OPPENHEIMER QUEST SMALL CAP VALUE FUND
Supplement dated April 28, 2000 to the
Statement of Additional Information dated February 25, 2000
The Statement of Additional Information is supplemented as follows:
1. In the section captioned "About the Fund - Additional Information About the
Fund's Investment Policies and Risks - The Fund's Investment Policies" on page 2
(a) the first sentence of the first paragraph is revised by replacing the
reference "Fund's Sub-Advisor, OpCap Advisors," with "Manager" and (b) the first
and third sentences of the second paragraph are revised by replacing the
reference "Sub-Advisor" with "Manager".
2. In the section captioned "About the Fund - Additional Information About the
Fund's Investment Policies and Risks - Investments in Equity Securities" on page
2 the third sentence of the first paragraph is revised to read as follows: "The
Fund's investments primarily include stocks of companies having a market
capitalization under $2.5 billion, but the Fund can purchase securities of
issuers having a larger market capitalization."
3. In the section captioned "About the Fund - Additional Information About the
Fund's Investment Policies and Risks - Investments in Equity Securities on page
3 (a) the first sentence of the section titled "Value Investing" is deleted and
(b) the following new section is added:
Growth Companies. Growth companies are those that the Manager
believes are entering into a growth cycle in their business, with the
expectation that their stock will increase in value. They may be
established companies as well as newer companies in the development stage.
Growth companies may have a variety of characteristics that in the
Manager's view define them as "growth" issuers. They may be generating or
applying new technologies, new or improved distribution techniques or new
services. They may own or develop natural resources. They may be companies
that can benefit from changing consumer demands or lifestyles, or
companies that have projected earnings in excess of the average for their
sector or industry. In each case, they have prospects that the Manager
believes are favorable for the long term. The portfolio managers of the
Fund look for growth companies with strong, capable management, sound
financial and accounting policies, successful product development and
marketing and other factors.
4. In the section captioned "About the Fund - Additional Information About the
Fund's Investment Policies and Risks" the reference to "Sub-Advisor" appearing
in the following sections is replaced by "Manager": "Investments in Equity
Securities - Convertible Securities"; "Investments in Debt Securities - Credit
Risk; - Special Risks of Lower-Grade Securities; - U.S. Government Securities; -
Variable Amount Master Demand Notes; and - Special Risks of Emerging Markets".
5. In the section captioned "About the Fund - Additional Information About the
Fund's Investment Policies and Risks - Other Investment Techniques and
Strategies" the reference to "Sub-Advisor" appearing in the subsections titled
"Investing in Other Investment Companies", "When-Issued and Delayed-Delivery
Transactions", "Repurchase Agreements" and "Hedging" is replaced by "Manager".
6. The eighth bullet within the section titled "Does the Fund Have Additional
Fundamental Policies" under "Investment Restrictions" on page 23 is revised to
read as follows: "The Fund cannot invest in securities of any issuer if, to the
knowledge of the Trust, officers, directors or trustees of the Trust or the
Manager who own more than 1/2 of 1% of the outstanding securities of such issuer
together own more than 5% of the outstanding securities of such issuer."
7. The fourth sentence of the paragraph titled "Renumeration of Trustees" under
"Trustees and Officers of the Fund" on page 29 is revised to read as follows:
"The table below also shows the total compensation from all of the Oppenheimer
funds listed above, including the compensation from the Fund, and from 12 other
funds that are not Oppenheimer funds but for which the Fund's former
Sub-Advisor, OpCap Advisors, acts as investment advisor."
8. The footnote numbered 3 beneath the chart under the heading "Renumeration of
Trustees" on page 30 is revised to read as follows: "Total compensation for the
1999 calendar year includes compensation from 12 funds for which the Fund's
former Sub-Advisor acts as investment adviser."
9. In the section captioned "About the Fund - How the Fund is Managed - The
Manager" the first paragraph of the section titled "The Investment Advisory
Agreement" is replaced with the following:
"The Manager provides investment advisory and management services to
the Fund under an investment advisory agreement between the Manager
and the Fund's parent Trust. The Manager selects securities for the
Fund's portfolio and handles the Fund's day-to-day business. The
portfolio managers of the Fund are employed by the Manager and are
the persons who are principally responsible for the day to day
management of the Fund's portfolio. From November 22, 1995 to April
28, 2000, pursuant to the terms of a Sub-Advisory Agreement with the
Manager, OpCap Advisors acted as the sub-advisor to the Fund and in
such capacity selected securities for the Fund's portfolio."
10. In the section captioned "About the Fund - How the Fund is Managed", the
section titled "The Sub-Advisor" on pages 32 and 33 is deleted in its entirety.
11. In the section captioned "About the Fund - How the Fund is Managed", the
section captioned "Brokerage Policies of the Fund" on page 33 is replaced in its
entirety with the following:
"Brokerage Provisions of the Investment Advisory Agreement. One of
the duties of the Manager under the investment advisory agreement is
to arrange the portfolio transactions for the Fund. The Fund's
investment advisory agreement with the Manager contain provisions
relating to the employment of broker-dealers to effect the Fund's
portfolio transactions. The Manager is authorized by the advisory
agreement to employ broker-dealers, including "affiliated" brokers,
as that term is defined in the Investment Company Act. The Manager
may employ broker-dealers that, in its best judgment based on all
relevant factors, will implement the policy of the Fund to obtain,
at reasonable expense, the "best execution" of the Fund's portfolio
transactions. "Best execution" means prompt and reliable execution
at the most favorable price obtainable. The Manager need not seek
competitive commission bidding. However, the Manager is expected to
be aware of the current rates of 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 of Trustees.
The Manager may select brokers (other than affiliates) that provide
brokerage and/or research services for the Fund and/or the other
accounts over which the Manager or their respective affiliates have
investment discretion. The commissions paid to such brokers may be
higher than another qualified broker would charge, if the Manager
makes a good faith determination that the commission is fair and
reasonable in relation to the services provided. Subject to those
considerations, as a factor in selecting brokers for the Fund's
portfolio transactions, the Manager may also consider sales of
shares of the Fund and other investment companies for which the
Manager or an affiliate serves as investment advisor.
Brokerage Practices Followed by the Manager. Brokerage for the Fund
is allocated subject to the provisions of the investment advisory
agreement and the procedures and rules described above. Generally,
the Manager's portfolio traders allocate brokerage based upon
recommendations from the Fund's portfolio manager. In certain
instances, portfolio managers may directly place trades and allocate
brokerage. In either case, the Manager's executive officers
supervise the allocation of brokerage.
Transactions in securities other than those for which an exchange is
the primary market are generally done with principals or market
makers. In transactions on foreign exchanges, the Fund may be
required to pay fixed brokerage commissions and therefore would not
have the benefit of negotiated commissions available in U.S.
markets. Brokerage commissions are paid primarily for transactions
in listed securities or for certain fixed-income agency transactions
in the secondary market. Otherwise brokerage commissions are paid
only if it appears likely that a better price or execution can be
obtained by doing so.
Other funds advised by the Manager have investment policies similar
to those of the Fund. Those other funds may purchase or sell the
same securities as the Fund at the same time as the Fund, which
could affect the supply and price of the securities. If two or more
funds advised by the Manager purchase the same security on the same
day from the same dealer, the transactions under those combined
orders are averaged as to price and allocated in accordance with the
purchase or sale orders actually placed for each account.
Most purchases of debt obligations are principal transactions at net
prices. Instead of using a broker for those transactions, the Fund
normally deals directly with the selling or purchasing principal or
market maker unless the Manager determines that a better price or
execution can be obtained by using the services of a broker.
Purchases of portfolio securities from underwriters include a
commission or concession paid by the issuer to the underwriter.
Purchases from dealers include a spread between the bid and asked
prices. The Fund seeks to obtain prompt execution of these orders at
the most favorable net price.
The investment advisory agreement permits the Manager to allocate
brokerage for research services. The research services provided by a
particular broker may be useful only to one or more of the advisory
accounts of the Manager and its affiliates. The investment research
received for the commissions of those other accounts may be useful
both to the Fund and one or more of the Manager's other accounts.
Investment research may be supplied to the Manager by a third party
at the instance of a broker through which trades are placed.
Investment research services include information and analysis on
particular companies and industries as well as market or economic
trends and portfolio strategy, market quotations for portfolio
evaluations, information systems, computer hardware and similar
products and services. If a research service also assists the
Manager in a non-research capacity (such as bookkeeping or other
administrative functions), then only the percentage or component
that provides assistance to the Manager in the investment
decision-making process may be paid in commission dollars.
The research services provided by brokers broadens the scope and
supplements the research activities of the Manager. That research
provides additional views and comparisons for consideration, and
helps the Manager to obtain market information for the valuation of
securities that are either held in the Fund's portfolio or are being
considered for purchase. The Manager provides information to the
Board about the commissions paid to brokers furnishing such
services, together with the Manager's representation that the amount
of such commissions was reasonably related to the value or benefit
of such services."
12. The reference to "Sub-Advisor" on the back cover and the name and
address thereunder are deleted.
April 28, 2000 px251.010
<PAGE>
OPPENHEIMER QUEST SMALL CAP VALUE FUND
Supplement dated April 28, 2000 to the
Prospectus dated February 25, 2000
The Prospectus is supplemented as follows:
1. The previous supplement dated March 10, 2000 is replaced by this
supplement.
2. In the section captioned "About The Fund - The Fund's Investment
Objective and Strategies", the first sentence of the paragraph titled "What
Does the Fund Mainly Invest In?" on page 3 is revised to read as follows:
"The Fund invests mainly in common stocks of U.S. issuers that have market
capitalizations under $2.5 billion."
3. In the section captioned "About The Fund - the Fund's
Investment Objective and Strategies", the paragraph titled "How Do the
Portfolio Managers Decide What Securities to Buy or Sell?" on page 3 is
revised to read as follows:
"In selecting securities for purchase or sale by the Fund, the Fund's
portfolio managers use an investment process that combines both "value" and
"growth" investment styles.
A "value" approach is used to search for securities of companies believed
to be undervalued in the marketplace, in relation to factors such as a
company's book value, sales, earnings, growth potential and cash flows. A
"growth" investing style encompasses a search for companies whose stock
price is expected to increase at a greater rate than the overall market.
These issuers may be entering a growth phase, marked by increases in
earnings, sales, cash flows, or other factors, which suggest that the stock
may increase in value over time. The portfolio managers construct the
portfolio using quantitative models, fundamental research about particular
securities and individual judgment. While this process and the
inter-relationship of the factors used may change over time and its
implementation may vary in particular cases, in general the selection
process involves the use of:
Multi-factor quantitative models: These include a group of "top-down"
models that analyze data such as relative valuations, relative price
trends, interest rates and the shape of the yield curve. These help direct
portfolio emphasis by industries and value and growth styles. A group of
"bottom up" models helps to rank stocks in a universe typically including
the 1000 stocks that follow the largest 1000 stocks in order of market
capitalization, selecting stocks for relative attractiveness by analyzing
fundamental stock and company characteristics.
Fundamental research: The portfolio managers use internal research and
analysis by other market analysts, with emphasis on current company news
and industry-related events.
Judgment: The portfolio is then continuously re-balanced by the
portfolio managers, using all of the tools described above.
4. In the section captioned "About The Fund - Main Risks of Investing in the
Fund", the first sentence of the paragraph titled "Special Risks of Small-Cap
Stocks" on page 4 is revised to read as follows: "The Fund emphasizes
investments in securities of companies having a market capitalization under $2.5
billion."
5. In the section captioned "About the Fund - About the Fund's Investments", the
first sentence of the paragraph titled "The Fund's Principal Investment
Policies" on page 8 is revised to read as follows: "The allocation of the Fund's
portfolio among different investments will vary over time based upon the
evaluation of economic and market trends by the Manager."
6. In the section captioned "About The Fund - About the Fund's Investments", the
second paragraph under "The Fund's Principal Investment Policies" on page 8 is
revised by deleting the first sentence and revising the second sentence to read
as follows: "The Manager tries to reduce risks by carefully researching
securities before they are purchased and by reducing the Fund's exposure to
market risks by diversifying its investments."
7. In the section captioned "About The Fund - About the Fund's Investments", the
first sentence of the paragraph titled "Small-Cap Stock Investments - Cyclical
Opportunities" on page 8 is revised to read as follows: "The Fund may seek to
take advantage of changes in the business cycle by investing in companies that
are sensitive to those changes if the portfolio managers believe they are
undervalued and have growth potential."
8. In the section captioned "About The Fund - About the Fund's Investments", the
last sentence of the paragraph titled "Other Investment Strategies - Debt
Securities" on page 10 is revised to read as follows: "That means that they are
rated lower than "Baa" by Moody's Investors Service or "BBB" by Standard &
Poor's Rating Service or have comparable ratings by other nationally-recognized
rating organizations or are unrated securities assigned an equivalent rating by
the Manager."
9. In the section captioned "About The Fund - About the Fund's Investments", the
fourth sentence of the paragraph titled "Other Investment Strategies - Hedging
Instruments" on page 10 is revised to read as follows: "The underlying security
or investment on which the hedging instrument is based, and the hedging
instrument itself, may not perform the way the Manager expected it to perform."
10. In the section captioned "About The Fund - How the Fund is Managed - The
Manager", the subsection titled "The Sub-Advisor" on pages 11 and 12 is deleted
in its entirety.
11. In the section captioned "About The Fund - How the Fund is Managed - The
Manager", the paragraph titled "Portfolio Managers" on page 12 is replaced in
its entirety with the following:
"The Fund's portfolio managers, Charles Albers and
Mark Zavanelli, are the persons primarily responsible
for the selection of the Fund's portfolio securities.
Mr. Albers is a Senior Vice President of the Manager
and an officer and portfolio manager of other
Oppenheimer funds. Mr. Zavanelli is an Assistant Vice
President of the Fund and a portfolio manager of
another Oppenheimer fund. Messrs. Albers and
Zavanelli became the Fund's portfolio managers on
April 28, 2000.
Prior to joining the Manager in April 1998, Mr. Albers was a
portfolio manager at Guardian Investor Services (from 1972), the
investment management subsidiary of The Guardian Life Insurance
Company. Before joining the Manager in April 1998, Mr. Zavanelli was
President of Waterside Capital Management, a registered investment
advisor (from August 1995), and a financial research analyst for
Elder Research (from June 1997). Prior to that he was a manager of
research services for ZPR Investment Management, Inc., an investment
advisor (from June 1992 to July 1995)."
12. In the section captioned "About Your Account - How to Sell Shares", the
subsection "Telephone Redemptions Paid by Check" under "Are There Limits on
Amounts Redeemed by Telephone" on page 23 is deleted and replaced with the
following: "Up to $100,000 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."
April 28, 2000 ps251.015
