement of Additional Information, and if given or
made, such information and representations must not be relied upon as having
been authorized by the Fund, OppenheimerFunds, Inc., OppenheimerFunds
Distributor, Inc. or any affiliate thereof. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any of the securities
offered hereby in any state to any person to whom it is unlawful to make such an
offer in such state.
prosp\229psp.# 3
B-3
<PAGE>
OPPENHEIMER QUEST OFFICERS VALUE FUND
Two World Trade Center, New York, New York 10048
1-800-525-7048
Statement of Additional Information dated January 26, 1998
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 January 26, 1998.
It should be read together with the Prospectus, which may be obtained upon
written request to the Fund's Transfer Agent, OppenheimerFunds Services at P.O.
Box 5270, Denver, Colorado 80217, or by calling the Transfer Agent at the
toll-free number shown above.
Contents
Page
About the Fund
Investment Objective and Policies.....................................
Investment Policies and Strategies...............................
Other Investment Techniques and Strategies.......................
Other Investment Restrictions......................................
How the Fund is Managed ...............................................
Organization and History........................................
Trustees and Officers of the Trust.................................
The Manager and Its Affiliates.....................................
Brokerage Policies of the Fund.........................................
Performance of the Fund................................................
Distribution and Service Plans.........................................
About Your Account
How To Buy Shares...................................................
How To Sell Shares.................................................
How To Exchange Shares.............................................
Dividends, Capital Gains and Taxes.................................
Additional Information About the Fund..................................
Financial Information About the Fund
Report of Independent Accountants..................................
Financial Statements...................................................
Appendix A: Corporate Industry Classifications......................A-1
-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.
o 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 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 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.
o 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.
o 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.
o U.S. Government Obligations. 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.
o 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:
o 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.
o 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 deter
mines 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.
o Convertible Securitie 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.
o Investment Risks of Fixed-Income Securities. All fixed-income securities
are subject to two types of risks: credit risk and interest rate risk. Credit
risk relates to the ability of the issuer to meet interest or principal payments
on a security as they become due. Interest rate risk refers to the fluctuations
in value of fixed-income securities resulting solely from the inverse
relationship between price and yield of outstanding fixed-income securities. An
increase in prevailing interest rates will generally reduce the market value of
already-issued fixed-income investments, and a decline in interest rates will
tend to increase their value. In addition, debt securities with longer
maturities, which tend to produce higher yields, are subject to potentially
greater changes in their prices from changes in interest rates than obligations
with shorter maturities. Fluctuations in the market value of fixed-income
securities after the Fund buys them will not affect the interest payable on
those securities, nor the cash income from such securities. However, those price
fluctuations will be reflected in the valuations of these securities and
therefore the Fund's net asset values.
o 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.
o Warrants and Rights. 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.
o 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 sell
them and can reduce the price the Fund might be able to obtain for them. If
other investors holding the same securities as the Fund sell them 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.
o 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
o 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.
o 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 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.
o 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. Illiquid securities include repurchase agreements
maturing in more than seven days, or certain participation interests other than
those with puts exercisable within seven days.
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.
o 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.
o 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,
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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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 unless the option is subject
to a buy-back agreement by the executing broker. The 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.
o Tax Aspects of Covered Calls and Hedging Instruments. The Fund intends to
qualify as a "regulated investment company" although there is no guarantee that
it will qualify 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).
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.
o 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:
o 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;
o 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);
o Mortgage, hypothecate or pledge any of its assets;
o 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
o 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);
o invest in physical commodities or physical commodity ; however, the Fund
may: (i) buy and sell hedging instruments to the extent specified in its
Prospectus from time to time, and (ii) buy and sell options, futures, securities
or other instruments backed by, or the investment return from which is linked to
changes in the price of, physical commodities; or
o 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.
Non-Fundamental Investment Restrictions. The following operating policies of the
Fund are not fundamental policies and, as such, may be changed by vote of a
majority of the Board of Trustees without shareholder approval. These additional
restrictions provide that the Fund cannot:
o purchase securities on margin, or make
short sales of securities;
o make loans to any person or individual (except that portfolio securities
may be loaned within the limitations set forth in the Prospectus) ; or
o 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 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. The percentage
restrictions described above and in the Prospectus apply only at the time of
investment and require no action by the Fund as a result of subsequent changes
in relative values.
-2-
<PAGE>
How the Fund is Managed
Organization and History. The Fund is one of four portfolios of the Trust, a
Massachusetts business trust named Oppenheimer Quest For Value Funds . 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. All of the Trustees are directors or trustees of Oppenheimer Quest For
Value Funds (Oppenheimer Quest Opportunity Value Fund, Oppenheimer Quest Growth
& Income Value Fund , Oppenheimer Quest Small Cap Value Fund and Oppenheimer
Quest Officers Value Fund), Oppenheimer Quest Value Fund, Inc. , Oppenheimer
Quest Global Value Fund, Inc. and Oppenheimer Quest Capital Value Fund, Inc.
(collectively, the "Oppenheimer Quest Funds") , 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") and Oppenheimer MidCap Fund. As of January __, 1998, the
Trustees and officers of the Trust as a group owned less than 1% of the
outstanding shares 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 officers of the Fund listed below.
Bridget A. Macaskill, Chairman of the Board of Trustees and President 1; Age: 49
President (since June 1991), Chief Executive Officer (since September 1995) and
a Director (since December 1994) of the Manager ; President and director (since
June 1991) of HarbourView Asset Management Corporation ("HarbourView"), a
subsidiary of the Manager; Chairman and a director of Shareholder Services, Inc.
("SSI") (since August 1994) and Shareholder Financial Services, Inc. ("SFSI")
(September 1995), transfer agent subsidiaries of the Manager; President (since
September 1995) and a director (since October 1990) of Oppenheimer Acquisition
Corp. ("OAC"), the Manager's parent holding company; President (since September
1995) and a director (since November 1989) of Oppenheimer Partnership Holdings,
Inc., a holding company subsidiary of the Manager; a director of Oppenheimer
Real Asset Management, Inc. (since July 1996); President and a director (since
October 1997) of OppenheimerFunds International Ltd. ("OFIL"), an offshore fund
manager subsidiary of the Manager and Oppenheimer Millennium Funds plc (since
October 1997); President and a director of other Oppenheimer funds; a director
of the NASDAQ Stock Market, Inc. and of Hillsdown Holdings plc (a U.K. food
company); formerly an Executive Vice President of the Manager.
Paul Y. Clinton, Trustee; Age: 67
39 Blossom Avenue, Osterville, Massachusetts 02655
Principal of Clinton Management Associates (financial and venture capital
consulting firm); Trustee of Capital Cash Management Trust (money-market fund)
and Narraganssett
Tax-Free Fund (tax-
exempt bond fund); Director of OCC Cash Reserves, Inc. and Trustee of OCC
Accumulation Trust,
(both open-end investment companies). Formerly: Director,
External Affairs, Kravco Corporation,( national real estate owner
and property management corporation); President of
Essex Management Corporation (management consulting company); a general partner
of Capital Growth Fund (venture capital partnership); a general partner of Essex
Limited Partnership ( investment partnership); President of Geneve Corp.
(venture capital fund); Chairman of Woodland Capital Corp. (small business
investment company); and Vice President of W.R. Grace & Co.
Thomas W. Courtney, Trustee; Age: 64
833 Wyndemere Way, Naples, Florida 34105
Principal of Courtney Associates, Inc. (venture capital firm); former General
Partner of Trivest Venture Fund (private venture capital fund); Trustee of Cash
Assets Trust, (money market fund); Director of OCC Cash Reserves, Inc., and
Trustee of OCC Accumulation Trust, both open-end investment companies ); Trustee
of Hawaiian Tax-Free Trust and Tax Free Trust of Arizona, (both tax-exempt bond
funds); Director of several privately owned . Formerly President of Investment
Counseling Federated Investors, Inc.; former President of Boston Company
Institutional Investors; Director of Financial Analysts Federation.
- --------
1Trustee who is an "interested person" (as defined in the Investment
Company Act) of the Fund and the Trust.
Lacy B. Herrmann, Trustee; Age: 68
380 Madison Avenue, Suite 2300, New York, New York 10017
Chairman and Chief Executive Officer of Aquila Management Corporation
(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, Aquila Cascadia Equity Fund,
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 (both open-end investment companies);
Trustee Emeritus of Brown University.
George Loft, Trustee; Age: 83
51 Herrick Road, Sharon, Connecticut 06069
Private Investor; Director of OCC Cash Reserves, Inc. and Trustee of OCC
Accumulation Trust
(both open-end investment
companies).
Robert C. Doll, Jr., Vice President; Age: 43
Executive Vice President and Director of the Manager (since January 1993) ;
Executive Vice President of HarbourView (since January 1993); Vice President and
a director of OAC (since September 1995); an officer of other Oppenheimer funds.
Jeffrey C. Whittington, Portfolio Manager; Age 40
One World Financial Center,
200 Liberty Street, New York, New York 10281
Senior Vice President of Oppenheimer Capital; formerly a portfolio manager at
Neuberger & Berman and prior thereto, a
portfolio manager at Oppenheimer & Co., Inc.
Andrew J. Donohue, Secretary; Age: 47
Executive Vice President (since January 1993), General Counsel (since October
1991) and a Director (since September 1995) of the Manager; Executive Vice
President (since September 1993), and a director (since January 1992) of
OppenheimerFunds Distributor, Inc. (the "Distributor"); Executive Vice
President, General Counsel and a director of HarbourView, SSI, SFSI and
Oppenheimer Partnership Holdings, Inc. since (September 1995) and MultiSource
Services, Inc. (a broker-dealer) (since December 1995); President and a director
of Centennial Asset Management Corporation ("Centennial") (since September
1995); President and a director of Oppenheimer Real Asset Management, Inc.
(since July 1996); General Counsel (since May 1996) and Secretary (since April
1997) of OAC; Vice President of OFIL and Oppenheimer Millennium Funds plc (since
October 1997); an officer of other Oppenheimer funds.
George C. Bowen, Treasurer; Age: 61
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President (since September 1987) and Treasurer (since March 1985) of
the Manager; Vice President (since June 1983) and Treasurer (since March 1985)
of the Distributor ; Vice President (since October 1989) and Treasurer (since
April 1986) of HarbourView; Senior Vice President (since February 1992),
Treasurer (since July 1991) and a director (since December 1991) of Centennial;
President, Treasurer and a director of Centennial Capital Corporation (since
June 1989); Vice President and Treasurer (since August 1978) and Secretary
(since April 1981) of SSI; Vice President, Treasurer and Secretary of SFSI
(since November 1989); Treasurer of OAC (since June 1990); Treasurer of
Oppenheimer Partnership Holdings, Inc. (since November 1989); Vice President and
Treasurer of Oppenheimer Real Asset Management, Inc. (since July 1996); Chief
Executive Officer, Treasurer and a director of MultiSource Services, Inc., a
broker-dealer (since December 1995); an officer of other Oppenheimer funds.
Robert Bishop, Assistant Treasurer; Age: 39
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); an
officer of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for
the Manager .
Scott T. Farrar, Assistant Treasurer; Age: 32
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996);
Assistant Treasurer of Oppenheimer Millennium Funds plc (since October 1997);
an officer of other Oppenheimer funds;
formerly an Assistant Vice President of the Manager/Mutual Fund Accounting
(April 1994-May 1996), and a Fund Controller for the Manager .
Robert G. Zack, Assistant Secretary; Age: 49
Senior Vice President (since May 1985) and Associate General Counsel (since May
1981) of the Manager, Assistant Secretary of SSI (since May 1985), and SFSI
(since November 1989); Assistant Secretary of Oppenheimer Millennium Funds plc
(since October 1997); an officer of other Oppenheimer funds.
o 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, 1997 and
(ii) other investment companies (or series thereof) managed by the Manager
and/or the Sub-Adviser paid during the calendar year ended December 31, 1997.
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)
Paul Y. Clinton $ None None $
Thomas W. Courtney $ None None $
Lacy B. Herrmann $ None None $
George Loft $ None None $
(1) For the purpose of the chart above, "Fund Complex" includes the Oppenheimer
Quest Funds (including the Fund), the Oppenheimer Rochester Funds, Oppenheimer
MidCap Fund and three other funds advised by the Sub-Adviser (the "Sub-Adviser
Funds"). For these purposes, each series constitutes a separate fund. Messrs.
Clinton and Courtney served as directors or trustees of two Sub- Adviser Funds,
for which they are to receive $______ and $______, respectively, and Messrs.
Herrmann and Loft served as a directors or trustees of three Sub-Adviser Funds,
for which they are to receive $_______ and $_______, respectively. Effective
April 1997, Messrs. Herrmann and Loft resigned as trustees from the third
Sub-Adviser fund.
Deferred Compensation Plan. The Board of Trustees has adopted a Deferred
Compensation plan for disinterested trustees that enables them to elect to defer
receipt of all or a portion of the annual fees they are entitled to receive from
the Fund. Under the plan, the compensation deferred by a Trustee is periodically
adjusted as though an equivalent amount had been invested in shares of one or
more Oppenheimer funds selected by the Trustee. The amount paid to the Trustee
under the plan will be determined based upon the performance of the selected
funds. Deferral of Trustees' fees under the plan will not materially affect the
Fund's assets, liabilities and net income per share. The plan will not obligate
the Fund to retain the services of any Trustee or to pay any particular level of
compensation to any Trustee. Pursuant to an Order issued by the Securities and
Exchange Commission, the Fund may invest in the funds selected by the Trustee
under the plan for the limited purpose of determining the value of the Trustee's
deferred fee account.
o 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 __, 1998, no person owned of record or was known by the Fund to own
beneficially 5% or more of the Fund's Class A shares except
:_______________________________________________________________________
The 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 Trust and one of whom (Ms. Macaskill) also
serves as an officer and a Trustee of the Trust.
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'Fund's
portfolio transactions. Compliance with the Code of Ethics is carefully
monitored and strictly enforced by the Manager.
o Portfolio Management. The Portfolio Manager of the Fund is Jeffrey
C. Whittington, who is principally responsible for the day-to-day management
of the Fund's portfolio. Mr. Whittington's background
is described in the Prospectus under "Portfolio
Manager".
o The Investment Advisory Agreement. The Manager acts as investment
adviser to the Fund pursuant to the terms of an Investment Advisory Agreement
dated May 27, 1997, as amended on October 22, 1997, which replaced the
investment advisory agreement dated as of November 22, 1995. The Investment
Advisory 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 agreement on February 4, 1997 and by the shareholders of the Fund at a
meeting held for that purpose on May 6, 1997. The Sub-Adviser previously served
as the Fund's investment adviser from the Fund's inception (November 8, 1994) 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 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 22,
1995 (when the Manager became the investment adviser to the Fund) to October 31,
1996 (the "Fiscal Period") and the fiscal year ended October 31, 1997, the Fund
paid to the Manager $58,216 and $____, respectively, in management fees. During
the Fiscal Period and the fiscal year ended October 31, 1997, the Fund also paid
or accrued accounting service fees to the Manager in the amount of $5,633 and
$_____, respectively.
The Investment Advisory Agreement contains no expense limitation. However,
independently of the Agreement, 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 rates for the Fiscal Period and
the fiscal year ended October 31, 1997 were .87% and ___%, respectively.
Pursuant to this undertaking, the Manager's fee at the end of any month
will be reduced or eliminated such that there will not be any accrued but unpaid
liability under this fee waiver. The Manager reserves the right to terminate or
amend the undertaking at any time. The Fund's overall expense ratio would be
reduced and its total return increased during any period in which fees were
waived.
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" or "Quest For Value" in
connection with its other investment companies for which it may act as an
investment adviser or general distributor. If the Manager shall no longer act as
investment adviser to a Fund, the right of the Fund to use "Oppenheimer" or
"Quest For Value" as part of its name may be withdrawn.
The Investment Advisory Agreement provides that the Manager may enter into
sub-advisory agreements with other affiliated or unaffiliated registered
investment advisers in order to obtain specialized services for the Funds
provided that the Fund is not required to pay any additional fees for such
services. The Manager has retained the Sub-Adviser pursuant to a separate
Subadvisory Agreement, dated as of November 5, 1997, with respect to the Fund,
described below, which replaced the Subadvisory Agreement dated as of November
22, 1995.
o 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 PeNo 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.
o 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 agreement, on
February 28, 1997 and by the shareholders of the Fund at a meeting held for that
purpose on May 6, 1997.
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 November 22, 1995 (the
"Base Amount") plus 30% of the investment advisory fee collected by the Manager
based on the total net assets of the Fund that exceed the Base Amount. 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 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. On November 4, 1997, PIMCO
Advisors L.P. ("PIMCO Advisors"), a registered investment adviser with $125
billion in assets under management through various subsidiaries, acquired
control of Oppenheimer Capital and the Sub-Adviser. Value Advisors LLC, a
limited liability company and a wholly-owned subsidiary of PIMCO Advisors, holds
a one-third managing general partner interest in Oppenheimer Capital and a 1.0%
general partner interest in the Sub-Adviser. Oppenheimer Capital L.P., a
Delaware limited partnership whose units are traded on The New York Stock
Exchange, owns the remaining two-thirds interest in Oppenheimer Capital. PIMCO
Partners G.P., general partner of PIMCO Advisors, holds the sole general partner
interest in Oppenheimer Capital, L.P.
PIMCO Partners, G.P. ("PIMCO GP") owns approximately 42.83% and 66.37%,
respectively, of the total outstanding Class A and Class B units of limited
partnership interest ("Units") of PIMCO Advisors' sole general partner. PIMCO GP
is a California general partnership with two general partners. The first of
these is Pacific Investment Management Company, which is a California
corporation and is wholly-owned by Pacific Financial Asset Management Company, a
direct subsidiary of Pacific Life Insurance Company ("Pacific Life").
The managing general partner of PIMCO GP is PIMCO Partners L.L.C. ("PPLLC"), a
California limited liability company. PPLLC's members are the Managing Directors
(the "PIMCO Managers") of Pacific Investment Management Company, a subsidiary of
PIMCO Advisors (the "PIMCO Subpartnership"). The PIMCO Managers are: William H.
Gross, Dean S. Meiling, James F. Muzzy, William F. Podlich, III, Frank B.
Rabinovitch, Brent R. Harris, John L. Hague, William S. Thompson Jr., William C.
Powers, David H. Edington, Benjamin Trosky, William R. Benz, II and Lee R.
Thomas, III.
PIMCO Advisors is governed by an Operating Board and an Equity Board.
Because of its power to appoint (directly or indirectly ) seven of the twelve
members of the Operating Board, the PIMCO Subpartnership may be deemed to
control PIMCO Advisors. Because of direct or indirect power to appoint 25% of
the members of the Equity Board, (i) Pacific Life and (ii) the PIMCO Managers
and/or the PIMCO Subpartnership may each be deemed, under applicable provisions
of the investment Company Act, to control PIMCO Advisors. Pacific Life, the
PIMCO Subpartnership and the PIMCO Managers disclaim such control.
o The Distributor. Under a General Distributor's Agreement with the Trust
dated as of November 22, 1995, the Distributor acts as the Fund's principal
underwriter in the continuous public offering of Class A, Class B and Class C
shares of the Fund but is not obligated to sell a specific number of shares. To
date, Class B and Class C shares have not been issued. Expenses normally
attributable to sales, including advertising and the cost of printing and
mailing prospectuses, other than those furnished to existing shareholders, are
borne by the Distributor. [During the Fund's fiscal year ended October 31, 1997,
the aggregate amount of sales charges on sales of the Fund's Class A shares was
$______, all of which the Distributor and affiliated brokers retained.] 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.
o The Transfer Agent. OppenheimerFunds Services acts as the Fund's
Transfer Agent pursuant to a Transfer Agency and Service 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.
o 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 of
Trustees under applicable rules of the SEC.
In addition, the Subadvisory Agreement permits the Sub-Adviser to enter
into "soft dollar" arrangements through the agency of third parties to obtain
services for the Fund. Pursuant to these arrangements, the Sub-Adviser will
undertake to place brokerage business with broker-dealers who pay third parties
that provide services. Any such "soft dollar" arrangements will be made in
accordance with policies adopted by the Board of the Trust and in compliance
with applicable law.
Description of Brokerage Practices. Portfolio decisions are based upon
recommendations of the portfolio manager and the judgment of the portfolio
managers. The Fund will pay brokerage commissions on transactions in listed
options and equity securities. Prices of portfolio securities purchased from
underwriters of new issues include a commission or concession paid by the issuer
to the underwriter, and prices of debt securities purchased from dealers include
a spread between the bid and asked prices.
Transactions may be directed to dealers during the course of an
underwriting in return for their brokerage and research services, which are
intangible and on which no dollar value can be placed. There is no formula for
such allocation. The research information may or may not be useful to one or
more of the Fund and/or other accounts of the Manager or the Sub-Adviser;
information received in connection with directed orders of other accounts
managed by the Manager or the Sub- Adviser or its affiliates may or may not be
useful to one or more of the Funds. Such information may be in written or oral
form and includes information on particular companies and industries as well as
market, economic or institutional activity areas. It serves to broaden the scope
and supplement the research activities of the Manager or the Sub-Adviser, to
make available additional views for consid eration 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 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 years ended
October 31, 1996 and 1997. Prior to November 3, 1997, Oppenheimer & Co., Inc.
("OpCo"), a broker-dealer, was an affiliate of the Sub-Adviser.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
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 Amoun % Dollar Amoun %
- ---------------- ---- -------------- ------------ -
1995 $11,593 $ 4,461 38.5% $2,153,416 39.8%
1996 $34,368 $13,921 40.5% $8,359,426 34.3%
1997 $ $ % $ %
</TABLE>
During the Fund's fiscal year ended October 31, 1997, $_____ was paid by
the Fund to brokers as commissions in return for research services; the
aggregate dollar amount of those transactions was $________.
Performance of the Fund
Total Return Information. As described in the Prospectus, from time to time the
"average annual total return," "cumulative total return" and "total return at
net asset value" of an investment in a class of shares of the Fund may be
advertised. An explanation of how these total returns are calculated for each
class and the components of those calculations is set forth below.
The Fund's advertisements of its performance data must, under applicable
SEC rules include the average annual total returns for each 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, 1997 and the one year period ended October 31,
1997 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.
o 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, 1997 and for the period from November 8, 1994 (commencement of
operations) to October 31, 1997 were _____% and______%, respectively.
o 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 (5.0% for the first year, 4.0% for the second
year, 3.0% for the third and fourth years, 2.0% for the fifth year, 1.0% 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, 1997 was _____%.
o 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, 1997 was ______%. The average annual total returns at net asset
value for Class A shares for the one year period ended October 31, 1997 and for
the period from November 8, 1994 through October 31, 1997 were _____% and
_____%, 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 would be ranked
against (i) all other funds and (ii) all other capital appreciation funds. The
Lipper performance rankings are based on total returns that include the
reinvestment of capital gain distributions and income dividends but do not take
sales charges or taxes into consideration.
From time to time the Fund may publish the star ranking of the performance
of its Class A, Class B or Class C shares by Morningstar, Inc. ("Morningstar"),
an independent mutual fund monitoring service. Morningstar ranks mutual funds in
broad investment categories (domestic stock funds, international stock funds,
taxable bond funds, municipal bond funds) based on risk-adjusted total
investment return. The Fund is ranked among domestic equity funds. Investment
return measures 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 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. From time to time, the Fund may include
in its advertisements and sales literature performance information about the
Fund cited in newspapers and other periodicals, such as The New York Times,
which may include performance quotations from other sources, including Lipper.
The Fund may also compare its performance to that of other funds in its
Morningstar category. In addition to its star ranking, Morningstar
also categorizes and compares a fund's 3-year
performance based on Morningstar's classification of the fund's investment
objective. Morningstar's four broad categories are each further subdivided into
categories based on types of investments and investment styles. Those
comparisons 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, each dated November 22, 1996, for Class A, Class B
and Class C shares of the Fund under Rule 12b-1 of the Investment Company Act
pursuant to which the Fund will compensate the Distributor for all or a portion
of its costs incurred in connection with the distribution and/or servicing of
the shares of that class, as described in the Prospectus. Each Plan has been
approved by (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"), cast in person at a meeting on February 4, 1997 called
for the purpose, among others, of voting on those plans 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.
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 an SEC 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
detailing services rendered in connection with the distribution of the shares,
the amount of all payments made pursuant to each Plan and the purpose for which
the payments were made . 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 amajority 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.
Effective August 1, 1996, the Distributor voluntarily agreed to waive all
fees payable to it under the Class A Plan. Had the waiver not been in effect,
for the fiscal year ended October 31, 1997, payments under the Plan for Class A
shares Distributor would have totaled $______. 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).
-3-
<PAGE>
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 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 SharThe 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, Martin Luther
King 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-type debt
securities held by a non-money market fund that had a maturity of less than 397
days when issued that have a remaining maturity of 60 days or less , and debt
instruments held by a money market fund that have a remaining maturity of 397
days or less, shall be 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 "asked" 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 and to price U.S. Government
securities or mortgage-backed securities for which last sale information is not
generally available. The Manager will monitor the accuracy of such pricing
services, which may include comparing prices used for portfolio evaluation to
actual sale 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.
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"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"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. Relations by virtue of a remarriage (step-children,
step-parents, etc. ) are included.
o 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 Discovery Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Multiple Strategies Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer MidCap 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 Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer International Bond Fund
Oppenheimer International Small Company Fund
Oppenheimer Enterprise Fund
Oppenheimer Quest Capital Value Fund, Inc.
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.
Oppenheimer Bond Fund For Growth
Limited Term New York Municipal Fund
Rochester Fund Municipals Oppenheimer
Disciplined Value Fund
Oppenheimer Disciplined Allocation Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Income Fund
Oppenheimer LifeSpan Growth Fund
Oppenheimer International Growth Fund
Oppenheimer Developing Markets Fund
Oppenheimer Real Asset 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
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).
o 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.
o 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 sold with a front-end sales charge or
Class B 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 "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 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 transmissions.
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 other than
public school 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 or association has made special arrangements with the
Distributor and all members of the group or association participating in or who
are eligible to participate in the plan(s) purchase Class A shares of the Fund
through a single investment dealer, broker, or other financial institution
designated by the group. "Group retirement plan" also includes qualified
retirement plans and non-qualified deferred compensation plans and IRAs that
purchase Class A shares of the Fund through a single investment dealer, broker,
or other financial institution, if that broker-dealer has made special
arrangements with the Distributor enabling those plans to purchase Class A
shares of the Fund at net asset value but subject to a contingent deferred sales
charge.
In addition to the discussion in the Prospectus relating to the ability of
Retirement Plans to purchase Class A shares at net asset value in certain
circumstances, there is no initial sales charge on purchases of Class A shares
of any one or more of the Oppenheimer funds by a Retirement Plan in the
following cases: (i) the recordkeeping for the Retirement Plan is performed on a
daily valuation basis by Merrill Lynch Pierce Fenner & Smith, Inc. ("Merrill
Lynch") and, on the date the plan sponsor signs the Merrill Lynch recordkeeping
service agreement, the Retirement Plan has $3 million or more in assets invested
in mutual funds other than those advised or managed by Merrill Lynch Asset
Management, L.P. ("MLAM") that are made available pursuant to a Service
Agreement between Merrill Lynch and the mutual fund's principal underwriter or
distributor and in funds advised or managed by MLAM (collectively, the
"Applicable Investments"); or (ii) the recordkeeping for the Retirement Plan is
performed on a daily valuation basis by an independent record keeper whose
services are provided under a contract or arrangement between the Retirement
Plan and Merrill Lynch. On the date the plan sponsor signs the Merrill Lynch
record keeping service agreement, the Plan must have $3 million or more in
assets, excluding assets held in money market funds, invested in Applicable
Investments; or (iii) the Plan has 500 or more eligible employees, as determined
by the Merrill Lynch plan conversion manager on the date the plan sponsor signs
the Merrill Lynch record keeping service agreement.
If a Retirement Plan's records are maintained on a daily valuation basis
by Merrill Lynch or an independent record keeper under a contract or alliance
arrangement with Merrill Lynch, and if on the date the plan sponsor signs the
Merrill Lynch record keeping service agreement the Retirement Plan has less than
$3 million in assets, excluding money market funds, invested in Applicable
Investments, then the Retirement Plan may purchase only Class B shares of one or
more of the Oppenheimer funds. Otherwise, the Retirement Plan will be permitted
to purchase Class A shares of one or more of the Oppenheimer funds. Any of those
Retirement Plans that currently invest in Class B shares of the Fund will have
their Class B shares be converted to Class A shares of the Fund once the Plan's
Applicable Investments have reached $5 million.
Any redemptions of shares of the Fund held by Retirement Plans whose
records are maintained on a daily valuation basis by Merrill Lynch or an
independent record keeper under a contract with Merrill Lynch that are currently
invested in Class B shares of the Fund shall not be subject to the Class B CDSC.
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.
o Involuntary Redemptions. The Trust'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 that were
subject to the Class B 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.
o 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.
o 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 . 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 12 months of the end of the calendar
month of the initial purchase of the exchanged Class A shares (18 months if the
shares were initially purchased prior to May 1, 1997), 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.
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.
-4-
<PAGE>
Appendix A
Corporate Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
Food
Gas
Utilities
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming Industrial Services
Information Technology
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
Wireless
Services
A-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
prosp\229SAI.# 4
A-2
<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")*
(ii) for Oppenheimer Quest Growth & Income Value Fund ("Growth &
Income Fund")*
(iii) for Oppenheimer Quest Opportunity Value Fund
("Opportunity Fund")*
(iv) for Oppenheimer Quest Officers Value Fund ("Officers Fund")*
(2) Report of Independent Accountants
(i) for Small Cap Fund*
(ii) for Growth & Income Fund*
(iii) for Opportunity Fund *
(iv) for Officers Fund*
(3) Statement of Investments
(i) for Small Cap Fund*
(ii) for Growth & Income Fund*
(iii) for Opportunity Fund*
(iv) for Officers Fund*
C-1
<PAGE>
C-2
<PAGE>
(4) Statement of Assets and Liabilities
(i) for Small Cap Fund*
(ii) for Growth & Income Fund*
(iii) for Opportunity Fund*
(iv) for Officers Fund*
(5) Statement of Operations
(i) for Small Cap Fund*
(ii) for Growth & Income Fund*
(iii) for Opportunity Fund*
(iv) for Officers Fund*
(6) Statement of Changes in Net Assets
(i) for Small Cap Fund*
(ii) for Growth & Income Fund*
(iii) for Opportunity Fund*
(iv) for Officers Fund*
(7) Notes to Financial Statements
(i) for Small Cap Fund*
(ii) for Growth & Income Fund*
(iii) for Opportunity Fund*
(iv) for Officers Fund*
(8) Consent of Independent Accountants
*
C-3
<PAGE>
* To be filed by amendment.
(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) (a) By-laws of Registrant: Filed with Post-Effective Amendment
No. 33, 6/23/95, and incorporated herein by reference.
(b) Amendment to By-laws: Filed herewith.
(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 herewith.
(e)Growth & Income Fund Specimen Class B Share Certificate -
Filed herewith.
(f) Growth & Income Fund Specimen Class C Share Certificate Filed
herewith.
(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.
C-4
<PAGE>
(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)(1) Investment Advisory Agreement dated
5/27/97: Filed herewith.
(2) Amendment dated 10/22/97 to Investment Advisory
Agreement: Filed herewith.
(b)(1)Subadvisory Agreement with respect to the Small Cap Fund
dated 11/5/97: Filed herewith.
(2) Subadvisory Agreement with respect to the Growth &
Income Fund dated 11/5/97: Filed herewith.
(3) Subadvisory Agreement with respect to the Opportunity
Fund dated 11/5/97: Filed herewith.
(4) Subadvisory Agreement with respect to the Officers
Fund dated 11/5/97: Filed herewith.
(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.
C-5
<PAGE>
(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)(iForm 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.
C-6
<PAGE>
(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 dated 11/22/96 with respect to Class A shares of the
Growth & Income Fund: Filed herewith.
(2)Amended and Restated Distribution and Service Plan and Agreement
dated 11/22/96 with respect to Class A shares of the Opportunity Fund:
Filed herewith.
(3)Amended and Restated Distribution and Service Plan and Agreement
dated 11/22/96 with respect to Class A shares of the Small Cap Fund: Filed
herewith.
(4)Amended and Restated Distribution and Service Plan and
Agreement dated 11/22/96 with respect to Class A shares of the Officers Fund:
Filed herewith.
C-8
<PAGE>
(b)(1) Amended and Restated Distribution and Service Plan and
Agreement with dated 11/22/96 with respect to Class B shares of the Growth &
Income Fund: Filed herewith.
(2)Amended and Restated Distribution and Service Plan and
Agreement dated 11/22/96 with respect to Class B
shares of the Opportunity Fund: Filed herewith.
(3)Amended and Restated Distribution and Service Plan and Agreement
dated 11/22/96 with respect to Class B shares of the Small Cap Fund: Filed
herewith.
(4)Amended and Restated Distribution and Service Plan and
Agreement dated 11/22/96 with respect to Class B shares of the Officers Fund:
Filed herewith.
(c)(1) Amended and Restated Distribution and Service Plan and
Agreement dated 11/22/96 with respect to Class C shares of the Growth & Income
Fund: Filed herewith.
(2)Amended and Restated Distribution and Service Plan and
Agreement dated 11/22/96 with respect to Class C shares of the Opportunity Fund:
Filed herewith.
(3)Amended and Restated Distribution and Service Plan and
Agreement dated 11/22/96 with respect to Class C shares of the Small Cap Fund:
Filed herewith.
(4)Amended and Restated Distribution and Service Plan and
Agreement dated 11/22/96 with respect to Class C shares of the Officers Fund:
Filed herewith.
(16)(1) Performance Computation Schedule of Growth & Income Fund:
To be filed by Amendment.
C-9
<PAGE>
(2)Performance Computation Schedule of Opportunity Fund: To be filed
by Amendment.
(3)Performance Computation Schedule of Small Cap Fund: To be filed by
Amendment.
(4)Performance Computation Schedule of Officers Fund: To be filed by
Amendment.
(17) (1)Financial Data Schedule for Class A shares of Growth &
Income Fund: To be filed by Amendment.
(2)Financial Data Schedule for Class B shares of Growth &
Income Fund: To be
filed by Amendment.
(3)Financial Data Schedule for Class C shares of Growth &
Income Fund: To be filed by Amendment.
(4)Financial Data Schedule for Class A shares of Opportunity
Fund: To be filed by Amendment.
(5)Financial Data Schedule for Class B shares of Opportunity
Fund: To be filed by Amendment.
(6)Financial Data Schedule for Class C shares of Opportunity
Fund: To be filed by Amendment.
(7)Financial Data Schedule for Class Y shares of Opportunity
Fund: To be filed by Amendment.
(8)Financial Data Schedule for Class A shares of Small Cap
Fund: To be filed by Amendment.
(9)Financial Data Schedule for Class B shares of Small Cap
Fund: To be filed by Amendment.
(10)Financial Data Schedule for Class C shares of Small Cap
Fund: To be filed by Amendment
(11)Financial Data Schedule for Class A shares of Officers
Fund: To be filed by Amendment.
(18) Oppenheimer Funds Multiple Class Plan under Rule 18f-3
dated 3/18/96: Filed with the Initial
Registration Statement of Oppenheimer MidCap Fund (333-31533),
7/18/97, 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 __, 1998
- -------------- -----------------
Shares of Beneficial Interest
Opportunity Fund - Class A
Opportunity Fund - Class B
Opportunity Fund - Class C
Opportunity Fund - Class Y
Small Cap Fund - Class A
Small Cap Fund - Class B
Small Cap Fund - Class C
Growth & Income Fund - Class A
Growth & Income Fund - Class B
Growth & Income Fund - Class C
Officers Fund - Class A
C-11
<PAGE>
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.
The directors and executive officers 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 and Current Position
with
OppenheimerFunds, Inc. Other Business and Connections
("OFI") During the Past Two Years
- --------------------------- ------------------------------------
Mark J.P. Anson,
Vice President Vice President of Oppenheimer Real
Asset
C-12
<PAGE>
Management, Inc. ("ORAMI");
formerly Vice
President of Equity Derivatives at
Salomon
Brothers, Inc.
Peter M. Antos,
Senior Vice President An officer
and/or portfolio manager of
certain Oppenheimer funds; a
Chartered Financial Analyst; Senior Vice
President of HarbourView Asset
Management Corporation ("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.
Beichert, Kathleen None.
Rajeev Bhaman,
Vice President Formerly Vice President
(January 1992 - February, 1996) of
Asian Equities for Barclays de Zoete
Wedd, Inc.
Robert J. Bishop,
Vice President
Vice
President of
Mutual Fund Accounting (since May
1996); an
officer of other Oppenheimer funds;
formerly
an Assistant Vice President of
OFI/Mutual
Fund Accounting (April 1994-May
1996), and
a Fund Controller for
OFI.
George C. Bowen,
Senior Vice President & Treasurer
Vice President
(since
June 1983) and Treasurer (since
March 1985)
of OppenheimerFunds Distributor,
Inc. (the
"Distributor"); Vice President
(since October
1989) and Treasurer (since April
1986) of
HarbourView; Senior Vice President
(since
February 1992), Treasurer (since
July
1991)and a director (since December
1991) of
Centennial; President, Treasurer
and a
director of Centennial Capital
Corporation
(since June 1989); Vice President
and
Treasurer (since August 1978) and
Secretary
(since April 1981) of Shareholder
Services,
Inc. ("SSI"); Vice President,
Treasurer and
Secretary of Shareholder Financial
Services,
Inc. ("SFSI") (since November 1989);
Treasurer of Oppenheimer
Acquisition Corp.
("OAC") (since June 1990);
Treasurer of
Oppenheimer Partnership Holdings,
Inc. (since
November 1989); Vice President and
Treasurer of
C-14
<PAGE>
ORAMI (since July 1996); Chief
Executive Officer, Treasurer and a
director of MultiSource Services, Inc.
, a broker-dealer (since December
1995); an officer of other Oppenheimer
funds.
Scott Brooks,
Vice President None.
2 Susan Burton,
Assistant Vice President None.
Adele Campbell,
Assistant Vice President
& Assistant
Treasurer: Rochester Division Formerly Assistant Vice President of
Rochester Fund Services, Inc.
Michael Carbuto,
Vice President An officer and/or portfolio manager
of certain
Oppenheimer funds; Vice President of
Centennial.
Ruxandra Chivu,
Assistant Vice President None.
C-15
<PAGE>
H.D. Digby Clements,
Assistant Vice President:
Rochester Division None.
O. Leonard Darling,
Executive Vice President
Trustee (1993 - present) of
Awhtolia College -Greece.
Robert A. Densen,
Senior Vice President None.
Sheri Devereux,
Assistant Vice President None.
Robert Doll, Jr.,
Executive Vice President & 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
Executive
Vice President (since September
1993), and a
director (since January 1992) of the
Distributor; Executive Vice
President,
General Counsel and a director
of
HarbourView, SSI, SFSI and
Oppenheimer
Partnership Holdings, Inc. since
(September
1995) and MultiSource Services,
Inc.
C-16
<PAGE>
(a broker-dealer) (since December
1995); President and a director of
Centennial (since September 1995);
President and a director of ORAMI
(since July 1996); General Counsel
(since May 1996) and Secretary (since
April 1997) of OAC; Vice President of
OppenheimerFunds International, Ltd.
("OFIL") and Oppenheimer Millennium
Funds plc (since October 1997); an
officer of other Oppenheimer funds.
George Evans,
Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
Edward Everett,
Assistant Vice President None.
Scott Farrar,
Vice President Assistant Treasurer of
Oppenheimer Millennium Funds plc
(since
October 1997); an officer of other
Oppenheimer funds; formerly an
Assistant
Vice President of OFI/Mutual Fund
Accounting (April 1994-May 1996),
and a
Fund Controller for OFI.
Leslie A. Falconio,
Assistant Vice President None.
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary of
the Distributor;
Secretary of HarbourView
, MultiSource and
Centennial;
C-17
<PAGE>
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;
Presently he holds the following
other
positions: Director (since 1995) of
ICI Mutual
Insurance Company; Governor (since
1994) of
St. John's College; Director (since
1994 -
present) of International Museum of
Photography at George Eastman House;
Director (since 1986) of GeVa
Theatre.
Formerly he held the following
positions:
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.; Director
(1993 -
1997) of VehiCare Corp.; Director
(1993 -
1996) of VoiceMode.
John Fortuna,
Vice President None.
Patricia Foster,
Vice President Formerly she held the following
positions: An
officer of certain Oppenheimer
funds (May, 1993 - January, 1996);
Secretary
of Rochester Capital
Advisors,
Inc. and General
Counsel (June,
1993 - January 1996) of Rochester
Capital Advisors,
L.P.
Jennifer Foxson,
Assistant Vice President None.
C-18
<PAGE>
Paula C. Gabriele,
Executive Vice President Formerly, Managing Director
(1990-1996) for
Bankers Trust Co.
Robert G. Galli,
Vice Chairman Trustee of the New York-based
Oppenheimer
Funds.
Formerly
Vice President and General Counsel
of
Oppenheimer Acquisition Corp.
Linda Gardner,
Vice President None.
Alan Gilston,
Vice President Formerly Vice President for
Schroder Capital
Management International.
Jill Glazerman,
Assistant Vice President None.
Jeremy Griffiths,
Chief Financial Officer Currently a Member and Fellow of the
Institute of Chartered Accountants;
formerly
an accountant for Arthur Young
(London,
U.K.).
Robert Grill,
Vice President Formerly Marketing Vice President
for
Bankers Trust Company (1993-1996);
Steering Committee Member,
Subcommittee
Chairman for American Savings
Education
Council (1995-1996).
C-19
<PAGE>
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.
Elaine T. Hamann,
Vice President Formerly Vice President (September,
1989 -
January, 1997) of Bankers Trust
Company.
Glenna Hale,
Director of Investor Marketing Formerly, Vice President
(1994-1997) of
Retirement Plans Services for
OppenheimerFunds Services.
Thomas B. Hayes,
Vice President None.
Barbara Hennigar,
Executive Vice 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, None.
Assistant Vice President
Alan Hoden,
Vice President None.
Merryl Hoffman,
Vice President None.
C-20
<PAGE>
Nicholas Horsley,
Vice President Formerly a Senior Vice President
and Portfolio
Manager for Warburg, Pincus
Counsellors,
Inc. (1993-1997), Co-manager of
Warburg,
Pincus Emerging Markets Fund (12/94
-
10/97), Co-manager Warburg, Pincus
Institutional Emerging Markets Fund
-
Emerging Markets Portfolio (8/96 -
10/97), Warburg Pincus Japan OTC Fund,
Associate Portfolio Manager of Warburg
Pincus International Equity Fund,
Warburg Pincus Institutional Fund -
Intermediate Equity Portfolio, and
Warburg Pincus EAFE Fund.
Scott T. Huebl,
Assistant Vice President None.
Richard Hymes,
Assistant Vice President None.
Jane Ingalls,
Vice President None.
C-21
<PAGE>
Byron Ingram,
** 7 Assistant Vice President None.
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.
Thomas W. Keffer,
Senior Vice President Formerly Senior Managing Director
(1994 -
1996) of Van Eck Global.
Avram Kornberg,
Vice President None.
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,
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.
C-22
<PAGE>
Stephen F. Libera,
Vice President An officer and/or portfolio manager
for
certain Oppenheimer funds; a
Chartered
Financial Analyst; a Vice President
of
HarbourView; prior to March
1996, the senior bond portfolio
manager for
Panorama Series Fund Inc., other
mutual
funds and pension accounts managed
by G.R. Phelps; so 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.
Steve Macchia,
Assistant Vice President None.
Bridget Macaskill,
President, Chief Executive Officer
and Director Chief Executive Officer (since
September
1995); President and director
(since June
1991) of HarbourView; Chairman and
a
director of SSI (since August
1994), and SFSI
(September 1995); President (since
September
1995) and a director (since
October 1990) of
OAC; President (since September
1995) and a
director (since November 1989) of
Oppenheimer Partnership Holdings,
Inc., a
holding company subsidiary of OFI;
a director
of ORAMI (since July 1996) ;
President and a
director (since October 1997) of
OFIL, an
offshore fund manager subsidiary of
OFI and
Oppenheimer Millennium Funds plc
(since
October 1997); President and a
director of
other Oppenheimer funds; a
director of the
NASDAQ Stock Market, Inc. and of
Hillsdown Holdings plc (a U.K. food
company); formerly an Executive Vice
President of OFI.
C-23
<PAGE>
Wesley Mayer,
Vice President Formerly Vice President (January,
1995 -June,
1996) of Manufacturers Life
Insurance Company.
Loretta McCarthy,
Executive Vice President None.
Kevin McNeil, Vice President Treasurer (September, 1994 -
present) for the
Martin Luther King Multi-Purpose
Center
(non-profit community organization);
Formerly Vice President (January,
1995 -April, 1996) for Lockheed Martin
IMS.
Tanya Mrva,
Assistant Vice President None.
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 (August, 1989 -
August,
1995) with Phoenix Securities Group.
C-24
<PAGE>
Denis R. Molleur,
Vice President None.
Linda Moore,
Vice President Formerly, Marketing Manager (July
1995-
November 1996) for Chase Investment
Services Corp.
Tanya Mrva,
Assistant Vice President None.
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.
Richard M. O'Shaugnessy,
Assistant Vice President:
Rochester Division 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
and Director Chairman and Director of the
Distributor.
C-25
<PAGE>
Jane Putnam,
Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
Russell Read,
Senior Vice Pres Formerly a 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
None.
Michael S. Rosen
Vice President; President,
Rochester Division An officer and/or portfolio manager
of certain
Oppenheimer funds ; Formerly, Vice
President
(June, 1983 - January, 1996) of RFS,
President and Director of RFD ; Vice
President and Director of FMC ; Vice
President and director of RCAI ;
General
Partner of RCA; Vice President and
Director
of Rochester Tax Managed Fund Inc.
C-26
<PAGE>
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
None.
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
Richard Soper,
Vice President None.
Nancy Sperte,
Executive Vice President None.
Donald W. Spiro,
Chairman Emeritus and Director Vice Chairman
and Trustee of the New York- based
Oppenheimer Funds; formerly Chairman
of the Manager and the Distributor.
C-27
<PAGE>
Richard A. Stein,
Vice President: Rochester Division Assistant Vice President (since
1995) of
Rochester Capitol Advisors, L.P.
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 , 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.
C-28
<PAGE>
Jay Tracey,
Vice President
An
officer and/or
portfolio manager of certain
Oppenheimer
funds; 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 Webman,
Senior Vice President Director of New York-based
tax-exempt fixed
income Oppenheimer funds;
Formerly,
Managing Director and Chief Fixed
Income
Strategist at Prudential Mutual
Funds.
Christine Wells,
Vice President None.
Joseph Welsh,
Assistant Vice President None.
Kenneth B.White,
Vice President An officer and/or portfolio manager
of certain
Oppenheimer funds; a Chartered
Financial
Analyst; Vice President of
HarbourView; prior
to March 1996 , an equity
portfolio
manager for Panorama Series Fund,
Inc. and
other mutual funds and pension
funds managed by G.R. Phelps.
C-29
<PAGE>
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.; Point of Contact: Finance
Supporters of
Children; Member of the Oncology
Advisory
Board of the Childrens Hospital;
Member of
the Board of Directors of the
Colorado
Museum of Contemporary Art.
Caleb Wong,
Assistant Vice President None.
Robert G. Zack,
Senior Vice President and
Assistant Secretary, Associate
General Counsel Assistant Secretary
of
SSI (since May 1985), and SFSI (since
November 1989); Assistant Secretary of
Oppenheimer Millennium Funds plc
(since October 1997); an officer of
other Oppenheimer funds.
Jill Zachman,
Assistant Vice President:
Rochester Division None.
Arthur J. Zimmer,
Senior 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 Oppenheimer/Quest Rochester Funds,
C-30
<PAGE>
as set forth below:
New York-based Oppenheimer Funds
- --------------------------------
Oppenheimer Multiple Strategies Fund
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global 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
Oppenheimer International Small Company Fund
** 11 Quest/Rochester Funds
- ---------------------
** 12 Oppenheimer Quest Global Value Fund, Inc.
** 13 Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest For Value Funds
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Bond Fund For Growth
Oppenheimer MidCap Fund
** 14 Rochester Fund Municipals
Limited Term New York Municipal Fund
Denver-based Oppenheimer Funds
- ------------------------------
Oppenheimer Cash Reserves
Centennial America Fund, L.P.
C-31
<PAGE>
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust Daily Cash Accumulation Fund, Inc.
The New York Tax-Exempt Income Fund,
Inc.
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Income Fund
Oppenheimer Municipal Fund
Oppenheimer TotalR eturn Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
Oppenheimer Real Asset Fund
The address of OppenheimerFunds, Inc., the New York- based
Oppenheimer Funds, the 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,
C-32
<PAGE>
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
Tucson Way, Englewood, Colorado 80012.
The address of MultiSource Services, Inc. is 1700 Lincoln
Street, Denver, Colorado 80203.
The address of the Rochester- based funds is 350 Linden Oaks,
Rochester, New York 14625-2807.
Name & Current Position with Other Business and
OpCap Advisors Connections During the Past Two Years
- ---------------------------- -------------------------------
Robert J. Bluestone,
Director of Fixed Income
Management Managing Director of Oppenheimer
Capital; Director of Oppenheimer
Capital
Trust Company.
Pierre Daviron,
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;
C-33
<PAGE>
Director of Oppenheimer Capital
Trust
Company.
John Giusio,
Portfolio Manager Vice President of Oppenheimer
Capital.
Richard J. Glasebrook, II,
Portfolio Manager Managing Director of Oppenheimer
Capital.
Colin Glinsman,
Portfolio Manager Senior Vice President of
Oppenheimer
Capital.
Louis Goldstein,
Assistant Portfolio Manager Senior Vice President of
Oppenheimer Capital.
Matthew Greenwald,
Portfolio Manager Vice President of Oppenheimer
Capital.
Vikki Y. Hanges,
Portfolio Manager Vice President of Oppenheimer
Capital.
Joseph M. LaMotta,
Chairman Chairman
Emeritus 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 Chairman, Chief
Executive
Officer and Chief Investment
Officer of
Oppenheimer Capital.
Elisa A. Mazen,
Portfolio Manager Vice President of Oppenheimer
Capital
International Division.
C-34
<PAGE>
Timothy McCormack,
Portfolio Manager Vice President of Oppenheimer
Capital;
formerly Assistant Vice
President of
Oppenheimer Capital.
Susan Murphy,
President of an affiliate President of OCC Cash Management
Services Division and
Oppenheimer Capital
Trust Company; Senior Vice
President of
Oppenheimer Capital.
Eileen Rominger,
Portfolio Manager Managing Director of Oppenheimer
Capital.
Sheldon M. Siegel,
Treasurer and Chief Financial
Officer Managing Director/Treasurer/Chief
Financial Officer of Oppenheimer
Capital;
Director of Oppenheimer Capital
Trust
Company; Treasurer and Chief
Financial
Officer of Oppenheimer Capital
Limited.
Jeffrey Whittington,
Portfolio Manager Senior Vice President of
Oppenheimer
Capital.
The address of OpCap Advisors is 200 Liberty Street, New York, New York
10281.
For information as to the business, profession, vocation or employment of
a substantial nature of the officers of Oppenheimer Capital, reference is
made to Form ADV filed by OpCap Advisors, under the Investment Advisers
Act of 1940, which is incorporated herein by reference.
Item 29. Principal Underwriter
- -------- ---------------------
(a) OppenheimerFunds Distributor, Inc. is the Distributor of the
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.
C-35
<PAGE>
(b) The directors and officers of the Registrant's principal
underwriter are:
Name & Principal Positions & Offices Positions & ffices
Business Address with Underwriter with Registrant
- ---------------- ----------------- -------------------------
George C.
Bowen(1)
Vice President and Vice President and
Treasurer Treasurer of the
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(2) Senior Vice President; None
Director: Financial
Institution Division
Robert Coli Vice President None
12 White Tail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce de Leon Ave.
Decatur, GA 30030
William Coughlin Vice President None
C-36
<PAGE>
542 West Surf - #2N
Chicago, IL 60657
Mary Crooks(1)
E. Drew Devereaux(3) Assistant Vice President None
Rhonda Dixon-Gunner(1) Assistant Vice President None
Andrew John Donohue(2) Executive Vice Secretary of
President & Director the 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
Todd Ermenio Vice President None
11011 South Darlington
Tulsa, OK 74137
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
George Fahey Vice President None
201 E. Rund Grove Rd.
#26-22
Lewisville, TX 75067
Katherine P. Feld(2) Vice President None
& Secretary
C-37
<PAGE>
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding(3) Vice President
None
Reed F. Finley Vice President None
1657 Graefield
Birmingham, MI 48009
Wendy Fishler(2) Vice President None
Ronald R. Foster Senior Vice President None
11339 Avant Lane
Cincinnati, OH 45249
Patricia Gadecki Vice President None
950 First St., S.
Suite 204
Winter Haven, FL 33880
Luiggino Galleto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President None
5506 Bryn Mawr
Dallas, TX 75209
Ralph Grant(2) Vice President/NationalNone
Sales Manager
C-38
<PAGE>
Sharon Hamilton Vice President None
720 N. Juanita Ave.,#1
Redondo Beach, CA 90277
Byron Ingram(2) Assistant Vice President None
Mark D. Johnson Vice President None
129 Girard Place
Kirkwood, MO 63105
Michael Keogh(2) Vice President None
Richard Klein Vice President None
4820 Fremont Avenue So.
Minneapolis, MN 55409
Daniel Krause Vice President None
13416 Larchmere Square
Shaker Heights, OH 44120
Ilene Kutno(2) Assistant Vice President None
Todd Lawson Vice President None
3333 E. Bayaud Avenue
Unit 714
Denver, CO 80209
Wayne A. LeBlang Senior Vice President None
23 Fox Trail
Lincolnshire, IL 60069
Dawn Lind Vice President None
7 Maize Court
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
Todd Marion Vice President None
21 N. Passaic Avenue
C-39
<PAGE>
Chatham,N.J. 07928
Marie Masters Vice President None
520 E. 76th Street
New York, NY 10021
John McDonough Vice President None
P.O. Box 760
50 Riverview Road
New Castle, NH 03854
Tanya MrvaAssistant Vice President None
Laura Mulhall(2) Senior Vice President None
Charles Murray Vice President None
18 Spring Lake Drive
Far Hills, NJ 07931
Wendy Murray Vice President None
32 Carolin Road
Upper Montclair, NJ 07043
Chad V. Noel Vice President None
3238 W. Taro Lane
Phoenix, AZ 85027
Joseph Norton Vice President None
2518 Fillmore Street
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
C-40
<PAGE>
Randall Payne Vice President None
3530 Providence Plantation Way
Charlotte, NC 28270
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(2) Chairman & Director None
Elaine Puleo(2) Vice President None
Minnie Ra Vice President None
895 Thirty-First Ave.
San Francisco, CA 94121
Michael Raso Vice President None
16 N. Chatsworth Ave.
Apt. 301
Larchmont, NY 10538
John C. Reinhardt(3) Vice President None
Douglas Rentschler Vice President None
867 Pemberton
Grosse Pointe Park, MI
48230
Ian Robertson Vice President None
4204 Summit Wa
Marietta, GA 30066
C-41
<PAGE>
Michael S. Rosen(3) Vice President None
Kenneth Rosenson Vice President None
3802 Knickerbocker Place
Apt. #3D
Indianapolis, IN 46240
James Ruff(2) President None
Timothy Schoeffler Vice President None
1717 Fox Hall Road
Washington, DC 77479
Michael Sciortino Vice President None
785 Beau Chene Drive
Mandeville, LA 70471
Robert Shore Vice President None
26 Baroness Lane
Laguna Niguel, CA 92677
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
C-42
<PAGE>
Andrew Sweeny Vice President None
5967 Bayberry Drive
Cincinnati, OH 45242
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
David G. Thomas Vice President
None
8116 Arlingon Blvd.
#123
Falls Church, VA 22042
Philip St. John Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Sarah Turpin Vice President None
2735 Dover Road
Atlanta,GA 30327
Gary Paul Tyc(1) Assistant Treasurer None
Mark Stephen Vandehey(1) Vice President None
Marjorie Williams Vice President None
6930 East Ranch Road
Cave Creek, AZ 85331
(1) 6803 South Tucson Way, Englewood, Colorado 80112 (2) Two World Trade Center,
New York, NY 10048-0203 (3) 350 Linden Oaks, Rochester, NY 14625-2807
(c) Not applicable.
C-43
<PAGE>
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.
C-44
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the Investment
Company Act of 1940, the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York and State of New York on the 21st day of November, 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:
Signatures Title Date
- ---------- ----- ----
/s/ Bridget A Macaskill* Chairman of the Board, November 21, 1997
- ----------------------- President (Principal
Bridget A. Macaskill Executive Officer) and
Trustee
/s/ George C. Bowen* Treasurer (Principal November 21,1997
- ----------------------- Financial and Accounting
George Bowen Officer)
/s/ Paul Y. Clinton* Trustee November 21, 1997
- -----------------------
Paul Y. Clinton
/s/ Thomas W. Courtney* Trustee November 21, 1997
- -----------------------
Thomas W. Courtney
/s/ Lacy B. Herrmann* Trustee November 21, 1997
- -----------------------
Lacy B. Herrmann
/s/ George Loft* Trustee November 21, 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. 41
Index to Exhibits
24(b)(2)(b) Amendment to By-laws
24(b)(4)(d) Growth & Income Fund Specimen Class A Share Certificate
24(b)(4)(e) Growth & Income Fund Specimen Class B Share Certificate
24(b)(4)(f) Growth & Income Fund Specimen Class C Share Certificate
24(b)(5)(a)(1) Investment Advisory Agreement dated 5/27/97
24(b)(5)(a)(2) Amendment dated 10/22/97 to the Investment Advisory
Agreement
24(b)(5)(b)(1) Subadvisory Agreement with respect to Small Cap Fund
dated 11/5/97
24(b)(5)(b)(2) Subadvisory Agreement with respect to Growth & Income
Fund dated 11/5/97
24(b)(5)(b)(3) Subadvisory Agreement with respect to Opportunity Fund
dated 11/5/97
24(b)(5)(b)(4) Subadvisory Agreement with respect to the Officers Fund
dated 11/5/97
24(b)(15)(a)(1) Amended and Restated Distribution and Service Plan and
Agreement dated 11/22/96 with respect to Class A shares of
Growth & Income Fund
24(b)(15)(a)(2) Amended and Restated Distribution and Service Plan and
Agreement dated 11/22/96 with respect to Class A shares of
Opportunity Fund
<PAGE>
24(b)(15)(a)(3) Amended and Restated Distribution and Service Plan and
Agreement dated 11/22/96 with respect to Class A shares of
Small Cap Fund
24(b)(15)(a)(4) Amended and Restated Distribution and Service Plan and
Agreement dated 11/22/96 with respect to Class A shares of
Officers Fund
24(b)(15)(b)(1) Amended and Restated Distribution and Service Plan and
Agreement dated 11/22/96 with respect to Class B shares of
Growth & Income Fund
24(b)(15)(b)(2) Amended and Restated Distribution and Service Plan and
Agreement dated 11/22/96 with respect to Class B
shares of Opportunity Fund
24(b)(15)(b)(3) Amended and Restated Distribution and Service Plan and
Agreement dated 11/22/96 with respect to Class B shares of
the Small Cap Fund
24(b)(15)(b)(4) Amended and Restated Distribution and Service Plan and
Agreement dated 11/22/96 with respect to Class B shares
of the Officers Fund
24(b)(15)(c)(1) Amended and Restated Distribution and Service Plan and
Agreement dated 11/22/96 with respect to Class C shares of
the Growth & Income Fund
24(b)(15)(c)(2) Amended and Restated Distribution and Service Plan and
Agreement dated 11/22/96 with respect to Class C
shares of the Opportunity Fund
24(b)(15)(c)(3) Amended and Restated Distribution and Service Plan and
Agreement dated 11/22/96 with respect to Class C shares of
the Small Cap Fund
24(b)(15)(c)(4) Amended and Restated Distribution and Service Plan and
Agreement dated 11/22/96 with respect to Class C shares
of the Officers Fund
prosp\questptc.#4
<PAGE>
AMENDMENT NO. 1 TO BY-LAWS OF
OPPENHEIMER QUEST FOR VALUE FUNDS
1. The By-Laws of Oppenheimer Quest For Value Funds, a Massachusetts business
trust (the "Fund"), are hereby amended by replacing Section 3.3 of Article III
thereof with the following:
3.3 Notice of Meetings; Waiver. Written or printed notice of
every Shareholders' meeting stating the place, date and purpose or
purposes thereof, shall be given by the Secretary not less than
seven (7) nor more than one hundred and twenty (120) days before
such meeting to each Shareholder entitled to vote at such meeting,
either by mail or by presenting it to him personally, or by leaving
it at his residence or usual place of business. If mailed, such
notice shall be deemed to be given when deposited in the United
States mail, postage prepaid, directed to the Shareholder at his
address as it appears on the records of the Trust. Any such notice
may be waived by any person or persons entitled to such notice, by a
notice signed by such person or persons and filed with the records
of the meeting, whether before or after the holding thereof, or by
actual attendance at the meeting, in person or by proxy, except
where the Shareholder attends a meeting for the express purpose of
objecting to the transaction of business on the grounds that the
meeting has not been lawfully called or convened.
2. The By-Laws of the Fund are hereby further amended by replacing the second
sentence of Section 9.2 of Article IX with the following:
Such date, in any case, shall be not more than one hundred and
twenty (120) days, and in case of a meeting of Shareholders not less
than ten (10) days prior to the date on which particular action
requiring such determination of Shareholders is to be taken.
3. The By-Laws of the Fund, as amended by this Amendment No. 1, hereby remain in
full force and effect.
IN WITNESS WHEREOF, I hereby set my hand as of this 4th day of February,
1997.
---------------------------
Robert G. Zack
Assistant Secretary
orgzn\qvfbly.amn
OPPENHEIMER QUEST GROWTH & INCOME VALUE FUND Class A Share
Certificate (8-1/2" x 11")
I. FACE OF CERTIFICATE (All text and other matter lies within
8-1/4" x 10-3/4" decorative border, 5/16" wide)
(upper left corner, box with heading: NUMBER [of shares]
(upper right corner) [share certificate no.] XX-000000
(upper right box, CLASS A SHARES
below cert. no.)
(centered
below boxes) Oppenheimer Quest for Value Funds
A MASSACHUSETTS BUSINESS TRUST
SERIES: OPPENHEIMER QUEST GROWTH & INCOME VALUE FUND
(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR
CERTAIN DEFINITIONS
(box with number)
CUSIP 68380E 403
(at left) is the owner of
(centered) FULLY PAID CLASS A SHARES OF
BENEFICIAL INTEREST OF
OPPENHEIMER QUEST GROWTH & INCOME VALUE FUND
A series of Oppenheimer Quest for Value Funds (hereinafter called
the "Trust"), transferable only on the books of the Trust by the
holder hereof in person or by duly authorized attorney, upon
surrender of this certificate properly endorsed. This certificate
and the shares represented hereby are issued and shall be held
subject to all of the provisions of the Declaration of Trust of the
Trust to all of which the holder by acceptance hereof assents. This
certificate is not valid until countersigned by the Transfer Agent.
WITNESS the facsimile seal of Trust and the signatures of its duly
authorized officers.
(signature Dated: (signature
at left of seal) at right of seal)
/s/ George C. Bowen /s/ Bridget Macaskill
----------------------- -------------------
TREASURER PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER QUEST FOR VALUE FUNDS
SEAL
1987
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS SERVICES
(A DIVISION OF OPPENHEIMERFUNDS,
INC.)
Denver (CO) Transfer Agent
By ____________________________
Authorized Signature
II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension)
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out
in full according to applicable laws or regulations.
TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT TEN WROS
NOT TC - as joint tenants with
rights of survivorship and not
as tenants in common
UNIF GIFT/TRANSFER MIN ACT - Custodian
--------------- -----------------
(Cust) (Minor)
UNDER UGMA/UTMA ___________________
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
- ---------------------------------------------------------------------
(Please print or type name and address of assignee)
- ------------------------------------------------------
________________________________________________Class A Shares of
beneficial interest represented by the within Certificate,
and do hereby irrevocably constitute and
appoint ___________________________ Attorney
to transfer the said shares on the books of the within named Trust with full
power of substitution in the premises.
Dated: ______________________
Signed: __________________________
-----------------------------------
(Both must sign if joint owners)
Signature(s) __________________________
guaranteed Name of Guarantor
by: _____________________________
Signature of
Officer/Title
(text printed NOTICE: The signature(s) to this
vertically to right assignment must corresponde with the as written
upon the face of the certificate in very
of above paragraph) particular without alteration or
enlargement or any
change whatever.
(text printed in Signatures must be guaranteed by a financial
box to left of institution of the type described
in
current in the prospectus of the Trust.
signature(s))
PLEASE NOTE: This document contains a watermark OppenheimerFunds
when viewed at an angle. It is invalid without this "four hands"
watermark: logotype
- --------------------------------------------------------------------------
THIS SPACE MUST NOT BE COVERED IN ANY WAY
CERTIFIC\257CERT.A
OPPENHEIMER QUEST GROWTH & INCOME VALUE FUND Class B Share
Certificate (8-1/2" x 11")
I. FACE OF CERTIFICATE (All text and other matter lies within
8-1/4" x 10-3/4" decorative border, 5/16" wide)
(upper left corner, box with heading: NUMBER [of shares]
(upper right corner) [share certificate no.] XX-000000
(upper right box, CLASS B SHARES
below cert. no.)
(centered
below boxes)Oppenheimer Quest for Value Funds
A MASSACHUSETTS BUSINESS TRUST
SERIES: OPPENHEIMER QUEST GROWTH & INCOME VALUE FUND
(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR
CERTAIN DEFINITIONS
(box with number)
CUSIP 68380E 502
(at left) is the owner of
(centered) FULLY PAID CLASS B SHARES OF
BENEFICIAL INTEREST OF
OPPENHEIMER QUEST GROWTH & INCOME VALUE FUND
A series of Oppenheimer Quest for Value Funds (hereinafter called
the "Trust"), transferable only on the books of the Trust by the
holder hereof in person or by duly authorized attorney, upon
surrender of this certificate properly endorsed. This certificate
and the shares represented hereby are issued and shall be held
subject to all of the provisions of the Declaration of Trust of the
Trust to all of which the holder by acceptance hereof assents. This
certificate is not valid until countersigned by the Transfer Agent.
WITNESS the facsimile seal of Trust and the signatures of its duly
authorized officers.
(signature Dated:(signature
at left of seal) at right of seal)
/s/ George C. Bowen /s/ Bridget Macaskill
----------------------- -------------------
TREASURER PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER QUEST FOR VALUE FUNDS
SEAL
1987
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS SERVICES
(A DIVISION OF OPPENHEIMERFUNDS, INC.)
Denver (CO) Transfer Agent
By ____________________________
Authorized Signature
II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension)
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT TEN WROS
NOT TC - as joint tenants with
rights of survivorship and not
as tenants in common
UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian _______________
(Cust) (Minor)
UNDER UGMA/UTMA ___________________
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
- ---------------------------------------------------------------------
(Please print or type name and address of assignee)
- ------------------------------------------------------
________________________________________________Class B Shares of beneficial
interest represented by the within Certificate, and do hereby irrevocably
constitute and appoint ___________________________ Attorney to transfer the said
shares on the books of the within named Trust with full power of substitution in
the premises.
Dated: ______________________
Signed: __________________________
-----------------------------------
(Both must sign if joint owners)
Signature(s) __________________________
guaranteed Name of Guarantor
by: _____________________________
Signature of
Officer/Title
(text printed NOTICE: The signature(s) to this assignment must
vertically to right correspond with the name(s) as written upon the
of above paragraph) face of the certificate in every particular
without alteration or enlargement or any change
whatever.
(text printed in Signatures must be guaranteed by a financial
box to left of institution of the type described in the current
signature(s)) prospectus of the Trust.
PLEASE NOTE: This document contains a watermark OppenheimerFunds
when viewed at an angle. It is invalid without "four hands"
watermark: logotype
- --------------------------------------------------------------------------
THIS SPACE MUST NOT BE COVERED IN ANY WAY
CERTIFIC\257CERT.B
OPPENHEIMER QUEST GROWTH & INCOME VALUE FUND Class C Share
Certificate (8-1/2" x 11")
I. FACE OF CERTIFICATE (All text and other matter lies within
8-1/4" x 10-3/4" decorative border, 5/16" wide)
(upper left corner, box with heading: NUMBER [of shares]
(upper right corner) [share certificate no.] XX-000000
(upper right box, CLASS C SHARES
below cert. no.)
(centered
below boxes)Oppenheimer Quest for Value Funds
A MASSACHUSETTS BUSINESS TRUST
SERIES: OPPENHEIMER QUEST GROWTH & INCOME VALUE FUND
(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR
CERTAIN DEFINITIONS
(box with number)
CUSIP 68380E 601
(at left) is the owner of
(centered) FULLY PAID CLASS C SHARES OF
BENEFICIAL INTEREST OF
OPPENHEIMER QUEST GROWTH & INCOME VALUE FUND
A series of Oppenheimer Quest for Value Funds (hereinafter called
the "Trust"), transferable only on the books of the Trust by the
holder hereof in person or by duly authorized attorney, upon
surrender of this certificate properly endorsed. This certificate
and the shares represented hereby are issued and shall be held
subject to all of the provisions of the Declaration of Trust of the
Trust to all of which the holder by acceptance hereof assents. This
certificate is not valid until countersigned by the Transfer Agent.
WITNESS the facsimile seal of Trust and the signatures of its duly
authorized officers.
(signature Dated:(signature
at left of seal) at right of seal)
/s/ George C. Bowen /s/ Bridget Macaskill
----------------------- -------------------
TREASURER PRESIDENT
<PAGE>
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER QUEST FOR VALUE FUNDS
SEAL
1987
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS SERVICES
(A DIVISION OF OPPENHEIMERFUNDS, INC.)
Denver (CO) Transfer Agent
By ____________________________
Authorized Signature
II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension)
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT TEN WROS
NOT TC - as joint tenants with
rights of survivorship and not
as tenants in common
UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian _______________
(Cust) (Minor)
UNDER UGMA/UTMA ___________________
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
- ---------------------------------------------------------------------
(Please print or type name and address of assignee)
______________________________________________Class C Shares of beneficial
interest represented by the within Certificate, and do hereby irrevocably
constitute and appoint ___________________________ Attorney to transfer the said
shares on the books of the within named Trust with full power of
substitution in the premises.
<PAGE>
Dated: ______________________
Signed: __________________________
-----------------------------------
(Both must sign if joint owners)
Signature(s) __________________________
guaranteed Name of Guarantor
by: _____________________________
Signature of
Officer/Title
(text printed NOTICE: The signature(s) to this assignment must
vertically to right correspond with the name(s) as written upon the
of above paragraph) face of the certificate in every particular
without alteration or enlargement or any change
whatever.
(text printed in Signatures must be guaranteed by a financial
box to left of institution of the type described in the current
signature(s)) prospectus of the Trust.
PLEASE NOTE: This document contains a watermark OppenheimerFunds
when viewed at an angle. It is invalid without "four hands"
watermark: logotype
- --------------------------------------------------------------------------
THIS SPACE MUST NOT BE COVERED IN ANY WAY
CERTIFIC\257CERT.C
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made the 27th day of May, 1997, by and between OPPENHEIMER
QUEST FOR VALUE FUNDS, a Massachusetts business trust (hereinafter referred to
as the "Company"), and OPPENHEIMERFUNDS, INC. (hereinafter referred to as
"OFI").
WHEREAS, the Company is an open-end, diversified management investment
company registered as such with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940 (the "Investment
Company Act"), and OFI is an investment adviser registered as such with the
Commission under the Investment Advisers Act of 1940;
WHEREAS, each of Growth and Income Value Fund, Small Cap Value Fund,
Opportunity Value Fund and Officers Value Fund is a separately capitalized
Series (the "Series") of the Shares of beneficial interest to be issued by the
Company ("Shares") pursuant to the Company's registration statement;
WHEREAS, the Company desires that OFI shall act as its investment adviser
with respect to each Series pursuant to this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, it is agreed by and between the parties, as follows:
1. General Provisions:
The Company hereby employs OFI and OFI hereby undertakes to act as
the investment adviser of the Company in connection with, and for the benefit
of, each Series(including any Series hereafter created) and to perform for the
Company such other duties and functions in connection with each Series for the
period and on such terms as set forth in this Agreement. OFI shall, in all
matters, give to the Company and its Board of Trustees (the "Trustees") the
benefit of its best judgement, effort, advice and recommendations and shall, at
all times conform to, and use its best efforts to enable the Company to conform
to (i) the provisions of the Investment Company Act and any rules or regulations
thereunder; (ii) any other applicable provisions of state or Federal law; (iii)
the provisions of the Declaration of Trust and By-Laws of the Company as amended
from time to time; (iv) policies and determinations of the Trustees; (v) the
fundamental policies and investment restrictions of each Series as reflected in
the registration statement of the Company under the Investment Company Act or as
such policies may, from time to time, be amended and (vi) the Prospectus and
Statement of Additional Information of each Series in effect from time to time.
The appropriate officers and employees of OFI shall be available upon reasonable
notice for consultation with any of the Trustees and officers of the Company
with respect to any matters dealing with the business and affairs of the Company
including the valuation of portfolio securities of the Company which are either
not registered for public sale or not traded on any securities market.
2. Investment Management:
(a) OFI shall, subject to the direction and control by the Trustees,
(i) regularly provide investment advise and recommendations to the Company with
respect to the investments, investment policies and the purchase and sale of
securities and other investments for each Series; (ii) supervise continuously
the investment program of each Series of the Company and the composition of its
portfolio and determine what securities shall be purchased or sold by; and(iii)
arrange, subject to the provisions of paragraph 7 hereof, for the purchase of
securities and other investments for each Series of the Company and the sale of
securities and other investments held in the portfolio of each Series.
-1-
(b) Provided that the Company shall not be required to pay any
compensation for services under this Agreement other than as provided by the
terms of the Agreement and subject to the provisions of paragraph 7 hereof, OFI
may obtain investment information, research or assistance from any other person,
firm or corporation to supplement, update or otherwise improve its investment
management services including entering into sub-advisory agreements with other
affiliated or unaffiliated registered investment advisors to obtain specialized
services.
(c) Provided that nothing herein shall be deemed to protect OFI from
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or reckless disregard of its obligations and duties under this
Agreement, OFI shall not be liable for any loss sustained by reason of good
faith errors or omissions in connection with any matters to which this Agreement
relates.
(d) Nothing in this Agreement shall prevent OFI or any entity
controlling, controlled by or under common control with OFI or any officer
thereof from acting as investment adviser for any other person, firm or
corporation or in any way limit or restrict OFI or any of its directors,
officers, stockholders or employees from buying, selling or trading any
securities or other investments for its or their own account or for the account
of others for whom it or they may be acting, provided that such activities will
not adversely affect or otherwise impair the performance by OFI of its duties
and obligations under this Agreement.
3. Other Duties of OFI:
OFI shall, at its own expense, provide and supervise the activities
of all administrative and clerical personnel as shall be required to provide
effective corporate administration for the Company, including the compilation
and maintenance of such records with respect to its operations as may reasonably
be required; the preparation and filing of such reports with respect thereto as
shall be required by the Commission; composition of periodic reports with
respect to operations of each Series of the Company for its shareholders;
composition of proxy materials for meetings of the Company's shareholders; and
the composition of such registration statements as may be required by Federal
and state securities laws for continuous public sale of Shares of each Series of
the Company. OFI shall, at its own cost and expense, also provide the Company
with adequate office space, facilities and equipment. OFI shall, at its own
expenses, provide such officers for the Company as the Board of Trustees may
request.
4. Allocation of Expenses:
All other costs and expenses of each Series of the Company not
expressly assumed by OFI under this Agreement, or to be paid by the Distributor
of the Shares of each Series of the Company, shall be paid by the Company on
behalf of the appropriate Series, including, but not limited to: (i) interest,
taxes and governmental fees; (ii) brokerage commissions and other expenses
incurred in acquiring or disposing of the portfolio securities and other
investments of each Series; (iii) insurance premiums for fidelity and other
coverage requisite to its operations; (iv) compensation and expenses of its
Trustees other than those affiliated with OFI; (v) legal and audit expenses;
(vi) custodian and transfer agent fees and expenses; (vii) expenses incident to
the redemption of its Shares; (viii) expenses incident to the issuance of its
Shares against payment therefor by or on behalf of the subscribers thereto; (ix)
fees and expenses, other than as hereinabove provided, incident to the
registration under Federal and state securities laws of Shares of the Company
and Series for public sale; (x) expenses of printing and mailing reports,
notices and proxy materials to shareholders of the Company and each Series; (xi)
except as noted above, all other expenses
-2-
incidental to holding meetings of the Company's shareholders; and (xii) such
extraordinary non-recurring expenses as may arise, including litigation,
affecting the Company or any Series thereof and any legal obligation which the
Company, or any Series of the Company, may have to indemnify its officers and
Trustees with respect thereto. Any officers or employees of OFI (or any entity
controlling, controlled by, or under common control with OFI) who also serve as
officers, Trustees or employees of the Company shall not receive any
compensation from the Company or any Series thereof for their services.
5. Compensation of OFI::
The Company agrees to pay OFI and OFI agrees to accept as full
compensation for the performance of all functions and duties on its part to be
performed pursuant to the provisions hereof, a fee computed on the total net
asset value of each Series of the Company as of the close of each business day
and payable monthly at the annual rate for each Series set forth on Schedule A
hereto.
6. Use of Name "Oppenheimer" or "Quest For Value":
OFI hereby grants to the Company a royalty-free, non-exclusive
license to use the name "Oppenheimer" or "Quest For Value" in the name of the
Company for the duration of this Agreement and any extensions or renewals
thereof. To the extent necessary to protect OFI's rights to the name
"Oppenheimer" or "Quest For Value" under applicable law, such license shall
allow OFI to inspect and, subject to control by the Company's Board, control the
nature and quality of services offered by the Company under such name and may,
upon termination of this Agreement, be terminated by OFI, in which event the
Company shall promptly take whatever action may be necessary to change its name
and discontinue any further use of the name "Oppenheimer" or "Quest For Value"
in the name of the Company or otherwise. The name "Oppenheimer" and "Quest For
Value" may be used or licensed by OFI in connection with any of its activities,
or licensed by OFI to any other party.
7. Portfolio Transactions and Brokerage:
(a) OFI (and any Sub Advisor) is authorized, in arranging the
purchase and sale of the portfolio securities and other investments of each
Series of the Company to employ or deal with such members of securities or
commodities exchanges, brokers or dealers (hereinafter "broker-dealers"),
including "affiliated" broker-dealers (as that term is defined in the Investment
Company Act), as may, in its best judgment, implement the policy of the Fund to
obtain, at reasonable expense, the "best execution" (prompt and reliable
execution at the most favorable security price obtainable) of the portfolio
transactions of each Series of the Company as well as to obtain, consistent with
the provisions of subparagraph (c) of this paragraph 7, the benefit of such
investment information or research as will be of significant assistance to the
performance by OFI (and any Sub Advisor) of its (their) investment management
functions.
(b) OFI (and any Sub Advisor) shall select broker-dealers to effect
the portfolio transactions of each Series of the Company on the basis of its
estimate of their ability to obtain best execution of particular and related
portfolio transactions. The abilities of a broker-dealer to obtain best
execution of particular portfolio transaction(s) will be judged by OFI (or any
Sub Advisor) on the basis of all relevant factors and considerations including,
insofar as feasible, the execution capabilities required by the transaction or
transactions; the ability and willingness of the broker-dealer to facilitate the
portfolio transactions of each Series of the Company by participating therein
for its own account; the importance to each Series of the Company of speed,
efficiency or confidentiality; the broker-dealer's apparent familiarity
-3-
with sources from or to whom particular securities or other investments might be
purchased or sold; as well as any other matters relevant to the selection of a
broker-dealer for particular and related transactions of each Series of the
Company.
(c) OFI (and any Sub Advisor) shall have discretion, in the interest
of the Company and each Series, to allocate brokerage on the portfolio
transactions of each Series of the Company to broker-dealers, other than an
affiliated broker-dealers, qualified to obtain best execution of such
transactions who provide brokerage and/or research services (as such services
are defined in Section 28(e)(3) of the Securities Exchange Act of 1934) for each
Series of the Company and/or other accounts for which OFI or its affiliates (or
any Sub Advisor) exercise "investment discretion" (as that term is defined in
Section 3(a)(35) of the Securities Exchange Act of 1934) and to cause the
Company or a Series to pay such broker-dealers a commission for effecting a
portfolio transaction for the Company or a Series that is in excess of the
amount of commission another broker-dealer adequately qualified to effect such
transaction would have charged for effecting that transaction, if OFI (or any
Sub Advisor) determines, in good faith, that such commission is reasonable in
relation to the value of the brokerage and/or research services provided by such
broker-dealer viewed in terms of either that particular transaction or the
overall responsibilities of OFI or its affiliates (or any Sub Advisor) with
respect to accounts as to which they exercise investment discretion. In reaching
such determination, OFI (or any Sub Advisor) will not be required to place or
attempt to place a specific dollar value on the brokerage and/or research
services provided or being provided by such broker-dealer. In demonstrating that
such determinations were made in good faith, OFI (and any Sub Advisor) shall be
prepared to show that all commissions were allocated for purposes contemplated
by this Agreement and that the total commissions paid by the Company and each
Series over a representative period selected by the Company's Trustees were
reasonable in relation to the benefits to the Company and each Series.
(d) OFI (or any Sub Advisor) shall have no duty or obligation to
seek advance competitive bidding for the most favorable commission rate
applicable to any particular portfolio transactions or to select any
broker-dealer on the basis of its purported or "posted" commission rate but
will, to the best of its ability, endeavor to be aware of the current level of
the charges of eligible broker-dealers and to minimize the expense incurred by
the Company and each Series for effecting its portfolio transactions to the
extent consistent with the interests and policies of the Company and each Series
as established by the determinations of the Board of Trustees of the Company and
the provisions of this paragraph 7.
(e) The Company recognizes that an affiliated broker-dealer: (i) may
act as one of the Company's regular brokers for the Company or a Series thereof
so long as it is lawful for it so to act; (ii) may be a major recipient of
brokerage commissions paid by the Company or a Series thereof; and (iii) may
effect portfolio transactions for the Company or a Series thereof only if the
commissions, fees or other remuneration received or to be received by it are
determined in accordance with procedures contemplated by any rule, regulation or
order adopted under the Investment Company Act to be within the permissible
level of such commissions.
(f) Subject to the foregoing provisions of this paragraph 7, OFI
(and any Sub Advisor) may also consider sales of Shares of the Company, each
Series thereof and the other funds advised by OFI and its affiliates as a factor
in the selection of broker-dealers for its
portfolio transactions.
-4-
8. Duration:
This Agreement will take effect on the date first set forth above.
Unless earlier terminated pursuant to paragraph 10 hereof, this Agreement shall
remain in effect for a period of two (2) years and thereafter from year to year,
so long as such continuance shall be approved at least annually by the Company's
Board of Trustees, including the vote of the majority of the Trustees of the
Company who are not parties to this Agreement or "interested persons" (as
defined in the Investment Company Act) of any such party, cast in person at a
meeting called for the purpose of voting on such approval, or by the holders of
a "majority" (as defined in the Investment Company Act) of the outstanding
voting securities of the Company, or each Series thereof, and by such a vote of
the Company's Board of Trustees.
9. Disclaimer of Shareholder or Trustee Liability:
OFI understands and agrees that the obligations of the Company under
this Agreement are not binding upon any shareholder or Trustee of the Company
personally, but bind only the Company and the Company's property; OFI represents
that it has notice of the provisions of the Declaration of Trust of the Company
disclaiming shareholder or Trustee liability for acts or obligations of the
Company.
10. Termination.
This Agreement may be terminated (i) by OFI at any time without
penalty upon sixty days' written notice to the Company (which notice may be
waived by the Company); or (ii) by the Company at any time without penalty upon
sixty days' written notice to OFI (which notice may be waived by OFI) provided
that such termination by the Company shall be directed or approved by the vote
of a majority of all of the Trustees of the Company then in office or by the
vote of the holders of a "majority" of the outstanding voting securities of the
Company (as defined in the Investment Company Act).
11. Assignment or Amendment:
This Agreement may not be amended, or the rights of OFI hereunder
sold, transferred, pledged or otherwise in any manner encumbered without the
affirmative vote or written consent of the holders of the "majority" of the
outstanding voting securities of the Company. This Agreement shall automatically
and immediately terminate in the event of its "assignment," as defined in the
Investment Company Act.
-5-
12. Definitions:
The terms and provisions of the Agreement shall be interpreted and
defined in a manner consistent with the provisions and definitions contained in
the Investment Company Act.
OPPENHEIMER QUEST FOR VALUE FUNDS
Attest: /s/ Robert G. Zack By: /s/ Andrew J. Donohue
Robert G. Zack Andrew J. Donohue
Assistant Secretary Secretary
OPPENHEIMERFUNDS, INC.
Attest:/s/ Robert G. Zack By: /s/ Andrew J. Donohue
Robert G. Zack Andrew J. Donohue
Assistant Secetary Executive Vice President
-6-
Schedule A
To
Investment Advisory Agreement
Between
Oppenheimer Quest For Value Funds
and
OppenheimerFunds, Inc.
Name of Series Annual Fee as a Percentage of Daily
Total Net Assets
============================= ====================================
Growth and Income Value Fund 0.85% of all net assets
Officers Value Fund 1.00% of all net assets
Small Cap Value Fund 1.00% of first $400 million of net
assets
0.90% of next $400 million of net assets
0.85% of net assets over $800 million
Opportunity Value Fund 1.00% of first $400 million of net
assets
0.90% of next $400 million of net assets
0.85% of net assets of $800 million
ADVISORY\236.WPD
-7-
AMENDMENT TO
INVESTMENT ADVISORY AGREEMENT
WHEREAS, Oppenheimer Quest For Value Funds (hereinafter referred to as the
"Company"), and OppenheimerFunds, Inc. (hereinafter referred to as "OFI"), are
party to an Investment Advisory Agreement dated May 27, 1997 (the "Agreement");
WHEREAS, Oppenheimer Quest Opportunity Value Fund (the "Fund") is a
series of the
Company;
WHEREAS, on October 22, 1997 the Company's Board of Trustees approved a
reduction in the Fund's annual management fee rate on assets in excess of $4
billion and $8 billion; and
WHEREAS, the Company and OFI desire to amend the Agreement to reflect
the foregoing
management fee change;
NOW THEREFORE, the Company and OFI agree as follows:
1. Schedule A of the Agreement is replaced in its entirety with the
Schedule A attached
hereto.
2. Except for the foregoing, no other provision of the Agreement is
modified or amended and the Agreement, as amended hereby, shall remain in full
force and effect.
Date: October 22, 1997
Oppenheimer Quest For Value Funds
By: /s/ Andrew J. Donohue
Andrew J. Donohue, Secretary
OppenheimerFunds, Inc.
By: /s/ Merryl Hoffman
Merryl Hoffman, Vice President
advisory\236.ame
Schedule A
To
Investment Advisory Agreement
Between
Oppenheimer Quest For Value Funds
and
OppenheimerFunds, Inc.
Name of Series Annual Fee as a Percentage of Daily
Total Net Assets
============================= ====================================
Growth and Income Value Fund 0.85% of all net assets
Officers Value Fund 1.00% of all net assets
Small Cap Value Fund 1.00% of first $400 million of net
assets
0.90% of next $400 million of net assets
0.85% of net assets over $800 million
Opportunity Value Fund 1.00% of first $400 million of net
assets
0.90% of next $400 million of net
assets
0.85% of next $3.2 billion of net
assets
0.80% of next $4 billion of net
assets
0.75% of net assets over $8 billion
SUBADVISORY AGREEMENT
THIS AGREEMENT is made by and between OppenheimerFunds, Inc., a Colorado
corporation (the "Adviser"), and OpCap Advisors, a Delaware general partnership
(the "Subadviser"), as of the date
set forth below.
RECITAL
WHEREAS, Oppenheimer Quest For Value Funds (the "Company") is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end, management investment company;
WHEREAS, the Adviser is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), as an investment adviser and engages in
the business of acting as an investment adviser;
WHEREAS, the Subadviser is registered under the Advisers Act as an
investment adviser and engages in the business of acting as an investment
adviser;
WHEREAS, the Company's Declaration of Trust authorizes the Board of
Trustees of the Company to classify or reclassify authorized but unissued shares
of the Company into series of shares representing
interests in various investment portfolios;
WHEREAS, pursuant to such authority, the Company has established the Small
Cap Value Fund (the "Fund");
WHEREAS, the Adviser has entered into an Investment Advisory Agreement as
of November 22, 1995 with the Company (the "Investment Advisory Agreement"),
pursuant to which the Adviser acts as investment adviser with respect to the
Fund; and
WHEREAS, pursuant to Paragraph 2 of the Investment Advisory Agreement, the
Adviser has retained and wishes to continue to retain the Subadviser for
purposes of rendering investment advisory services to the Adviser in connection
with the Fund upon the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which are hereby
acknowledged, the parties hereto agree as follows:
I. Appointment and Obligations of the Adviser.
The Adviser hereby appoints the Subadviser to render, to the Adviser with
respect to the Fund, investment research and advisory services as set forth
below in Section II, under the supervision of the Adviser and subject to the
approval and direction of the Company's Board of Trustees (the "Board"), and the
Subadviser hereby accepts such appointment, all subject to the terms and
conditions contained herein. The Subadviser shall, for all purposes herein, be
deemed an independent contractor and shall not have, unless otherwise expressly
provided or authorized, any authority to act for or represent the Company or the
Fund in any way or otherwise to serve as or be deemed an agent of the Company or
the Fund.
-1-
<PAGE>
II. Duties of the Subadviser and the Adviser.
A. Duties of the Subadviser.
The Subadviser shall regularly provide investment advice with respect to
the Fund and shall, subject to the terms of this Agreement, continuously
supervise the investment and reinvestment of cash, securities and instruments or
other property comprising the assets of the Fund, and in furtherance thereof,
the Subadviser's duties shall include:
1. Obtaining and evaluating pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the
Fund, and whether concerning the individual issuers whose securities
are included in the Fund or the activities in which such issuers
engage, or with respect to securities which the Subadviser considers
desirable for inclusion in the Fund's investment portfolio;
2. Determining which securities shall be purchased, sold or
exchanged by the Fund or otherwise represented in the Fund's
investment portfolio and regularly reporting thereon to the Adviser
and, at the request of the Adviser, to the Board;
3. Formulating and implementing continuing programs for the
purchases and sales of the securities of such issuers and regularly
reporting thereon to the Adviser and, at the request of the Adviser,
to the Board; and
4. Taking, on behalf of the Fund, all actions that appear to the
Subadviser necessary to carry into effect such investment program,
including the placing of purchase and sale orders, and making
appropriate reports thereon to the Adviser and
the Board.
B. Duties of the Adviser.
The Adviser shall retain responsibility for, among other things, providing
the following advice and services with respect to the Fund:
1. Without limiting the obligation of the Subadviser to so
comply, the Adviser shall
monitor the investment program maintained by the Subadviser
for the Fund to
ensure that the Fund's assets are invested in compliance
with this Agreement and
the Fund's Registration Statement, as currently in effect
from time to time; and
2. The Adviser shall oversee matters relating to Fund promotion,
including, but not limited to, marketing materials and the
Subadviser's reports to the Board.
III. Representations, Warranties and Covenants.
A. Representations, Warranties and Covenants of the Subadviser.
1. Organization. The Subadviser is now, and will continue to
be, a general
partnership duly formed and validly existing under the laws of
its jurisdiction of formation,
-2-
<PAGE>
fully authorized to enter into this Agreement and carry out its
duties and obligations hereunder.
2. Registration. The Subadviser is registered as an investment
adviser with the Securities and Exchange Commission (the "SEC")
under the Advisers Act, and is registered or licensed as an
investment adviser under the laws of all jurisdictions in which its
activities require it to be so registered or licensed, except where
the failure to be so licensed would not have a material adverse
effect on the Subadviser. The Subadviser shall maintain such
registration or license in effect at all times during the term of
this Agreement.
3. Best Efforts. The Subadviser at all times shall provide its best
judgment and effort to the Adviser and the Fund in carrying out its
obligations hereunder.
4. Other Covenants. The Subadviser further agrees that:
a. it will use the same skill and care in providing such
services as it uses in providing services to other
accounts for which it has investment management
responsibilities;
b. it will not make loans to any person to purchase or
carry units of beneficial interest in the Fund or make
loans to the Fund;
c. it will report regularly to the Fund and to the Adviser
and will make appropriate persons available for the
purpose of reviewing with representatives of the
Adviser on a regular basis the management of the Fund,
including, without limitation, review of the general
investment strategy of the Fund, economic
considerations and general conditions affecting the
marketplace;
d. as required by applicable laws and regulations, it will
maintain books and records with respect to the Fund's
securities transactions and it will furnish to the
Adviser and to the Board such periodic and special
reports as the Adviser or the Board may reasonably
request;
e. it will treat confidentially and as proprietary
information of the Fund all records and other
information relative to the Fund, and will not use
records and information for any purpose other than
performance of its responsibilities and duties
hereunder, except after prior notification to and
approval in writing by the Fund or when so requested by
the Fund or required by law or regulation;
f. it will, on a continuing basis and at its own expense,
(1) provide the distributor of the Fund (the
"Distributor") with assistance in the distribution and
marketing of the Fund in such amount and form as the
Adviser may reasonably request from time to time, and
(2) use its best efforts to cause the portfolio manager
or other person who manages or is responsible for
overseeing the management of the Fund's portfolio (the
-3-
<PAGE>
"Portfolio Manager") to provide marketing and
distribution assistance to the Distributor, including,
without limitation, conference calls, meetings and road
trips, provided that each Portfolio Manager shall not be
required to devote more than 10% of his or her time to
such marketing and distribution activities;
g. it will use its reasonable best efforts (i) to retain
the services of the Portfolio Manager who manages the
portfolio of the Fund, from time to time and (ii) to
promptly obtain the services of a Portfolio Manager
acceptable to the Adviser if the services of the
Portfolio Manager are no longer available to the
Subadviser;
h. it will, from time to time, assure that each Portfolio
Manager is acceptable to the Adviser;
i. it will obtain the written approval of the Adviser
prior to designating a new Portfolio Manager; provided,
however, that, if the services of a Portfolio Manager
are no longer available to the Subadviser due to
circumstances beyond the reasonable control of the
Subadviser (e.g., voluntary resignation, death or
disability), the Subadviser may designate an interim
Portfolio Manager who (a) shall be reasonably
acceptable to the Adviser and (b) shall function for a
reasonable period of time until the Subadviser
designates an acceptable permanent replacement; and
j. it will promptly notify the Adviser of any impending
change in Portfolio Manager, portfolio management or any
other material matter that may require disclosure to the
Board, shareholders of the
Fund or dealers.
B. Representations, Warranties and Covenants of the Adviser.
1. Organization. The Adviser is now, and will continue to be, duly
organized and in good standing under the laws of its state of
incorporation, fully authorized to enter into this Agreement and
carry out its duties and obligations hereunder.
2. Registration. The Adviser is registered as an investment adviser
with the SEC under the Advisers Act, and is registered or licensed
as an investment adviser under the laws of all jurisdictions in
which its activities require it to be so registered or licensed. The
Adviser shall maintain such registration or license in effect at all
times during the term of this Agreement.
3. Best Efforts. The Adviser at all times shall provide its best
judgment and effort to the Fund in carrying out its obligations
hereunder.
-4-
<PAGE>
IV. Compliance with Applicable Requirements.
In carrying out its obligations under this Agreement, the Subadviser shall
at all times conform to:
A. all applicable provisions of the 1940 Act and any rules and
regulations adopted thereunder;
B. the provisions of the registration statement of the Company, as the
same may be amended from time to time, under the Securities Act of
1933, as amended, and the 1940 Act;
C. the provisions of the Company's Declaration of Trust or other
governing document, as
amended from time to time;
D. the provisions of the By-laws of the Company, as amended from
time to time;
E. any other applicable provisions of state or federal law; and
F. guidelines, investment restrictions, policies, procedures or
instructions adopted or issued by the Company, the Fund or the
Adviser from time to time.
The Adviser shall promptly notify the Subadviser of any changes or
amendments to the provisions
of B., C., D. and F. above when such changes or amendments relate to the
obligations of the Subadviser.
V. Control by the Board.
Any investment program undertaken by the Subadviser pursuant to this
Agreement, as well as any other activities undertaken by the Subadviser with
respect to the Fund, shall at all times be subject to any directives of the
Adviser and the Board.
VI. Books and Records.
The Subadviser agrees that all records which it maintains for the Fund on
behalf of the Adviser are the property of the Fund and further agrees to
surrender promptly to the Fund or to the Adviser any of such records upon
request. The Subadviser further agrees to preserve for the periods prescribed by
applicable laws, rules and regulations all records required to be maintained by
the Subadviser on behalf of the Adviser under such applicable laws, rules and
regulations, or such longer period as the Adviser may reasonably request from
time to time.
VII. Broker-Dealer Relationships.
A. Portfolio Trades.
The Subadviser, at its own expense, and to the extent appropriate,
in consultation with the Adviser, shall place all orders for the purchase and
sale of portfolio securities for the Fund with brokers or dealers selected by
the Subadviser, which may include, to the extent permitted by the Adviser and
the Fund, brokers or dealers affiliated with the Subadviser. The Subadviser
shall use its best efforts to seek to execute portfolio transactions at prices
that are advantageous to the Fund and at commission rates that are reasonable in
relation to the benefits received.
-5-
<PAGE>
B. Selection of Broker-Dealers.
With respect to the execution of particular transactions, the
Subadviser may, to the extent permitted by the Adviser and the Fund, select
brokers or dealers who also provide brokerage and research services (as those
terms are defined in Section 28(e) of the Securities Exchange Act of 1934, as
amended) to the Fund and/or the other accounts over which the Subadviser or its
affiliates exercise investment discretion. The Subadviser is authorized to pay a
broker or dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for the Fund that is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if the Subadviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer. This determination may be viewed in
terms of either that particular transaction or the overall responsibilities that
the Subadviser and its affiliates have with respect to accounts over which they
exercise investment discretion. The Adviser, Subadviser and the Board shall
periodically review the commissions paid by the Fund to determine, among other
things, if the commissions paid over representative periods of time were
reasonable in relation to the benefits received.
C. Soft Dollar Arrangements.
The Subadviser may enter into "soft dollar" arrangements through the
agency of third parties on behalf of the Adviser. Soft dollar arrangements for
services may be entered into in order to facilitate an improvement in
performance in respect of the Subadviser's service to the Adviser with respect
to the Fund. The Subadviser makes no direct payments but instead undertakes to
place business with broker-dealers who in turn pay third parties who provide
these services. Soft dollar transactions will be conducted on an arm's-length
basis, and the Subadviser will secure best execution for the Adviser. Any
arrangements involving soft dollars and/or brokerage services shall be effected
in compliance with Section 28(e) of the Securities Exchange Act of 1934, as
amended, and the policies that the Adviser and the Board may adopt from time to
time. The Subadviser agrees to provide reports to the Adviser as necessary for
purposes of providing information on these arrangements to the Board.
VIII. Compensation.
A. Amount of Compensation. The Adviser shall pay the Subadviser, as
compensation for services rendered hereunder, from its own assets, an
annual fee, payable monthly, equal to 40% of the investment advisory
fee collected by the Adviser from the Fund, based on the total net
assets of the Fund existing as of November 22, 1995 (the "base
amount"), plus 30% of the advisory fee collected by the Adviser, based
on the total net assets of the Fund that exceed the base amount (the
"marginal amount"), in each case calculated after any waivers,
voluntary or otherwise.
B. Calculation of Compensation. Except as hereinafter set forth,
compensation under this Agreement shall be calculated and accrued on
the same basis as the advisory fee paid to the Adviser by the Fund. If
this Agreement becomes effective subsequent to the first day of a
month or shall terminate before the last day of a month, compensation
for that part of the month this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fees set
forth above.
-6-
<PAGE>
C. Payment of Compensation: Subject to the provisions of this
paragraph, payment of the Subadviser's compensation for the
preceding month shall be made within 15 days after the end of the
preceding month.
D. Reorganization of the Fund. If the Fund is reorganized with another
investment company for which the Subadviser does not serve as an
investment adviser or subadviser, and the Fund is the surviving
entity, the subadvisory fee payable under this section shall be
adjusted in an appropriate manner as the parties may agree.
IX. Allocation of Expenses.
The Subadviser shall pay the expenses incurred in providing services in
connection with this Agreement, including, but not limited to, the salaries,
employment benefits and other related costs of those of its personnel engaged in
providing investment advice to the Fund hereunder, including, without
limitation, office space, office equipment, telephone and postage costs and
other expenses. In the event of an "assignment" of this Agreement, other than an
assignment resulting solely by action of the Adviser or an affiliate thereof,
the Subadviser shall be responsible for payment of all costs and expenses
incurred by the Adviser and the Fund relating thereto, including, but not
limited to, reasonable legal, accounting, printing and mailing costs related to
obtaining approval of Fund shareholders.
X. Non-Exclusivity.
The services of the Subadviser with respect to the Company and the Fund
are not to be deemed to be exclusive, and the Subadviser shall be free to render
investment advisory and administrative or other services to others (including
other investment companies) and to engage in other activities, subject to the
provisions of a certain Agreement Not to Compete dated as of November 22, 1995
among the Adviser, Oppenheimer Capital, the Subadviser and Quest For Value
Distributors (the "Agreement Not to Compete"). It is understood and agreed that
officers or directors of the Subadviser may serve as officers or directors of
the Adviser or of the Fund; that officers or directors of the Adviser or of the
Company may serve as officers or directors of the Subadviser to the extent
permitted by law; and that the officers and directors of the Subadviser are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm or trust, including other investment advisory
companies (subject to the provisions of the Agreement Not to Compete) provided
it is permitted by applicable law and does not adversely affect the Company or
the Fund.
XI. Term.
This Agreement shall become effective at the close of business on the date
hereof and shall remain in force and effect, subject to Paragraphs XII.A and
XII.B hereof and approval by the Fund's shareholders, for a period of two years
from the date hereof.
XII. Renewal.
Following the expiration of its initial two-year term, the Agreement shall
continue in full force and effect from year to year until November 22, 2005,
provided that such continuance is specifically approved:
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<PAGE>
A. at least annually (1) by the Board or by the vote of a majority of the
Fund's outstanding voting securities (as defined in Section 2(a)(42)
of the 1940 Act), and (2) by the affirmative vote of a majority of the
Trustees who are not parties to this Agreement or interested persons
of a party to this Agreement (other than as a Trustee of the Fund), by
votes cast in person at a meeting specifically called for such
purpose; or
B. by such method required by applicable law, rule or regulation then
in effect.
XIII. Termination.
A. Termination by the Company. This Agreement may be terminated at any
time, without the payment of any penalty, by vote of the Board or by
vote of a majority of the Fund's outstanding voting securities, on
sixty (60) days' written notice. The notice provided for herein may
be waived by the party required to be notified.
B. Assignment. This Agreement shall automatically terminate in the event
of its "assignment," as defined in Section 2 (a) (4) of the 1940 Act.
In the event of an assignment that occurs solely due to the change in
control of the Subadviser (provided that no condition exists that
permits, or, upon the consummation of the assignment, will permit, the
termination of this Agreement by the Adviser pursuant to Section XIII.
D. hereof), the Adviser and the Subadviser, at the sole expense of the
Subadviser, shall use their reasonable best efforts to obtain
shareholder approval of a successor Subadvisory Agreement on
substantially the same terms as contained in this Agreement.
C. Payment of Fees After Termination. Notwithstanding the termination of
this Agreement prior to the tenth anniversary of November 22, 1995,
the Adviser shall continue to pay to the Subadviser the subadvisory
fee for the term of this Agreement and any renewals thereof through
such tenth anniversary, if: (1) the Adviser or the Company terminates
this Agreement for a reason other than the reasons set forth in
Section XIII.D. hereof, provided the Investment Advisory Agreement
remains in effect; (2) the Fund reorganizes with another investment
company advised by the Adviser (or an affiliate of the Adviser) and
for which the Subadviser does not serve as an investment adviser or
subadviser and such other investment company is the surviving entity;
or (3) the Investment Advisory Agreement terminates (i) by reason of
an "assignment;" (ii) because the Adviser is disqualified from serving
as an investment adviser; or (iii) by reason of a voluntary
termination by the Adviser; provided that the Subadviser does not
serve as the investment adviser or subadviser of the Fund after such
termination of the Investment Advisory Agreement. The amount of the
subadvisory fee paid pursuant to this section shall be calculated on
the basis of the Fund's net assets measured at the time of such
termination or such reorganization. Notwithstanding anything to the
contrary, if the Subadviser terminates this Agreement or if this
Agreement is terminated by operation of law, due solely to an act or
omission by the Subadviser, Oppenheimer Capital ("OpCap") or their
respective partners, subsidiaries, directors, officers, employees or
agents (other than by reason of an "assignment"of this Agreement),
then the Adviser shall not be liable for any further payments under
this Agreement, provided, however, that if at any time prior to the
end of the term of the Agreement Not to Compete any event that would
have permitted the termination of this Agreement by the Adviser
pursuant to Section XIII. D. (3) hereof occurs, the Adviser shall be
under no further obligation to pay any subadvisory fees.
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<PAGE>
D. Termination by the Adviser. The Adviser may terminate this Agreement
without penalty and without the payment of any fee or penalty,
immediately after giving written notice, upon the occurrence of any
of the following events:
1. The Fund's investment performance of the Fund's Class A shares
compared to the appropriate universe of Class A shares (or their
equivalent), as set forth on Schedule D-1, as amended from time
to time, ranks in the bottom quartile for two consecutive
calendar years (beginning with the calendar year 1995) and earns
a Morningstar three-year rating of less than three (3) stars at
the time of such termination; or
2. Any of the Subadviser, OpCap, their respective partners,
subsidiaries, affiliates, directors, officers, employees or
agents engages in an action or omits to take an action that would
cause the Subadviser or OpCap to be disqualified in any manner
under Section 9(a) of the 1940 Act, if the SEC were not to grant
an exemptive order under Section 9(c) thereof or that would
constitute grounds for the SEC to deny, revoke or suspend the
registration of the Subadviser as an investment adviser with the
SEC;
3. Any of OpCap, the Subadviser, their respective partners,
subsidiaries, affiliates, directors, officers, employees or
agents causes a material violation of the Agreement Not to
Compete which is not cured in accordance with the provisions
of that agreement; or
4. The Subadviser breaches the representations contained in
Paragraph III.A.4.i. of this Agreement or any other material
provision of this Agreement, and any such breach is not cured
within a reasonable period of time after notice thereof from the
Adviser to the Subadviser. However, consistent with its fiduciary
obligations, for a period of seven months the Adviser will not
terminate this Agreement solely because the Subadviser has failed
to designate an acceptable permanent replacement to a Portfolio
Manager whose services are no longer available to the Subadviser
due to circumstances beyond the reasonable control of the
Subadviser, provided that the Subadviser uses its reasonable best
efforts to promptly obtain the services of a Portfolio Manager
acceptable to the Adviser and further provided that the Adviser
has not unreasonably withheld approval of such replacement
Portfolio Manager.
E. Transactions in Progress upon Termination. The Adviser and
Subadviser will cooperate with each other to ensure that
portfolio or other transactions in progress at the date of
termination of this Agreement shall be completed by the Adviser
in accordance with the terms of such transactions, and to this
end the Subadviser shall provide the Adviser with all necessary
information and documentation to secure the implementation
thereof.
XIV. Non-Solicitation.
During the term of this Agreement, the Adviser (and its affiliates under
its control) shall not solicit or knowingly assist in the solicitation of any
Portfolio Manager of the Fund or any portfolio assistant of the
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<PAGE>
Fund then employed by the Subadviser or OpCap, provided, however, that the
Adviser (or its affiliates) may solicit or hire any such individual who (A) the
Subadviser or OpCap (or its affiliates) has terminated or (B) has voluntarily
terminated his or her employment with the Subadviser, OpCap (or its affiliates)
without inducement of the Adviser (or its affiliates under its control) prior to
the time of such solicitation. Advertising in general circulation newspapers or
industry newsletters by the Adviser shall not constitute "inducement" by the
Adviser (or its affiliates under its control).
XV. Liability of the Subadviser.
In the absence of willful misfeasance, bad faith, negligence or reckless
disregard of obligations or duties hereunder on the part of the Subadviser or
any of its officers, directors or employees, the Subadviser shall not be subject
to liability to the Adviser for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security; provided, however,
that the foregoing shall not be construed to relieve the Subadviser of any
liability it may have arising under the Agreement Not to Compete or the
Acquisition Agreement dated August 17, 1995, among the Subadviser, the Adviser
and certain affiliates of the Subadviser.
XVI. Notices.
Any notice or other communication required or that may be given hereunder
shall be in writing and shall be delivered personally, telecopied, sent by
certified, registered or express mail, postage prepaid or sent by national
next-day delivery service and shall be deemed given when so delivered personally
or telecopied, or if mailed, two days after the date of mailing, or if by
next-day delivery service, on the business day following delivery thereto, as
follows or to such other location as any party notifies any other party:
A. if to the Adviser, to:
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Attention: Andrew J. Donohue
Executive Vice President and General Counsel
Telecopier: 212-321-1159
B. if to the Subadviser, to:
OpCap Advisors
c/o Oppenheimer Capital
225 Liberty Street
New York, New York 10281
Attention: Thomas E. Duggan
Secretary and General Counsel
Telecopier: 212-349-4759
XVII. Questions of Interpretation.
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<PAGE>
This Agreement shall be governed by the laws of the State of New York
applicable to agreements made and to be performed entirely within the State of
New York (without regard to any conflicts of law principles thereof). Any
question of interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the 1940 Act
shall be resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States Courts or, in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the SEC issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement is
revised by rule, regulation or order of the SEC, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
XVIII. Form ADV - Delivery.
The Adviser hereby acknowledges that it has received from the Subadviser a
copy of the Subadviser's Form ADV, Part II as currently filed, at least 48 hours
prior to entering into this Agreement and that it has read and understood the
disclosures set forth in the Subadviser's Form ADV, Part II.
XIX. Miscellaneous.
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors.
XX. Counterparts.
This Agreement may be executed in counterparts, each of which shall
constitute an original and both of which, collectively, shall constitute one
agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers as of the 5th day of November
, 1997.
OPPENHEIMERFUNDS, INC.
By:/s/ Andrew J. Donohue
Andrew J. Donohue
Executive Vice President
OPCAP ADVISORS
By:/s/ Bernard H. Garil
Bernard H. Garil
President
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<PAGE>
SCHEDULE XIII.D.1.
The universe of funds to which Class A shares of funds subadvised by OpCap
Advisors will be compared to so that it can be determined in which quartile the
performance ranks shall consist of those funds with the same Lipper investment
objective being offered as the only class of shares of such fund or, in the case
where there is more than one class of shares being offered, with a front-end
load (typically referred to as Class A shares).
The present Lipper investment objective categories for the funds are:
Fund Lipper Category
Oppenheimer Quest Value Fund, Inc. CA - Capital Appreciation
Oppenheimer Quest Global Value Fund, Inc. GL - Global
Oppenheimer Quest Opportunity Value Fund FX - Flexible Portfolio
Oppenheimer Quest Small Cap Value Fund SG - Small Company Growth
Oppenheimer Quest Growth & Income Value Fund GI - Growth & Income
Oppenheimer Quest Officers Value Fund CA - Capital Appreciation
Oppenheimer Quest Capital Value Fund, Inc. CA - Capital Appreciation
ADVISORY\251SUB.WPD
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SUBADVISORY AGREEMENT
THIS AGREEMENT is made by and between OppenheimerFunds, Inc., a Colorado
corporation (the "Adviser"), and OpCap Advisors, a Delaware general partnership
(the "Subadviser"), as of the date
set forth below.
RECITAL
WHEREAS, Oppenheimer Quest For Value Funds (the "Company") is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end, management investment company;
WHEREAS, the Adviser is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), as an investment adviser and engages in
the business of acting as an investment adviser;
WHEREAS, the Subadviser is registered under the Advisers Act as an
investment adviser and engages in the business of acting as an investment
adviser;
WHEREAS, the Company's Declaration of Trust authorizes the Board of
Trustees of the Company to classify or reclassify authorized but unissued shares
of the Company into series of shares representing
interests in various investment portfolios;
WHEREAS, pursuant to such authority, the Company has established the
Growth & Income Value
Fund (the "Fund");
WHEREAS, the Adviser has entered into an Investment Advisory Agreement as
of November 22, 1995 with the Company (the "Investment Advisory Agreement"),
pursuant to which the Adviser acts as investment adviser with respect to the
Fund; and
WHEREAS, pursuant to Paragraph 2 of the Investment Advisory Agreement, the
Adviser has retained and wishes to continue to retain the Subadviser for
purposes of rendering investment advisory services to the Adviser in connection
with the Fund upon the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which are hereby
acknowledged, the parties hereto agree as follows:
I. Appointment and Obligations of the Adviser.
The Adviser hereby appoints the Subadviser to render, to the Adviser with
respect to the Fund, investment research and advisory services as set forth
below in Section II, under the supervision of the Adviser and subject to the
approval and direction of the Company's Board of Trustees (the "Board"), and the
Subadviser hereby accepts such appointment, all subject to the terms and
conditions contained herein. The Subadviser shall, for all purposes herein, be
deemed an independent contractor and shall not have, unless otherwise expressly
provided or authorized, any authority to act for or represent the Company or the
Fund in any way or otherwise to serve as or be deemed an agent of the Company or
the Fund.
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<PAGE>
II. Duties of the Subadviser and the Adviser.
A. Duties of the Subadviser.
The Subadviser shall regularly provide investment advice with respect to
the Fund and shall, subject to the terms of this Agreement, continuously
supervise the investment and reinvestment of cash, securities and instruments or
other property comprising the assets of the Fund, and in furtherance thereof,
the Subadviser's duties shall include:
1. Obtaining and evaluating pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the
Fund, and whether concerning the individual issuers whose securities
are included in the Fund or the activities in which such issuers
engage, or with respect to securities which the Subadviser considers
desirable for inclusion in the Fund's investment portfolio;
2. Determining which securities shall be purchased, sold or
exchanged by the Fund or otherwise represented in the Fund's
investment portfolio and regularly reporting thereon to the Adviser
and, at the request of the Adviser, to the Board;
3. Formulating and implementing continuing programs for the
purchases and sales of the securities of such issuers and regularly
reporting thereon to the Adviser and, at the request of the Adviser,
to the Board; and
4. Taking, on behalf of the Fund, all actions that appear to the
Subadviser necessary to carry into effect such investment program,
including the placing of purchase and sale orders, and making
appropriate reports thereon to the Adviser and
the Board.
B. Duties of the Adviser.
The Adviser shall retain responsibility for, among other things, providing
the following advice and services with respect to the Fund:
1. Without limiting the obligation of the Subadviser to so comply,
the Adviser shall monitor the investment program maintained by
the Subadviser for the Fund to ensure that the Fund's assets are
invested in compliance with this Agreement and the Fund's
Registration Statement, as currently in effect from time to time;
and
2. The Adviser shall oversee matters relating to Fund promotion,
including, but not limited to, marketing materials and the
Subadviser's reports to the Board.
III. Representations, Warranties and Covenants.
A. Representations, Warranties and Covenants of the Subadviser.
1. Organization. The Subadviser is now, and will continue to be, a
general partnership duly formed and validly existing under the
laws of its jurisdiction of formation,
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<PAGE>
fully authorized to enter into this Agreement and carry out its
duties and obligations hereunder.
2. Registration. The Subadviser is registered as an investment
adviser with the Securities and Exchange Commission (the "SEC")
under the Advisers Act, and is registered or licensed as an
investment adviser under the laws of all jurisdictions in which its
activities require it to be so registered or licensed, except where
the failure to be so licensed would not have a material adverse
effect on the Subadviser. The Subadviser shall maintain such
registration or license in effect at all times during the term of
this Agreement.
3. Best Efforts. The Subadviser at all times shall provide its best
judgment and effort to the Adviser and the Fund in carrying out its
obligations hereunder.
4. Other Covenants. The Subadviser further agrees that:
a. it will use the same skill and care in providing such
services as it uses in providing services to other
accounts for which it has investment management
responsibilities;
b. it will not make loans to any person to purchase or
carry units of beneficial interest in the Fund or make
loans to the Fund;
c. it will report regularly to the Fund and to the Adviser
and will make appropriate persons available for the
purpose of reviewing with representatives of the
Adviser on a regular basis the management of the Fund,
including, without limitation, review of the general
investment strategy of the Fund, economic
considerations and general conditions affecting the
marketplace;
d. as required by applicable laws and regulations, it will
maintain books and records with respect to the Fund's
securities transactions and it will furnish to the
Adviser and to the Board such periodic and special
reports as the Adviser or the Board may reasonably
request;
e. it will treat confidentially and as proprietary
information of the Fund all records and other
information relative to the Fund, and will not use
records and information for any purpose other than
performance of its responsibilities and duties
hereunder, except after prior notification to and
approval in writing by the Fund or when so requested by
the Fund or required by law or regulation;
f. it will, on a continuing basis and at its own expense,
(1) provide the distributor of the Fund (the
"Distributor") with assistance in the distribution and
marketing of the Fund in such amount and form as the
Adviser may reasonably request from time to time, and
(2) use its best efforts to cause the portfolio manager
or other person who manages or is
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<PAGE>
responsible for overseeing the management of the Fund's
portfolio (the "Portfolio Manager") to provide marketing
and distribution assistance to the Distributor,
including, without limitation, conference calls,
meetings and road trips, provided that each Portfolio
Manager shall not be required to devote more than 10% of
his or her time to such marketing and distribution
activities;
g. it will use its reasonable best efforts (i) to retain
the services of the Portfolio Manager who manages the
portfolio of the Fund, from time to time and (ii) to
promptly obtain the services of a Portfolio Manager
acceptable to the Adviser if the services of the
Portfolio Manager are no longer available to the
Subadviser;
h. it will, from time to time, assure that each Portfolio
Manager is acceptable to the Adviser;
i. it will obtain the written approval of the Adviser
prior to designating a new Portfolio Manager; provided,
however, that, if the services of a Portfolio Manager
are no longer available to the Subadviser due to
circumstances beyond the reasonable control of the
Subadviser (e.g., voluntary resignation, death or
disability), the Subadviser may designate an interim
Portfolio Manager who (a) shall be reasonably
acceptable to the Adviser and (b) shall function for a
reasonable period of time until the Subadviser
designates an acceptable permanent replacement; and
j. it will promptly notify the Adviser of any impending
change in Portfolio Manager, portfolio management or any
other material matter that may require disclosure to the
Board, shareholders of the
Fund or dealers.
B. Representations, Warranties and Covenants of the Adviser.
1. Organization. The Adviser is now, and will continue to be, duly
organized and in good standing under the laws of its state of
incorporation, fully authorized to enter into this Agreement and
carry out its duties and obligations hereunder.
2. Registration. The Adviser is registered as an investment adviser
with the SEC under the Advisers Act, and is registered or licensed
as an investment adviser under the laws of all jurisdictions in
which its activities require it to be so registered or licensed. The
Adviser shall maintain such registration or license in effect at all
times during the term of this Agreement.
3. Best Efforts. The Adviser at all times shall provide its best
judgment and effort to the Fund in carrying out its obligations
hereunder.
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<PAGE>
IV. Compliance with Applicable Requirements.
In carrying out its obligations under this Agreement, the Subadviser shall
at all times conform to:
A. all applicable provisions of the 1940 Act and any rules and
regulations adopted thereunder;
B. the provisions of the registration statement of the Company, as the
same may be amended from time to time, under the Securities Act of
1933, as amended, and the 1940 Act;
C. the provisions of the Company's Declaration of Trust or other
governing document, as
amended from time to time;
D. the provisions of the By-laws of the Company, as amended from
time to time;
E. any other applicable provisions of state or federal law; and
F. guidelines, investment restrictions, policies, procedures or
instructions adopted or issued by the Company, the Fund or the
Adviser from time to time.
The Adviser shall promptly notify the Subadviser of any changes or
amendments to the provisions
of B., C., D. and F. above when such changes or amendments relate to the
obligations of the Subadviser.
V. Control by the Board.
Any investment program undertaken by the Subadviser pursuant to this
Agreement, as well as any other activities undertaken by the Subadviser with
respect to the Fund, shall at all times be subject to any directives of the
Adviser and the Board.
VI. Books and Records.
The Subadviser agrees that all records which it maintains for the Fund on
behalf of the Adviser are the property of the Fund and further agrees to
surrender promptly to the Fund or to the Adviser any of such records upon
request. The Subadviser further agrees to preserve for the periods prescribed by
applicable laws, rules and regulations all records required to be maintained by
the Subadviser on behalf of the Adviser under such applicable laws, rules and
regulations, or such longer period as the Adviser may reasonably request from
time to time.
VII. Broker-Dealer Relationships.
A. Portfolio Trades.
The Subadviser, at its own expense, and to the extent appropriate,
in consultation with the Adviser, shall place all orders for the purchase and
sale of portfolio securities for the Fund with brokers or dealers selected by
the Subadviser, which may include, to the extent permitted by the Adviser and
the Fund, brokers or dealers affiliated with the Subadviser. The Subadviser
shall use its best efforts to seek to execute portfolio transactions at prices
that are advantageous to the Fund and at commission rates that are reasonable in
relation to the benefits received.
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<PAGE>
B. Selection of Broker-Dealers.
With respect to the execution of particular transactions, the
Subadviser may, to the extent permitted by the Adviser and the Fund, select
brokers or dealers who also provide brokerage and research services (as those
terms are defined in Section 28(e) of the Securities Exchange Act of 1934, as
amended) to the Fund and/or the other accounts over which the Subadviser or its
affiliates exercise investment discretion. The Subadviser is authorized to pay a
broker or dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for the Fund that is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if the Subadviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer. This determination may be viewed in
terms of either that particular transaction or the overall responsibilities that
the Subadviser and its affiliates have with respect to accounts over which they
exercise investment discretion. The Adviser, Subadviser and the Board shall
periodically review the commissions paid by the Fund to determine, among other
things, if the commissions paid over representative periods of time were
reasonable in relation to the benefits received.
C. Soft Dollar Arrangements.
The Subadviser may enter into "soft dollar" arrangements through the
agency of third parties on behalf of the Adviser. Soft dollar arrangements for
services may be entered into in order to facilitate an improvement in
performance in respect of the Subadviser's service to the Adviser with respect
to the Fund. The Subadviser makes no direct payments but instead undertakes to
place business with broker-dealers who in turn pay third parties who provide
these services. Soft dollar transactions will be conducted on an arm's-length
basis, and the Subadviser will secure best execution for the Adviser. Any
arrangements involving soft dollars and/or brokerage services shall be effected
in compliance with Section 28(e) of the Securities Exchange Act of 1934, as
amended, and the policies that the Adviser and the Board may adopt from time to
time. The Subadviser agrees to provide reports to the Adviser as necessary for
purposes of providing information on these arrangements to the Board.
VIII. Compensation.
A. Amount of Compensation. The Adviser shall pay the Subadviser, as
compensation for services rendered hereunder, from its own assets, an
annual fee, payable monthly, equal to 40% of the investment advisory
fee collected by the Adviser from the Fund, based on the total net
assets of the Fund existing as of November 22, 1995 (the "base
amount"), plus 30% of the advisory fee collected by the Adviser, based
on the total net assets of the Fund that exceed the base amount (the
"marginal amount"), in each case calculated after any waivers,
voluntary or otherwise.
B. Calculation of Compensation. Except as hereinafter set forth,
compensation under this Agreement shall be calculated and accrued on
the same basis as the advisory fee paid to the Adviser by the Fund. If
this Agreement becomes effective subsequent to the first day of a
month or shall terminate before the last day of a month, compensation
for that part of the month this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fees set
forth above.
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<PAGE>
C. Payment of Compensation: Subject to the provisions of this
paragraph, payment of the Subadviser's compensation for the
preceding month shall be made within 15 days after the end of the
preceding month.
D. Reorganization of the Fund. If the Fund is reorganized with another
investment company for which the Subadviser does not serve as an
investment adviser or subadviser, and the Fund is the surviving
entity, the subadvisory fee payable under this section shall be
adjusted in an appropriate manner as the parties may agree.
IX. Allocation of Expenses.
The Subadviser shall pay the expenses incurred in providing services in
connection with this Agreement, including, but not limited to, the salaries,
employment benefits and other related costs of those of its personnel engaged in
providing investment advice to the Fund hereunder, including, without
limitation, office space, office equipment, telephone and postage costs and
other expenses. In the event of an "assignment" of this Agreement, other than an
assignment resulting solely by action of the Adviser or an affiliate thereof,
the Subadviser shall be responsible for payment of all costs and expenses
incurred by the Adviser and the Fund relating thereto, including, but not
limited to, reasonable legal, accounting, printing and mailing costs related to
obtaining approval of Fund shareholders.
X. Non-Exclusivity.
The services of the Subadviser with respect to the Company and the Fund
are not to be deemed to be exclusive, and the Subadviser shall be free to render
investment advisory and administrative or other services to others (including
other investment companies) and to engage in other activities, subject to the
provisions of a certain Agreement Not to Compete dated as of November 22, 1995
among the Adviser, Oppenheimer Capital, the Subadviser and Quest For Value
Distributors (the "Agreement Not to Compete"). It is understood and agreed that
officers or directors of the Subadviser may serve as officers or directors of
the Adviser or of the Fund; that officers or directors of the Adviser or of the
Company may serve as officers or directors of the Subadviser to the extent
permitted by law; and that the officers and directors of the Subadviser are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm or trust, including other investment advisory
companies (subject to the provisions of the Agreement Not to Compete) provided
it is permitted by applicable law and does not adversely affect the Company or
the Fund.
XI. Term.
This Agreement shall become effective at the close of business on the date
hereof and shall remain in force and effect, subject to Paragraphs XII.A and
XII.B hereof and approval by the Fund's shareholders, for a period of two years
from the date hereof.
XII. Renewal.
Following the expiration of its initial two-year term, the Agreement shall
continue in full force and effect from year to year until November 22, 2005,
provided that such continuance is specifically approved:
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<PAGE>
A. at least annually (1) by the Board or by the vote of a majority of the
Fund's outstanding voting securities (as defined in Section 2(a)(42)
of the 1940 Act), and (2) by the affirmative vote of a majority of the
Trustees who are not parties to this Agreement or interested persons
of a party to this Agreement (other than as a Trustee of the Fund), by
votes cast in person at a meeting specifically called for such
purpose; or
B. by such method required by applicable law, rule or regulation then
in effect.
XIII. Termination.
A. Termination by the Company. This Agreement may be terminated at any
time, without the payment of any penalty, by vote of the Board or by
vote of a majority of the Fund's outstanding voting securities, on
sixty (60) days' written notice. The notice provided for herein may
be waived by the party required to be notified.
B. Assignment. This Agreement shall automatically terminate in the event
of its "assignment," as defined in Section 2 (a) (4) of the 1940 Act.
In the event of an assignment that occurs solely due to the change in
control of the Subadviser (provided that no condition exists that
permits, or, upon the consummation of the assignment, will permit, the
termination of this Agreement by the Adviser pursuant to Section XIII.
D. hereof), the Adviser and the Subadviser, at the sole expense of the
Subadviser, shall use their reasonable best efforts to obtain
shareholder approval of a successor Subadvisory Agreement on
substantially the same terms as contained in this Agreement.
C. Payment of Fees After Termination. Notwithstanding the termination of
this Agreement prior to the tenth anniversary of November 22, 1995,
the Adviser shall continue to pay to the Subadviser the subadvisory
fee for the term of this Agreement and any renewals thereof through
such tenth anniversary, if: (1) the Adviser or the Company terminates
this Agreement for a reason other than the reasons set forth in
Section XIII.D. hereof, provided the Investment Advisory Agreement
remains in effect; (2) the Fund reorganizes with another investment
company advised by the Adviser (or an affiliate of the Adviser) and
for which the Subadviser does not serve as an investment adviser or
subadviser and such other investment company is the surviving entity;
or (3) the Investment Advisory Agreement terminates (i) by reason of
an "assignment;" (ii) because the Adviser is disqualified from serving
as an investment adviser; or (iii) by reason of a voluntary
termination by the Adviser; provided that the Subadviser does not
serve as the investment adviser or subadviser of the Fund after such
termination of the Investment Advisory Agreement. The amount of the
subadvisory fee paid pursuant to this section shall be calculated on
the basis of the Fund's net assets measured at the time of such
termination or such reorganization. Notwithstanding anything to the
contrary, if the Subadviser terminates this Agreement or if this
Agreement is terminated by operation of law, due solely to an act or
omission by the Subadviser, Oppenheimer Capital ("OpCap") or their
respective partners, subsidiaries, directors, officers, employees or
agents (other than by reason of an "assignment"of this Agreement),
then the Adviser shall not be liable for any further payments under
this Agreement, provided, however, that if at any time prior to the
end of the term of the Agreement Not to Compete any event that would
have permitted the termination of this
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<PAGE>
Agreement by the Adviser pursuant to Section XIII. D. (3) hereof
occurs, the Adviser shall
be under no further obligation to pay any subadvisory fees.
D. Termination by the Adviser. The Adviser may terminate this Agreement
without penalty and without the payment of any fee or penalty,
immediately after giving written notice, upon the occurrence of any
of the following events:
1. The Fund's investment performance of the Fund's Class A shares
compared to the appropriate universe of Class A shares (or their
equivalent), as set forth on Schedule D-1, as amended from time
to time, ranks in the bottom quartile for two consecutive
calendar years (beginning with the calendar year 1995) and earns
a Morningstar three-year rating of less than three (3) stars at
the time of such termination; or
2. Any of the Subadviser, OpCap, their respective partners,
subsidiaries, affiliates, directors, officers, employees or
agents engages in an action or omits to take an action that would
cause the Subadviser or OpCap to be disqualified in any manner
under Section 9(a) of the 1940 Act, if the SEC were not to grant
an exemptive order under Section 9(c) thereof or that would
constitute grounds for the SEC to deny, revoke or suspend the
registration of the Subadviser as an investment adviser with the
SEC;
3. Any of OpCap, the Subadviser, their respective partners,
subsidiaries, affiliates, directors, officers, employees or
agents causes a material violation of the Agreement Not to
Compete which is not cured in accordance with the provisions
of that agreement; or
4. The Subadviser breaches the representations contained in
Paragraph III.A.4.i. of this Agreement or any other material
provision of this Agreement, and any such breach is not cured
within a reasonable period of time after notice thereof from the
Adviser to the Subadviser. However, consistent with its fiduciary
obligations, for a period of seven months the Adviser will not
terminate this Agreement solely because the Subadviser has failed
to designate an acceptable permanent replacement to a Portfolio
Manager whose services are no longer available to the Subadviser
due to circumstances beyond the reasonable control of the
Subadviser, provided that the Subadviser uses its reasonable best
efforts to promptly obtain the services of a Portfolio Manager
acceptable to the Adviser and further provided that the Adviser
has not unreasonably withheld approval of such replacement
Portfolio Manager.
E. Transactions in Progress upon Termination. The Adviser and
Subadviser will cooperate with each other to ensure that
portfolio or other transactions in progress at the date of
termination of this Agreement shall be completed by the Adviser
in accordance with the terms of such transactions, and to this
end the Subadviser shall provide the Adviser with all necessary
information and documentation to secure the implementation
thereof.
XIV. Non-Solicitation.
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During the term of this Agreement, the Adviser (and its affiliates under
its control) shall not solicit or knowingly assist in the solicitation of any
Portfolio Manager of the Fund or any portfolio assistant of the Fund then
employed by the Subadviser or OpCap, provided, however, that the Adviser (or its
affiliates) may solicit or hire any such individual who (A) the Subadviser or
OpCap (or its affiliates) has terminated or (B) has voluntarily terminated his
or her employment with the Subadviser, OpCap (or its affiliates) without
inducement of the Adviser (or its affiliates under its control) prior to the
time of such solicitation. Advertising in general circulation newspapers or
industry newsletters by the Adviser shall not constitute "inducement" by the
Adviser (or its affiliates under its control).
XV. Liability of the Subadviser.
In the absence of willful misfeasance, bad faith, negligence or reckless
disregard of obligations or duties hereunder on the part of the Subadviser or
any of its officers, directors or employees, the Subadviser shall not be subject
to liability to the Adviser for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security; provided, however,
that the foregoing shall not be construed to relieve the Subadviser of any
liability it may have arising under the Agreement Not to Compete or the
Acquisition Agreement dated August 17, 1995, among the Subadviser, the Adviser
and certain affiliates of the Subadviser.
XVI. Notices.
Any notice or other communication required or that may be given hereunder
shall be in writing and shall be delivered personally, telecopied, sent by
certified, registered or express mail, postage prepaid or sent by national
next-day delivery service and shall be deemed given when so delivered personally
or telecopied, or if mailed, two days after the date of mailing, or if by
next-day delivery service, on the business day following delivery thereto, as
follows or to such other location as any party notifies any other party:
A. if to the Adviser, to:
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Attention: Andrew J. Donohue
Executive Vice President and General Counsel
Telecopier: 212-321-1159
B. if to the Subadviser, to:
OpCap Advisors
c/o Oppenheimer Capital
225 Liberty Street
New York, New York 10281
Attention: Thomas E. Duggan
Secretary and General Counsel
Telecopier: 212-349-4759
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<PAGE>
XVII. Questions of Interpretation.
This Agreement shall be governed by the laws of the State of New York
applicable to agreements made and to be performed entirely within the State of
New York (without regard to any conflicts of law principles thereof). Any
question of interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the 1940 Act
shall be resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States Courts or, in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the SEC issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement is
revised by rule, regulation or order of the SEC, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
XVIII. Form ADV - Delivery.
The Adviser hereby acknowledges that it has received from the Subadviser a
copy of the Subadviser's Form ADV, Part II as currently filed, at least 48 hours
prior to entering into this Agreement and that it has read and understood the
disclosures set forth in the Subadviser's Form ADV, Part II.
XIX. Miscellaneous.
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors. XX. Counterparts.
This Agreement may be executed in counterparts, each of which shall
constitute an original and both of which, collectively, shall constitute one
agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers as of the 5th day of
November, 1997.
OPPENHEIMERFUNDS, INC.
By:/s/ Andrew J. Donohue
Andrew J. Donohue
Executive Vice President
OPCAP ADVISORS
By:/s/ Bernard H. Garil
Bernard H. Garil
President
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<PAGE>
SCHEDULE XIII.D.1
The universe of funds to which Class A shares of funds subadvised by OpCap
Advisors will be compared to so that it can be determined in which quartile the
performance ranks shall consist of those funds with the same Lipper investment
objective being offered as the only
class of shares of such fund or,
in the case where there is more than one class of shares being offered, with a
front-end load (typically referred to as Class A shares).
The present Lipper investment objective categories for the funds are:
Fund Lipper Category
Oppenheimer Quest Value Fund, Inc. CA - Capital Appreciation
Oppenheimer Quest Global Value Fund, Inc. GL - Global
Oppenheimer Quest Opportunity Value Fund FX - Flexible Portfolio
Oppenheimer Quest Small Cap Value Fund SG - Small Company Growth
Oppenheimer Quest Growth & Income Value Fund GI - Growth & Income
Oppenheimer Quest Officers Value Fund CA - Capital Appreciation
Oppenheimer Quest Capital Value Fund, Inc. CA - Capital Appreciation
ADVISORY\257SUB.WPD
SUBADVISORY AGREEMENT
THIS AGREEMENT is made by and between OppenheimerFunds, Inc., a Colorado
corporation (the "Adviser"), and OpCap Advisors, a Delaware general partnership
(the "Subadviser"), as of the date
set forth below.
RECITAL
WHEREAS, Oppenheimer Quest For Value Funds (the "Company") is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end, management investment company;
WHEREAS, the Adviser is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), as an investment adviser and engages in
the business of acting as an investment adviser;
WHEREAS, the Subadviser is registered under the Advisers Act as an
investment adviser and engages in the business of acting as an investment
adviser;
WHEREAS, the Company's Declaration of Trust authorizes the Board of
Trustees of the Company to classify or reclassify authorized but unissued shares
of the Company into series of shares representing
interests in various investment portfolios;
WHEREAS, pursuant to such authority, the Company has established the
Opportunity Value Fund
(the "Fund");
WHEREAS, the Adviser has entered into an Investment Advisory Agreement as
of November 22, 1995 with the Company (the "Investment Advisory Agreement"),
pursuant to which the Adviser acts as investment adviser with respect to the
Fund; and
WHEREAS, pursuant to Paragraph 2 of the Investment Advisory Agreement, the
Adviser has retained and wishes to continue to retain the Subadviser for
purposes of rendering investment advisory services to the Adviser in connection
with the Fund upon the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which are hereby
acknowledged, the parties hereto agree as follows:
I. Appointment and Obligations of the Adviser.
The Adviser hereby appoints the Subadviser to render, to the Adviser with
respect to the Fund, investment research and advisory services as set forth
below in Section II, under the supervision of the Adviser and subject to the
approval and direction of the Company's Board of Trustees (the "Board"), and the
Subadviser hereby accepts such appointment, all subject to the terms and
conditions contained herein. The Subadviser shall, for all purposes herein, be
deemed an independent contractor and shall not have, unless otherwise expressly
provided or authorized, any authority to act for or represent the Company or the
Fund in any way or otherwise to serve as or be deemed an agent of the Company or
the Fund.
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<PAGE>
II. Duties of the Subadviser and the Adviser.
A. Duties of the Subadviser.
The Subadviser shall regularly provide investment advice with respect to
the Fund and shall, subject to the terms of this Agreement, continuously
supervise the investment and reinvestment of cash, securities and instruments or
other property comprising the assets of the Fund, and in furtherance thereof,
the Subadviser's duties shall include:
1. Obtaining and evaluating pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the
Fund, and whether concerning the individual issuers whose securities
are included in the Fund or the activities in which such issuers
engage, or with respect to securities which the Subadviser considers
desirable for inclusion in the Fund's investment portfolio;
2. Determining which securities shall be purchased, sold or
exchanged by the Fund or otherwise represented in the Fund's
investment portfolio and regularly reporting thereon to the Adviser
and, at the request of the Adviser, to the Board;
3. Formulating and implementing continuing programs for the
purchases and sales of the securities of such issuers and regularly
reporting thereon to the Adviser and, at the request of the Adviser,
to the Board; and
4. Taking, on behalf of the Fund, all actions that appear to the
Subadviser necessary to carry into effect such investment program,
including the placing of purchase and sale orders, and making
appropriate reports thereon to the Adviser and
the Board.
B. Duties of the Adviser.
The Adviser shall retain responsibility for, among other things, providing
the following advice and services with respect to the Fund:
1. Without limiting the obligation of the Subadviser to so comply,
the Adviser shall monitor the investment program maintained by
the Subadviser for the Fund to ensure that the Fund's assets are
invested in compliance with this Agreement and the Fund's
Registration Statement, as currently in effect from time to time;
and
2. The Adviser shall oversee matters relating to Fund promotion,
including, but not limited to, marketing materials and the
Subadviser's reports to the Board.
III. Representations, Warranties and Covenants.
A. Representations, Warranties and Covenants of the Subadviser.
1. Organization. The Subadviser is now, and will continue to be, a
general partnership duly formed and validly existing under the
laws of its jurisdiction of formation,
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<PAGE>
fully authorized to enter into this Agreement and carry out its
duties and obligations hereunder.
2. Registration. The Subadviser is registered as an investment
adviser with the Securities and Exchange Commission (the "SEC")
under the Advisers Act, and is registered or licensed as an
investment adviser under the laws of all jurisdictions in which its
activities require it to be so registered or licensed, except where
the failure to be so licensed would not have a material adverse
effect on the Subadviser. The Subadviser shall maintain such
registration or license in effect at all times during the term of
this Agreement.
3. Best Efforts. The Subadviser at all times shall provide its best
judgment and effort to the Adviser and the Fund in carrying out its
obligations hereunder.
4. Other Covenants. The Subadviser further agrees that:
a. it will use the same skill and care in providing such
services as it uses in providing services to other
accounts for which it has investment management
responsibilities;
b. it will not make loans to any person to purchase or
carry units of beneficial interest in the Fund or make
loans to the Fund;
c. it will report regularly to the Fund and to the Adviser and
will make appropriate persons available for the purpose of
reviewing with representatives of the Adviser on a regular
basis the management of the Fund, including, without
limitation, review of the general investment strategy of the
Fund, economic considerations and general conditions
affecting the marketplace;
d. as required by applicable laws and regulations, it will
maintain books and records with respect to the Fund's
securities transactions and it will furnish to the
Adviser and to the Board such periodic and special
reports as the Adviser or the Board may reasonably
request;
e. it will treat confidentially and as proprietary information
of the Fund all records and other information relative to
the Fund, and will not use records and information for any
purpose other than performance of its responsibilities and
duties hereunder, except after prior notification to and
approval in writing by the Fund or when so requested by the
Fund or required by law or regulation;
f. it will, on a continuing basis and at its own expense, (1)
provide the distributor of the Fund (the "Distributor") with
assistance in the distribution and marketing of the Fund in
such amount and form as the Adviser may reasonably request
from time to time, and (2) use its best efforts to cause the
portfolio manager or other person who manages or is
-3-
<PAGE>
responsible for overseeing the management of the Fund's
portfolio (the "Portfolio Manager") to provide marketing
and distribution assistance to the Distributor,
including, without limitation, conference calls,
meetings and road trips, provided that each Portfolio
Manager shall not be required to devote more than 10% of
his or her time to such marketing and distribution
activities;
g. it will use its reasonable best efforts (i) to retain
the services of the Portfolio Manager who manages the
portfolio of the Fund, from time to time and (ii) to
promptly obtain the services of a Portfolio Manager
acceptable to the Adviser if the services of the
Portfolio Manager are no longer available to the
Subadviser;
h. it will, from time to time, assure that each Portfolio
Manager is acceptable to the Adviser;
i. it will obtain the written approval of the Adviser
prior to designating a new Portfolio Manager; provided,
however, that, if the services of a Portfolio Manager
are no longer available to the Subadviser due to
circumstances beyond the reasonable control of the
Subadviser (e.g., voluntary resignation, death or
disability), the Subadviser may designate an interim
Portfolio Manager who (a) shall be reasonably
acceptable to the Adviser and (b) shall function for a
reasonable period of time until the Subadviser
designates an acceptable permanent replacement; and
j. it will promptly notify the Adviser of any impending
change in Portfolio Manager, portfolio management or any
other material matter that may require disclosure to the
Board, shareholders of the
Fund or dealers.
B. Representations, Warranties and Covenants of the Adviser.
1. Organization. The Adviser is now, and will continue to be, duly
organized and in good standing under the laws of its state of
incorporation, fully authorized to enter into this Agreement and
carry out its duties and obligations hereunder.
2. Registration. The Adviser is registered as an investment adviser
with the SEC under the Advisers Act, and is registered or licensed
as an investment adviser under the laws of all jurisdictions in
which its activities require it to be so registered or licensed. The
Adviser shall maintain such registration or license in effect at all
times during the term of this Agreement.
3. Best Efforts. The Adviser at all times shall provide its best
judgment and effort to the Fund in carrying out its obligations
hereunder. For a period of five years from November 22, 1995, and
subject to the Adviser's fiduciary obligations to the Fund and its
shareholders, the Adviser will not recommend to the Board that the
Fund be reorganized into another Fund unless the total net assets of
the Fund are less than $100 million at the time of such
reorganization.
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<PAGE>
IV. Compliance with Applicable Requirements.
In carrying out its obligations under this Agreement, the Subadviser shall
at all times conform to:
A. all applicable provisions of the 1940 Act and any rules and
regulations adopted thereunder;
B. the provisions of the registration statement of the Company, as the
same may be amended from time to time, under the Securities Act of
1933, as amended, and the 1940 Act;
C. the provisions of the Company's Declaration of Trust or other
governing document, as
amended from time to time;
D. the provisions of the By-laws of the Company, as amended from
time to time;
E. any other applicable provisions of state or federal law; and
F. guidelines, investment restrictions, policies, procedures or
instructions adopted or issued by the Company, the Fund or the
Adviser from time to time.
The Adviser shall promptly notify the Subadviser of any changes or
amendments to the provisions
of B., C., D. and F. above when such changes or amendments relate to the
obligations of the Subadviser.
V. Control by the Board.
Any investment program undertaken by the Subadviser pursuant to this
Agreement, as well as any other activities undertaken by the Subadviser with
respect to the Fund, shall at all times be subject to any directives of the
Adviser and the Board.
VI. Books and Records.
The Subadviser agrees that all records which it maintains for the Fund on
behalf of the Adviser are the property of the Fund and further agrees to
surrender promptly to the Fund or to the Adviser any of such records upon
request. The Subadviser further agrees to preserve for the periods prescribed by
applicable laws, rules and regulations all records required to be maintained by
the Subadviser on behalf of the Adviser under such applicable laws, rules and
regulations, or such longer period as the Adviser may reasonably request from
time to time.
VII. Broker-Dealer Relationships.
A. Portfolio Trades.
The Subadviser, at its own expense, and to the extent appropriate,
in consultation with the Adviser, shall place all orders for the purchase and
sale of portfolio securities for the Fund with brokers or dealers selected by
the Subadviser, which may include, to the extent permitted by the Adviser and
the Fund, brokers or dealers affiliated with the Subadviser. The Subadviser
shall use its best efforts to seek to execute portfolio transactions at prices
that are advantageous to the Fund and at commission rates that are reasonable in
relation to the benefits received.
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<PAGE>
B. Selection of Broker-Dealers.
With respect to the execution of particular transactions, the
Subadviser may, to the extent permitted by the Adviser and the Fund, select
brokers or dealers who also provide brokerage and research services (as those
terms are defined in Section 28(e) of the Securities Exchange Act of 1934, as
amended) to the Fund and/or the other accounts over which the Subadviser or its
affiliates exercise investment discretion. The Subadviser is authorized to pay a
broker or dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for the Fund that is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if the Subadviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer. This determination may be viewed in
terms of either that particular transaction or the overall responsibilities that
the Subadviser and its affiliates have with respect to accounts over which they
exercise investment discretion. The Adviser, Subadviser and the Board shall
periodically review the commissions paid by the Fund to determine, among other
things, if the commissions paid over representative periods of time were
reasonable in relation to the benefits received.
C. Soft Dollar Arrangements.
The Subadviser may enter into "soft dollar" arrangements through the
agency of third parties on behalf of the Adviser. Soft dollar arrangements for
services may be entered into in order to facilitate an improvement in
performance in respect of the Subadviser's service to the Adviser with respect
to the Fund. The Subadviser makes no direct payments but instead undertakes to
place business with broker-dealers who in turn pay third parties who provide
these services. Soft dollar transactions will be conducted on an arm's-length
basis, and the Subadviser will secure best execution for the Adviser. Any
arrangements involving soft dollars and/or brokerage services shall be effected
in compliance with Section 28(e) of the Securities Exchange Act of 1934, as
amended, and the policies that the Adviser and the Board may adopt from time to
time. The Subadviser agrees to provide reports to the Adviser as necessary for
purposes of providing information on these arrangements to the Board.
VIII. Compensation.
A. Amount of Compensation. The Adviser shall pay the Subadviser, as
compensation for services rendered hereunder, from its own assets, an
annual fee, payable monthly, equal to 40% of the investment advisory
fee collected by the Adviser from the Fund, based on the total net
assets of the Fund existing as of November 22, 1995 (the "base
amount"), plus 30% of the advisory fee collected by the Adviser, based
on the total net assets of the Fund that exceed the base amount (the
"marginal amount"), in each case calculated after any waivers,
voluntary or otherwise.
B. Calculation of Compensation. Except as hereinafter set forth,
compensation under this Agreement shall be calculated and accrued on
the same basis as the advisory fee paid to the Adviser by the Fund. If
this Agreement becomes effective subsequent to the first day of a
month or shall terminate before the last day of a month, compensation
for that part of the month this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fees set
forth above.
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<PAGE>
C. Payment of Compensation: Subject to the provisions of this
paragraph, payment of the Subadviser's compensation for the
preceding month shall be made within 15 days after the end of the
preceding month.
D. Reorganization of the Fund. If the Fund is reorganized with another
investment company for which the Subadviser does not serve as an
investment adviser or subadviser, and the Fund is the surviving
entity, the subadvisory fee payable under this section shall be
adjusted in an appropriate manner as the parties may agree.
IX. Allocation of Expenses.
The Subadviser shall pay the expenses incurred in providing services in
connection with this Agreement, including, but not limited to, the salaries,
employment benefits and other related costs of those of its personnel engaged in
providing investment advice to the Fund hereunder, including, without
limitation, office space, office equipment, telephone and postage costs and
other expenses. In the event of an "assignment" of this Agreement, other than an
assignment resulting solely by action of the Adviser or an affiliate thereof,
the Subadviser shall be responsible for payment of all costs and expenses
incurred by the Adviser and the Fund relating thereto, including, but not
limited to, reasonable legal, accounting, printing and mailing costs related to
obtaining approval of Fund shareholders.
X. Non-Exclusivity.
The services of the Subadviser with respect to the Company and the Fund
are not to be deemed to be exclusive, and the Subadviser shall be free to render
investment advisory and administrative or other services to others (including
other investment companies) and to engage in other activities, subject to the
provisions of a certain Agreement Not to Compete dated as of November 22, 1995
among the Adviser, Oppenheimer Capital, the Subadviser and Quest For Value
Distributors (the "Agreement Not to Compete"). It is understood and agreed that
officers or directors of the Subadviser may serve as officers or directors of
the Adviser or of the Fund; that officers or directors of the Adviser or of the
Company may serve as officers or directors of the Subadviser to the extent
permitted by law; and that the officers and directors of the Subadviser are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm or trust, including other investment advisory
companies (subject to the provisions of the Agreement Not to Compete) provided
it is permitted by applicable law and does not adversely affect the Company or
the Fund.
XI. Term.
This Agreement shall become effective at the close of business on the date
hereof and shall remain in force and effect, subject to Paragraphs XII.A and
XII.B hereof and approval by the Fund's shareholders, for a period of two years
from the date hereof.
XII. Renewal.
Following the expiration of its initial two-year term, the Agreement shall
continue in full force and effect from year to year until November 22, 2005,
provided that such continuance is specifically approved:
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<PAGE>
A. at least annually (1) by the Board or by the vote of a majority of the
Fund's outstanding voting securities (as defined in Section 2(a)(42)
of the 1940 Act), and (2) by the affirmative vote of a majority of the
Trustees who are not parties to this Agreement or interested persons
of a party to this Agreement (other than as a Trustee of the Fund), by
votes cast in person at a meeting specifically called for such
purpose; or
B. by such method required by applicable law, rule or regulation then
in effect.
XIII. Termination.
A. Termination by the Company. This Agreement may be terminated at any
time, without the payment of any penalty, by vote of the Board or by
vote of a majority of the Fund's outstanding voting securities, on
sixty (60) days' written notice. The notice provided for herein may
be waived by the party required to be notified.
B. Assignment. This Agreement shall automatically terminate in the event
of its "assignment," as defined in Section 2 (a) (4) of the 1940 Act.
In the event of an assignment that occurs solely due to the change in
control of the Subadviser (provided that no condition exists that
permits, or, upon the consummation of the assignment, will permit, the
termination of this Agreement by the Adviser pursuant to Section XIII.
D. hereof), the Adviser and the Subadviser, at the sole expense of the
Subadviser, shall use their reasonable best efforts to obtain
shareholder approval of a successor Subadvisory Agreement on
substantially the same terms as contained in this Agreement.
C. Payment of Fees After Termination. Notwithstanding the termination of
this Agreement prior to the tenth anniversary of November 22, 1995,
the Adviser shall continue to pay to the Subadviser the subadvisory
fee for the term of this Agreement and any renewals thereof through
such tenth anniversary, if: (1) the Adviser or the Company terminates
this Agreement for a reason other than the reasons set forth in
Section XIII.D. hereof, provided the Investment Advisory Agreement
remains in effect; (2) the Fund reorganizes with another investment
company advised by the Adviser (or an affiliate of the Adviser) and
for which the Subadviser does not serve as an investment adviser or
subadviser and such other investment company is the surviving entity;
or (3) the Investment Advisory Agreement terminates (i) by reason of
an "assignment;" (ii) because the Adviser is disqualified from serving
as an investment adviser; or (iii) by reason of a voluntary
termination by the Adviser; provided that the Subadviser does not
serve as the investment adviser or subadviser of the Fund after such
termination of the Investment Advisory Agreement. The amount of the
subadvisory fee paid pursuant to this section shall be calculated on
the basis of the Fund's net assets measured at the time of such
termination or such reorganization. Notwithstanding anything to the
contrary, if the Subadviser terminates this Agreement or if this
Agreement is terminated by operation of law, due solely to an act or
omission by the Subadviser, Oppenheimer Capital ("OpCap") or their
respective partners, subsidiaries, directors, officers, employees or
agents (other than by reason of an "assignment"of this Agreement),
then the Adviser shall not be liable for any further payments under
this Agreement, provided, however, that if at any time prior to the
end of the term of the Agreement Not to Compete any event that would
have permitted the termination of this Agreement by the Adviser
pursuant to Section XIII. D. (3) hereof occurs, the Adviser shall be
under no further obligation to pay any subadvisory fees.
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<PAGE>
D. Termination by the Adviser. The Adviser may terminate this Agreement
without penalty and without the payment of any fee or penalty,
immediately after giving written notice, upon the occurrence of any
of the following events:
1. The Fund's investment performance of the Fund's Class A shares
compared to the appropriate universe of Class A shares (or their
equivalent), as set forth on Schedule D-1, as amended from time
to time, ranks in the bottom quartile for two consecutive
calendar years (beginning with the calendar year 1995) and earns
a Morningstar three-year rating of less than three (3) stars at
the time of such termination; or
2. Any of the Subadviser, OpCap, their respective partners,
subsidiaries, affiliates, directors, officers, employees or
agents engages in an action or omits to take an action that would
cause the Subadviser or OpCap to be disqualified in any manner
under Section 9(a) of the 1940 Act, if the SEC were not to grant
an exemptive order under Section 9(c) thereof or that would
constitute grounds for the SEC to deny, revoke or suspend the
registration of the Subadviser as an investment adviser with the
SEC;
3. Any of OpCap, the Subadviser, their respective partners,
subsidiaries, affiliates, directors, officers, employees or
agents causes a material violation of the Agreement Not to
Compete which is not cured in accordance with the provisions
of that agreement; or
4. The Subadviser breaches the representations contained in
Paragraph III.A.4.i. of this Agreement or any other material
provision of this Agreement, and any such breach is not cured
within a reasonable period of time after notice thereof from the
Adviser to the Subadviser. However, consistent with its fiduciary
obligations, for a period of seven months the Adviser will not
terminate this Agreement solely because the Subadviser has failed
to designate an acceptable permanent replacement to a Portfolio
Manager whose services are no longer available to the Subadviser
due to circumstances beyond the reasonable control of the
Subadviser, provided that the Subadviser uses its reasonable best
efforts to promptly obtain the services of a Portfolio Manager
acceptable to the Adviser and further provided that the Adviser
has not unreasonably withheld approval of such replacement
Portfolio Manager.
E. Transactions in Progress upon Termination. The Adviser and
Subadviser will cooperate with each other to ensure that
portfolio or other transactions in progress at the date of
termination of this Agreement shall be completed by the Adviser
in accordance with the terms of such transactions, and to this
end the Subadviser shall provide the Adviser with all necessary
information and documentation to secure the implementation
thereof.
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<PAGE>
XIV. Non-Solicitation.
During the term of this Agreement, the Adviser (and its affiliates under
its control) shall not solicit or knowingly assist in the solicitation of any
Portfolio Manager of the Fund or any portfolio assistant of the Fund then
employed by the Subadviser or OpCap, provided, however, that the Adviser (or its
affiliates) may solicit or hire any such individual who (A) the Subadviser or
OpCap (or its affiliates) has terminated or (B) has voluntarily terminated his
or her employment with the Subadviser, OpCap (or its affiliates) without
inducement of the Adviser (or its affiliates under its control) prior to the
time of such solicitation. Advertising in general circulation newspapers or
industry newsletters by the Adviser shall not constitute "inducement" by the
Adviser (or its affiliates under its control).
XV. Liability of the Subadviser.
In the absence of willful misfeasance, bad faith, negligence or reckless
disregard of obligations or duties hereunder on the part of the Subadviser or
any of its officers, directors or employees, the Subadviser shall not be subject
to liability to the Adviser for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security; provided, however,
that the foregoing shall not be construed to relieve the Subadviser of any
liability it may have arising under the Agreement Not to Compete or the
Acquisition Agreement dated August 17, 1995, among the Subadviser, the Adviser
and certain affiliates of the Subadviser.
XVI. Notices.
Any notice or other communication required or that may be given hereunder
shall be in writing and shall be delivered personally, telecopied, sent by
certified, registered or express mail, postage prepaid or sent by national
next-day delivery service and shall be deemed given when so delivered personally
or telecopied, or if mailed, two days after the date of mailing, or if by
next-day delivery service, on the business day following delivery thereto, as
follows or to such other location as any party notifies any other party:
A. if to the Adviser, to:
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Attention: Andrew J. Donohue
Executive Vice President and General Counsel
Telecopier: 212-321-1159
B. if to the Subadviser, to:
OpCap Advisors
c/o Oppenheimer Capital
225 Liberty Street
New York, New York 10281
Attention: Thomas E. Duggan
Secretary and General Counsel
Telecopier: 212-349-4759
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<PAGE>
XVII. Questions of Interpretation.
This Agreement shall be governed by the laws of the State of New York
applicable to agreements made and to be performed entirely within the State of
New York (without regard to any conflicts of law principles thereof). Any
question of interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the 1940 Act
shall be resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States Courts or, in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the SEC issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement is
revised by rule, regulation or order of the SEC, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
XVIII. Form ADV - Delivery.
The Adviser hereby acknowledges that it has received from the Subadviser a
copy of the Subadviser's Form ADV, Part II as currently filed, at least 48 hours
prior to entering into this Agreement and that it has read and understood the
disclosures set forth in the Subadviser's Form ADV, Part II.
XIX. Miscellaneous.
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors.
XX. Counterparts.
This Agreement may be executed in counterparts, each of which shall
constitute an original and both of which, collectively, shall constitute one
agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers as of the 5th day of
November, 1997.
OPPENHEIMERFUNDS, INC.
By:/s/ Andrew J. Donohue
Andrew J. Donohue
Executive Vice President
OPCAP ADVISORS
By:/s/ Bernard H. Garil
Bernard H. Garil
President
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<PAGE>
SCHEDULE XIII.D.1
The universe of funds to which Class A shares of funds subadvised by OpCap
Advisors will be compared to so that it can be determined in which quartile the
performance ranks shall consist of those funds with the same Lipper investment
objective being offered as the only class of shares of such fund or, in the case
where there is more than one class of shares being offered, with a front-end
load (typically referred to as Class A shares).
The present Lipper investment objective categories for the funds are:
Fund Lipper Category
Oppenheimer Quest Value Fund, Inc. CA - Capital Appreciation
Oppenheimer Quest Global Value Fund, Inc. GL - Global
Oppenheimer Quest Opportunity Value Fund FX - Flexible Portfolio
Oppenheimer Quest Small Cap Value Fund SG - Small Company Growth
Oppenheimer Quest Growth & Income Value Fund GI - Growth & Income
Oppenheimer Quest Officers Value Fund CA - Capital Appreciation
Oppenheimer Quest Capital Value Fund, Inc. CA - Capital Appreciation
ADVISORY\236SUB.WPD
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SUBADVISORY AGREEMENT
THIS AGREEMENT is made by and between OppenheimerFunds, Inc., a Colorado
corporation (the "Adviser"), and OpCap Advisors, a Delaware general partnership
(the "Subadviser"), as of the date
set forth below.
RECITAL
WHEREAS, Oppenheimer Quest For Value Funds (the "Company") is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end, management investment company;
WHEREAS, the Adviser is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), as an investment adviser and engages in
the business of acting as an investment adviser;
WHEREAS, the Subadviser is registered under the Advisers Act as an
investment adviser and engages in the business of acting as an investment
adviser;
WHEREAS, the Company's Declaration of Trust authorizes the Board of
Trustees of the Company to classify or reclassify authorized but unissued shares
of the Company into series of shares representing
interests in various investment portfolios;
WHEREAS, pursuant to such authority, the Company has established the
Officers Value Fund (the
"Fund");
WHEREAS, the Adviser has entered into an Investment Advisory Agreement as
of November 22, 1995 with the Company (the "Investment Advisory Agreement"),
pursuant to which the Adviser acts as investment adviser with respect to the
Fund; and
WHEREAS, pursuant to Paragraph 2 of the Investment Advisory Agreement, the
Adviser has retained and wishes to continue to retain the Subadviser for
purposes of rendering investment advisory services to the Adviser in connection
with the Fund upon the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which are hereby
acknowledged, the parties hereto agree as follows:
I. Appointment and Obligations of the Adviser.
The Adviser hereby appoints the Subadviser to render, to the Adviser with
respect to the Fund, investment research and advisory services as set forth
below in Section II, under the supervision of the Adviser and subject to the
approval and direction of the Company's Board of Trustees (the "Board"), and the
Subadviser hereby accepts such appointment, all subject to the terms and
conditions contained herein. The Subadviser shall, for all purposes herein, be
deemed an independent contractor and shall not have, unless otherwise expressly
provided or authorized, any authority to act for or represent the Company or the
Fund in any way or otherwise to serve as or be deemed an agent of the Company or
the Fund.
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<PAGE>
II. Duties of the Subadviser and the Adviser.
A. Duties of the Subadviser.
The Subadviser shall regularly provide investment advice with respect to
the Fund and shall, subject to the terms of this Agreement, continuously
supervise the investment and reinvestment of cash, securities and instruments or
other property comprising the assets of the Fund, and in furtherance thereof,
the Subadviser's duties shall include:
1. Obtaining and evaluating pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the
Fund, and whether concerning the individual issuers whose securities
are included in the Fund or the activities in which such issuers
engage, or with respect to securities which the Subadviser considers
desirable for inclusion in the Fund's investment portfolio;
2. Determining which securities shall be purchased, sold or
exchanged by the Fund or otherwise represented in the Fund's
investment portfolio and regularly reporting thereon to the Adviser
and, at the request of the Adviser, to the Board;
3. Formulating and implementing continuing programs for the
purchases and sales of the securities of such issuers and regularly
reporting thereon to the Adviser and, at the request of the Adviser,
to the Board; and
4. Taking, on behalf of the Fund, all actions that appear to the
Subadviser necessary to carry into effect such investment program,
including the placing of purchase and sale orders, and making
appropriate reports thereon to the Adviser and
the Board.
B. Duties of the Adviser.
The Adviser shall retain responsibility for, among other things, providing
the following advice and services with respect to the Fund:
1. Without limiting the obligation of the Subadviser to so comply,
the Adviser shall monitor the investment program maintained by
the Subadviser for the Fund to ensure that the Fund's assets are
invested in compliance with this Agreement and the Fund's
Registration Statement, as currently in effect from time to time;
and
2. The Adviser shall oversee matters relating to Fund promotion,
including, but not limited to, marketing materials and the
Subadviser's reports to the Board.
III. Representations, Warranties and Covenants.
A. Representations, Warranties and Covenants of the Subadviser.
1. Organization. The Subadviser is now, and will continue to be, a
general partnership duly formed and validly existing under the
laws of its jurisdiction of formation,
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<PAGE>
fully authorized to enter into this Agreement and carry out its
duties and obligations hereunder.
2. Registration. The Subadviser is registered as an investment
adviser with the Securities and Exchange Commission (the "SEC")
under the Advisers Act, and is registered or licensed as an
investment adviser under the laws of all jurisdictions in which its
activities require it to be so registered or licensed, except where
the failure to be so licensed would not have a material adverse
effect on the Subadviser. The Subadviser shall maintain such
registration or license in effect at all times during the term of
this Agreement.
3. Best Efforts. The Subadviser at all times shall provide its best
judgment and effort to the Adviser and the Fund in carrying out its
obligations hereunder.
4. Other Covenants. The Subadviser further agrees that:
a. it will use the same skill and care in providing such
services as it uses in providing services to other
accounts for which it has investment management
responsibilities;
b. it will not make loans to any person to purchase or
carry units of beneficial interest in the Fund or make
loans to the Fund;
c. it will report regularly to the Fund and to the Adviser
and will make appropriate persons available for the
purpose of reviewing with representatives of the
Adviser on a regular basis the management of the Fund,
including, without limitation, review of the general
investment strategy of the Fund, economic
considerations and general conditions affecting the
marketplace;
d. as required by applicable laws and regulations, it will
maintain books and records with respect to the Fund's
securities transactions and it will furnish to the
Adviser and to the Board such periodic and special
reports as the Adviser or the Board may reasonably
request;
e. it will treat confidentially and as proprietary
information of the Fund all records and other
information relative to the Fund, and will not use
records and information for any purpose other than
performance of its responsibilities and duties
hereunder, except after prior notification to and
approval in writing by the Fund or when so requested by
the Fund or required by law or regulation;
f. it will, on a continuing basis and at its own expense,
(1) provide the distributor of the Fund (the
"Distributor") with assistance in the distribution and
marketing of the Fund in such amount and form as the
Adviser may reasonably request from time to time, and
(2) use its best efforts to cause the portfolio manager
or other person who manages or is responsible for
overseeing the management of the Fund's portfolio (the
-3-
<PAGE>
"Portfolio Manager") to provide marketing and
distribution assistance to the Distributor, including,
without limitation, conference calls, meetings and road
trips, provided that each Portfolio Manager shall not be
required to devote more than 10% of his or her time to
such marketing and distribution activities;
g. it will use its reasonable best efforts (i) to retain
the services of the Portfolio Manager who manages the
portfolio of the Fund, from time to time and (ii) to
promptly obtain the services of a Portfolio Manager
acceptable to the Adviser if the services of the
Portfolio Manager are no longer available to the
Subadviser;
h. it will, from time to time, assure that each Portfolio
Manager is acceptable to the Adviser;
i. it will obtain the written approval of the Adviser
prior to designating a new Portfolio Manager; provided,
however, that, if the services of a Portfolio Manager
are no longer available to the Subadviser due to
circumstances beyond the reasonable control of the
Subadviser (e.g., voluntary resignation, death or
disability), the Subadviser may designate an interim
Portfolio Manager who (a) shall be reasonably
acceptable to the Adviser and (b) shall function for a
reasonable period of time until the Subadviser
designates an acceptable permanent replacement; and
j. it will promptly notify the Adviser of any impending
change in Portfolio Manager, portfolio management or any
other material matter that may require disclosure to the
Board, shareholders of the
Fund or dealers.
B. Representations, Warranties and Covenants of the Adviser.
1. Organization. The Adviser is now, and will continue to be, duly
organized and in good standing under the laws of its state of
incorporation, fully authorized to enter into this Agreement and
carry out its duties and obligations hereunder.
2. Registration. The Adviser is registered as an investment adviser
with the SEC under the Advisers Act, and is registered or licensed
as an investment adviser under the laws of all jurisdictions in
which its activities require it to be so registered or licensed. The
Adviser shall maintain such registration or license in effect at all
times during the term of this Agreement.
3. Best Efforts. The Adviser at all times shall provide its best
judgment and effort to the Fund in carrying out its obligations
hereunder.
IV. Compliance with Applicable Requirements.
In carrying out its obligations under this Agreement, the Subadviser shall
at all times conform to:
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<PAGE>
A. all applicable provisions of the 1940 Act and any rules and
regulations adopted thereunder;
B. the provisions of the registration statement of the Company, as the
same may be amended from time to time, under the Securities Act of
1933, as amended, and the 1940 Act;
C. the provisions of the Company's Declaration of Trust or other
governing document, as
amended from time to time;
D. the provisions of the By-laws of the Company, as amended from
time to time;
E. any other applicable provisions of state or federal law; and
F. guidelines, investment restrictions, policies, procedures or
instructions adopted or issued by the Company, the Fund or the
Adviser from time to time.
The Adviser shall promptly notify the Subadviser of any changes or
amendments to the provisions
of B., C., D. and F. above when such changes or amendments relate to the
obligations of the Subadviser.
V. Control by the Board.
Any investment program undertaken by the Subadviser pursuant to this
Agreement, as well as any other activities undertaken by the Subadviser with
respect to the Fund, shall at all times be subject to any directives of the
Adviser and the Board.
VI. Books and Records.
The Subadviser agrees that all records which it maintains for the Fund on
behalf of the Adviser are the property of the Fund and further agrees to
surrender promptly to the Fund or to the Adviser any of such records upon
request. The Subadviser further agrees to preserve for the periods prescribed by
applicable laws, rules and regulations all records required to be maintained by
the Subadviser on behalf of the Adviser under such applicable laws, rules and
regulations, or such longer period as the Adviser may reasonably request from
time to time.
VII. Broker-Dealer Relationships.
A. Portfolio Trades.
The Subadviser, at its own expense, and to the extent appropriate,
in consultation with the Adviser, shall place all orders for the purchase and
sale of portfolio securities for the Fund with brokers or dealers selected by
the Subadviser, which may include, to the extent permitted by the Adviser and
the Fund, brokers or dealers affiliated with the Subadviser. The Subadviser
shall use its best efforts to seek to execute portfolio transactions at prices
that are advantageous to the Fund and at commission rates that are reasonable in
relation to the benefits received.
B. Selection of Broker-Dealers.
With respect to the execution of particular transactions, the
Subadviser may, to the extent
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<PAGE>
permitted by the Adviser and the Fund, select brokers or dealers who also
provide brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934, as amended) to the Fund and/or the
other accounts over which the Subadviser or its affiliates exercise investment
discretion. The Subadviser is authorized to pay a broker or dealer who provides
such brokerage and research services a commission for executing a portfolio
transaction for the Fund that is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if the
Subadviser determines in good faith that such amount of commission is reasonable
in relation to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either that
particular transaction or the overall responsibilities that the Subadviser and
its affiliates have with respect to accounts over which they exercise investment
discretion. The Adviser, Subadviser and the Board shall periodically review the
commissions paid by the Fund to determine, among other things, if the
commissions paid over representative periods of time were reasonable in relation
to the benefits received.
C. Soft Dollar Arrangements.
The Subadviser may enter into "soft dollar" arrangements through the
agency of third parties on behalf of the Adviser. Soft dollar arrangements for
services may be entered into in order to facilitate an improvement in
performance in respect of the Subadviser's service to the Adviser with respect
to the Fund. The Subadviser makes no direct payments but instead undertakes to
place business with broker-dealers who in turn pay third parties who provide
these services. Soft dollar transactions will be conducted on an arm's-length
basis, and the Subadviser will secure best execution for the Adviser. Any
arrangements involving soft dollars and/or brokerage services shall be effected
in compliance with Section 28(e) of the Securities Exchange Act of 1934, as
amended, and the policies that the Adviser and the Board may adopt from time to
time. The Subadviser agrees to provide reports to the Adviser as necessary for
purposes of providing information on these arrangements to the Board.
VIII. Compensation.
A. Amount of Compensation. The Adviser shall pay the Subadviser, as
compensation for services rendered hereunder, from its own assets, an
annual fee, payable monthly, equal to 40% of the investment advisory
fee collected by the Adviser from the Fund, based on the total net
assets of the Fund existing as of November 22, 1995 (the "base
amount"), plus 30% of the advisory fee collected by the Adviser, based
on the total net assets of the Fund that exceed the base amount (the
"marginal amount"), in each case calculated after any waivers,
voluntary or otherwise.
B. Calculation of Compensation. Except as hereinafter set forth,
compensation under this Agreement shall be calculated and accrued on
the same basis as the advisory fee paid to the Adviser by the Fund. If
this Agreement becomes effective subsequent to the first day of a
month or shall terminate before the last day of a month, compensation
for that part of the month this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fees set
forth above.
C. Payment of Compensation: Subject to the provisions of this
paragraph, payment of the Subadviser's compensation for the
preceding month shall be made within 15 days after the end of the
preceding month.
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<PAGE>
D. Reorganization of the Fund. If the Fund is reorganized with another
investment company for which the Subadviser does not serve as an
investment adviser or subadviser, and the Fund is the surviving
entity, the subadvisory fee payable under this section shall be
adjusted in an appropriate manner as the parties may agree.
IX. Allocation of Expenses.
The Subadviser shall pay the expenses incurred in providing services in
connection with this Agreement, including, but not limited to, the salaries,
employment benefits and other related costs of those of its personnel engaged in
providing investment advice to the Fund hereunder, including, without
limitation, office space, office equipment, telephone and postage costs and
other expenses. In the event of an "assignment" of this Agreement, other than an
assignment resulting solely by action of the Adviser or an affiliate thereof,
the Subadviser shall be responsible for payment of all costs and expenses
incurred by the Adviser and the Fund relating thereto, including, but not
limited to, reasonable legal, accounting, printing and mailing costs related to
obtaining approval of Fund shareholders.
X. Non-Exclusivity.
The services of the Subadviser with respect to the Company and the Fund
are not to be deemed to be exclusive, and the Subadviser shall be free to render
investment advisory and administrative or other services to others (including
other investment companies) and to engage in other activities, subject to the
provisions of a certain Agreement Not to Compete dated as of November 22, 1995
among the Adviser, Oppenheimer Capital, the Subadviser and Quest For Value
Distributors (the "Agreement Not to Compete"). It is understood and agreed that
officers or directors of the Subadviser may serve as officers or directors of
the Adviser or of the Fund; that officers or directors of the Adviser or of the
Company may serve as officers or directors of the Subadviser to the extent
permitted by law; and that the officers and directors of the Subadviser are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm or trust, including other investment advisory
companies (subject to the provisions of the Agreement Not to Compete) provided
it is permitted by applicable law and does not adversely affect the Company or
the Fund.
XI. Term.
This Agreement shall become effective at the close of business on the date
hereof and shall remain in force and effect, subject to Paragraphs XII.A and
XII.B hereof and approval by the Fund's shareholders, for a period of two years
from the date hereof.
XII. Renewal.
Following the expiration of its initial two-year term, the Agreement shall
continue in full force and effect from year to year until November 22, 2005,
provided that such continuance is specifically approved:
A. at least annually (1) by the Board or by the vote of a majority of the
Fund's outstanding voting securities (as defined in Section 2(a)(42)
of the 1940 Act), and (2) by the affirmative vote of a majority of the
Trustees who are not parties to this Agreement or interested persons
of a party to this Agreement (other than as a Trustee of the Fund), by
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<PAGE>
votes cast in person at a meeting specifically called for such
purpose; or
B. by such method required by applicable law, rule or regulation then
in effect.
XIII. Termination.
A. Termination by the Company. This Agreement may be terminated at any
time, without the payment of any penalty, by vote of the Board or by
vote of a majority of the Fund's outstanding voting securities, on
sixty (60) days' written notice. The notice provided for herein may
be waived by the party required to be notified.
B. Assignment. This Agreement shall automatically terminate in the
event of its "assignment," as defined in Section 2 (a) (4) of the
1940 Act. In the event of an assignment that occurs solely due to
the change in control of the Subadviser (provided that no
condition exists that permits, or, upon the consummation of the
assignment, will permit, the termination of this Agreement by the
Adviser pursuant to Section XIII. D. hereof), the Adviser and the
Subadviser, at the sole expense of the Subadviser, shall use
their reasonable best efforts to obtain shareholder approval of a
successor Subadvisory Agreement on substantially the same terms
as contained in this Agreement.
C. Payment of Fees After Termination. Notwithstanding the
termination of this Agreement prior to the tenth anniversary of
November 22, 1995, the Adviser shall continue to pay to the
Subadviser the subadvisory fee for the term of this Agreement and
any renewals thereof through such tenth anniversary, if: (1) the
Adviser or the Company terminates this Agreement for a reason
other than the reasons set forth in Section XIII.D. hereof,
provided the Investment Advisory Agreement remains in effect; (2)
the Fund reorganizes with another investment company advised by
the Adviser (or an affiliate of the Adviser) and for which the
Subadviser does not serve as an investment adviser or subadviser
and such other investment company is the surviving entity; or (3)
the Investment Advisory Agreement terminates (i) by reason of an
"assignment;" (ii) because the Adviser is disqualified from
serving as an investment adviser; or (iii) by reason of a
voluntary termination by the Adviser; provided that the
Subadviser does not serve as the investment adviser or subadviser
of the Fund after such termination of the Investment Advisory
Agreement. The amount of the subadvisory fee paid pursuant to
this section shall be calculated on the basis of the Fund's net
assets measured at the time of such termination or such
reorganization. Notwithstanding anything to the contrary, if the
Subadviser terminates this Agreement or if this Agreement is
terminated by operation of law, due solely to an act or omission
by the Subadviser, Oppenheimer Capital ("OpCap") or their
respective partners, subsidiaries, directors, officers, employees
or agents (other than by reason of an "assignment"of this
Agreement), then the Adviser shall not be liable for any further
payments under this Agreement, provided, however, that if at any
time prior to the end of the term of the Agreement Not to Compete
any event that would have permitted the termination of this
Agreement by the Adviser pursuant to Section XIII. D. (3) hereof
occurs, the Adviser shall be under no further obligation to pay
any subadvisory fees.
D. Termination by the Adviser. The Adviser may terminate this Agreement
without penalty and without the payment of any fee or penalty,
immediately after giving written notice,
-8-
<PAGE>
upon the occurrence of any of the following events:
1. The Fund's investment performance of the Fund's Class A shares
compared to the appropriate universe of Class A shares (or their
equivalent), as set forth on Schedule D-1, as amended from time
to time, ranks in the bottom quartile for two consecutive
calendar years (beginning with the calendar year 1995) and earns
a Morningstar three-year rating of less than three (3) stars at
the time of such termination; or
2. Any of the Subadviser, OpCap, their respective partners,
subsidiaries, affiliates, directors, officers, employees or
agents engages in an action or omits to take an action that would
cause the Subadviser or OpCap to be disqualified in any manner
under Section 9(a) of the 1940 Act, if the SEC were not to grant
an exemptive order under Section 9(c) thereof or that would
constitute grounds for the SEC to deny, revoke or suspend the
registration of the Subadviser as an investment adviser with the
SEC;
3. Any of OpCap, the Subadviser, their respective partners,
subsidiaries, affiliates, directors, officers, employees or
agents causes a material violation of the Agreement Not to
Compete which is not cured in accordance with the provisions
of that agreement; or
4. The Subadviser breaches the representations contained in
Paragraph III.A.4.i. of this Agreement or any other material
provision of this Agreement, and any such breach is not cured
within a reasonable period of time after notice thereof from the
Adviser to the Subadviser. However, consistent with its fiduciary
obligations, for a period of seven months the Adviser will not
terminate this Agreement solely because the Subadviser has failed
to designate an acceptable permanent replacement to a Portfolio
Manager whose services are no longer available to the Subadviser
due to circumstances beyond the reasonable control of the
Subadviser, provided that the Subadviser uses its reasonable best
efforts to promptly obtain the services of a Portfolio Manager
acceptable to the Adviser and further provided that the Adviser
has not unreasonably withheld approval of such replacement
Portfolio Manager.
E. Transactions in Progress upon Termination. The Adviser and
Subadviser will cooperate with each other to ensure that
portfolio or other transactions in progress at the date of
termination of this Agreement shall be completed by the Adviser
in accordance with the terms of such transactions, and to this
end the Subadviser shall provide the Adviser with all necessary
information and documentation to secure the implementation
thereof.
XIV. Non-Solicitation.
During the term of this Agreement, the Adviser (and its affiliates under
its control) shall not solicit or knowingly assist in the solicitation of any
Portfolio Manager of the Fund or any portfolio assistant of the Fund then
employed by the Subadviser or OpCap, provided, however, that the Adviser (or its
affiliates) may solicit or hire any such individual who (A) the Subadviser or
OpCap (or its affiliates) has terminated
-9-
<PAGE>
or (B) has voluntarily terminated his or her employment with the Subadviser,
OpCap (or its affiliates) without inducement of the Adviser (or its affiliates
under its control) prior to the time of such solicitation. Advertising in
general circulation newspapers or industry newsletters by the Adviser shall not
constitute "inducement" by the Adviser (or its affiliates under its control).
XV. Liability of the Subadviser.
In the absence of willful misfeasance, bad faith, negligence or reckless
disregard of obligations or duties hereunder on the part of the Subadviser or
any of its officers, directors or employees, the Subadviser shall not be subject
to liability to the Adviser for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security; provided, however,
that the foregoing shall not be construed to relieve the Subadviser of any
liability it may have arising under the Agreement Not to Compete or the
Acquisition Agreement dated August 17, 1995, among the Subadviser, the Adviser
and certain affiliates of the Subadviser.
XVI. Notices.
Any notice or other communication required or that may be given hereunder
shall be in writing and shall be delivered personally, telecopied, sent by
certified, registered or express mail, postage prepaid or sent by national
next-day delivery service and shall be deemed given when so delivered personally
or telecopied, or if mailed, two days after the date of mailing, or if by
next-day delivery service, on the business day following delivery thereto, as
follows or to such other location as any party notifies any other party:
A. if to the Adviser, to:
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Attention: Andrew J. Donohue
Executive Vice President and General Counsel
Telecopier: 212-321-1159
B. if to the Subadviser, to:
OpCap Advisors
c/o Oppenheimer Capital
225 Liberty Street
New York, New York 10281
Attention: Thomas E. Duggan
Secretary and General Counsel
Telecopier: 212-349-4759
XVII. Questions of Interpretation.
This Agreement shall be governed by the laws of the State of New York
applicable to agreements made and to be performed entirely within the State of
New York (without regard to any conflicts of law
-10-
<PAGE>
principles thereof). Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretations thereof, if any, by the United
States Courts or, in the absence of any controlling decision of any such court,
by rules, regulations or orders of the SEC issued pursuant to the 1940 Act. In
addition, where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is revised by rule, regulation or order of the SEC,
such provision shall be deemed to incorporate the effect of such rule,
regulation or order.
XVIII. Form ADV - Delivery.
The Adviser hereby acknowledges that it has received from the Subadviser a
copy of the Subadviser's Form ADV, Part II as currently filed, at least 48 hours
prior to entering into this Agreement and that it has read and understood the
disclosures set forth in the Subadviser's Form ADV, Part II.
XIX. Miscellaneous.
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors. XX. Counterparts.
This Agreement may be executed in counterparts, each of which shall
constitute an original and both of which, collectively, shall constitute one
agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers as of the 5th day of
November, 1997.
OPPENHEIMERFUNDS, INC.
By:/s/ Andrew J. Donohue
Andrew J. Donohue
Executive Vice President
OPCAP ADVISORS
By:/s/ Bernard H. Garil
Bernard H. Garil
President
-11-
<PAGE>
SCHEDULE XIII.D.1
The universe of funds to which Class A shares of funds subadvised by OpCap
Advisors will be compared to so that it can be determined in which quartile the
performance ranks shall consist of those funds with the same Lipper investment
objective being offered as the only class of shares of such fund or, in the case
where there is more than one class of shares being offered, with a front-end
load (typically referred to as Class A shares).
The present Lipper investment objective categories for the funds are:
Fund Lipper Category
Oppenheimer Quest Value Fund, Inc. CA - Capital Appreciation
Oppenheimer Quest Global Value Fund, Inc. GL - Global
Oppenheimer Quest Opportunity Value Fund FX - Flexible Portfolio
Oppenheimer Quest Small Cap Value Fund SG - Small Company Growth
Oppenheimer Quest Growth & Income Value Fund GI - Growth & Income
Oppenheimer Quest Officers Value Fund CA - Capital Appreciation
Oppenheimer Quest Capital Value Fund, Inc. CA - Capital Appreciation
ADVISORY\229SUB.WPD
-12-
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST FOR VALUE FUNDS
FOR CLASS A SHARES OF
OPPENHEIMER QUEST GROWTH & INCOME VALUE FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the
"Plan") dated the 22nd day of November, 1996, by and between OPPENHEIMER QUEST
FOR VALUE FUNDS (the "Trust") for the account of its OPPENHEIMER QUEST GROWTH &
INCOME VALUE FUND the "Fund") and OPPENHEIMERFUNDS DISTRIBUTOR, INC. (the
"Distributor").
1. The Plan. This Plan is the Fund's written distribution and service plan
for Class A shares of the Fund (the "Shares"), contemplated by Rule 12b-1 (the
"Rule") under the Investment Company Act of 1940 (the "1940 Act"), pursuant to
which the Fund will compensate the Distributor for its services incurred in
connection with the distribution of Shares, and the personal service and
maintenance of shareholder accounts that hold Shares ("Accounts"). The Fund may
act as distributor of securities of which it is the issuer, pursuant to the
Rule, according to the terms of this Plan. The Distributor is authorized under
the Plan to pay "Recipients," as hereinafter defined, for rendering (1)
distribution assistance in connection with the sale of Shares and/or (2)
administrative support services with respect to Accounts. Such Recipients are
intended to have certain rights as third-party beneficiaries under this Plan.
The terms and provisions of this Plan shall be interpreted and defined in a
manner consistent with the provisions and definitions contained in (i) the 1940
Act, (ii) the Rule, (iii) Rule 2830 of the Conduct Rules of the National
Association of Securities Dealers, Inc., or any amendment or successor to such
rule (the "NASD Conduct Rules") and (iv) any conditions pertaining either to
distribution-related expenses or to a plan of distribution, to which the Fund is
subject under any order on which the Fund relies, issued at any time by the
Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has rendered assistance (whether direct, administrative or
both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer such questions
as may arise concerning the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the foregoing, a
majority of the Trust's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of this Plan or in any agreements relating
to this Plan (the "Independent Trustees") may remove any broker, dealer, bank or
other person or entity as a Recipient, whereupon such person's or entity's
rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such brokerage or
other customers, or investment advisory or other clients of such Recipient
and/or accounts as to which such Recipient is a fiduciary or custodian or
co-fiduciary or co-custodian (collectively, the "Customers"), but in no event
shall any such Shares be deemed owned by more than one Recipient for purposes of
this Plan. In the event that more than one person or
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<PAGE>
entity would otherwise qualify as Recipients as to the same Shares, the
Recipient which is the dealer of record on the Fund's books as determined by the
Distributor shall be deemed the Recipient as to such Shares for purposes of this
Plan.
3. Payments for Distribution Assistance and Administrative Support
Services.
(a) The Fund will make payments to the Distributor (i) within forty-five
(45) days of the end of each calendar quarter, in the aggregate amount of
0.0625% (0.25% on an annual basis) of the average during the calendar quarter of
the aggregate net asset value of the Shares computed as of the close of each
business day (the "Service Fee"), plus (ii) within ten (10) days of the end of
each month, in the aggregate 0.0125% (0.15% on an annual basis) of the average
during the calendar quarter of the aggregate net asset value of the Shares
computed as of the close of each business day (the "Asset-Based Sales Charge").
Such Service Fee payments received from the Fund will compensate the Distributor
and Recipients for providing administrative support services with respect to
Accounts. Such Asset-Based Sales Charge payments received from the Fund will
compensate the Distributor and Recipients for providing distribution assistance
in connection with the sale of Shares.
The administrative support services in connection with the Accounts to be
rendered by Recipients may include, but shall not be limited to, the following:
answering routine inquiries concerning the Fund, assisting in establishing and
maintaining accounts or sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend payment options
available, and providing such other information and services in connection with
the rendering of personal services and/or the maintenance of Accounts, as the
Distributor or the Fund may reasonably request.
The distribution assistance in connection with the sale of Shares to be
rendered by the Distributor and by Recipients may include, but shall not be
limited to, the following: distributing sales literature and prospectuses other
than those furnished to current holders of the Fund's Shares ("Shareholders"),
and providing such other information and services in connection with the
distribution of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution assistance
or administrative support services qualifying for payment under the Plan if it
has Qualified Holdings of Shares to entitle it to payments under the Plan. In
the event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate distribution assistance in connection with the sale of
Shares or administrative support services for the Accounts, then the
Distributor, at the request of the Board, shall require the Recipient to provide
a written report or other information to verify that said Recipient is providing
appropriate distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either may take
appropriate steps to terminate the Recipient's status as such under the Plan,
whereupon such Recipient's rights as a third-party beneficiary hereunder shall
terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares, computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, to be set from time to
time by a majority of the Independent Trustees.
-2-
<PAGE>
Alternatively, the Distributor may, at its sole option, make service fee
payments to any Recipient quarterly, within forty-five (45) days of the end of
each calendar quarter: (i) "Advance Service Fee Payments" at a rate not to
exceed 0.25% of the average during the calendar quarter of the aggregate net
asset value of Shares, computed as of the close of business on the day such
Shares are sold, constituting Qualified Holdings sold by the Recipient during
that quarter and owned beneficially or of record by the Recipient or by its
Customers, plus (ii) 0.0625% (0.25% on an annual basis) of the average during
the calendar quarter of the aggregate net asset value of Shares computed as of
the close of each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for a period of
more than one (1) year, subject to reduction or chargeback so that the Advance
Service Fee Payments do not exceed the limits on payments to Recipients that
are, or may be, imposed by Rule 2830 of the NASD Conduct Rules. In the event
Shares are redeemed less than one year after the date such Shares were sold, the
Recipient is obligated and will repay to the Distributor on demand a pro rata
portion of such Advance Service Fee Payments, based on the ratio of the time
such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of the preceding
sentence may, at the Distributor's sole option, be made more often than
quarterly, and sooner than the end of the calendar quarter. In addition, the
Distributor may make asset-based sales charge payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0375% (0.15% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or its Customers. However, no such service fee or
asset-based sales charge payments (collectively, the "Recipient Payments") shall
be made to any Recipient for any such quarter in which its Qualified Holdings do
not equal or exceed, at the end of such quarter, the minimum amount ("Minimum
Qualified Holdings"), if any, to be set from time to time by a majority of the
Independent Trustees.
A majority of the Independent Trustees may at any time or from time to
time decrease and thereafter adjust the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rates set forth above,
and/or direct the Distributor to increase or decrease the Minimum Holding Period
or the Minimum Qualified Holdings. The Distributor shall notify all Recipients
of the Minimum Qualified Holdings or Minimum Holding Period, if any, and the
rates of Recipient Payments hereunder applicable to Recipients, and shall
provide each Recipient with written notice within thirty (30) days after any
change in these provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute sufficient notice.
The Distributor may make Plan payments to any "affiliated person" (as defined in
the 1940 Act) of the Distributor if such affiliated person qualifies as a
Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination of such amounts under the limits to which the
Distributor is, or may become, subject under Rule 2830 of the NASD Conduct
Rules. The distribution assistance and administrative support services to be
rendered by the Distributor in connection with the Shares may include, but shall
not be limited to, the following: (i) paying sales commissions to any broker,
dealer, bank or other person or entity that sells Shares, and\or paying such
persons Advance Service Fee Payments in advance of, and\or greater than, the
amount provided for in Section 3(b) of this Agreement; (ii) paying compensation
to and expenses of personnel of the Distributor who support distribution of
Shares by Recipients; (iii) obtaining financing or providing such financing from
its own resources, or from an affiliate, for interest and other borrowing costs
of the Distributor's unreimbursed expenses incurred in rendering distribution
assistance and administrative
-3-
<PAGE>
support services to the Fund; (iv) paying other direct distribution costs,
including without limitation the costs of sales literature, advertising and
prospectuses (other than those furnished to current Shareholders) and state
"blue sky" registration expenses; and (v) providing any service rendered by the
Distributor that a Recipient may render pursuant to part (a) of this Section 3.
Such services include distribution assistance and administrative support
services rendered in connection with Shares acquired (i) by purchase, (ii) in
exchange for shares of another investment company for which the Distributor
serves as distributor or sub- distributor, or (iii) pursuant to a plan of
reorganization to which the Fund is a party. In the event that the Board should
have reason to believe that the Distributor may not be rendering appropriate
distribution assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the Board, shall
provide the Board with a written report or other information to verify that the
Distributor is providing appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by
OppenheimerFunds, Inc. ("OFI") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OFI), from its own resources, from Asset-Based
Sales Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does not
obligate or in any way make the Fund liable to make any payment whatsoever to
any person or entity other than directly to the Distributor. In no event shall
the amounts to be paid to the Distributor exceed the rate of fees to be paid by
the Fund to the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of those persons to be Trustees of the Trust who are
not "interested persons" of the Fund or the Trust ("Disinterested Trustees")
shall be committed to the discretion of such Disinterested Trustees. Nothing
herein shall prevent the Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final decision on
any such selection and nomination is approved by a majority of the incumbent
Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Trust shall
provide at least quarterly written reports to the Trust's Board for its review,
detailing services rendered in connection with the distribution of the Shares,
the amount of all payments made and the purpose for which the payments were
made. The reports shall be provided quarterly and shall state whether all
provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at any
time, without payment of any penalty, by a vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding Class A voting shares; (ii) such termination
shall be on not more than sixty days written notice to any other party to the
agreement; (iii) such agreement shall automatically terminate in the event of
its assignment (as defined in the 1940 Act); (iv) it shall go into effect when
approved by a vote of the Board and its Independent Trustees cast in person at a
meeting called for the purpose of voting on such agreement; and (v) it shall,
unless terminated as herein provided, continue in effect from year to year only
so long as such continuance is specifically approved at least annually by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such continuance.
-4-
<PAGE>
7. Effectiveness, Continuation, Termination and Amendment. This Amended
and Restated Plan has been approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called on February 4, 1997 for the purpose
of voting on this Plan, and shall take effect as of the date first set forth
above. Unless terminated as hereinafter provided, it shall continue in effect
from year to year from the date first set forth above or as the Board may
otherwise determine only so long as such continuance is specifically approved at
least annually by a vote of the Board and its Independent Trustees cast in
person at a meeting called for the purpose of voting on such continuance. This
Plan may not be amended to increase materially the amount of payments to be made
under this Plan without approval of the Class A Shareholders, in the manner
described above, and all material amendments must be approved by a vote of the
Board and of the Independent Trustees. This Plan may be terminated at any time
by vote of a majority of the Independent Trustees or by the vote of the holders
of a "majority" (as defined in the 1940 Act) of the Fund's outstanding Class A
voting shares. In the event of such termination, the Board and its Independent
Trustees shall determine whether the Distributor is entitled to payment from the
Fund of all or a portion of the Service Fee and/or the Asset-Based Sales Charge
in respect of Shares sold prior to the effective date of such termination.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor
understands that the obligations of the Trust and the Fund under this Plan are
not binding upon any Trustee or shareholder of the Fund personally, but bind
only the Fund and the Fund's property.
The Distributor represents that it has
notice of the provisions of the Declaration of Trust of the Fund disclaiming
shareholder and Trustee liability for acts or obligations of the Trust and the
Fund.
OPPENHEIMER QUEST FOR VALUE FUNDS On Behalf of
OPPENHEIMER QUEST GROWTH & INCOME VALUE FUND
By: /s/ Robert G. Zack
Robert G. Zack
Assistant Secretary
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: /s/ Andrew J. Donohue
Andrew J. Donohue
Executive Vice President
OFMI\257A.#1
-5-
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST FOR VALUE FUNDS
FOR CLASS A SHARES OF
OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the
"Plan") dated the 22nd day of November, 1996, by and between OPPENHEIMER QUEST
FOR VALUE FUNDS (the "Trust") for the account of its OPPENHEIMER QUEST
OPPORTUNITY VALUE FUND (the "Fund") and OPPENHEIMERFUNDS DISTRIBUTOR, INC. (the
"Distributor").
1. The Plan. This Plan is the Fund's written distribution and service plan
for Class A shares of the Fund (the "Shares"), contemplated by Rule 12b-1 (the
"Rule") under the Investment Company Act of 1940 (the "1940 Act"), pursuant to
which the Fund will compensate the Distributor for its services incurred in
connection with the distribution of Shares, and the personal service and
maintenance of shareholder accounts that hold Shares ("Accounts"). The Fund may
act as distributor of securities of which it is the issuer, pursuant to the
Rule, according to the terms of this Plan. The Distributor is authorized under
the Plan to pay "Recipients," as hereinafter defined, for rendering (1)
distribution assistance in connection with the sale of Shares and/or (2)
administrative support services with respect to Accounts. Such Recipients are
intended to have certain rights as third-party beneficiaries under this Plan.
The terms and provisions of this Plan shall be interpreted and defined in a
manner consistent with the provisions and definitions contained in (i) the 1940
Act, (ii) the Rule, (iii) Rule 2830 of the Conduct Rules of the National
Association of Securities Dealers, Inc., or any amendment or successor to such
rule (the "NASD Conduct Rules") and (iv) any conditions pertaining either to
distribution-related expenses or to a plan of distribution, to which the Fund is
subject under any order on which the Fund relies, issued at any time by the
Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has rendered assistance (whether direct, administrative or
both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer such questions
as may arise concerning the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the foregoing, a
majority of the Trust's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of this Plan or in any agreements relating
to this Plan (the "Independent Trustees") may remove any broker, dealer, bank or
other person or entity as a Recipient, whereupon such person's or entity's
rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such brokerage or
other customers, or investment advisory or other clients of such Recipient
and/or accounts as to which such Recipient is a fiduciary or custodian or
co-fiduciary or co-custodian (collectively, the "Customers"), but in no event
shall any such Shares be deemed owned by more than one Recipient for purposes of
this Plan. In the event that more than one person or
-1-
<PAGE>
entity would otherwise qualify as Recipients as to the same Shares, the
Recipient which is the dealer of record on the Fund's books as determined by the
Distributor shall be deemed the Recipient as to such Shares for purposes of this
Plan.
3. Payments for Distribution Assistance and Administrative Support
Services.
(a) The Fund will make payments to the Distributor (i) within forty-five
(45) days of the end of each calendar quarter, in the aggregate amount of
0.0625% (0.25% on an annual basis) of the average during the calendar quarter of
the aggregate net asset value of the Shares computed as of the close of each
business day (the "Service Fee"), plus (ii) within ten (10) days of the end of
each month, in the aggregate 0.020833% (0.25% on an annual basis) of the average
during the calendar quarter of the aggregate net asset value of the Shares
computed as of the close of each business day (the "Asset-Based Sales Charge").
Such Service Fee payments received from the Fund will compensate the Distributor
and Recipients for providing administrative support services with respect to
Accounts. Such Asset-Based Sales Charge payments received from the Fund will
compensate the Distributor and Recipients for providing distribution assistance
in connection with the sale of Shares.
The administrative support services in connection with the Accounts to be
rendered by Recipients may include, but shall not be limited to, the following:
answering routine inquiries concerning the Fund, assisting in establishing and
maintaining accounts or sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend payment options
available, and providing such other information and services in connection with
the rendering of personal services and/or the maintenance of Accounts, as the
Distributor or the Fund may reasonably request.
The distribution assistance in connection with the sale of Shares to be
rendered by the Distributor and by Recipients may include, but shall not be
limited to, the following: distributing sales literature and prospectuses other
than those furnished to current holders of the Fund's Shares ("Shareholders"),
and providing such other information and services in connection with the
distribution of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution assistance
or administrative support services qualifying for payment under the Plan if it
has Qualified Holdings of Shares to entitle it to payments under the Plan. In
the event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate distribution assistance in connection with the sale of
Shares or administrative support services for the Accounts, then the
Distributor, at the request of the Board, shall require the Recipient to provide
a written report or other information to verify that said Recipient is providing
appropriate distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either may take
appropriate steps to terminate the Recipient's status as such under the Plan,
whereupon such Recipient's rights as a third-party beneficiary hereunder shall
terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares, computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, to be set from time to
time by a majority of the Independent Trustees.
-2-
<PAGE>
Alternatively, the Distributor may, at its sole option, make service fee
payments to any Recipient quarterly, within forty-five (45) days of the end of
each calendar quarter: (i) "Advance Service Fee Payments" at a rate not to
exceed 0.25% of the average during the calendar quarter of the aggregate net
asset value of Shares, computed as of the close of business on the day such
Shares are sold, constituting Qualified Holdings sold by the Recipient during
that quarter and owned beneficially or of record by the Recipient or by its
Customers, plus (ii) 0.0625% (0.25% on an annual basis) of the average during
the calendar quarter of the aggregate net asset value of Shares computed as of
the close of each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for a period of
more than one (1) year, subject to reduction or chargeback so that the Advance
Service Fee Payments do not exceed the limits on payments to Recipients that
are, or may be, imposed by Rule 2830 of the NASD Conduct Rules. In the event
Shares are redeemed less than one year after the date such Shares were sold, the
Recipient is obligated and will repay to the Distributor on demand a pro rata
portion of such Advance Service Fee Payments, based on the ratio of the time
such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of the preceding
sentence may, at the Distributor's sole option, be made more often than
quarterly, and sooner than the end of the calendar quarter. In addition, the
Distributor may make asset-based sales charge payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or its Customers. However, no such service fee or
asset-based sales charge payments (collectively, the "Recipient Payments") shall
be made to any Recipient for any such quarter in which its Qualified Holdings do
not equal or exceed, at the end of such quarter, the minimum amount ("Minimum
Qualified Holdings"), if any, to be set from time to time by a majority of the
Independent Trustees.
A majority of the Independent Trustees may at any time or from time to
time decrease and thereafter adjust the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rates set forth above,
and/or direct the Distributor to increase or decrease the Minimum Holding Period
or the Minimum Qualified Holdings. The Distributor shall notify all Recipients
of the Minimum Qualified Holdings or Minimum Holding Period, if any, and the
rates of Recipient Payments hereunder applicable to Recipients, and shall
provide each Recipient with written notice within thirty (30) days after any
change in these provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute sufficient notice.
The Distributor may make Plan payments to any "affiliated person" (as defined in
the 1940 Act) of the Distributor if such affiliated person qualifies as a
Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination of such amounts under the limits to which the
Distributor is, or may become, subject under Rule 2830 of the NASD Conduct
Rules. The distribution assistance and administrative support services to be
rendered by the Distributor in connection with the Shares may include, but shall
not be limited to, the following: (i) paying sales commissions to any broker,
dealer, bank or other person or entity that sells Shares, and\or paying such
persons Advance Service Fee Payments in advance of, and\or greater than, the
amount provided for in Section 3(b) of this Agreement; (ii) paying compensation
to and expenses of personnel of the Distributor who support distribution of
Shares by Recipients; (iii) obtaining financing or providing such financing from
its own resources, or from an affiliate, for interest and other borrowing costs
of the Distributor's unreimbursed expenses incurred in rendering distribution
assistance and administrative
-3-
<PAGE>
support services to the Fund; (iv) paying other direct distribution costs,
including without limitation the costs of sales literature, advertising and
prospectuses (other than those furnished to current Shareholders) and state
"blue sky" registration expenses; and (v) providing any service rendered by the
Distributor that a Recipient may render pursuant to part (a) of this Section 3.
Such services include distribution assistance and administrative support
services rendered in connection with Shares acquired (i) by purchase, (ii) in
exchange for shares of another investment company for which the Distributor
serves as distributor or sub- distributor, or (iii) pursuant to a plan of
reorganization to which the Fund is a party. In the event that the Board should
have reason to believe that the Distributor may not be rendering appropriate
distribution assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the Board, shall
provide the Board with a written report or other information to verify that the
Distributor is providing appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by
OppenheimerFunds, Inc. ("OFI") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OFI), from its own resources, from Asset-Based
Sales Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does not
obligate or in any way make the Fund liable to make any payment whatsoever to
any person or entity other than directly to the Distributor. In no event shall
the amounts to be paid to the Distributor exceed the rate of fees to be paid by
the Fund to the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of those persons to be Trustees of the Trust who are
not "interested persons" of the Fund or the Trust ("Disinterested Trustees")
shall be committed to the discretion of such Disinterested Trustees. Nothing
herein shall prevent the Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final decision on
any such selection and nomination is approved by a majority of the incumbent
Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Trust shall
provide at least quarterly written reports to the Trust's Board for its review,
detailing services rendered in connection with the distribution of the Shares,
the amount of all payments made and the purpose for which the payments were
made. The reports shall be provided quarterly and shall state whether all
provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at any
time, without payment of any penalty, by a vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding Class A voting securities; (ii) such termination
shall be on not more than sixty days written notice to any other party to the
agreement; (iii) such agreement shall automatically terminate in the event of
its assignment (as defined in the 1940 Act); (iv) it shall go into effect when
approved by a vote of the Board and its Independent Trustees cast in person at a
meeting called for the purpose of voting on such agreement; and (v) it shall,
unless terminated as herein provided, continue in effect from year to year only
so long as such continuance is specifically approved at least annually by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such continuance.
-4-
<PAGE>
7. Effectiveness, Continuation, Termination and Amendment. This Amended
and Restated Plan has been approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called on February 4, 1997 for the purpose
of voting on this Plan, and shall take effect as of the date first set forth
above. Unless terminated as hereinafter provided, it shall continue in effect
from year to year from the date first set forth above or as the Board may
otherwise determine only so long as such continuance is specifically approved at
least annually by a vote of the Board and its Independent Trustees cast in
person at a meeting called for the purpose of voting on such continuance. This
Plan may not be amended to increase materially the amount of payments to be made
under this Plan without approval of the Class A Shareholders, in the manner
described above, and all material amendments must be approved by a vote of the
Board and of the Independent Trustees. This Plan may be terminated at any time
by vote of a majority of the Independent Trustees or by the vote of the holders
of a "majority" (as defined in the 1940 Act) of the Fund's outstanding Class A
voting shares. In the event of such termination, the Board and its Independent
Trustees shall determine whether the Distributor is entitled to payment from the
Fund of all or a portion of the Service Fee and/or the Asset-Based Sales Charge
in respect of Shares sold prior to the effective date of such termination.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor
understands that the obligations of the Trust and the Fund under this Plan are
not binding upon any Trustee or shareholder of the Fund personally, but bind
only the Fund and the Fund's property.
The Distributor represents that it has
notice of the provisions of the Declaration of Trust of the Fund disclaiming
shareholder and Trustee liability for acts or obligations of the Trust and the
Fund.
OPPENHEIMER QUEST FOR VALUE FUNDS On Behalf of
OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
By: /s/ Robert G. Zack
Robert G. Zack
Assistant Secretary
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: /s/ Andrew J. Donohue
Andrew J. Donohue
Executive Vice President
OFMI\236A.#1
-5-
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST FOR VALUE FUNDS
FOR CLASS A SHARES OF
OPPENHEIMER QUEST SMALL CAP VALUE FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the
"Plan") dated the 22nd day of November, 1996, by and between OPPENHEIMER QUEST
FOR VALUE FUNDS (the "Trust") for the account of its OPPENHEIMER QUEST SMALL CAP
VALUE FUND (the "Fund") and OPPENHEIMERFUNDS DISTRIBUTOR, INC. (the
"Distributor").
1. The Plan. This Plan is the Fund's written distribution and service plan
for Class A shares of the Fund (the "Shares"), contemplated by Rule 12b-1 (the
"Rule") under the Investment Company Act of 1940 (the "1940 Act"), pursuant to
which the Fund will compensate the Distributor for its services incurred in
connection with the distribution of Shares, and the personal service and
maintenance of shareholder accounts that hold Shares ("Accounts"). The Fund may
act as distributor of securities of which it is the issuer, pursuant to the
Rule, according to the terms of this Plan. The Distributor is authorized under
the Plan to pay "Recipients," as hereinafter defined, for rendering (1)
distribution assistance in connection with the sale of Shares and/or (2)
administrative support services with respect to Accounts. Such Recipients are
intended to have certain rights as third-party beneficiaries under this Plan.
The terms and provisions of this Plan shall be interpreted and defined in a
manner consistent with the provisions and definitions contained in (i) the 1940
Act, (ii) the Rule, (iii) Rule 2830 of the Conduct Rules of the National
Association of Securities Dealers, Inc., or any amendment or successor to such
rule (the "NASD Conduct Rules") and (iv) any conditions pertaining either to
distribution-related expenses or to a plan of distribution, to which the Fund is
subject under any order on which the Fund relies, issued at any time by the
Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has rendered assistance (whether direct, administrative or
both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer such questions
as may arise concerning the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the foregoing, a
majority of the Trust's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of this Plan or in any agreements relating
to this Plan (the "Independent Trustees") may remove any broker, dealer, bank or
other person or entity as a Recipient, whereupon such person's or entity's
rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such brokerage or
other customers, or investment advisory or other clients of such Recipient
and/or accounts as to which such Recipient is a fiduciary or custodian or
co-fiduciary or co-custodian (collectively, the "Customers"), but in no event
shall any such Shares be deemed owned by more than one Recipient for purposes of
this Plan. In the event that more than one person or
-1-
<PAGE>
entity would otherwise qualify as Recipients as to the same Shares, the
Recipient which is the dealer of record on the Fund's books as determined by the
Distributor shall be deemed the Recipient as to such Shares for purposes of this
Plan.
3. Payments for Distribution Assistance and Administrative Support
Services.
(a) The Fund will make payments to the Distributor (i) within forty-five
(45) days of the end of each calendar quarter, in the aggregate amount of
0.0625% (0.25% on an annual basis) of the average during the calendar quarter of
the aggregate net asset value of the Shares computed as of the close of each
business day (the "Service Fee"), plus (ii) within ten (10) days of the end of
each month, in the aggregate 0.020833% (0.25% on an annual basis) of the average
during the calendar quarter of the aggregate net asset value of the Shares
computed as of the close of each business day (the "Asset-Based Sales Charge").
Such Service Fee payments received from the Fund will compensate the Distributor
and Recipients for providing administrative support services with respect to
Accounts. Such Asset-Based Sales Charge payments received from the Fund will
compensate the Distributor and Recipients for providing distribution assistance
in connection with the sale of Shares.
The administrative support services in connection with the Accounts to be
rendered by Recipients may include, but shall not be limited to, the following:
answering routine inquiries concerning the Fund, assisting in establishing and
maintaining accounts or sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend payment options
available, and providing such other information and services in connection with
the rendering of personal services and/or the maintenance of Accounts, as the
Distributor or the Fund may reasonably request.
The distribution assistance in connection with the sale of Shares to be
rendered by the Distributor and by Recipients may include, but shall not be
limited to, the following: distributing sales literature and prospectuses other
than those furnished to current holders of the Fund's Shares ("Shareholders"),
and providing such other information and services in connection with the
distribution of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution assistance
or administrative support services qualifying for payment under the Plan if it
has Qualified Holdings of Shares to entitle it to payments under the Plan. In
the event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate distribution assistance in connection with the sale of
Shares or administrative support services for the Accounts, then the
Distributor, at the request of the Board, shall require the Recipient to provide
a written report or other information to verify that said Recipient is providing
appropriate distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either may take
appropriate steps to terminate the Recipient's status as such under the Plan,
whereupon such Recipient's rights as a third-party beneficiary hereunder shall
terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares, computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, to be set from time to
time by a majority of the Independent Trustees.
-2-
<PAGE>
Alternatively, the Distributor may, at its sole option, make service fee
payments to any Recipient quarterly, within forty-five (45) days of the end of
each calendar quarter: (i) "Advance Service Fee Payments" at a rate not to
exceed 0.25% of the average during the calendar quarter of the aggregate net
asset value of Shares, computed as of the close of business on the day such
Shares are sold, constituting Qualified Holdings sold by the Recipient during
that quarter and owned beneficially or of record by the Recipient or by its
Customers, plus (ii) 0.0625% (0.25% on an annual basis) of the average during
the calendar quarter of the aggregate net asset value of Shares computed as of
the close of each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for a period of
more than one (1) year, subject to reduction or chargeback so that the Advance
Service Fee Payments do not exceed the limits on payments to Recipients that
are, or may be, imposed by Rule 2830 of the NASD Conduct Rules. In the event
Shares are redeemed less than one year after the date such Shares were sold, the
Recipient is obligated and will repay to the Distributor on demand a pro rata
portion of such Advance Service Fee Payments, based on the ratio of the time
such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of the preceding
sentence may, at the Distributor's sole option, be made more often than
quarterly, and sooner than the end of the calendar quarter. In addition, the
Distributor may make asset-based sales charge payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or its Customers. However, no such service fee or
asset-based sales charge payments (collectively, the "Recipient Payments") shall
be made to any Recipient for any such quarter in which its Qualified Holdings do
not equal or exceed, at the end of such quarter, the minimum amount ("Minimum
Qualified Holdings"), if any, to be set from time to time by a majority of the
Independent Trustees.
A majority of the Independent Trustees may at any time or from time to
time decrease and thereafter adjust the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rates set forth above,
and/or direct the Distributor to increase or decrease the Minimum Holding Period
or the Minimum Qualified Holdings. The Distributor shall notify all Recipients
of the Minimum Qualified Holdings or Minimum Holding Period, if any, and the
rates of Recipient Payments hereunder applicable to Recipients, and shall
provide each Recipient with written notice within thirty (30) days after any
change in these provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute sufficient notice.
The Distributor may make Plan payments to any "affiliated person" (as defined in
the 1940 Act) of the Distributor if such affiliated person qualifies as a
Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination of such amounts under the limits to which the
Distributor is, or may become, subject under Rule 2830 of the NASD Conduct
Rules. The distribution assistance and administrative support services to be
rendered by the Distributor in connection with the Shares may include, but shall
not be limited to, the following: (i) paying sales commissions to any broker,
dealer, bank or other person or entity that sells Shares, and\or paying such
persons Advance Service Fee Payments in advance of, and\or greater than, the
amount provided for in Section 3(b) of this Agreement; (ii) paying compensation
to and expenses of personnel of the Distributor who support distribution of
Shares by Recipients; (iii) obtaining financing or providing such financing from
its own resources, or from an affiliate, for interest and other borrowing costs
of the Distributor's unreimbursed expenses incurred in rendering distribution
assistance and administrative
-3-
<PAGE>
support services to the Fund; (iv) paying other direct distribution costs,
including without limitation the costs of sales literature, advertising and
prospectuses (other than those furnished to current Shareholders) and state
"blue sky" registration expenses; and (v) providing any service rendered by the
Distributor that a Recipient may render pursuant to part (a) of this Section 3.
Such services include distribution assistance and administrative support
services rendered in connection with Shares acquired (i) by purchase, (ii) in
exchange for shares of another investment company for which the Distributor
serves as distributor or sub- distributor, or (iii) pursuant to a plan of
reorganization to which the Fund is a party. In the event that the Board should
have reason to believe that the Distributor may not be rendering appropriate
distribution assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the Board, shall
provide the Board with a written report or other information to verify that the
Distributor is providing appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by
OppenheimerFunds, Inc. ("OFI") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OFI), from its own resources, from Asset-Based
Sales Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does not
obligate or in any way make the Fund liable to make any payment whatsoever to
any person or entity other than directly to the Distributor. In no event shall
the amounts to be paid to the Distributor exceed the rate of fees to be paid by
the Fund to the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of those persons to be Trustees of the Trust who are
not "interested persons" of the Fund or the Trust ("Disinterested Trustees")
shall be committed to the discretion of such Disinterested Trustees. Nothing
herein shall prevent the Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final decision on
any such selection and nomination is approved by a majority of the incumbent
Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Trust shall
provide at least quarterly written reports to the Trust's Board for its review,
detailing services rendered in connection with the distribution of the Shares,
the amount of all payments made and the purpose for which the payments were
made. The reports shall be provided quarterly and shall state whether all
provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at any
time, without payment of any penalty, by a vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding Class A voting shares; (ii) such termination
shall be on not more than sixty days written notice to any other party to the
agreement; (iii) such agreement shall automatically terminate in the event of
its assignment (as defined in the 1940 Act); (iv) it shall go into effect when
approved by a vote of the Board and its Independent Trustees cast in person at a
meeting called for the purpose of voting on such agreement; and (v) it shall,
unless terminated as herein provided, continue in effect from year to year only
so long as such continuance is specifically approved at least annually by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such continuance.
-4-
<PAGE>
7. Effectiveness, Continuation, Termination and Amendment. This Amended
and Restated Plan has been approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called on February 4, 1997 for the purpose
of voting on this Plan, and shall take effect as of the date first set forth
above. Unless terminated as hereinafter provided, it shall continue in effect
from year to year from the date first set forth above or as the Board may
otherwise determine only so long as such continuance is specifically approved at
least annually by a vote of the Board and its Independent Trustees cast in
person at a meeting called for the purpose of voting on such continuance. This
Plan may not be amended to increase materially the amount of payments to be made
under this Plan without approval of the Class A Shareholders, in the manner
described above, and all material amendments must be approved by a vote of the
Board and of the Independent Trustees. This Plan may be terminated at any time
by vote of a majority of the Independent Trustees or by the vote of the holders
of a "majority" (as defined in the 1940 Act) of the Fund's outstanding Class A
voting shares. In the event of such termination, the Board and its Independent
Trustees shall determine whether the Distributor is entitled to payment from the
Fund of all or a portion of the Service Fee and/or the Asset-Based Sales Charge
in respect of Shares sold prior to the effective date of such termination.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor
understands that the obligations of the Trust and the Fund under this Plan are
not binding upon any Trustee or shareholder of the Fund personally, but bind
only the Fund and the Fund's property. The Distributor represents that it has
notice of the provisions of the Declaration of Trust of the Fund disclaiming
shareholder and Trustee liability for acts or obligations of the Trust and the
Fund.
OPPENHEIMER QUEST FOR VALUE FUNDS On Behalf of
OPPENHEIMER QUEST SMALL CAP VALUE FUND
By: /s/ Robert G. Zack
Robert G. Zack
Assistant Secretary
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: /s/ Andrew J. Donohue
Andrew J. Donohue
Executive Vice President
OFMI\251A.#1
-5-
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST FOR VALUE FUNDS
FOR CLASS A SHARES OF
OPPENHEIMER QUEST OFFICERS VALUE FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the
"Plan") dated the 22nd day of November, 1996, by and between OPPENHEIMER QUEST
FOR VALUE FUNDS (the "Trust") for the account of its OPPENHEIMER QUEST OFFICERS
VALUE FUND (the "Fund") and OPPENHEIMERFUNDS DISTRIBUTOR, INC. (the
"Distributor").
1. The Plan. This Plan is the Fund's written distribution and service plan
for Class A shares of the Fund (the "Shares"), contemplated by Rule 12b-1 (the
"Rule") under the Investment Company Act of 1940 (the "1940 Act"), pursuant to
which the Fund will compensate the Distributor for its services incurred in
connection with the distribution of Shares, and the personal service and
maintenance of shareholder accounts that hold Shares ("Accounts"). The Fund may
act as distributor of securities of which it is the issuer, pursuant to the
Rule, according to the terms of this Plan. The Distributor is authorized under
the Plan to pay "Recipients," as hereinafter defined, for rendering (1)
distribution assistance in connection with the sale of Shares and/or (2)
administrative support services with respect to Accounts. Such Recipients are
intended to have certain rights as third-party beneficiaries under this Plan.
The terms and provisions of this Plan shall be interpreted and defined in a
manner consistent with the provisions and definitions contained in (i) the 1940
Act, (ii) the Rule, (iii) Rule 2830 of the Conduct Rules of the National
Association of Securities Dealers, Inc., or any amendment or successor to such
rule (the "NASD Conduct Rules") and (iv) any conditions pertaining either to
distribution-related expenses or to a plan of distribution, to which the Fund is
subject under any order on which the Fund relies, issued at any time by the
Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has rendered assistance (whether direct, administrative or
both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer such questions
as may arise concerning the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the foregoing, a
majority of the Trust's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of this Plan or in any agreements relating
to this Plan (the "Independent Trustees") may remove any broker, dealer, bank or
other person or entity as a Recipient, whereupon such person's or entity's
rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such brokerage or
other customers, or investment advisory or other clients of such Recipient
and/or accounts as to which such Recipient is a fiduciary or custodian or
co-fiduciary or co-custodian (collectively, the "Customers"), but in no event
shall any such Shares be deemed owned by more than one Recipient for purposes of
this Plan. In the event that more than one person or
-1-
<PAGE>
entity would otherwise qualify as Recipients as to the same Shares, the
Recipient which is the dealer of record on the Fund's books as determined by the
Distributor shall be deemed the Recipient as to such Shares for purposes of this
Plan.
3. Payments for Distribution Assistance and Administrative Support
Services.
(a) The Fund will make payments to the Distributor (i) within forty-five
(45) days of the end of each calendar quarter, in the aggregate amount of
0.0625% (0.25% on an annual basis) of the average during the calendar quarter of
the aggregate net asset value of the Shares computed as of the close of each
business day (the "Service Fee"), plus (ii) within ten (10) days of the end of
each month, in the aggregate 0.020833% (0.25% on an annual basis) of the average
during the calendar quarter of the aggregate net asset value of the Shares
computed as of the close of each business day (the "Asset-Based Sales Charge").
Such Service Fee payments received from the Fund will compensate the Distributor
and Recipients for providing administrative support services with respect to
Accounts. Such Asset-Based Sales Charge payments received from the Fund will
compensate the Distributor and Recipients for providing distribution assistance
in connection with the sale of Shares.
The administrative support services in connection with the Accounts to be
rendered by Recipients may include, but shall not be limited to, the following:
answering routine inquiries concerning the Fund, assisting in establishing and
maintaining accounts or sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend payment options
available, and providing such other information and services in connection with
the rendering of personal services and/or the maintenance of Accounts, as the
Distributor or the Fund may reasonably request.
The distribution assistance in connection with the sale of Shares to be
rendered by the Distributor and by Recipients may include, but shall not be
limited to, the following: distributing sales literature and prospectuses other
than those furnished to current holders of the Fund's Shares ("Shareholders"),
and providing such other information and services in connection with the
distribution of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution assistance
or administrative support services qualifying for payment under the Plan if it
has Qualified Holdings of Shares to entitle it to payments under the Plan. In
the event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate distribution assistance in connection with the sale of
Shares or administrative support services for the Accounts, then the
Distributor, at the request of the Board, shall require the Recipient to provide
a written report or other information to verify that said Recipient is providing
appropriate distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either may take
appropriate steps to terminate the Recipient's status as such under the Plan,
whereupon such Recipient's rights as a third-party beneficiary hereunder shall
terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares, computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, to be set from time to
time by a majority of the Independent Trustees.
-2-
<PAGE>
Alternatively, the Distributor may, at its sole option, make service fee
payments to any Recipient quarterly, within forty-five (45) days of the end of
each calendar quarter: (i) "Advance Service Fee Payments" at a rate not to
exceed 0.25% of the average during the calendar quarter of the aggregate net
asset value of Shares, computed as of the close of business on the day such
Shares are sold, constituting Qualified Holdings sold by the Recipient during
that quarter and owned beneficially or of record by the Recipient or by its
Customers, plus (ii) 0.0625% (0.25% on an annual basis) of the average during
the calendar quarter of the aggregate net asset value of Shares computed as of
the close of each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for a period of
more than one (1) year, subject to reduction or chargeback so that the Advance
Service Fee Payments do not exceed the limits on payments to Recipients that
are, or may be, imposed by Rule 2830 of the NASD Conduct Rules. In the event
Shares are redeemed less than one year after the date such Shares were sold, the
Recipient is obligated and will repay to the Distributor on demand a pro rata
portion of such Advance Service Fee Payments, based on the ratio of the time
such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of the preceding
sentence may, at the Distributor's sole option, be made more often than
quarterly, and sooner than the end of the calendar quarter. In addition, the
Distributor may make asset-based sales charge payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or its Customers. However, no such service fee or
asset-based sales charge payments (collectively, the "Recipient Payments") shall
be made to any Recipient for any such quarter in which its Qualified Holdings do
not equal or exceed, at the end of such quarter, the minimum amount ("Minimum
Qualified Holdings"), if any, to be set from time to time by a majority of the
Independent Trustees.
A majority of the Independent Trustees may at any time or from time to
time decrease and thereafter adjust the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rates set forth above,
and/or direct the Distributor to increase or decrease the Minimum Holding Period
or the Minimum Qualified Holdings. The Distributor shall notify all Recipients
of the Minimum Qualified Holdings or Minimum Holding Period, if any, and the
rates of Recipient Payments hereunder applicable to Recipients, and shall
provide each Recipient with written notice within thirty (30) days after any
change in these provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute sufficient notice.
The Distributor may make Plan payments to any "affiliated person" (as defined in
the 1940 Act) of the Distributor if such affiliated person qualifies as a
Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination of such amounts under the limits to which the
Distributor is, or may become, subject under Rule 2830 of the NASD Conduct
Rules. The distribution assistance and administrative support services to be
rendered by the Distributor in connection with the Shares may include, but shall
not be limited to, the following: (i) paying sales commissions to any broker,
dealer, bank or other person or entity that sells Shares, and\or paying such
persons Advance Service Fee Payments in advance of, and\or greater than, the
amount provided for in Section 3(b) of this Agreement; (ii) paying compensation
to and expenses of personnel of the Distributor who support distribution of
Shares by Recipients; (iii) obtaining financing or providing such financing from
its own resources, or from an affiliate, for interest and other borrowing costs
of the Distributor's unreimbursed expenses incurred in rendering distribution
assistance and administrative
-3-
<PAGE>
support services to the Fund; (iv) paying other direct distribution costs,
including without limitation the costs of sales literature, advertising and
prospectuses (other than those furnished to current Shareholders) and state
"blue sky" registration expenses; and (v) providing any service rendered by the
Distributor that a Recipient may render pursuant to part (a) of this Section 3.
Such services include distribution assistance and administrative support
services rendered in connection with Shares acquired (i) by purchase, (ii) in
exchange for shares of another investment company for which the Distributor
serves as distributor or sub- distributor, or (iii) pursuant to a plan of
reorganization to which the Fund is a party. In the event that the Board should
have reason to believe that the Distributor may not be rendering appropriate
distribution assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the Board, shall
provide the Board with a written report or other information to verify that the
Distributor is providing appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by
OppenheimerFunds, Inc. ("OFI") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OFI), from its own resources, from Asset-Based
Sales Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does not
obligate or in any way make the Fund liable to make any payment whatsoever to
any person or entity other than directly to the Distributor. In no event shall
the amounts to be paid to the Distributor exceed the rate of fees to be paid by
the Fund to the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of those persons to be Trustees of the Trust who are
not "interested persons" of the Fund or the Trust ("Disinterested Trustees")
shall be committed to the discretion of such Disinterested Trustees. Nothing
herein shall prevent the Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final decision on
any such selection and nomination is approved by a majority of the incumbent
Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Trust shall
provide at least quarterly written reports to the Trust's Board for its review,
detailing services rendered in connection with the distribution of the Shares,
the amount of all payments made and the purpose for which the payments were
made. The reports shall be provided quarterly and shall state whether all
provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at any
time, without payment of any penalty, by a vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding Class A voting shares; (ii) such termination
shall be on not more than sixty days written notice to any other party to the
agreement; (iii) such agreement shall automatically terminate in the event of
its assignment (as defined in the 1940 Act); (iv) it shall go into effect when
approved by a vote of the Board and its Independent Trustees cast in person at a
meeting called for the purpose of voting on such agreement; and (v) it shall,
unless terminated as herein provided, continue in effect from year to year only
so long as such continuance is specifically approved at least annually by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such continuance.
-4-
<PAGE>
7. Effectiveness, Continuation, Termination and Amendment. This Amended
and Restated Plan has been approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called on February 4, 1997 for the purpose
of voting on this Plan, and shall take effect as of the date first set forth
above. Unless terminated as hereinafter provided, it shall continue in effect
from year to year from the date first set forth above or as the Board may
otherwise determine only so long as such continuance is specifically approved at
least annually by a vote of the Board and its Independent Trustees cast in
person at a meeting called for the purpose of voting on such continuance. This
Plan may not be amended to increase materially the amount of payments to be made
under this Plan, without approval of the Class A Shareholders, in the manner
described above, and all material amendments must be approved by a vote of the
Board and of the Independent Trustees. This Plan may be terminated at any time
by vote of a majority of the Independent Trustees or by the vote of the holders
of a "majority" (as defined in the 1940 Act) of the Fund's outstanding Class A
voting shares. In the event of such termination, the Board and its Independent
Trustees shall determine whether the Distributor is entitled to payment from the
Fund of all or a portion of the Service Fee and/or the Asset-Based Sales Charge
in respect of Shares sold prior to the effective date of such termination.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor
understands that the obligations of the Trust and the Fund under this Plan are
not binding upon any Trustee or shareholder of the Fund personally, but bind
only the Fund and the Fund's property.
The Distributor represents that it has
notice of the provisions of the Declaration of Trust of the Fund disclaiming
shareholder and Trustee liability for acts or obligations of the Trust and the
Fund.
OPPENHEIMER QUEST FOR VALUE FUNDS On Behalf of
OPPENHEIMER QUEST OFFICERS VALUE FUND
By: /s/ Robert G. Zack
Robert G. Zack
Assistant Secretary
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: /s/Andrew J. Donohue
Andrew J. Donohue
Executive Vice President
OFMI\229#1.A
-5-
-12-
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST FOR VALUE FUNDS
FOR CLASS B SHARES OF
OPPENHEIMER QUEST GROWTH & INCOME VALUE FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the
"Plan") dated the 22nd day of November, 1996, by and between OPPENHEIMER QUEST
FOR VALUE FUNDS (the "Trust") for the account of its OPPENHEIMER QUEST GROWTH &
INCOME VALUE FUND (the "Fund") and OPPENHEIMERFUNDS DISTRIBUTOR, INC. (the
"Distributor").
1. The Plan. This Plan is the Fund's written distribution and
service plan for Class B sharesof the Fund (the "Shares"), contemplated by Rule
12b-1 (the "Rule") under the Investment Company Act of 1940 (the "1940 Act"),
pursuant to which the Fund will compensate the Distributor for its services in
connection with the distribution of Shares, and the personal service and
maintenance of shareholder accounts that hold Shares ("Accounts"). The Fund may
act as distributor of securities of which it is the issuer, pursuant to the
Rule, according to the terms of this Plan. The Distributor is authorized under
the Plan to pay "Recipients," as hereinafter defined, for rendering (1)
distribution assistance in connection with the sale of Shares and/or (2)
administrative support services with respect to Accounts. Such Recipients are
intended to have certain rights as third-party beneficiaries under this Plan.
The terms and provisions of this Plan shall be interpreted and defined in a
manner consistent with the provisions and definitions contained in (i) the 1940
Act, (ii) the Rule, (iii) Rule 2830 of the Conduct Rules of the National
Association of Securities Dealers, Inc., or any amendment or successor to such
rule (the "NASD Conduct Rules") and (iv) any conditions pertaining either to
distribution-related expenses or to a plan of distribution, to which the Fund is
subject under any order on which the Fund relies, issued at any time by the
Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has rendered assistance (whether direct, administrative or
both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer such questions
as may arise concerning the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the foregoing, a
majority of the Trust's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of this Plan or in any agreements relating
to this Plan (the "Independent Trustees") may remove any broker, dealer, bank or
other person or entity as a Recipient, whereupon such person's or entity's
rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such brokerage or
other customers, or investment advisory or other clients of such Recipient
and/or accounts as to which such Recipient is a fiduciary or custodian or
co-fiduciary or co-custodian (collectively, the "Customers"), but in no event
shall any such Shares be deemed owned by more than one Recipient for purposes of
this Plan. In the event that more than one person or
-1-
<PAGE>
entity would otherwise qualify as Recipients as to the same Shares, the
Recipient which is the dealer of record on the Fund's books as determined by the
Distributor shall be deemed the Recipient as to such Shares for purposes of this
Plan.
3. Payments for Distribution Assistance and Administrative Support
Services.
(a) The Fund will make payments to the Distributor, (i) within forty-five
(45) days of the end of each calendar quarter, in the aggregate amount of
0.0625% (0.25% on an annual basis) of the average during the calendar quarter of
the aggregate net asset value of the Shares computed as of the close of each
business day (the "Service Fee"), plus (ii) within ten (10) days of the end of
each month, in the aggregate amount of 0.0625% (0.75% on an annual basis) of the
average during the month of the aggregate net asset value of Shares computed as
of the close of each business day (the "Asset-Based Sales Charge") outstanding
for six years or less (the "Maximum Holding Period"). Such Service Fee payments
received from the Fund will compensate the Distributor and Recipients for
providing administrative support services with respect to Accounts. Such
Asset-Based Sales Charge payments received from the Fund will compensate the
Distributor and Recipients for providing distribution assistance in connection
with the sales of Shares.
The administrative support services in connection with the Accounts to be
rendered by Recipients may include, but shall not be limited to, the following:
answering routine inquiries concerning the Fund, assisting in the establishment
and maintenance of accounts or sub-accounts in the Fund and processing Share
redemption transactions, making the Fund's investment plans and dividend payment
options available, and providing such other information and services in
connection with the rendering of personal services and/or the maintenance of
Accounts, as the Distributor or the Fund may reasonably request.
The distribution assistance in connection with the sale of Shares to be
rendered by the Distributor and Recipients may include, but shall not be limited
to, the following: distributing sales literature and prospectuses other than
those furnished to current holders of the Fund's Shares ("Shareholders"), and
providing such other information and services in connection with the
distribution of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution assistance
or administrative support services qualifying for payment under the Plan if it
has Qualified Holdings of Shares to entitle it to payments under the Plan. In
the event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate distribution assistance in connection with the sale of
Shares or administrative support services for Accounts, then the Distributor, at
the request of the Board, shall require the Recipient to provide a written
report or other information to verify that said Recipient is providing
appropriate distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either may take
appropriate steps to terminate the Recipient's status as such under the Plan,
whereupon such Recipient's rights as a third-party beneficiary hereunder shall
terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, to be set from time to
time by a majority of the Independent Trustees.
-2-
<PAGE>
Alternatively, the Distributor may, at its sole option, make service fee
payments to any Recipient quarterly, within forty-five (45) days of the end of
each calendar quarter: (i) "Advance Service Fee Payments" at a rate not to
exceed 0.25% of the average during the calendar quarter of the aggregate net
asset value of Shares, computed as of the close of business on the day such
Shares are sold, constituting Qualified Holdings sold by the Recipient during
that quarter and owned beneficially or of record by the Recipient or by its
Customers, plus (ii) 0.0625% (0.25% on an annual basis) of the average during
the calendar quarter of the aggregate net asset value of Shares computed as of
the close of each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for a period of
more than one (1) year, subject to reduction or chargeback so that the Advance
Service Fee Payments do not exceed the limits on payments to Recipients that
are, or may be, imposed by Rule 2830 of the NASD Conduct Rules. In the event
Shares are redeemed less than one year after the date such Shares were sold, the
Recipient is obligated and will repay to the Distributor on demand a pro rata
portion of such Advance Service Fee Payments, based on the ratio of the time
such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of this paragraph
(b) may, at the Distributor's sole option, be made more often than quarterly,
and sooner than the end of the calendar quarter. However, no such payments shall
be made to any Recipient for any such quarter in which its Qualified Holdings do
not equal or exceed, at the end of such quarter, the minimum amount ("Minimum
Qualified Holdings"), if any, to be set from time to time by a majority of the
Independent Trustees.
A majority of the Independent Trustees may at any time or from time to
time decrease and thereafter adjust the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rate set forth above,
and/or direct the Distributor to increase or decrease the Maximum Holding
Period, the Minimum Holding Period or the Minimum Qualified Holdings. The
Distributor shall notify all Recipients of the Minimum Qualified Holdings,
Maximum Holding Period and Minimum Holding Period, if any, and the rate of
payments hereunder applicable to Recipients, and shall provide each Recipient
with written notice within thirty (30) days after any change in these
provisions. Inclusion of such provisions or a change in such provisions in a
revised current prospectus shall constitute sufficient notice. The Distributor
may make Plan payments to any "affiliated person" (as defined in the 1940 Act)
of the Distributor if such affiliated person qualifies as a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination of such amounts under the limits to which the
Distributor is, or may become, subject under Rule 2830 of the NASD Conduct
Rules. The distribution assistance and administrative support services to be
rendered by the Distributor in connection with the Shares may include, but shall
not be limited to, the following: (i) paying sales commissions to any broker,
dealer, bank or other person or entity that sells Shares, and\or paying such
persons Advance Service Fee Payments in advance of, and\or greater than, the
amount provided for in Section 3(b) of this Agreement; (ii) paying compensation
to and expenses of personnel of the Distributor who support distribution of
Shares by Recipients; (iii) obtaining financing or providing such financing from
its own resources, or from an affiliate, for interest and other borrowing costs
on the Distributor's unreimbursed expenses incurred in rendering distribution
assistance and administrative support services to the Fund; (iv) paying other
direct distribution costs, including without limitation the costs of sales
literature, advertising and prospectuses (other than those furnished to current
Shareholders) and state "blue sky" registration expenses; and (v) providing any
service rendered by the Distributor that a Recipient may render pursuant to part
(a) of this Section 3. Such services include distribution assistance and
administrative support services rendered in connection with Shares acquired (i)
by purchase, (ii) in
-3-
<PAGE>
exchange for shares of another investment company for which the Distributor
serves as distributor or sub- distributor, or (iii) pursuant to a plan of
reorganization to which the Fund is a party. In the event that the Board should
have reason to believe that the Distributor may not be rendering appropriate
distribution assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the Board, shall
provide the Board with a written report or other information to verify that the
Distributor is providing appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by
OppenheimerFunds, Inc. ("OFI") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OFI), from its own resources, from Asset-Based
Sales Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does not
obligate or in any way make the Fund liable to make any payment whatsoever to
any person or entity other than directly to the Distributor. In no event shall
the amounts to be paid to the Distributor exceed the rate of fees to be paid by
the Fund to the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of those persons to be Trustees of the Trust who are
not "interested persons" of the Fund or the Trust ("Disinterested Trustees")
shall be committed to the discretion of such Disinterested Trustees. Nothing
herein shall prevent the Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final decision on
any such selection and nomination is approved by a majority of the incumbent
Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Trust shall
provide written reports to the Trust's Board for its review, detailing services
rendered in connection with the distribution of the Shares, the amount of all
payments made and the purpose for which the payments were made. The reports
shall be provided quarterly, and shall state whether all provisions of Section 3
of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in writing
and shall provide that: (i) such agreement may be terminated at any time,
without payment of any penalty, by a vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's Class B voting shares; (ii) such termination shall be on not
more than sixty days written notice to any other party to the agreement; (iii)
such agreement shall automatically terminate in the event of its assignment (as
defined in the 1940 Act); (iv) it shall go into effect when approved by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such agreement; and (v) it shall, unless terminated as
herein provided, continue in effect from year to year only so long as such
continuance is specifically approved at least annually by a vote of the Board
and its Independent Trustees cast in person at a meeting called for the purpose
of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Amended and
Restated Plan has been approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called on February 4, 1997 for the purpose
of voting on this Plan, and shall take effect as of the date first set forth
above. Unless terminated as hereinafter provided, it shall continue in effect
from year to year thereafter or as the Board may otherwise determine only so
long as such continuance is specifically approved at least annually by a vote of
the Board and its Independent Trustees cast in person at a meeting called for
the
-4-
<PAGE>
purpose of voting on such continuance. This Plan may not be amended to increase
materially the amount of payments to be made under this Plan without approval of
the Class B Shareholders, in the manner described above, and all material
amendments must be approved by a vote of the Board and of the Independent
Trustees. This Plan may be terminated at any time by vote of a majority of the
Independent Trustees or by the vote of the holders of a "majority" (as defined
in the 1940 Act) of the Fund's outstanding Class B voting shares. In the event
of such termination, the Board and its Independent Trustees shall determine
whether the Distributor shall be entitled to payment from the Fund of all or a
portion of the Service Fee and/or the Asset-Based Sales Charge in respect of
Shares sold prior to the effective date of such termination.
8. Disclaimer of Shareholder Liability. The Distributor understands that the
obligations of the Trust and the Fund under this Plan are not binding upon any
Trustee or shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of the provisions
of the Declaration of Trust of the Trust disclaiming shareholder and Trustee
liability for acts or obligations of the Trust and the Fund.
OPPENHEIMER QUEST FOR VALUE FUNDS On Behalf Of
OPPENHEIMER QUEST GROWTH & INCOME VALUE FUND
By: /s/ Robert G. Zack
Robert G. Zack
Assistant Secretary
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: /s/ Andrew J. Donohue
Andrew J. Donohue
Executive Vice President
OFMI\257B.#1
-5-
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST FOR VALUE FUNDS
FOR CLASS B SHARES OF
OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the
"Plan") dated the 22nd day of November, 1996, by and between OPPENHEIMER QUEST
FOR VALUE FUNDS (the "Trust") for the account of its OPPENHEIMER QUEST
OPPORTUNITY VALUE FUND (the "Fund") and OPPENHEIMERFUNDS DISTRIBUTOR, INC. (the
"Distributor").
1. The Plan. This Plan is the Fund's written distribution and service plan
for Class B shares of the Fund (the "Shares"), contemplated by Rule 12b-1 (the
"Rule") under the Investment Company Act of 1940 (the "1940 Act"), pursuant to
which the Fund will compensate the Distributor for its services in connection
with the distribution of Shares, and the personal service and maintenance of
shareholder accounts that hold Shares ("Accounts"). The Fund may act as
distributor of securities of which it is the issuer, pursuant to the Rule,
according to the terms of this Plan. The Distributor is authorized under the
Plan to pay "Recipients," as hereinafter defined, for rendering (1) distribution
assistance in connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are intended to have
certain rights as third-party beneficiaries under this Plan. The terms and
provisions of this Plan shall be interpreted and defined in a manner consistent
with the provisions and definitions contained in (i) the 1940 Act, (ii) the
Rule, (iii) Rule 2830 of the Conduct Rules of the National Association of
Securities Dealers, Inc., or any amendment or successor to such rule (the "NASD
Conduct Rules") and (iv) any conditions pertaining either to
distribution-related expenses or to a plan of distribution, to which the Fund is
subject under any order on which the Fund relies, issued at any time by the
Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has rendered assistance (whether direct, administrative or
both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer such questions
as may arise concerning the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the foregoing, a
majority of the Trust's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of this Plan or in any agreements relating
to this Plan (the "Independent Trustees") may remove any broker, dealer, bank or
other person or entity as a Recipient, whereupon such person's or entity's
rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such brokerage or
other customers, or investment advisory or other clients of such Recipient
and/or accounts as to which such Recipient is a fiduciary or custodian or
co-fiduciary or co-custodian (collectively, the "Customers"), but in no event
shall any such Shares be deemed owned by more than one Recipient for purposes of
this Plan. In the event that more than one person or
-1-
<PAGE>
entity would otherwise qualify as Recipients as to the same Shares, the
Recipient which is the dealer of record on the Fund's books as determined by the
Distributor shall be deemed the Recipient as to such Shares for purposes of this
Plan.
3. Payments for Distribution Assistance and Administrative Support
Services.
(a) The Fund will make payments to the Distributor, (i) within forty-five
(45) days of the end of each calendar quarter, in the aggregate amount of
0.0625% (0.25% on an annual basis) of the average during the calendar quarter of
the aggregate net asset value of the Shares computed as of the close of each
business day (the "Service Fee"), plus (ii) within ten (10) days of the end of
each month, in the aggregate amount of 0.0625% (0.75% on an annual basis) of the
average during the month of the aggregate net asset value of Shares computed as
of the close of each business day (the "Asset-Based Sales Charge") outstanding
for six years or less (the "Maximum Holding Period"). Such Service Fee payments
received from the Fund will compensate the Distributor and Recipients for
providing administrative support services with respect to Accounts. Such
Asset-Based Sales Charge payments received from the Fund will compensate the
Distributor and Recipients for providing distribution assistance in connection
with the sales of Shares.
The administrative support services in connection with the Accounts to be
rendered by Recipients may include, but shall not be limited to, the following:
answering routine inquiries concerning the Fund, assisting in the establishment
and maintenance of accounts or sub-accounts in the Fund and processing Share
redemption transactions, making the Fund's investment plans and dividend payment
options available, and providing such other information and services in
connection with the rendering of personal services and/or the maintenance of
Accounts, as the Distributor or the Fund may reasonably request.
The distribution assistance in connection with the sale of Shares to be
rendered by the Distributor and Recipients may include, but shall not be limited
to, the following: distributing sales literature and prospectuses other than
those furnished to current holders of the Fund's Shares ("Shareholders"), and
providing such other information and services in connection with the
distribution of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution assistance
or administrative support services qualifying for payment under the Plan if it
has Qualified Holdings of Shares to entitle it to payments under the Plan. In
the event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate distribution assistance in connection with the sale of
Shares or administrative support services for Accounts, then the Distributor, at
the request of the Board, shall require the Recipient to provide a written
report or other information to verify that said Recipient is providing
appropriate distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either may take
appropriate steps to terminate the Recipient's status as such under the Plan,
whereupon such Recipient's rights as a third-party beneficiary hereunder shall
terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, to be set from time to
time by a majority of the Independent Trustees.
-2-
<PAGE>
Alternatively, the Distributor may, at its sole option, make service fee
payments to any Recipient quarterly within forty-five (45) days of the end of
each calendar quarter: (i) "Advance Service Fee Payments"at a rate not to exceed
0.25% of the average during the calendar quarter of the aggregate net asset
value of Shares, computed as of the close of business on the day such Shares are
sold, constituting Qualified Holdings sold by the Recipient during that quarter
and owned beneficially or of record by the Recipient or by its Customers, plus
(ii) 0.0625% (0.25% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of Shares computed as of the close of
each business day, constituting Qualified Holdings owned beneficially or of
record by the Recipient or by its Customers for a period of more than one (1)
year, subject to reduction or chargeback so that the Advance Service Fee
Payments do not exceed the limits on payments to Recipients that are, or may be,
imposed by Rule 2830 of the NASD Conduct Rules. In the event Shares are redeemed
less than one year after the date such Shares were sold, the Recipient is
obligated and will repay to the Distributor on demand a pro rata portion of such
Advance Service Fee Payments, based on the ratio of the time such shares were
held to one (1) year.
The Advance Service Fee Payments described in part (i) of this paragraph
(b) may, at the Distributor's sole option, be made more often than quarterly,
and sooner than the end of the calendar quarter. However, no such payments shall
be made to any Recipient for any such quarter in which its Qualified Holdings do
not equal or exceed, at the end of such quarter, the minimum amount ("Minimum
Qualified Holdings"), if any, to be set from time to time by a majority of the
Independent Trustees.
A majority of the Independent Trustees may at any time or from time to
time decrease and thereafter adjust the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rate set forth above,
and/or direct the Distributor to increase or decrease the Maximum Holding
Period, the Minimum Holding Period or the Minimum Qualified Holdings. The
Distributor shall notify all Recipients of the Minimum Qualified Holdings,
Maximum Holding Period and Minimum Holding Period, if any, and the rate of
payments hereunder applicable to Recipients, and shall provide each Recipient
with written notice within thirty (30) days after any change in these
provisions. Inclusion of such provisions or a change in such provisions in a
revised current prospectus shall constitute sufficient notice. The Distributor
may make Plan payments to any "affiliated person" (as defined in the 1940 Act)
of the Distributor if such affiliated person qualifies as a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination of such amounts under the limits to which the
Distributor is, or may become, subject under Rule 2830 of the NASD Conduct
Rules. The distribution assistance and administrative support services to be
rendered by the Distributor in connection with the Shares may include, but shall
not be limited to, the following: (i) paying sales commissions to any broker,
dealer, bank or other person or entity that sells Shares, and\or paying such
persons Advance Service Fee Payments in advance of, and\or greater than, the
amount provided for in Section 3(b) of this Agreement; (ii) paying compensation
to and expenses of personnel of the Distributor who support distribution of
Shares by Recipients; (iii) obtaining financing or providing such financing from
its own resources, or from an affiliate, for interest and other borrowing costs
on the Distributor's unreimbursed expenses incurred in rendering distribution
assistance and administrative support services to the Fund; (iv) paying other
direct distribution costs, including without limitation the costs of sales
literature, advertising and prospectuses (other than those furnished to current
Shareholders) and state "blue sky" registration expenses; and (v) providing any
service rendered by the Distributor that a Recipient may render pursuant to part
(a) of this Section 3. Such services include distribution assistance and
administrative support services rendered in connection with Shares acquired (i)
by purchase, (ii) in
-3-
<PAGE>
exchange for shares of another investment company for which the Distributor
serves as distributor or sub- distributor, or (iii) pursuant to a plan of
reorganization to which the Fund is a party. In the event that the Board should
have reason to believe that the Distributor may not be rendering appropriate
distribution assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the Board, shall
provide the Board with a written report or other information to verify that the
Distributor is providing appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by
OppenheimerFunds, Inc. ("OFI") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OFI), from its own resources, from Asset-Based
Sales Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does not
obligate or in any way make the Fund liable to make any payment whatsoever to
any person or entity other than directly to the Distributor. In no event shall
the amounts to be paid to the Distributor exceed the rate of fees to be paid by
the Fund to the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of those persons to be Trustees of the Trust who are
not "interested persons" of the Fund or the Trust ("Disinterested Trustees")
shall be committed to the discretion of such Disinterested Trustees. Nothing
herein shall prevent the Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final decision on
any such selection and nomination is approved by a majority of the incumbent
Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Trust shall
provide written reports to the Trust's Board for its review, detailing services
rendered in connection with the distribution of the Shares, the amount of all
payments made and the purpose for which the payments were made. The reports
shall be provided quarterly, and shall state whether all provisions of Section 3
of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in writing
and shall provide that: (i) such agreement may be terminated at any time,
without payment of any penalty, by a vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding Class B voting shares; (ii) such termination
shall be on not more than sixty days written notice to any other party to the
agreement; (iii) such agreement shall automatically terminate in the event of
its assignment (as defined in the 1940 Act); (iv) it shall go into effect when
approved by a vote of the Board and its Independent Trustees cast in person at a
meeting called for the purpose of voting on such agreement; and (v) it shall,
unless terminated as herein provided, continue in effect from year to year only
so long as such continuance is specifically approved at least annually by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Amended and
Restated Plan has been approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called on February 4, 1997 for the purpose
of voting on this Plan, and shall take effect as of the date first set forth
above. Unless terminated as hereinafter provided, it shall continue in effect
from year to year thereafter or as the Board may otherwise determine only so
long as such continuance is specifically approved at least annually by a vote of
the Board and its Independent Trustees cast in person at a meeting called for
the
-4-
<PAGE>
purpose of voting on such continuance. This Plan may not be amended to increase
materially the amount of payments to be made under this Plan without approval of
the Class B Shareholders, in the manner described above, and all material
amendments must be approved by a vote of the Board and of the Independent
Trustees. This Plan may be terminated at any time by vote of a majority of the
Independent Trustees or by the vote of the holders of a "majority" (as defined
in the 1940 Act) of the Fund's outstanding Class B voting shares. In the event
of such termination, the Board and its Independent Trustees shall determine
whether the Distributor shall be entitled to payment from the Fund of all or a
portion of the Service Fee and/or the Asset-Based Sales Charge in respect of
Shares sold prior to the effective date of such termination.
8. Disclaimer of Shareholder Liability. The Distributor understands that the
obligations of the Trust and the Fund under this Plan are not binding upon any
Trustee or shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of the provisions
of the Declaration of Trust of the Trust disclaiming shareholder and Trustee
liability for acts or obligations of the Trust and the Fund.
OPPENHEIMER QUEST FOR VALUE FUNDS On Behalf Of
OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
By: /s/ Robert G. Zack
Robert G. Zack
Assistant Secretary
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: /s/ Andrew J. Donohue
Andrew J. Donohue
Executive Vice President
ofmi\236B.#1
-5-
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST FOR VALUE FUNDS
FOR CLASS B SHARES OF
OPPENHEIMER QUEST SMALL CAP VALUE FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the
"Plan") dated the 22nd day of November, 1996, by and between OPPENHEIMER QUEST
FOR VALUE FUNDS (the "Trust") for the account of its OPPENHEIMER QUEST SMALL CAP
VALUE FUND (the "Fund") and OPPENHEIMERFUNDS DISTRIBUTOR, INC. (the
"Distributor").
1. The Plan. This Plan is the Fund's written distribution and service plan
for Class B shares of the Fund (the "Shares"), contemplated by Rule 12b-1 (the
"Rule") under the Investment Company Act of 1940 (the "1940 Act"), pursuant to
which the Fund will compensate the Distributor for its services in connection
with the distribution of Shares, and the personal service and maintenance of
shareholder accounts that hold Shares ("Accounts"). The Fund may act as
distributor of securities of which it is the issuer, pursuant to the Rule,
according to the terms of this Plan. The Distributor is authorized under the
Plan to pay "Recipients," as hereinafter defined, for rendering (1) distribution
assistance in connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are intended to have
certain rights as third-party beneficiaries under this Plan. The terms and
provisions of this Plan shall be interpreted and defined in a manner consistent
with the provisions and definitions contained in (i) the 1940 Act, (ii) the
Rule, (iii) Rule 2830 of the Conduct Rules of the National Association of
Securities Dealers, Inc., or any amendment or successor to such rule (the "NASD
Conduct Rules") and (iv) any conditions pertaining either to
distribution-related expenses or to a plan of distribution, to which the Fund is
subject under any order on which the Fund relies, issued at any time by the
Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has rendered assistance (whether direct, administrative or
both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer such questions
as may arise concerning the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the foregoing, a
majority of the Trust's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of this Plan or in any agreements relating
to this Plan (the "Independent Trustees") may remove any broker, dealer, bank or
other person or entity as a Recipient, whereupon such person's or entity's
rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such brokerage or
other customers, or investment advisory or other clients of such Recipient
and/or accounts as to which such Recipient is a fiduciary or custodian or
co-fiduciary or co-custodian (collectively, the "Customers"), but in no event
shall any such Shares be deemed owned by more than one Recipient for purposes of
this Plan. In the event that more than one person or
-1-
<PAGE>
entity would otherwise qualify as Recipients as to the same Shares, the
Recipient which is the dealer of record on the Fund's books as determined by the
Distributor shall be deemed the Recipient as to such Shares for purposes of this
Plan.
3. Payments for Distribution Assistance and Administrative Support
Services.
(a) The Fund will make payments to the Distributor, (i) within forty-five
(45) days of the end of each calendar quarter, in the aggregate amount of
0.0625% (0.25% on an annual basis) of the average during the calendar quarter of
the aggregate net asset value of the Shares computed as of the close of each
business day (the "Service Fee"), plus (ii) within ten (10) days of the end of
each month, in the aggregate amount of 0.0625% (0.75% on an annual basis) of the
average during the month of the aggregate net asset value of Shares computed as
of the close of each business day (the "Asset-Based Sales Charge") outstanding
for six years or less (the "Maximum Holding Period"). Such Service Fee payments
received from the Fund will compensate the Distributor and Recipients for
providing administrative support services with respect to Accounts. Such
Asset-Based Sales Charge payments received from the Fund will compensate the
Distributor and Recipients for providing distribution assistance in connection
with the sales of Shares.
The administrative support services in connection with the Accounts to be
rendered by Recipients may include, but shall not be limited to, the following:
answering routine inquiries concerning the Fund, assisting in the establishment
and maintenance of accounts or sub-accounts in the Fund and processing Share
redemption transactions, making the Fund's investment plans and dividend payment
options available, and providing such other information and services in
connection with the rendering of personal services and/or the maintenance of
Accounts, as the Distributor or the Fund may reasonably request.
The distribution assistance in connection with the sale of Shares to be
rendered by the Distributor and Recipients may include, but shall not be limited
to, the following: distributing sales literature and prospectuses other than
those furnished to current holders of the Fund's Shares ("Shareholders"), and
providing such other information and services in connection with the
distribution of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution assistance
or administrative support services qualifying for payment under the Plan if it
has Qualified Holdings of Shares to entitle it to payments under the Plan. In
the event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate distribution assistance in connection with the sale of
Shares or administrative support services for Accounts, then the Distributor, at
the request of the Board, shall require the Recipient to provide a written
report or other information to verify that said Recipient is providing
appropriate distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either may take
appropriate steps to terminate the Recipient's status as such under the Plan,
whereupon such Recipient's rights as a third-party beneficiary hereunder shall
terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, to be set from time to
time by a majority of the Independent Trustees.
-2-
<PAGE>
Alternatively, the Distributor may, at its sole option, make service fee
payments to any Recipient quarterly, within forty-five (45) days of the end of
each calendar quarter: (i) "Advance Service Fee Payments" at a rate not to
exceed 0.25% of the average during the calendar quarter of the aggregate net
asset value of Shares, computed as of the close of business on the day such
Shares are sold, constituting Qualified Holdings sold by the Recipient during
that quarter and owned beneficially or of record by the Recipient or by its
Customers, plus (ii) 0.0625% (0.25% on an annual basis) of the average during
the calendar quarter of the aggregate net asset value of Shares computed as of
the close of each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for a period of
more than one (1) year, subject to reduction or chargeback so that the Advance
Service Fee Payments do not exceed the limits on payments to Recipients that
are, or may be, imposed by Rule 2830 of the NASD Conduct Rules. In the event
Shares are redeemed less than one year after the date such Shares were sold, the
Recipient is obligated and will repay to the Distributor on demand a pro rata
portion of such Advance Service Fee Payments, based on the ratio of the time
such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of this paragraph
(b) may, at the Distributor's sole option, be made more often than quarterly,
and sooner than the end of the calendar quarter. However, no such payments shall
be made to any Recipient for any such quarter in which its Qualified Holdings do
not equal or exceed, at the end of such quarter, the minimum amount ("Minimum
Qualified Holdings"), if any, to be set from time to time by a majority of the
Independent Trustees.
A majority of the Independent Trustees may at any time or from time to
time decrease and thereafter adjust the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rate set forth above,
and/or direct the Distributor to increase or decrease the Maximum Holding
Period, the Minimum Holding Period or the Minimum Qualified Holdings. The
Distributor shall notify all Recipients of the Minimum Qualified Holdings,
Maximum Holding Period and Minimum Holding Period, if any, and the rate of
payments hereunder applicable to Recipients, and shall provide each Recipient
with written notice within thirty (30) days after any change in these
provisions. Inclusion of such provisions or a change in such provisions in a
revised current prospectus shall constitute sufficient notice. The Distributor
may make Plan payments to any "affiliated person" (as defined in the 1940 Act)
of the Distributor if such affiliated person qualifies as a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination of such amounts under the limits to which the
Distributor is, or may become, subject under Rule 2830 of the NASD Conduct
Rules. The distribution assistance and administrative support services to be
rendered by the Distributor in connection with the Shares may include, but shall
not be limited to, the following: (i) paying sales commissions to any broker,
dealer, bank or other person or entity that sells Shares, and\or paying such
persons Advance Service Fee Payments in advance of, and\or greater than, the
amount provided for in Section 3(b) of this Agreement; (ii) paying compensation
to and expenses of personnel of the Distributor who support distribution of
Shares by Recipients; (iii) obtaining financing or providing such financing from
its own resources, or from an affiliate, for interest and other borrowing costs
on the Distributor's unreimbursed expenses incurred in rendering distribution
assistance and administrative support services to the Fund; (iv) paying other
direct distribution costs, including without limitation the costs of sales
literature, advertising and prospectuses (other than those furnished to current
Shareholders) and state "blue sky" registration expenses; and (v) providing any
service rendered by the Distributor that a Recipient may render pursuant to part
(a) of this Section 3. Such services include distribution assistance and
administrative support services rendered in connection with Shares acquired (i)
by purchase, (ii) in
-3-
<PAGE>
exchange for shares of another investment company for which the Distributor
serves as distributor or sub- distributor, or (iii) pursuant to a plan of
reorganization to which the Fund is a party. In the event that the Board should
have reason to believe that the Distributor may not be rendering appropriate
distribution assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the Board, shall
provide the Board with a written report or other information to verify that the
Distributor is providing appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by
OppenheimerFunds, Inc. ("OFI") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OFI), from its own resources, from Asset-Based
Sales Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does not
obligate or in any way make the Fund liable to make any payment whatsoever to
any person or entity other than directly to the Distributor. In no event shall
the amounts to be paid to the Distributor exceed the rate of fees to be paid by
the Fund to the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of those persons to be Trustees of the Trust who are
not "interested persons" of the Fund or the Trust ("Disinterested Trustees")
shall be committed to the discretion of such Disinterested Trustees. Nothing
herein shall prevent the Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final decision on
any such selection and nomination is approved by a majority of the incumbent
Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Trust shall
provide written reports to the Trust's Board for its review, detailing services
rendered in connection with the distribution of the Shares, the amount of all
payments made and the purpose for which the payments were made. The reports
shall be provided quarterly, and shall state whether all provisions of Section 3
of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in writing
and shall provide that: (i) such agreement may be terminated at any time,
without payment of any penalty, by a vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding Class B voting shares; (ii) such termination
shall be on not more than sixty days written notice to any other party to the
agreement; (iii) such agreement shall automatically terminate in the event of
its assignment (as defined in the 1940 Act); (iv) it shall go into effect when
approved by a vote of the Board and its Independent Trustees cast in person at a
meeting called for the purpose of voting on such agreement; and (v) it shall,
unless terminated as herein provided, continue in effect from year to year only
so long as such continuance is specifically approved at least annually by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Amended and
Restated Plan has been approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called on February 4, 1997 for the purpose
of voting on this Plan, and shall take effect as of the date first set forth
above. Unless terminated as hereinafter provided, it shall continue in effect
from year to year thereafter or as the Board may otherwise determine only so
long as such continuance is specifically approved at least annually by a vote of
the Board and its Independent Trustees cast in person at a meeting called for
the
-4-
<PAGE>
purpose of voting on such continuance. This Plan may not be amended to increase
materially the amount of payments to be made under this Plan without approval of
the Class B Shareholders, in the manner described above, and all material
amendments must be approved by a vote of the Board and of the Independent
Trustees. This Plan may be terminated at any time by vote of a majority of the
Independent Trustees or by the vote of the holders of a "majority" (as defined
in the 1940 Act) of the Fund's outstanding Class B voting shares. In the event
of such termination, the Board and its Independent Trustees shall determine
whether the Distributor shall be entitled to payment from the Fund of all or a
portion of the Service Fee and/or the Asset-Based Sales Charge in respect of
Shares sold prior to the effective date of such termination.
8. Disclaimer of Shareholder Liability. The Distributor understands that the
obligations of the Trust and the Fund under this Plan are not binding upon any
Trustee or shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of the provisions
of the Declaration of Trust of the Trust disclaiming shareholder and Trustee
liability for acts or obligations of the Trust and the Fund.
OPPENHEIMER QUEST FOR VALUE FUNDS On Behalf Of
OPPENHEIMER QUEST SMALL CAP VALUE FUND
By: /s/ Robert G. Zack
Robert G. Zack
Assistant Secretary
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: /s/ Andrew J.Donohue
Andrew J. Donohue
Executive Vice President
Exhibit 14(15)(b)(4)
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST FOR VALUE FUNDS
FOR CLASS B SHARES OF
OFFICERS VALUE FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the
"Plan") dated the 22nd day of November, 1995, by and between OPPENHEIMER QUEST
FOR VALUE FUNDS (the "Trust") for the account of its OFFICERS VALUE FUND (the
"Fund") and OPPENHEIMER
FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution and service plan
for Class B shares of the Fund (the "Shares"), contemplated by Rule 12b-1 (the
"Rule") under the Investment Company Act of 1940 (the "1940 Act"), pursuant to
which the Fund will compensate the Distributor for its services in connection
with the distribution of Shares, and the personal service and maintenance of
shareholder accounts that hold Shares ("Accounts"). The Fund may act as
distributor of securities of which it is the issuer, pursuant to the Rule,
according to the terms of this Plan. The Distributor is authorized under the
Plan to pay "Recipients," as hereinafter defined, for rendering (1) distribution
assistance in connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are intended to have
certain rights as third-party beneficiaries under this Plan. The terms and
provisions of this Plan shall be interpreted and defined in a manner consistent
with the provisions and definitions contained in (i) the 1940 Act, (ii) the
Rule, (iii) Article III, Section 26, of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., or its successor (the "NASD
Rules of Fair Practice") and (iv) any conditions pertaining either to
distribution-related expenses or to a plan of distribution, to which the Fund is
subject under any order on which the Fund relies, issued at any time by the
Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following
terms
shall have the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has rendered assistance (whether direct, administrative or
both) in the distribution of Shares or
1
<PAGE>
has provided administrative support services with respect to Shares held by
Customers (defined below) of the Recipient; (ii) shall furnish the Distributor
(on behalf of the Fund) with such information as the Distributor shall
reasonably request to answer such questions as may arise concerning the sale of
Shares; and (iii) has been selected by the Distributor to receive payments under
the Plan. Notwithstanding the foregoing, a majority of the Trust's Board of
Trustees (the "Board") who are not "interested persons" (as defined in the 1940
Act) and who have no direct or indirect financial interest in the operation of
this Plan or in any agreements relating to this Plan (the "Independent
Trustees") may remove any broker, dealer, bank or other person or entity as a
Recipient, whereupon such person's or entity's rights as a third-party
beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such customers,
clients and/or accounts as to which such Recipient is a fiduciary or custodian
or co-fiduciary or co- custodian (collectively, the "Customers"), but in no
event shall any such Shares be deemed owned by more than one Recipient for
purposes of this Plan. In the event that more than one person or entity would
otherwise qualify as Recipients as to the same Shares, the Recipient which is
the dealer of record on the Fund's books as determined by the Distributor shall
be deemed the Recipient as to such Shares for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative Support
Services.
(a) The Fund will make payments to the Distributor, (i) within forty-five
(45) days of the end of each calendar quarter, in the aggregate amount of
0.0625% (0.25% on an annual basis) of the average during the calendar quarter of
the aggregate net asset value of the Shares computed as of the close of each
business day (the "Service Fee"), plus (ii) within ten (10) days of the end of
each month, in the aggregate amount of 0.0625% (0.75% on an annual basis) of the
average during the month of the aggregate net asset value of Shares computed as
of the close of each business day (the "Asset-Based Sales Charge") outstanding
for six years or less (the "Maximum Holding Period"). Such Service Fee payments
received from the Fund will compensate the Distributor and Recipients for
providing administrative support services with respect to Accounts. Such
Asset-Based Sales Charge payments received from the Fund will compensate the
Distributor and Recipients for providing distribution assistance in connection
with the sales of Shares.
The administrative support services in connection with the
2
<PAGE>
Accounts to be rendered by Recipients may include, but shall not be limited to,
the following: answering routine inquiries concerning the Fund, assisting in the
establishment and maintenance of accounts or sub-accounts in the Fund and
processing Share redemption transactions, making the Fund's investment plans and
dividend payment options available, and providing such other information and
services in connection with the rendering of personal services and/or the
maintenance of Accounts, as the Distributor or the Fund may reasonably request.
The distribution assistance in connection with the sale of Shares to be
rendered by the Distributor and Recipients may include, but shall not be limited
to, the following: distributing sales literature and prospectuses other than
those furnished to current holders of the Fund's Shares ("Shareholders"), and
providing such other information and services in connection with the
distribution of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution assistance
or administrative support services qualifying for payment under the Plan if it
has Qualified Holdings of Shares to entitle it to payments under the Plan. In
the event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate distribution assistance in connection with the sale of
Shares or administrative support services for Accounts, then the Distributor, at
the request of the Board, shall require the Recipient to provide a written
report or other information to verify that said Recipient is providing
appropriate distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either may take
appropriate steps to terminate the Recipient's status as such under the Plan,
whereupon such Recipient's rights as a third-party beneficiary hereunder shall
terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, to be set from time to
time by a majority of the Independent Trustees.
Alternatively, the Distributor may, at its sole option,
make
3
<PAGE>
service fee payments ("Advance Service Fee Payments") to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed (i) 0.25% of the average during the calendar quarter of the
aggregate net asset value of Shares, computed as of the close of business on the
day such Shares are sold, constituting Qualified Holdings sold by the Recipient
during that quarter and owned beneficially or of record by the Recipient or by
its Customers, plus (ii) 0.0625% (0.25% on an annual basis) of the average
during the calendar quarter of the aggregate net asset value of Shares computed
as of the close of each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for a period of
more than one (1) year, subject to reduction or chargeback so that the Advance
Service Fee Payments do not exceed the limits on payments to Recipients that
are, or may be, imposed by Article III, Section 26, of the NASD Rules of Fair
Practice.
In the event Shares are redeemed less than one year after the date such
Shares were sold, the Recipient is obligated and will repay to the Distributor
on demand a pro rata portion of such Advance Service Fee Payments, based on the
ratio of the time such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of this paragraph
(b) may, at the Distributor's sole option, be made more often than quarterly,
and sooner than the end of the calendar quarter. However, no such payments shall
be made to any Recipient for any such quarter in which its Qualified Holdings do
not equal or exceed, at the end of such quarter, the minimum amount ("Minimum
Qualified Holdings"), if any, to be set from time to time by a majority of the
Independent Trustees.
A majority of the Independent Trustees may at any time or from time to
time decrease and thereafter adjust the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rate set forth above,
and/or direct the Distributor to increase or decrease the Maximum Holding
Period, the Minimum Holding Period or the Minimum Qualified Holdings. The
Distributor shall notify all Recipients of the Minimum Qualified Holdings,
Maximum Holding Period and Minimum Holding Period, if any, and the rate of
payments hereunder applicable to Recipients, and shall provide each Recipient
with written notice within thirty (30) days after any change in these
provisions. Inclusion of such provisions or a change in such provisions in a
revised current prospectus shall constitute sufficient notice. The Distributor
may make Plan payments to any "affiliated person" (as defined in the 1940 Act)
of the Distributor if such affiliated person qualifies as a Recipient.
4
<PAGE>
(c) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination of such amounts under the limits to which the
Distributor is, or may become, subject under Article III, Section 26, of the
NASD Rules of Fair Practice. The distribution assistance and administrative
support services to be rendered by the Distributor in connection with the Shares
may include, but shall not be limited to, the following: (i) paying sales
commissions to any broker, dealer, bank or other person or entity that sells
Shares, and\or paying such persons Advance Service Fee Payments in advance of,
and\or greater than, the amount provided for in Section 3(b) of this Agreement;
(ii) paying compensation to and expenses of personnel of the Distributor who
support distribution of Shares by Recipients; (iii) obtaining financing or
providing such financing from its own resources, or from an affiliate, for
interest and other borrowing costs on the Distributor's unreimbursed expenses
incurred in rendering distribution assistance and administrative support
services to the Fund; (iv) paying other direct distribution costs, including
without limitation the costs of sales literature, advertising and prospectuses
(other than those furnished to current Shareholders) and state "blue sky"
registration expenses; and (v) providing any service rendered by the Distributor
that a Recipient may render pursuant to part (a) of this Section 3. Such
services include distribution assistance and administrative support services
rendered in connection with Shares acquired (i) by purchase, (ii) in exchange
for shares of another investment company for which the Distributor serves as
distributor or sub-distributor, or (iii) pursuant to a plan of reorganization to
which the Fund is a party. In the event that the Board should have reason to
believe that the Distributor may not be rendering appropriate distribution
assistance or administrative support services in connection with the sale of
Shares, then the Distributor, at the request of the Board, shall provide the
Board with a written report or other information to verify that the Distributor
is providing appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by Oppenheimer
Management Corporation ("OMC") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OMC), from its own resources, from Asset-Based
Sales Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does not
obligate or in any way make the Fund liable to make any payment whatsoever to
any person or entity other than directly to the Distributor. In no event shall
the amounts to be paid to the Distributor exceed the rate of fees to be paid by
the Fund to
5
<PAGE>
the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of those persons to be Trustees of the Trust who are
not "interested persons" of the Fund or the Trust ("Disinterested Trustees")
shall be committed to the discretion of such Disinterested Trustees. Nothing
herein shall prevent the Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final decision on
any such selection and nomination is approved by a majority of the incumbent
Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Trust shall
provide written reports to the Trust's Board for its review, detailing services
rendered in connection with the distribution of the Shares, the amount of all
payments made and the purpose for which the payments were made. The reports
shall be provided quarterly, and shall state whether all provisions of Section 3
of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in writing
and shall provide that: (i) such agreement may be terminated at any time,
without payment of any penalty, by a vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting securities of the Class, on not more than
sixty days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its assignment (as
defined in the 1940 Act); (iii) it shall go into effect when approved by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such agreement; and (iv) it shall, unless terminated as
herein provided, continue in effect from year to year only so long as such
continuance is specifically approved at least annually by a vote of the Board
and its Independent Trustees cast in person at a meeting called for the purpose
of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Amended and
Restated Plan has been approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called on June 22, 1995, for the purpose of
voting on this Plan, and shall take effect after approval by Class B
shareholders of the Fund, at which time it shall replace the Fund's Amended and
Restated Distribution Plan adopted as of December 23, 1994 and the Amended and
Restated Distribution Agreement for the Shares dated December 23, 1994. Unless
terminated as hereinafter provided, it shall continue in effect from year to
year thereafter or as the Board may otherwise determine only so long as such
continuance is
6
<PAGE>
specifically approved at least annually by a vote of the Board and its
Independent Trustees cast in person at a meeting called for the purpose of
voting on such continuance. This Plan may not be amended to increase materially
the amount of payments to be made without approval of the Class B Shareholders,
in the manner described above, and all material amendments must be approved by a
vote of the Board and of the Independent Trustees. This Plan may be terminated
at any time by vote of a majority of the Independent Trustees or by the vote of
the holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities of the Class. In the event of such termination,
the Board and its Independent Trustees shall determine whether the Distributor
shall be entitled to payment from the Fund of all or a portion of the Service
Fee and/or the Asset-Based Sales Charge in respect of Shares sold prior to the
effective date of such termination.
8. Disclaimer of Shareholder Liability. The Distributor understands that the
obligations of the Trust and the Fund under this Plan are not binding upon any
Trustee or shareholder of the Fund personally, but bind only the Fund and the
Fund's property. The Distributor represents that it has notice of the provisions
of the Declaration of Trust of the Trust disclaiming shareholder and Trustee
liability for acts or obligations of the Trust and the Fund.
OPPENHEIMER QUEST FOR VALUE FUNDS
ON BEHALF OF OFFICERS VALUE FUND
By: /s/ Bridget A. Macaskill
-----------------------------
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By: /s/ Andrew J. Donohue
-------------------------------
Andrew J. Donohue
Executive Vice President
ofmi\229.b
7
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST FOR VALUE FUNDS
FOR CLASS C SHARES OF
OPPENHEIMER QUEST GROWTH & INCOME VALUE FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the
"Plan") dated the 22nd day of November, 1996, by and between OPPENHEIMER QUEST
FOR VALUE FUNDS (the "Trust") for the account of its OPPENHEIMER QUEST GROWTH &
INCOME VALUE FUND (the "Fund") and OPPENHEIMERFUNDS DISTRIBUTOR, INC. (the
"Distributor").
1. The Plan. This Plan is the Fund's written distribution plan for Class C
shares of the Fund (the "Shares"), contemplated by Rule 12b-1 (the "Rule") under
the Investment Company Act of 1940 (the "1940 Act"), pursuant to which the Fund
will compensate the Distributor for its services incurred in connection with the
distribution of Shares, and the personal service and maintenance of shareholder
accounts that hold Shares ("Accounts"). The Fund may act as distributor of
securities of which it is the issuer, pursuant to the Rule, according to the
terms of this Plan. The Distributor is authorized under the Plan to pay
"Recipients," as hereinafter defined, for rendering (1) distribution assistance
in connection with the sale of Shares and/or (2) administrative support services
with respect to Accounts. Such Recipients are intended to have certain rights as
third-party beneficiaries under this Plan. The terms and provisions of this Plan
shall be interpreted and defined in a manner consistent with the provisions and
definitions contained in (i) the 1940 Act, (ii) the Rule, (iii) Rule 2830 of the
Conduct Rules of the National Association of Securities Dealers, Inc., or any
amendment or successor to such rule (the "NASD Conduct Rules") and (iv) any
conditions pertaining either to distribution-related expenses or to a plan of
distribution, to which the Fund is subject under any order on which the Fund
relies, issued at any time by the Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has rendered assistance (whether direct, administrative or
both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer such questions
as may arise concerning the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the foregoing, a
majority of the Trust's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of this Plan or in any agreements relating
to this Plan (the "Independent Trustees") may remove any broker, dealer, bank or
other person or entity as a Recipient, whereupon such person's or entity's
rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such brokerage or
other customers, or investment advisory or other clients of such Recipient
and/or accounts as to which such Recipient is a fiduciary or custodian or
co-fiduciary or co-custodian (collectively, the "Customers"), but in no event
shall any such Shares be deemed owned by more than one Recipient for purposes of
this Plan. In the event that more than one person or
-1-
<PAGE>
entity would otherwise qualify as Recipients as to the same Shares, the
Recipient which is the dealer of record on the Fund's books as determined by the
Distributor shall be deemed the Recipient as to such Shares for purposes of this
Plan.
3. Payments for Distribution Assistance and Administrative Support
Services.
(a) The Fund will make payments to the Distributor, within forty-five (45)
days of the end of each calendar quarter, in the aggregate amount (i) of 0.0625%
(0.25% on an annual basis) of the average during the calendar quarter of the
aggregate net asset value of the Shares computed as of the close of each
business day (the "Service Fee"), plus (ii) 0.1875% (0.75% on an annual basis)
of the average during the calendar quarter of the aggregate net asset value of
the Shares computed as of the close of each business day (the "Asset-Based Sales
Charge"). Such Service Fee payments received from the Fund will compensate the
Distributor and Recipients for providing administrative support services with
respect to Accounts. Such Asset-Based Sales Charge payments received from the
Fund will compensate the Distributor and Recipients for providing distribution
assistance in connection with the sale of Shares.
The administrative support services in connection with the Accounts to be
rendered by Recipients may include, but shall not be limited to, the following:
answering routine inquiries concerning the Fund, assisting in establishing and
maintaining accounts or sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend payment options
available, and providing such other information and services in connection with
the rendering of personal services and/or the maintenance of Accounts, as the
Distributor or the Fund may reasonably request.
The distribution assistance in connection with the sale of Shares to be
rendered by the Distributor and by Recipients may include, but shall not be
limited to, the following: distributing sales literature and prospectuses other
than those furnished to current holders of the Fund's Shares ("Shareholders"),
and providing such other information and services in connection with the
distribution of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution assistance
or administrative support services qualifying for payment under the Plan if it
has Qualified Holdings of Shares to entitle it to payments under the Plan. In
the event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate distribution assistance in connection with the sale of
Shares or administrative support services for the Accounts, then the
Distributor, at the request of the Board, shall require the Recipient to provide
a written report or other information to verify that said Recipient is providing
appropriate distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either may take
appropriate steps to terminate the Recipient's status as such under the Plan,
whereupon such Recipient's rights as a third-party beneficiary hereunder shall
terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares, computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, to be set from time to
time by a majority of the Independent Trustees.
-2-
<PAGE>
Alternatively, the Distributor may, at its sole option, make service fee
payments to any Recipient quarterly, within forty-five (45) days of the end of
each calendar quarter: (i) "Advance Service Fee Payments" at a rate not to
exceed 0.25% of the average during the calendar quarter of the aggregate net
asset value of Shares, computed as of the close of business on the day such
Shares are sold, constituting Qualified Holdings sold by the Recipient during
that quarter and owned beneficially or of record by the Recipient or by its
Customers, plus (ii) 0.0625% (0.25% on an annual basis) of the average during
the calendar quarter of the aggregate net asset value of Shares computed as of
the close of each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for a period of
more than one (1) year, subject to reduction or chargeback so that the Advance
Service Fee Payments do not exceed the limits on payments to Recipients that
are, or may be, imposed by Rule 2830 of the NASD Conduct Rules. In the event
Shares are redeemed less than one year after the date such Shares were sold, the
Recipient is obligated and will repay to the Distributor on demand a pro rata
portion of such Advance Service Fee Payments, based on the ratio of the time
such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of the preceding
sentence may, at the Distributor's sole option, be made more often than
quarterly, and sooner than the end of the calendar quarter. In addition, the
Distributor shall make asset-based sales charge payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.1875% (0.75% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or its Customers for a period of more than one (1)
year. However, no such service fee or asset-based sales charge payments
(collectively, the "Recipient Payments") shall be made to any Recipient for any
such quarter in which its Qualified Holdings do not equal or exceed, at the end
of such quarter, the minimum amount ("Minimum Qualified Holdings"), if any, to
be set from time to time by a majority of the Independent Trustees.
A majority of the Independent Trustees may at any time or from time to
time decrease and thereafter adjust the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rates set forth above,
and/or direct the Distributor to increase or decrease the Minimum Holding Period
or the Minimum Qualified Holdings. The Distributor shall notify all Recipients
of the Minimum Qualified Holdings or Minimum Holding Period, if any, and the
rates of Recipient Payments hereunder applicable to Recipients, and shall
provide each Recipient with written notice within thirty (30) days after any
change in these provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute sufficient notice.
The Distributor may make Plan payments to any "affiliated person" (as defined in
the 1940 Act) of the Distributor if such affiliated person qualifies as a
Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination of such amounts under the limits to which the
Distributor is, or may become, subject under Rule 2830 of the NASD Conduct
Rules. The distribution assistance and administrative support services to be
rendered by the Distributor in connection with the Shares may include, but shall
not be limited to, the following: (i) paying sales commissions to any broker,
dealer, bank or other person or entity that sells Shares, and\or paying such
persons Advance Service Fee Payments in advance of, and\or greater than, the
amount provided for in Section 3(b) of this Agreement; (ii) paying compensation
to and expenses of personnel of the Distributor who support distribution of
Shares by Recipients; (iii) obtaining financing or providing such financing from
its own resources, or from an affiliate, for interest and other borrowing costs
of the Distributor's unreimbursed expenses incurred in rendering distribution
assistance and administrative
-3-
<PAGE>
support services to the Fund; (iv) paying other direct distribution costs,
including without limitation the costs of sales literature, advertising and
prospectuses (other than those furnished to current Shareholders) and state
"blue sky" registration expenses; and (v) providing any service rendered by the
Distributor that a Recipient may render pursuant to part (a) of this Section 3.
Such services include distribution assistance and administrative support
services rendered in connection with Shares acquired (i) by purchase, (ii) in
exchange for shares of another investment company for which the Distributor
serves as distributor or sub- distributor, or (iii) pursuant to a plan of
reorganization to which the Fund is a party. In the event that the Board should
have reason to believe that the Distributor may not be rendering appropriate
distribution assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the Board, shall
provide the Board with a written report or other information to verify that the
Distributor is providing appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by
OppenheimerFunds, Inc. ("OFI") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OFI), from its own resources, from Asset-Based
Sales Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does not
obligate or in any way make the Fund liable to make any payment whatsoever to
any person or entity other than directly to the Distributor. In no event shall
the amounts to be paid to the Distributor exceed the rate of fees to be paid by
the Fund to the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of those persons to be Trustees of the Trust who are
not "interested persons" of the Fund or the Trust ("Disinterested Trustees")
shall be committed to the discretion of such Disinterested Trustees. Nothing
herein shall prevent the Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final decision on
any such selection and nomination is approved by a majority of the incumbent
Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Trust shall
provide at least quarterly written reports to the Trust's Board for its review,
detailing services rendered in connection with the distribution of the Shares,
the amount of all payments made and the purpose for which the payments were
made. The reports shall be provided quarterly and shall state whether all
provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at any
time, without payment of any penalty, by a vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding Class C voting shares; (ii) such termination
shall be on not more than sixty days written notice to any other party to the
agreement; (iii) such agreement shall automatically terminate in the event of
its assignment (as defined in the 1940 Act); (iv) it shall go into effect when
approved by a vote of the Board and its Independent Trustees cast in person at a
meeting called for the purpose of voting on such agreement; and (iv) it shall,
unless terminated as herein provided, continue in effect from year to year only
so long as such continuance is specifically approved at least annually by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such continuance.
-4-
<PAGE>
7. Effectiveness, Continuation, Termination and Amendment. This Amended
and Restated Plan has been approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called on February 4, 1997 for the purpose
of voting on this Plan, and shall take effect as of the date first set forth
above. Unless terminated as hereinafter provided, it shall continue in effect
from year to year from the date first set forth above or as the Board may
otherwise determine only so long as such continuance is specifically approved at
least annually by a vote of the Board and its Independent Trustees cast in
person at a meeting called for the purpose of voting on such continuance. This
Plan may not be amended to increase materially the amount of payments to be made
under this Plan without approval of the Class C Shareholders, in the manner
described above, and all material amendments must be approved by a vote of the
Board and of the Independent Trustees. This Plan may be terminated at any time
by vote of a majority of the Independent Trustees or by the vote of the holders
of a "majority" (as defined in the 1940 Act) of the Fund's outstanding Class C
voting shares. In the event of such termination, the Board and its Independent
Trustees shall determine whether the Distributor is entitled to payment from the
Fund of all or a portion of the Service Fee and/or the Asset-Based Sales Charge
in respect of Shares sold prior to the effective date of such termination.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor
understands that the obligations of the Trust and the Fund under this Plan are
not binding upon any Trustee or shareholder of the Fund personally, but bind
only the Fund and the Fund's property. The Distributor represents that it has
notice of the provisions of the Declaration of Trust of the Fund disclaiming
shareholder and Trustee liability for acts or obligations of the Trust and the
Fund.
OPPENHEIMER QUEST FOR VALUE FUNDS On Behalf of
OPPENHEIMER QUEST GROWTH & INCOME VALUE FUND
By: /s/ Robert G. Zack
Robert G. Zack
Assistant Secretary
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: /s/ Andrew J. Donohue
Andrew J. Donohue
Executive Vice President
OFMI\257C.#1
-5-
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST FOR VALUE FUNDS
FOR CLASS C SHARES OF
OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the
"Plan") dated the 22nd day of November, 1996, by and between OPPENHEIMER QUEST
FOR VALUE FUNDS (the "Trust") for the account of its OPPENHEIMER QUEST
OPPORTUNITY VALUE FUND (the "Fund") and OPPENHEIMERFUNDS DISTRIBUTOR, INC. (the
"Distributor").
1. The Plan. This Plan is the Fund's written distribution plan for Class C
shares of the Fund (the "Shares"), contemplated by Rule 12b-1 (the "Rule") under
the Investment Company Act of 1940 (the "1940 Act"), pursuant to which the Fund
will compensate the Distributor for its services incurred in connection with the
distribution of Shares, and the personal service and maintenance of shareholder
accounts that hold Shares ("Accounts"). The Fund may act as distributor of
securities of which it is the issuer, pursuant to the Rule, according to the
terms of this Plan. The Distributor is authorized under the Plan to pay
"Recipients," as hereinafter defined, for rendering (1) distribution assistance
in connection with the sale of Shares and/or (2) administrative support services
with respect to Accounts. Such Recipients are intended to have certain rights as
third-party beneficiaries under this Plan. The terms and provisions of this Plan
shall be interpreted and defined in a manner consistent with the provisions and
definitions contained in (i) the 1940 Act, (ii) the Rule, (iii) Rule 2830 of the
Conduct Rules of the National Association of Securities Dealers, Inc., or any
amendment or successor to such rule (the "NASD Conduct Rules") and (iv) any
conditions pertaining either to distribution-related expenses or to a plan of
distribution, to which the Fund is subject under any order on which the Fund
relies, issued at any time by the Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has rendered assistance (whether direct, administrative or
both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer such questions
as may arise concerning the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the foregoing, a
majority of the Trust's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of this Plan or in any agreements relating
to this Plan (the "Independent Trustees") may remove any broker, dealer, bank or
other person or entity as a Recipient, whereupon such person's or entity's
rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such brokerage or
other customers, or investment advisory or other clients of such Recipient
and/or accounts as to which such Recipient is a fiduciary or custodian or
co-fiduciary or co-custodian (collectively, the "Customers"), but in no event
shall any such Shares be deemed owned by more than one Recipient for purposes of
this Plan. In the event that more than one person or
-1-
<PAGE>
entity would otherwise qualify as Recipients as to the same Shares, the
Recipient which is the dealer of record on the Fund's books as determined by the
Distributor shall be deemed the Recipient as to such Shares for purposes of this
Plan.
3. Payments for Distribution Assistance and Administrative Support
Services.
(a) The Fund will make payments to the Distributor, within forty-five (45)
days of the end of each calendar quarter, in the aggregate amount (i) of 0.0625%
(0.25% on an annual basis) of the average during the calendar quarter of the
aggregate net asset value of the Shares computed as of the close of each
business day (the "Service Fee"), plus (ii) 0.1875% (0.75% on an annual basis)
of the average during the calendar quarter of the aggregate net asset value of
the Shares computed as of the close of each business day (the "Asset-Based Sales
Charge"). Such Service Fee payments received from the Fund will compensate the
Distributor and Recipients for providing administrative support services with
respect to Accounts. Such Asset-Based Sales Charge payments received from the
Fund will compensate the Distributor and Recipients for providing distribution
assistance in connection with the sale of Shares.
The administrative support services in connection with the Accounts to be
rendered by Recipients may include, but shall not be limited to, the following:
answering routine inquiries concerning the Fund, assisting in establishing and
maintaining accounts or sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend payment options
available, and providing such other information and services in connection with
the rendering of personal services and/or the maintenance of Accounts, as the
Distributor or the Fund may reasonably request.
The distribution assistance in connection with the sale of Shares to be
rendered by the Distributor and by Recipients may include, but shall not be
limited to, the following: distributing sales literature and prospectuses other
than those furnished to current holders of the Fund's Shares ("Shareholders"),
and providing such other information and services in connection with the
distribution of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution assistance
or administrative support services qualifying for payment under the Plan if it
has Qualified Holdings of Shares to entitle it to payments under the Plan. In
the event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate distribution assistance in connection with the sale of
Shares or administrative support services for the Accounts, then the
Distributor, at the request of the Board, shall require the Recipient to provide
a written report or other information to verify that said Recipient is providing
appropriate distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either may take
appropriate steps to terminate the Recipient's status as such under the Plan,
whereupon such Recipient's rights as a third-party beneficiary hereunder shall
terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares, computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, to be set from time to
time by a majority of the Independent Trustees.
-2-
<PAGE>
Alternatively, the Distributor may, at its sole option, make service fee
payments to any Recipient quarterly, within forty-five (45) days of the end of
each calendar quarter: (i) "Advance Service Fee Payments" at a rate not to
exceed 0.25% of the average during the calendar quarter of the aggregate net
asset value of Shares, computed as of the close of business on the day such
Shares are sold, constituting Qualified Holdings sold by the Recipient during
that quarter and owned beneficially or of record by the Recipient or by its
Customers, plus (ii) 0.0625% (0.25% on an annual basis) of the average during
the calendar quarter of the aggregate net asset value of Shares computed as of
the close of each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for a period of
more than one (1) year, subject to reduction or chargeback so that the Advance
Service Fee Payments do not exceed the limits on payments to Recipients that
are, or may be, imposed by Rule 2830 of the NASD Conduct Rules. In the event
Shares are redeemed less than one year after the date such Shares were sold, the
Recipient is obligated and will repay to the Distributor on demand a pro rata
portion of such Advance Service Fee Payments, based on the ratio of the time
such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of the preceding
sentence may, at the Distributor's sole option, be made more often than
quarterly, and sooner than the end of the calendar quarter. In addition, the
Distributor shall make asset-based sales charge payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.1875% (0.75% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or its Customers for a period of more than one (1)
year. However, no such service fee or asset-based sales charge payments
(collectively, the "Recipient Payments") shall be made to any Recipient for any
such quarter in which its Qualified Holdings do not equal or exceed, at the end
of such quarter, the minimum amount ("Minimum Qualified Holdings"), if any, to
be set from time to time by a majority of the Independent Trustees.
A majority of the Independent Trustees may at any time or from time to
time decrease and thereafter adjust the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rates set forth above,
and/or direct the Distributor to increase or decrease the Minimum Holding Period
or the Minimum Qualified Holdings. The Distributor shall notify all Recipients
of the Minimum Qualified Holdings or Minimum Holding Period, if any, and the
rates of Recipient Payments hereunder applicable to Recipients, and shall
provide each Recipient with written notice within thirty (30) days after any
change in these provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute sufficient notice.
The Distributor may make Plan payments to any "affiliated person" (as defined in
the 1940 Act) of the Distributor if such affiliated person qualifies as a
Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination of such amounts under the limits to which the
Distributor is, or may become, subject under Rule 2830 of the NASD Conduct
Rules. The distribution assistance and administrative support services to be
rendered by the Distributor in connection with the Shares may include, but shall
not be limited to, the following: (i) paying sales commissions to any broker,
dealer, bank or other person or entity that sells Shares, and\or paying such
persons Advance Service Fee Payments in advance of, and\or greater than, the
amount provided for in Section 3(b) of this Agreement; (ii) paying compensation
to and expenses of personnel of the Distributor who support distribution of
Shares by Recipients; (iii) obtaining financing or providing such financing from
its own resources, or from an affiliate, for interest and other borrowing costs
of the Distributor's unreimbursed expenses incurred in rendering distribution
assistance and administrative
-3-
<PAGE>
support services to the Fund; (iv) paying other direct distribution costs,
including without limitation the costs of sales literature, advertising and
prospectuses (other than those furnished to current Shareholders) and state
"blue sky" registration expenses; and (v) providing any service rendered by the
Distributor that a Recipient may render pursuant to part (a) of this Section 3.
Such services include distribution assistance and administrative support
services rendered in connection with Shares acquired (i) by purchase, (ii) in
exchange for shares of another investment company for which the Distributor
serves as distributor or sub- distributor, or (iii) pursuant to a plan of
reorganization to which the Fund is a party. In the event that the Board should
have reason to believe that the Distributor may not be rendering appropriate
distribution assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the Board, shall
provide the Board with a written report or other information to verify that the
Distributor is providing appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by
OppenheimerFunds, Inc. ("OFI") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OFI), from its own resources, from Asset-Based
Sales Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does not
obligate or in any way make the Fund liable to make any payment whatsoever to
any person or entity other than directly to the Distributor. In no event shall
the amounts to be paid to the Distributor exceed the rate of fees to be paid by
the Fund to the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of those persons to be Trustees of the Trust who are
not "interested persons" of the Fund or the Trust ("Disinterested Trustees")
shall be committed to the discretion of such Disinterested Trustees. Nothing
herein shall prevent the Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final decision on
any such selection and nomination is approved by a majority of the incumbent
Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Trust shall
provide at least quarterly written reports to the Trust's Board for its review,
detailing services rendered in connection with the distribution of the Shares,
the amount of all payments made and the purpose for which the payments were
made. The reports shall be provided quarterly and shall state whether all
provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at any
time, without payment of any penalty, by a vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding Class C voting shares; (ii) such termination
shall be on not more than sixty days written notice to any other party to the
agreement; (iii) such agreement shall automatically terminate in the event of
its assignment (as defined in the 1940 Act); (iv) it shall go into effect when
approved by a vote of the Board and its Independent Trustees cast in person at a
meeting called for the purpose of voting on such agreement; and (v) it shall,
unless terminated as herein provided, continue in effect from year to year only
so long as such continuance is specifically approved at least annually by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such continuance.
-4-
<PAGE>
7. Effectiveness, Continuation, Termination and Amendment. This Amended
and Restated Plan has been approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called on February 4, 1997 for the purpose
of voting on this Plan, and shall take effect as of the date first set forth
above. Unless terminated as hereinafter provided, it shall continue in effect
from year to year from the date first set forth above or as the Board may
otherwise determine only so long as such continuance is specifically approved at
least annually by a vote of the Board and its Independent Trustees cast in
person at a meeting called for the purpose of voting on such continuance. This
Plan may not be amended to increase materially the amount of payments to be made
under this Plan without approval of the Class C Shareholders, in the manner
described above, and all material amendments must be approved by a vote of the
Board and of the Independent Trustees. This Plan may be terminated at any time
by vote of a majority of the Independent Trustees or by the vote of the holders
of a "majority" (as defined in the 1940 Act) of the Fund's outstanding Class C
voting shares. In the event of such termination, the Board and its Independent
Trustees shall determine whether the Distributor is entitled to payment from the
Fund of all or a portion of the Service Fee and/or the Asset-Based Sales Charge
in respect of Shares sold prior to the effective date of such termination.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor
understands that the obligations of the Trust and the Fund under this Plan are
not binding upon any Trustee or shareholder of the Fund personally, but bind
only the Fund and the Fund's property. The Distributor represents that it has
notice of the provisions of the Declaration of Trust of the Fund disclaiming
shareholder and Trustee liability for acts or obligations of the Trust and the
Fund.
OPPENHEIMER QUEST FOR VALUE FUNDS On Behalf of
OPPENHEIMER QUEST OPPORTUNITY VALUE FUND
By: /s/ Robert G.Zack
Robert G. Zack
Assistant Secretary
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: /s/ Andrew J. Donohue
Andrew J. Donohue
Executive Vice President
OFMI\236C.#1
-5-
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST FOR VALUE FUNDS
FOR CLASS C SHARES OF
OPPENHEIMER QUEST SMALL CAP VALUE FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the
"Plan") dated the 22nd day of November, 1996, by and between OPPENHEIMER QUEST
FOR VALUE FUNDS (the "Trust") for the account of its OPPENHEIMER QUEST SMALL CAP
VALUE FUND (the "Fund") and OPPENHEIMERFUNDS DISTRIBUTOR, INC. (the
"Distributor").
1. The Plan. This Plan is the Fund's written distribution plan for Class C
shares of the Fund (the "Shares"), contemplated by Rule 12b-1 (the "Rule") under
the Investment Company Act of 1940 (the "1940 Act"), pursuant to which the Fund
will compensate the Distributor for its services incurred in connection with the
distribution of Shares, and the personal service and maintenance of shareholder
accounts that hold Shares ("Accounts"). The Fund may act as distributor of
securities of which it is the issuer, pursuant to the Rule, according to the
terms of this Plan. The Distributor is authorized under the Plan to pay
"Recipients," as hereinafter defined, for rendering (1) distribution assistance
in connection with the sale of Shares and/or (2) administrative support services
with respect to Accounts. Such Recipients are intended to have certain rights as
third-party beneficiaries under this Plan. The terms and provisions of this Plan
shall be interpreted and defined in a manner consistent with the provisions and
definitions contained in (i) the 1940 Act, (ii) the Rule, (iii) Rule 2830 of the
Conduct Rules of the National Association of Securities Dealers, Inc., or any
amendment or successor to such rule (the "NASD Conduct Rules") and (iv) any
conditions pertaining either to distribution-related expenses or to a plan of
distribution, to which the Fund is subject under any order on which the Fund
relies, issued at any time by the Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has rendered assistance (whether direct, administrative or
both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer such questions
as may arise concerning the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the foregoing, a
majority of the Trust's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of this Plan or in any agreements relating
to this Plan (the "Independent Trustees") may remove any broker, dealer, bank or
other person or entity as a Recipient, whereupon such person's or entity's
rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such brokerage or
other customers, or investment advisory or other clients of such Recipient
and/or accounts as to which such Recipient is a fiduciary or custodian or
co-fiduciary or co-custodian (collectively, the "Customers"), but in no event
shall any such Shares be deemed owned by more than one Recipient for purposes of
this Plan. In the event that more than one person or
-1-
<PAGE>
entity would otherwise qualify as Recipients as to the same Shares, the
Recipient which is the dealer of record on the Fund's books as determined by the
Distributor shall be deemed the Recipient as to such Shares for purposes of this
Plan.
3. Payments for Distribution Assistance and Administrative Support
Services.
(a) The Fund will make payments to the Distributor, within forty-five (45)
days of the end of each calendar quarter, in the aggregate amount (i) of 0.0625%
(0.25% on an annual basis) of the average during the calendar quarter of the
aggregate net asset value of the Shares computed as of the close of each
business day (the "Service Fee"), plus (ii) 0.1875% (0.75% on an annual basis)
of the average during the calendar quarter of the aggregate net asset value of
the Shares computed as of the close of each business day (the "Asset-Based Sales
Charge"). Such Service Fee payments received from the Fund will compensate the
Distributor and Recipients for providing administrative support services with
respect to Accounts. Such Asset-Based Sales Charge payments received from the
Fund will compensate the Distributor and Recipients for providing distribution
assistance in connection with the sale of Shares.
The administrative support services in connection with the Accounts to be
rendered by Recipients may include, but shall not be limited to, the following:
answering routine inquiries concerning the Fund, assisting in establishing and
maintaining accounts or sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend payment options
available, and providing such other information and services in connection with
the rendering of personal services and/or the maintenance of Accounts, as the
Distributor or the Fund may reasonably request.
The distribution assistance in connection with the sale of Shares to be
rendered by the Distributor and by Recipients may include, but shall not be
limited to, the following: distributing sales literature and prospectuses other
than those furnished to current holders of the Fund's Shares ("Shareholders"),
and providing such other information and services in connection with the
distribution of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution assistance
or administrative support services qualifying for payment under the Plan if it
has Qualified Holdings of Shares to entitle it to payments under the Plan. In
the event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate distribution assistance in connection with the sale of
Shares or administrative support services for the Accounts, then the
Distributor, at the request of the Board, shall require the Recipient to provide
a written report or other information to verify that said Recipient is providing
appropriate distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either may take
appropriate steps to terminate the Recipient's status as such under the Plan,
whereupon such Recipient's rights as a third-party beneficiary hereunder shall
terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares, computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, to be set from time to
time by a majority of the Independent Trustees.
-2-
<PAGE>
Alternatively, the Distributor may, at its sole option, make service fee
payments to any Recipient quarterly, within forty-five (45) days of the end of
each calendar quarter: (i) "Advance Service Fee Payments" at a rate not to
exceed 0.25% of the average during the calendar quarter of the aggregate net
asset value of Shares, computed as of the close of business on the day such
Shares are sold, constituting Qualified Holdings sold by the Recipient during
that quarter and owned beneficially or of record by the Recipient or by its
Customers, plus (ii) 0.0625% (0.25% on an annual basis) of the average during
the calendar quarter of the aggregate net asset value of Shares computed as of
the close of each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for a period of
more than one (1) year, subject to reduction or chargeback so that the Advance
Service Fee Payments do not exceed the limits on payments to Recipients that
are, or may be, imposed by Rule 2830 of the NASD Conduct Rules. In the event
Shares are redeemed less than one year after the date such Shares were sold, the
Recipient is obligated and will repay to the Distributor on demand a pro rata
portion of such Advance Service Fee Payments, based on the ratio of the time
such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of the preceding
sentence may, at the Distributor's sole option, be made more often than
quarterly, and sooner than the end of the calendar quarter. In addition, the
Distributor shall make asset-based sales charge payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.1875% (0.75% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or its Customers for a period of more than one (1)
year. However, no such service fee or asset-based sales charge payments
(collectively, the "Recipient Payments") shall be made to any Recipient for any
such quarter in which its Qualified Holdings do not equal or exceed, at the end
of such quarter, the minimum amount ("Minimum Qualified Holdings"), if any, to
be set from time to time by a majority of the Independent Trustees.
A majority of the Independent Trustees may at any time or from time to
time decrease and thereafter adjust the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rates set forth above,
and/or direct the Distributor to increase or decrease the Minimum Holding Period
or the Minimum Qualified Holdings. The Distributor shall notify all Recipients
of the Minimum Qualified Holdings or Minimum Holding Period, if any, and the
rates of Recipient Payments hereunder applicable to Recipients, and shall
provide each Recipient with written notice within thirty (30) days after any
change in these provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute sufficient notice.
The Distributor may make Plan payments to any "affiliated person" (as defined in
the 1940 Act) of the Distributor if such affiliated person qualifies as a
Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination of such amounts under the limits to which the
Distributor is, or may become, subject under Rule 2830 of the NASD Conduct
Rules. The distribution assistance and administrative support services to be
rendered by the Distributor in connection with the Shares may include, but shall
not be limited to, the following: (i) paying sales commissions to any broker,
dealer, bank or other person or entity that sells Shares, and\or paying such
persons Advance Service Fee Payments in advance of, and\or greater than, the
amount provided for in Section 3(b) of this Agreement; (ii) paying compensation
to and expenses of personnel of the Distributor who support distribution of
Shares by Recipients; (iii) obtaining financing or providing such financing from
its own resources, or from an affiliate, for interest and other borrowing costs
of the Distributor's unreimbursed expenses incurred in rendering distribution
assistance and administrative
-3-
<PAGE>
support services to the Fund; (iv) paying other direct distribution costs,
including without limitation the costs of sales literature, advertising and
prospectuses (other than those furnished to current Shareholders) and state
"blue sky" registration expenses; and (v) providing any service rendered by the
Distributor that a Recipient may render pursuant to part (a) of this Section 3.
Such services include distribution assistance and administrative support
services rendered in connection with Shares acquired (i) by purchase, (ii) in
exchange for shares of another investment company for which the Distributor
serves as distributor or sub- distributor, or (iii) pursuant to a plan of
reorganization to which the Fund is a party. In the event that the Board should
have reason to believe that the Distributor may not be rendering appropriate
distribution assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the Board, shall
provide the Board with a written report or other information to verify that the
Distributor is providing appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by
OppenheimerFunds, Inc. ("OFI") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OFI), from its own resources, from Asset-Based
Sales Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does not
obligate or in any way make the Fund liable to make any payment whatsoever to
any person or entity other than directly to the Distributor. In no event shall
the amounts to be paid to the Distributor exceed the rate of fees to be paid by
the Fund to the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of those persons to be Trustees of the Trust who are
not "interested persons" of the Fund or the Trust ("Disinterested Trustees")
shall be committed to the discretion of such Disinterested Trustees. Nothing
herein shall prevent the Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final decision on
any such selection and nomination is approved by a majority of the incumbent
Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Trust shall
provide at least quarterly written reports to the Trust's Board for its review,
detailing services rendered in connection with the distribution of the Shares,
the amount of all payments made and the purpose for which the payments were
made. The reports shall be provided quarterly and shall state whether all
provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at any
time, without payment of any penalty, by a vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding Class C voting shares; (ii) such termination
shall be on not more than sixty days written notice to any other party to the
agreement; (iii) such agreement shall automatically terminate in the event of
its assignment (as defined in the 1940 Act); (iv) it shall go into effect when
approved by a vote of the Board and its Independent Trustees cast in person at a
meeting called for the purpose of voting on such agreement; and (v) it shall,
unless terminated as herein provided, continue in effect from year to year only
so long as such continuance is specifically approved at least annually by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such continuance.
-4-
<PAGE>
7. Effectiveness, Continuation, Termination and Amendment. This Amended
and Restated Plan has been approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called on February 4, 1997 for the purpose
of voting on this Plan, and shall take effect as of the date first set forth
above. Unless terminated as hereinafter provided, it shall continue in effect
from year to year from the date first set forth above or as the Board may
otherwise determine only so long as such continuance is specifically approved at
least annually by a vote of the Board and its Independent Trustees cast in
person at a meeting called for the purpose of voting on such continuance. This
Plan may not be amended to increase materially the amount of payments to be made
under this Plan without approval of the Class C Shareholders, in the manner
described above, and all material amendments must be approved by a vote of the
Board and of the Independent Trustees. This Plan may be terminated at any time
by vote of a majority of the Independent Trustees or by the vote of the holders
of a "majority" (as defined in the 1940 Act) of the Fund's outstanding Class C
voting shares. In the event of such termination, the Board and its Independent
Trustees shall determine whether the Distributor is entitled to payment from the
Fund of all or a portion of the Service Fee and/or the Asset-Based Sales Charge
in respect of Shares sold prior to the effective date of such termination.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor
understands that the obligations of the Trust and the Fund under this Plan are
not binding upon any Trustee or shareholder of the Fund personally, but bind
only the Fund and the Fund's property. The Distributor represents that it has
notice of the provisions of the Declaration of Trust of the Fund disclaiming
shareholder and Trustee liability for acts or obligations of the Trust and the
Fund.
OPPENHEIMER QUEST FOR VALUE FUNDS On Behalf of
OPPENHEIMER QUEST SMALL CAP VALUE FUND
By: /s/ Robert G. Zack
Robert G. Zack
Assistant Secretary
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: /s/ Andrew J. Donohue
Andrew J. Donohue
Executive Vice President
OFMI\251C.#1
-5-
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST FOR VALUE FUNDS
FOR CLASS C SHARES OF
OPPENHEIMER QUEST OFFICERS VALUE FUND
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the
"Plan") dated the 22nd day of November, 1996, by and between OPPENHEIMER QUEST
FOR VALUE FUNDS (the "Trust") for the account of its OPPENHEIMER QUEST OFFICERS
VALUE FUND (the "Fund") and OPPENHEIMERFUNDS DISTRIBUTOR, INC. (the
"Distributor").
1. The Plan. This Plan is the Fund's written distribution plan for Class C
shares of the Fund (the "Shares"), contemplated by Rule 12b-1 (the "Rule") under
the Investment Company Act of 1940 (the "1940 Act"), pursuant to which the Fund
will compensate the Distributor for its services incurred in connection with the
distribution of Shares, and the personal service and maintenance of shareholder
accounts that hold Shares ("Accounts"). The Fund may act as distributor of
securities of which it is the issuer, pursuant to the Rule, according to the
terms of this Plan. The Distributor is authorized under the Plan to pay
"Recipients," as hereinafter defined, for rendering (1) distribution assistance
in connection with the sale of Shares and/or (2) administrative support services
with respect to Accounts. Such Recipients are intended to have certain rights as
third-party beneficiaries under this Plan. The terms and provisions of this Plan
shall be interpreted and defined in a manner consistent with the provisions and
definitions contained in (i) the 1940 Act, (ii) the Rule, (iii) Rule 2830 of the
Conduct Rules of the National Association of Securities Dealers, Inc., or any
amendment or successor to such rule (the "NASD Conduct Rules") and (iv) any
conditions pertaining either to distribution-related expenses or to a plan of
distribution, to which the Fund is subject under any order on which the Fund
relies, issued at any time by the Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has rendered assistance (whether direct, administrative or
both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer such questions
as may arise concerning the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the foregoing, a
majority of the Trust's Board of Trustees (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of this Plan or in any agreements relating
to this Plan (the "Independent Trustees") may remove any broker, dealer, bank or
other person or entity as a Recipient, whereupon such person's or entity's
rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such brokerage or
other customers, or investment advisory or other clients of such Recipient
and/or accounts as to which such Recipient is a fiduciary or custodian or
co-fiduciary or co-custodian (collectively, the "Customers"), but in no event
shall any such Shares be deemed owned by more than one Recipient for purposes of
this Plan. In the event that more than one person or
-1-
<PAGE>
entity would otherwise qualify as Recipients as to the same Shares, the
Recipient which is the dealer of record on the Fund's books as determined by the
Distributor shall be deemed the Recipient as to such Shares for purposes of this
Plan.
3. Payments for Distribution Assistance and Administrative Support
Services.
(a) The Fund will make payments to the Distributor, within forty-five (45)
days of the end of each calendar quarter, in the aggregate amount (i) of 0.0625%
(0.25% on an annual basis) of the average during the calendar quarter of the
aggregate net asset value of the Shares computed as of the close of each
business day (the "Service Fee"), plus (ii) 0.1875% (0.75% on an annual basis)
of the average during the calendar quarter of the aggregate net asset value of
the Shares computed as of the close of each business day (the "Asset-Based Sales
Charge"). Such Service Fee payments received from the Fund will compensate the
Distributor and Recipients for providing administrative support services with
respect to Accounts. Such Asset-Based Sales Charge payments received from the
Fund will compensate the Distributor and Recipients for providing distribution
assistance in connection with the sale of Shares.
The administrative support services in connection with the Accounts to be
rendered by Recipients may include, but shall not be limited to, the following:
answering routine inquiries concerning the Fund, assisting in establishing and
maintaining accounts or sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend payment options
available, and providing such other information and services in connection with
the rendering of personal services and/or the maintenance of Accounts, as the
Distributor or the Fund may reasonably request.
The distribution assistance in connection with the sale of Shares to be
rendered by the Distributor and by Recipients may include, but shall not be
limited to, the following: distributing sales literature and prospectuses other
than those furnished to current holders of the Fund's Shares ("Shareholders"),
and providing such other information and services in connection with the
distribution of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution assistance
or administrative support services qualifying for payment under the Plan if it
has Qualified Holdings of Shares to entitle it to payments under the Plan. In
the event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate distribution assistance in connection with the sale of
Shares or administrative support services for the Accounts, then the
Distributor, at the request of the Board, shall require the Recipient to provide
a written report or other information to verify that said Recipient is providing
appropriate distribution assistance and/or services in this regard. If the
Distributor or the Board of Trustees still is not satisfied, either may take
appropriate steps to terminate the Recipient's status as such under the Plan,
whereupon such Recipient's rights as a third-party beneficiary hereunder shall
terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares, computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, to be set from time to
time by a majority of the Independent Trustees.
-2-
<PAGE>
Alternatively, the Distributor may, at its sole option, make service fee
payments to any Recipient quarterly, within forty-five (45) days of the end of
each calendar quarter: (i) "Advance Service Fee Payments" at a rate not to
exceed 0.25% of the average during the calendar quarter of the aggregate net
asset value of Shares, computed as of the close of business on the day such
Shares are sold, constituting Qualified Holdings sold by the Recipient during
that quarter and owned beneficially or of record by the Recipient or by its
Customers, plus (ii) 0.0625% (0.25% on an annual basis) of the average during
the calendar quarter of the aggregate net asset value of Shares computed as of
the close of each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for a period of
more than one (1) year, subject to reduction or chargeback so that the Advance
Service Fee Payments do not exceed the limits on payments to Recipients that
are, or may be, imposed by Rule 2830 of the NASD Conduct Rules. In the event
Shares are redeemed less than one year after the date such Shares were sold, the
Recipient is obligated and will repay to the Distributor on demand a pro rata
portion of such Advance Service Fee Payments, based on the ratio of the time
such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of the preceding
sentence may, at the Distributor's sole option, be made more often than
quarterly, and sooner than the end of the calendar quarter. In addition, the
Distributor shall make asset-based sales charge payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.1875% (0.75% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or its Customers for a period of more than one (1)
year. However, no such service fee or asset-based sales charge payments
(collectively, the "Recipient Payments") shall be made to any Recipient for any
such quarter in which its Qualified Holdings do not equal or exceed, at the end
of such quarter, the minimum amount ("Minimum Qualified Holdings"), if any, to
be set from time to time by a majority of the Independent Trustees.
A majority of the Independent Trustees may at any time or from time to
time decrease and thereafter adjust the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rates set forth above,
and/or direct the Distributor to increase or decrease the Minimum Holding Period
or the Minimum Qualified Holdings. The Distributor shall notify all Recipients
of the Minimum Qualified Holdings or Minimum Holding Period, if any, and the
rates of Recipient Payments hereunder applicable to Recipients, and shall
provide each Recipient with written notice within thirty (30) days after any
change in these provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute sufficient notice.
The Distributor may make Plan payments to any "affiliated person" (as defined in
the 1940 Act) of the Distributor if such affiliated person qualifies as a
Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination of such amounts under the limits to which the
Distributor is, or may become, subject under Rule 2830 of the NASD Conduct
Rules. The distribution assistance and administrative support services to be
rendered by the Distributor in connection with the Shares may include, but shall
not be limited to, the following: (i) paying sales commissions to any broker,
dealer, bank or other person or entity that sells Shares, and\or paying such
persons Advance Service Fee Payments in advance of, and\or greater than, the
amount provided for in Section 3(b) of this Agreement; (ii) paying compensation
to and expenses of personnel of the Distributor who support distribution of
Shares by Recipients; (iii) obtaining financing or providing such financing from
its own resources, or from an affiliate, for interest and other borrowing costs
of the Distributor's unreimbursed expenses incurred in rendering distribution
assistance and administrative
-3-
<PAGE>
support services to the Fund; (iv) paying other direct distribution costs,
including without limitation the costs of sales literature, advertising and
prospectuses (other than those furnished to current Shareholders) and state
"blue sky" registration expenses; and (v) providing any service rendered by the
Distributor that a Recipient may render pursuant to part (a) of this Section 3.
Such services include distribution assistance and administrative support
services rendered in connection with Shares acquired (i) by purchase, (ii) in
exchange for shares of another investment company for which the Distributor
serves as distributor or sub- distributor, or (iii) pursuant to a plan of
reorganization to which the Fund is a party. In the event that the Board should
have reason to believe that the Distributor may not be rendering appropriate
distribution assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the Board, shall
provide the Board with a written report or other information to verify that the
Distributor is providing appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by
OppenheimerFunds, Inc. ("OFI") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OFI), from its own resources, from Asset-Based
Sales Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does not
obligate or in any way make the Fund liable to make any payment whatsoever to
any person or entity other than directly to the Distributor. In no event shall
the amounts to be paid to the Distributor exceed the rate of fees to be paid by
the Fund to the Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of those persons to be Trustees of the Trust who are
not "interested persons" of the Fund or the Trust ("Disinterested Trustees")
shall be committed to the discretion of such Disinterested Trustees. Nothing
herein shall prevent the Disinterested Trustees from soliciting the views or the
involvement of others in such selection or nomination if the final decision on
any such selection and nomination is approved by a majority of the incumbent
Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Trust shall
provide at least quarterly written reports to the Trust's Board for its review,
detailing services rendered in connection with the distribution of the Shares,
the amount of all payments made and the purpose for which the payments were
made. The reports shall be provided quarterly and shall state whether all
provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at any
time, without payment of any penalty, by a vote of a majority of the Independent
Trustees or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding Class C voting shares; (ii) such termination
shall be on not more than sixty days written notice to any other party to the
agreement; (iii) such agreement shall automatically terminate in the event of
its assignment (as defined in the 1940 Act); (iv) it shall go into effect when
approved by a vote of the Board and its Independent Trustees cast in person at a
meeting called for the purpose of voting on such agreement; and (v) it shall,
unless terminated as herein provided, continue in effect from year to year only
so long as such continuance is specifically approved at least annually by a vote
of the Board and its Independent Trustees cast in person at a meeting called for
the purpose of voting on such continuance.
-4-
<PAGE>
7. Effectiveness, Continuation, Termination and Amendment. This Amended
and Restated Plan has been approved by a vote of the Board and its Independent
Trustees cast in person at a meeting called on February 4, 1997 for the purpose
of voting on this Plan, and shall take effect as of the date first set forth
above. Unless terminated as hereinafter provided, it shall continue in effect
from year to year from the date first set forth above or as the Board may
otherwise determine only so long as such continuance is specifically approved at
least annually by a vote of the Board and its Independent Trustees cast in
person at a meeting called for the purpose of voting on such continuance. This
Plan may not be amended to increase materially the amount of payments to be made
under this Plan without approval of the Class C Shareholders, in the manner
described above, and all material amendments must be approved by a vote of the
Board and of the Independent Trustees. This Plan may be terminated at any time
by vote of a majority of the Independent Trustees or by the vote of the holders
of a "majority" (as defined in the 1940 Act) of the Fund's outstanding Class C
voting shares. In the event of such termination, the Board and its Independent
Trustees shall determine whether the Distributor is entitled to payment from the
Fund of all or a portion of the Service Fee and/or the Asset-Based Sales Charge
in respect of Shares sold prior to the effective date of such termination.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor
understands that the obligations of the Trust and the Fund under this Plan are
not binding upon any Trustee or shareholder of the Fund personally, but bind
only the Fund and the Fund's property. The Distributor represents that it has
notice of the provisions of the Declaration of Trust of the Fund disclaiming
shareholder and Trustee liability for acts or obligations of the Trust and the
Fund.
OPPENHEIMER QUEST FOR VALUE FUNDS On Behalf of
OPPENHEIMER QUEST OFFICERS VALUE FUND
By: /s/ Robert G. Zack
Robert G. Zack
Assistant Secretary
OPPENHEIMERFUNDS DISTRIBUTOR, INC.
By: /s/ George C. Bowen
George C. Bowen
Vice President
OFMI\229C.#1
-5-
