As filed with the Securities and Exchange Commission on September 22,
1995
Registration No. 33-62153
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
PRE-EFFECTIVE AMENDMENT NO. / 1 /
POST-EFFECTIVE AMENDMENT NO. / /
OPPENHEIMER STRATEGIC FUNDS TRUST
(Exact Name of Registrant as Specified in Charter)
3410 South Galena Street, Denver, Colorado 80231-5099
(Address of Principal Executive Offices)
212-323-0200
(Registrant's Telephone Number)
Andrew J. Donohue, Esq.
Executive Vice President & General Counsel
Oppenheimer Management Corporation
Two World Trade Center, New York, New York 10048-0203
(212) 323-0256
(Name and Address of Agent for Service)
As soon as practicable after the Registration Statement becomes
effective.
(Approximate Date of Proposed Public Offering)
It is proposed that this filing will become effective on September 27,
1995, pursuant to Rule 488.
No filing fee is due because the Registrant has previously registered
an indefinite number of shares under Rule 24f-2; a Rule 24f-2 notice
for the year ended September 30, 1994 was filed on November 29, 1994.
Pursuant to Rule 429, this Registration Statement relates to shares
previously registered by the Registrant on Form N-1A (Reg. No. 33-
28598; 811-5724).
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following pages and documents:
Front Cover
Contents Page
Cross-Reference Sheet
Part A
Proxy Statement for Quest for Value Global Income Fund,
a series of Quest for Value Global Funds, Inc.
and
Prospectus for Oppenheimer Strategic Income Fund
Part B
Statement of Additional Information
Part C
Other Information
Signatures
Exhibits
<PAGE>
FORM N-14
OPPENHEIMER STRATEGIC FUNDS TRUST
Cross Reference Sheet
Part A of
Form N-14
Item No. Proxy Statement and Prospectus Heading and/or Title of
Document
1 (a) Cross Reference Sheet
(b) Front Cover Page
(c) *
2 (a) *
(b) Table of Contents
3 (a) Comparative Fee Tables
(b) Synopsis
(c) Principal Risk Factors
4 (a) Synopsis; Approval of the Reorganization; Comparison between
Strategic Income Fund and the Fund; Miscellaneous
(b) Approval of the Reorganization - Capitalization Table
5 (a) Registrant's Prospectus; Comparison Between Strategic Income
Fund and the Fund
(b) *
(c) *
(d) *
(e) Miscellaneous
(f) Miscellaneous
6 (a) Prospectus of Quest for Value Global Income Fund; Annual
Report of Quest For Value Global Income Fund; Comparison
Between Strategic Income Fund and the Fund
(b) Miscellaneous
(c) *
(d) *
7 (a) Synopsis; Information Concerning the Meeting
(b) *
(c) Synopsis; Information Concerning the Meeting
8 (a) Proxy Statement
(b) *
9 *
Part B of
Form N-14
Item No. Statement of Additional Information Heading
--------- -------------------------------------------
10 Cover Page
11 Table of Contents
12 (a) Registrant's Statement of Additional Information
(b) *
(c) *
13 (a) Statement of Additional Information about Quest for Value
Global Income Fund
(b) *
(c) *
14 Registrant's Statement of Additional Information; Statement
of Additional Information about Quest for Value Global Income
Fund; Annual Report of Quest for Value Global Income Fund at
11/30/94; Semi-Annual Report of Quest for Value Global Income
Fund at 5/31/95; Registrant's Annual Report at 9/30/94; Semi-
Annual Report of Registrant at 3/31/95
Part C of
Form N-14
Item No. Other Information Heading
--------- -------------------------
15 Indemnification
16 Exhibits
17 Undertakings
_______________
* Not Applicable or negative answer
merge/231qvn14.a
<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant / x /
Filed by a party other than the registrant / /
Check the appropriate box:
/ X / Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Oppenheimer Strategic Funds Trust
------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Quest for Value Global Income Fund,
a series of Quest for Value Global Funds, Inc.
------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-
6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee Computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.
(1) Amount previously paid:
------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------
(4) Date Filed:
-----------------------
(1) Set forth the amount on which the filing fee is calculated and
state how it was determined.
<PAGE>
October 1995
Dear Quest for Value Global Income Fund Shareholder:
On August 17, Oppenheimer Capital signed a definitive agreement
with Oppenheimer Management Corporation (OMC). The Agreement
contemplates that OMC would acquire, subject to certain conditions, all
of the investment advisory and other contracts and business
relationships and certain assets and liabilities of Quest for Value
Advisors, Quest for Value Distributors and Oppenheimer Capital relating
to twelve Quest for Value mutual funds.
One aspect of the acquisition involves the proposed reorganization
of your fund and Oppenheimer Strategic Income Fund. As discussed below
and in the accompanying proxy statement, your fund's Board of Trustees
believes that Quest for Value Global Income Fund shareholders would
benefit from a reorganization into Oppenheimer Strategic Income Fund.
A shareholder meeting has been scheduled in November and all
shareholders of record on September 25, 1995 are being asked to vote
either in person or by proxy. Enclosed you will find a proxy statement
detailing the proposals, a ballot card, an Oppenheimer Strategic Income
Fund prospectus and a postage-paid return envelope for your
convenience.
What is being proposed?
As stated in the proxy statement, there is one proposal to be voted on
by fund shareholders -- approval of an:
Agreement and Plan of Reorganization for Quest for Value Global
Income Fund and the transactions contemplated by the agreement.
The proposal to reorganize your fund into Oppenheimer Strategic
Income Fund, a fund that seeks high current income, is outlined in
the accompanying proxy statement.
As an OppenheimerFunds shareholder, you will have the ability to
exchange into any of the more than thirty Oppenheimer funds at no
charge. You will also enjoy the other benefits available to
OppenheimerFunds shareholders such as AccountLink, which links your
mutual fund and bank accounts so that you can have your money
electronically transferred to or from your bank and fund account
with none of the delays involved in writing or cashing a check.
And Oppenheimer's PhoneLink gives you access to your account 24
hours a day to make purchasing, exchanging or redeeming shares more
convenient.
Please read the accompanying prospectus of Oppenheimer Strategic
Income Fund for conditions and details.
How do you vote?
No matter how large or small your investment, your vote is
important, so please review the proxy statement carefully. To cast
your vote, simply mark, sign and date the enclosed proxy ballot and
return it in the postage-paid envelope today.
If the reorganization is approved, you would receive shares of
Oppenheimer Strategic Income Fund of the same class as you presently
hold, equal in dollar value to your investment in Quest for Value
Global Income Fund (as a result, the number of shares you receive will
vary from the number of fund shares you previously held, even though
the value will be the same). Of course, no sales charge would be paid
on shares received in the reorganization. In addition, you would
receive a final dividend distribution from the Quest for Value Global
Income Fund before the reorganization took place.
Please contact your financial adviser or call us at 1-800-232-FUND
if you have any questions.
Thank you for your continuing trust in allowing us to manage your
investments.
Sincerely,
Joseph M. LaMotta
Chairman of the Board and President
Quest for Value Global Funds, Inc.
<PAGE>
Preliminary Copy
QUEST FOR VALUE GLOBAL FUNDS, INC.
QUEST FOR VALUE GLOBAL INCOME FUND
One World Financial Center, New York, New York 10281
1-800-232-FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held November 16, 1995
To the Shareholders of Quest for Value Global Income Fund:
Notice is hereby given that a Special Meeting of the Shareholders of
Quest for Value Global Income Fund (the "Fund"), a series of Quest for
Value Global Funds, Inc. (the "Corporation"), an open-end, management
investment company, will be held at One World Financial Center, New
York, New York 10281 on the 40th Floor, at 10:00 A.M., New York time,
on November 16, 1995, and any adjournments thereof (the "Meeting"), for
the following purposes:
1. To consider and vote upon approval of the Agreement and Plan of
Reorganization dated as of ____, 1995 (the "Reorganization
Agreement") by and among Oppenheimer Strategic Funds Trust, on
behalf of Oppenheimer Strategic Income Fund ("Strategic Income
Fund"), the Corporation, on behalf of the Fund, and Quest for
Value Advisors, investment adviser to the Fund, and the
transactions contemplated thereby (the "Reorganization"),
including (i) the transfer of substantially all the assets of the
Fund to Strategic Income Fund in exchange for Class A, Class B and
Class C shares of Strategic Income Fund and the assumption by
Strategic Income Fund of certain liabilities of the Fund, (ii) the
distribution of such shares of Strategic Income Fund to
shareholders of the Fund in liquidation of the Fund, and (iii) the
cancellation of the outstanding shares of the Fund (the
"Proposal"); and
2. To act upon such other matters as may properly come before the
Meeting.
The Reorganization is more fully described in the accompanying Proxy
Statement and Prospectus and a copy of the Reorganization Agreement is
attached as Exhibit A thereto. Shareholders of record at the close of
business on September 25, 1995 are entitled to notice of, and to vote
at, the Meeting. Please read the Proxy Statement and Prospectus
carefully before telling us, through your proxy or in person, how you
wish your shares to be voted. The Board of Directors of the
Corporation recommends a vote in favor of the Reorganization. WE URGE
YOU TO SIGN, DATE AND MAIL THE ENCLOSED PROXY PROMPTLY.
By Order of the Board of Directors,
Deborah Kaback, Secretary
_________, 1995
Shareholders who do not expect to attend the Meeting are requested to
indicate voting instructions on the enclosed proxy and to date, sign
and return it in the accompanying postage-paid envelope. To avoid
unnecessary duplicate mailings, we ask your cooperation in promptly
mailing your proxy no matter how large or small your holdings may be.
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE PROPOSED REORGANIZATION
1.What is the Reorganization?
The proposed Reorganization provides for the transfer of all the assets
the Quest for Value Global Income Fund (the "Fund") to the Oppenheimer
Strategic Income Fund, the issuance of shares of the Oppenheimer
Strategic Income Fund to shareholders of the Fund and the cancellation
of the outstanding shares of the Fund. The number of shares of the
Oppenheimer Strategic Income Fund that will be issued to shareholders
of the Fund will be determined on the basis of the relative net asset
values of the Oppenheimer Strategic Income Fund and the Fund. Although
the number of shares of the Oppenheimer Strategic Income Fund issued to
a shareholder of the Fund may be more or less than the shareholder's
holdings of Fund shares, the value of the shares of the Oppenheimer
Strategic Income Fund issued in the Reorganization will be equal to the
value of the shares previously held in the Fund.
The Reorganization has been proposed in connection with a proposed
acquisition by Oppenheimer Management Corporation ("OMC") of the assets
of Quest for Value Advisors, Quest for Value Distributors and
Oppenheimer Capital relating to twelve Quest for Value mutual funds
(including the Fund) and the assumption by OMC of certain liabilities.
2.What are the reasons for the Reorganization?
After an intensive examination of the mutual fund industry, Quest for
Value Advisors and Distributors concluded that smaller fund
distributors would find it increasingly difficult to compete with
larger distributors with greater resources. Based on that conclusion,
Quest for Value has chosen to sell certain of its mutual fund related
assets to OMC. OMC, the purchaser, is seeking to merge certain of the
Quest for Value funds into certain of its funds.
3.What benefits to shareholders may result from this transaction?
The Board of the Fund determined that, among other things, the
Reorganization would afford the shareholders of the Quest Fund: 1) the
capabilities and resources of OMC and its affiliates in the area of
fixed income investment management, distribution, shareholder services
and marketing; 2) the ability to exchange their shares for a wider
variety of portfolios within the OppenheimerFunds family than are
currently available to the shareholders of the Fund; and 3) an
investment in a fund which, on a pro-forma basis, will have lower
operating expenses as a percent of average net assets than is currently
the case.
4.Who is paying the expenses of the Reorganization?
All expenses of the Reorganization will be paid by Quest for Value and
Oppenheimer Management Corporation and not Quest Fund or Oppenheimer
Strategic Income Fund shareholders.
5.Who is Oppenheimer Management Corporation?
Oppenheimer Management Corporation and its subsidiaries are engaged
principally in the business of managing, distributing and servicing
registered investment companies. Oppenheimer Management Corporation is
indirectly controlled by Massachusetts Mutual Life Insurance Company.
As of August 31, 1995, Oppenheimer Management Corporation and its
affiliates had assets of more than $36 billion under management in more
than 45 mutual funds.
6.Do the OppenheimerFunds have a sales charge?
Yes, other than their money market funds. However, there will be no
commission or salesload of any kind charged in connection with this
Reorganization. The full value of your shares in the Quest Fund will
be exchanged for shares of the Oppenheimer Strategic Income Fund.
Those shareholders who, because they were shareholders of the AMA
Family of Funds or the Unified Funds who were eligible to purchase
shares of any Quest for Value fund without a sales charge, after the
Reorganization will be eligible to purchase shares of any
OppenheimerFund without a sales charge.
7.May I exchange between other OppenheimerFunds without a sales charge
or exchange fee?
Yes. As a shareholder of an OppenheimerFund, you will be able to make
exchanges into any of the other funds into any of the OppenheimerFunds
without payment of any sales charges or exchange fees. The Quest Fund
currently imposes a fee of $5 for every exchange into another Quest for
Value fund.
8.Where can I get prospectuses and other information on the
OppenheimerFunds?
Call OppenheimerFunds at 1-(800) 255-2755. They will be pleased to
supply you with all the information, including prospectuses which you
will need to make an investment decision.
9.After the Reorganization, who do I contact about my account or to
initiate a transaction in my account?
For information about your account or to initiate a transaction in your
account, you may continue to contact your registered representative at
your broker/dealer or, in the alternative, Shareholder Services, Inc.
at 1-(800) 525-7048 .
10.Will this Reorganization result in any tax liability to the Quest
Fund, Oppenheimer Trust or to me as a shareholder?
The Reorganization is intended to qualify for federal income tax
purposes as a tax-free reorganization. The aggregate tax basis of the
Oppenheimer Strategic Income Fund shares received by you will be the
same as the aggregate tax basis of your Quest Fund shares prior to the
Reorganization and the holding period of the shares of the Oppenheimer
Strategic Income Fund to be received by you will include the period
during which the Quest Fund shares surrendered in exchange, therefore,
were held.
Preliminary Copy
QUEST FOR VALUE GLOBAL FUNDS, INC.
QUEST FOR VALUE GLOBAL INCOME FUND
One World Financial Center, New York, New York 10281
1-800-232-FUND
PROXY STATEMENT
--------------------------
OPPENHEIMER STRATEGIC INCOME FUND
3410 South Galena Street, Denver, Colorado 80231
1-800-525-7048
PROSPECTUS
This Proxy Statement and Prospectus is being furnished to shareholders
of Quest for Value Global Income Fund (the "Fund"), a series of Quest
for Value Global Funds, Inc. (the "Corporation"), an open-end,
management investment company, in connection with the solicitation by
the Board of Directors of the Corporation (the "Board") of proxies to
be used at the Special Meeting of Shareholders of the Fund, to be held
at One World Financial Center, New York, New York 10281 on the 40th
Floor at 10:00 A.M., New York time, on November 16, 1995, and any
adjournments thereof (the "Meeting"). It is expected that this Proxy
Statement and Prospectus will be mailed to shareholders on or about
____, 1995.
At the Meeting, shareholders of the Fund will be asked to consider and
vote upon approval of the Agreement and Plan of Reorganization, dated
as of _____, 1995 (the "Reorganization Agreement"), by and among
Oppenheimer Strategic Funds Trust (the "Strategic Trust"), an open-end
management investment company, on behalf of Oppenheimer Strategic
Income Fund ("Strategic Income Fund"), the Corporation, on behalf of
the Fund, and Quest for Value Advisors ("QVA"), investment adviser to
the Fund, and the transactions contemplated by the Reorganization
Agreement (the "Reorganization"). The Reorganization Agreement
provides for the transfer of substantially all the assets of the Fund
to Strategic Income Fund in exchange for Class A, Class B and Class C
shares of Strategic Income Fund and the assumption by Strategic Income
Fund of certain liabilities of the Fund, the distribution of such
shares of Strategic Income Fund to shareholders of the Fund in
liquidation of the Fund and the cancellation of the outstanding shares
of the Fund. A copy of the Reorganization Agreement is attached hereto
as Exhibit A and is incorporated by reference herein. As a result of
the proposed Reorganization, each Class A, Class B and Class C
shareholder of the Fund will receive that number of Class A, Class B
and Class C shares, respectively, of Strategic Income Fund having an
aggregate net asset value equal to the net asset value of such
shareholder's shares of the Fund of that class. This transaction is
being structured as a tax-free reorganization. See "Approval of the
Reorganization."
Strategic Income Fund currently offers Class A, Class B and Class C
shares. Class A shares are sold with a sales charge imposed at the
time of purchase (certain purchases aggregating $1.0 million or more
($500,000 as to purchases by OppenheimerFunds prototype 401(k) plans)
are not subject to a sales charge, but may be subject to a contingent
deferred sales charge ("CDSC") if redeemed within 18 months of the date
of purchase); Class B shares are sold without a front end sales charge
but may be subject to a CDSC if redeemed within six years of the date
of purchase; and Class C shares are sold without a front-end sales
charge but may be subject to a CDSC if not held for one year. Holders
of Class A shares in the Fund will receive Class A shares of Strategic
Income Fund and no sales charge will be imposed on the Class A shares
received by the Fund Class A shareholders. Holders of Class B and
Class C shares in the Fund will receive Class B and Class C shares,
respectively, of Strategic Income Fund; any CDSC which is applicable to
a shareholder's investment will continue to apply, and, in calculating
the applicable CDSC payable upon the subsequent redemption of shares of
Strategic Income Fund the period during which a Fund shareholder held
shares of the Fund will be counted.
Strategic Income Fund is a mutual fund that seeks a high level of
current income by investing mainly in debt securities and by writing
covered call options on them. Strategic Income Fund does not invest
with the objective of seeking capital appreciation. The Fund seeks
investment income as its primary objective, with capital appreciation
as a secondary objective through a non-diversified portfolio primarily
of debt securities. Shareholders of the Fund should consider the
differences in investment objectives and policies of Strategic Income
Fund and the Fund, including the ability of Strategic Income Fund to
invest without limit in securities rated lower than investment grade.
Strategic Income Fund is a diversified portfolio designed for investors
willing to assume additional risk in return for seeking high current
income. See "Comparison Between Strategic Income Fund and the Fund -
Comparison of Investment Objectives, Policies and Restrictions."
Strategic Income Fund has filed with the Securities and Exchange
Commission (the "SEC") a Registration Statement on Form N-14 (the
"Registration Statement") relating to the registration of shares of
Strategic Income Fund to be offered to the shareholders of the Fund
pursuant to the Reorganization Agreement. This Proxy Statement and
Prospectus relating to the Reorganization also constitutes a
Prospectus of Strategic Income Fund filed as part of such Registration
Statement. Information contained or incorporated by reference herein
relating to Strategic Income Fund has been prepared by and is the
responsibility of Strategic Income Fund. Information contained or
incorporated by reference herein relating to the Fund has been prepared
by and is the responsibility of the Fund.
This Proxy Statement and Prospectus sets forth concisely information
about Strategic Income Fund that a prospective investor should know
before voting on the Reorganization. The following documents have been
filed with the SEC and are available without charge upon written
request to Quest for Value Distributors ("QVD"), the general
distributor for the Fund, at P.O. Box 3567, Church Street Station, New
York, New York 10277-1296, or by calling the toll-free number for the
Fund shown above: (i) a Prospectus for the Fund, dated March 1, 1995,
as revised June 30, 1995; and (ii) a Statement of Additional
Information about the Fund, dated March 1, 1995 (the "Fund Additional
Statement"). The following documents have each been filed with the
SEC, are incorporated herein by reference and are available without
charge upon written request to the transfer and shareholder servicing
agent for Strategic Income Fund, Oppenheimer Shareholder Services
("OSS"), at P.O. Box 5270, Denver Colorado 80217, or by calling the
toll-free number for Strategic Income Fund shown above: (i) a
Prospectus for Strategic Income Fund, dated May 26, 1995, as
supplemented July 14, 1995; and (ii) a Statement of Additional
Information relating to the Reorganization described in this Proxy
Statement and Prospectus (the "Additional Statement"), dated ____, 1995
and filed as part of the Registration Statement, which Additional
Statement includes, among other things, the Prospectus for the Fund,
the Fund Additional Statement and a Statement of Additional Information
about Strategic Income Fund, dated May 26, 1995, as supplemented July
14, 1995 (the "Strategic Income Fund Additional Statement"), which
contains more detailed information about Strategic Income Fund and its
management.
Investors are advised to read and retain this Proxy Statement and
Prospectus for future reference.
Shares of Strategic Income Fund are not deposits or obligations of any
bank, are not guaranteed by any bank, and are not insured by the
F.D.I.C. or any other agency, and involve investment risks, including
the possible loss of the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Proxy Statement and Prospectus is dated _______, 1995.
<PAGE>
TABLE OF CONTENTS
PROXY STATEMENT AND PROSPECTUS
COMPARATIVE FEE TABLES
SYNOPSIS
Parties to the Reorganization
The Reorganization
Tax Consequences of the Reorganization
Investment Objectives and Policies
Investment Advisory and Distribution Plan Fees
Purchases, Exchanges and Redemptions
PRINCIPAL RISK FACTORS
APPROVAL OF THE REORGANIZATION (The Proposal)
Reasons for the Reorganization
The Reorganization
Tax Aspects of the Reorganization
Capitalization Table (Unaudited)
COMPARISON BETWEEN STRATEGIC INCOME FUND AND THE FUND
Comparison of Investment Objectives, Policies and Restrictions
Special Investment Methods
Investment Restrictions
Strategic Income Fund Performance
Additional Comparative Information
INFORMATION CONCERNING THE MEETING
General
Record Date; Vote Required; Share Information
Proxies
Costs of the Solicitation and the Reorganization
MISCELLANEOUS
Financial Information
Public Information
OTHER BUSINESS
EXHIBIT A -Agreement and Plan of Reorganization, dated as of _____,
1995, by and among Oppenheimer Strategic Funds Trust, on behalf of
Oppenheimer Strategic Income Fund, Quest for Value Global Funds, Inc.,
on behalf of Quest for Value Global Income Fund, and Quest for Value
Advisors A-1
EXHIBIT B - Purchase Price Formula Pursuant to the Acquisition
Agreement B-1
<PAGE>
COMPARATIVE FEE TABLES
Transaction Charges
Shareholders pay certain expenses directly, such as sales charges and
account transaction charges. The schedule of such charges for both
Strategic Income Fund and the Fund (collectively, the "funds") is
substantially the same, except as noted below.
<TABLE>
<CAPTION> Oppenheimer Strategic
Income Fund
Class A Class B Class C
<S> <C> <C> <C>
Maximum Sales Charge on Purchases 4.75% None None
(as a % of offering price)
Sales Charge on Reinvested Dividends None None None
Deferred Sales Charge None(1) 5.0%(2) 1.0%(3)
(as a % of the lower of the original
purchase price or redemption proceeds)
Exchange Fee None None None
Global Income Fund
Class A Class B Class C
Maximum Sales Charge on Purchases 3.00% None None
(as a % of offering price)
Sales Charge on Reinvested Dividends None None None
Deferred Sales Charge None 5.0%(2) 1.0%(3)
(as a % of the lower of the original
purchase price or redemption proceeds)
Exchange Fee $5.00 $5.00 $5.00
(1)If you invest $1 million or more ($500,000 for purchases by OppenheimerFunds prototype 401(k) plans) in Class A
shares of Strategic Income Fund, although you will generally not pay an initial sales charge, you may have to pay a
sales charge of up to 1.0% if you sell your shares within 18 calendar months from the end of the calendar month during
which you purchased those shares.
(2)If you redeem Class B shares within six years of their purchase, you may have to pay a contingent deferred sales charge
starting at 5.0% in the first year and declining thereafter.
(3) If you redeem Class C shares within 12 months of their purchase, you may have to pay a 1.0% contingent deferred
sales charge.
</TABLE>
Expenses of Strategic Income Fund and the Fund; Pro Forma Expenses
The funds each pay a variety of expenses directly for management of
their assets, administration, distribution of their shares and other
services, and those expenses are reflected in the net asset value per
share of each of Strategic Income Fund and the Fund.
The following calculations are based on the expenses of Strategic
Income Fund and the Fund for the 12 months ended September 30, 1994 and
the six months ended March 31, 1995. These amounts are shown as a
percentage of the average net assets of each class of shares of the
Fund and of Strategic Income Fund for those periods. The pro forma
fees reflect what the fee schedules would have been at September 30,
1994 and March 31, 1995 as if the Reorganization had occurred 12 months
and six months, respectively, prior to those dates.
<TABLE>
<CAPTION>
Oppenheimer Strategic Income Fund
12 months ended 9/30/94 6 months ended 3/31/95(1)
Class A Class B Class C(2) Class A Class B Class C(2)
<S> <C> <C> <C> <C> <C> <C>
Management Fees 0.54% 0.54% 0.54% 0.54% 0.54% 0.54%
12b-1 Fees 0.25% 1.00% 1.00% 0.24% 1.00% 1.00%
Other Expenses 0.16% 0.17% 0.17% 0.16% 0.15% 0.15%
Total Fund Operating
Expenses 0.95% 1.71% 1.71% 0.94% 1.69% 1.69%
</TABLE>
[CAPTION]
<TABLE>
Global Income Fund
12 months ended 9/30/94 6 months ended 3/31/95(1)
Class A Class B Class C Class A Class B Class C
<S> <C> <C> <C> <C> <C> <C>
Management Fees
(after waiver)(3) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12b-1 Fees 0.25% 1.00% 1.00% 0.25% 1.00% 1.00%
Other Expenses
(after waiver)(3)(4) 1.42% 1.41% 1.41% 1.37% 1.38% 2.04%
Total Fund Operating
Expenses (after
waiver)(3)(4) 1.67% 2.41% 2.41% 1.62% 2.38% 3.04%
</TABLE>
<TABLE>
<CAPTION>
Pro Forma Combined Fund
12 months ended 9/30/94 6 months ended 3/31/95(1)
Class A Class B Class C(2) Class A Class B Class C(2)
<S> <C> <C> <C> <C> <C> <C>
Management Fees 0.54% 0.54% 0.54% 0.54% 0.54% 0.54%
12b-1 Fees 0.25% 1.00% 1.00% 0.24% 1.00% 1.00%
Other Expenses 0.16% 0.17% 0.17% 0.16% 0.15% 0.15%
Total Fund Operating
Expenses 0.95% 1.71% 1.71% 0.94% 1.69% 1.69%
</TABLE>
(1) Annualized
(2)Class C shares of Strategic Income Fund were first publicly offered
on May 26, 1995. "Other Expenses" shown for Class C shares of
Strategic Income Fund and the combined fund on a pro forma basis are
estimates based on amounts that would have been payable if Strategic
Income Fund Class C shares had been outstanding for the 12 months ended
September 30, 1994 and the six months ended March 31, 1995,
respectively.
(3)"Management Fees," "Other Expenses" and "Total Fund Operating
Expenses" reflect a voluntary expense limitation by QVA to limit the
Fund's annualized operating expenses to no more than 1.45% of average
daily net assets. This expense limitation does not apply to expenses
attributable only to a class of shares. Without such expense
limitation, for the 12 months ended September 30, 1994, as to Class A,
Class B and Class C shares of the Fund, "Management Fees" would have
been 0.50%, 0.50% and 0.50%, "Other Expenses" would have been 1.57%,
1.62% and 1.59%, and "Total Fund Operating Expenses" would have been
2.32%, 3.12% and 3.09%, in each case of their respective average annual
net assets. Without such waiver and reimbursement, for the six months
ended March 31, 1995, as to Class A, Class B and Class C shares of the
Fund, "Management Fees" would have been 0.50%, 0.50% and 0.50%, "Other
Expenses" would have been 1.52%, 1.54% and 2.22% and "Total Fund
Operating Expenses" would have been 2.27%, 3.04% and 3.72%, in each
case of their respective average annual net assets. The expense
limitation, which is still in effect, may be terminated at any time.
(4)"Other Expenses" for the Fund includes a fee for administrative
services payable to QVA at the annual rate of .25% of average daily net
assets of the Fund. OMC provides such services to Strategic Income
Fund under its investment advisory agreement and no separate fee is
charged.
Hypothetical Example
To attempt to show the effect of these expenses on an investment over
time, the example shown below has been created. Assume that you make a
$1,000 investment in either the Fund or Strategic Income Fund or the
new combined fund and that the annual return is 5% and that the
operating expenses for each fund are the ones shown in the chart above
for the 12 months ended September 30, 1994 and the six months ended
March 31, 1995. If you were to redeem your shares at the end of each
period shown below, your investment would incur the following expenses
by the end of each period shown:
12 Months ended 9/30/94
1 year 3 years 5 years 10 years
Oppenheimer Strategic
Income Fund
Class A Shares $57 $76 $ 98 $159
Class B Shares $67 $84 $113 $163(1)
Class C Shares $27 $54 $ 93 $202(2)
Global Income Fund
Class A Shares $46 $ 81 $118 $222
Class B Shares $74 $105 $149 $256(1)
Class C Shares $34 $ 75 $129 $275(2)
Pro Forma Combined
Fund
Class A Shares $57 $76 $ 98 $159
Class B Shares $67 $84 $113 $163(1)
Class C Shares $27 $54 $ 93 $202(2)
If you did not redeem your investment, it would incur the following
expenses:
12 months ended 9/30/94
1 year 3 years 5 years 10 years
Oppenheimer Strategic
Income Fund
Class A Shares $57 $76 $98 $159
Class B Shares $17 $54 $93 $163 (1)
Class C Shares $17 $54 $93 $202(2)
Global Income Fund
Class A Shares $46 $81 $118 $222
Class B Shares $24 $75 $129 $256(1)
Class C Shares $24 $75 $129 $275(2)
Pro Forma Combined
Fund
Class A Shares $57 $76 $98 $159
Class B Shares $17 $54 $93 $163(1)
Class C Shares $17 $54 $93 $202(2)
If you were to redeem your shares at the end of each period shown
below, your investment would incur the following expenses by the end of
each period shown:
6 Months ended 3/31/95
1 year 3 years 5 years 10 years
Oppenheimer Strategic
Income Fund
Class A Shares $57 $76 $ 97 $157
Class B Shares $67 $83 $112 $162(1)
Class C Shares $27 $53 $ 92 $200(2)
Global Income Fund
Class A Shares $46 $ 80 $115 $216
Class B Shares $74 $104 $147 $253(1)
Class C Shares $41 $ 94 $160 $336(2)
Pro Forma Combined
Fund
Class A Shares $57 $76 $ 97 $157
Class B Shares $67 $83 $112 $162(1)
Class C Shares $27 $53 $ 92 $200(2)
If you did not redeem your investment, it would incur the following
expenses:
6 months ended 3/31/95
1 year 3 years 5 years 10 years
Oppenheimer Strategic
Income Fund
Class A Shares $57 $76 $97 $157
Class B Shares $17 $53 $92 $162 (1)
Class C Shares $17 $53 $92 $200(2)
Global Income Fund
Class A Shares $46 $80 $115 $216
Class B Shares $24 $74 $127 $253(1)
Class C Shares $31 $94 $160 $336(2)
Pro Forma Combined
Fund
Class A Shares $57 $76 $97 $157
Class B Shares $17 $53 $92 $162(1)
Class C Shares $17 $53 $92 $200(2)
(1)The Class B expenses in years seven through ten for Strategic Income
Fund and year nine and ten for the Fund are based on the Class A
expenses shown above, because Strategic Income Fund and the Fund
automatically convert Class B shares into Class A shares after six
years and eight years, respectively. Long-term Class B shareholders
could pay the economic equivalent of more than the maximum front-end
sales charge allowed under applicable regulatory requirements, because
of the effect of the asset-based sales charge and contingent deferred
sales charge. The automatic conversion of Class B shares to Class A
shares is designed to minimize the likelihood that this will occur.
(2)Because of the asset-based sales charge imposed on Class C shares of
Strategic Income Fund and the Fund, long-term shareholders of Class C
shares could bear expenses that would be the economic equivalent of an
amount greater than the maximum front-end sales charges permitted under
applicable regulatory requirements.
SYNOPSIS
The following is a synopsis of certain information contained in or
incorporated by reference in this Proxy Statement and Prospectus and
presents key considerations for shareholders of the Fund to assist them
in determining whether to approve the Reorganization. This synopsis is
only a summary and is qualified in its entirety by the more detailed
information contained in or incorporated by reference in this Proxy
Statement and Prospectus and the Exhibits hereto. Shareholders should
carefully review this Proxy Statement and Prospectus and the Exhibits
hereto in their entirety and, in particular, the current Prospectus of
Strategic Income Fund which accompanies this Proxy Statement and
Prospectus and is incorporated by reference herein.
Parties to the Reorganization
Strategic Income Fund was organized in 1989 as a Massachusetts business
trust with one series. In December 1993, that business trust was
reorganized to become a multi-series business trust called Oppenheimer
Strategic Funds Trust (the "Strategic Trust") and Strategic Income Fund
became a series of it. The Strategic Trust is an open-end, diversified
management investment company. Strategic Income Fund is located at
3410 South Galena Street, Denver, Colorado 80231. Oppenheimer
Management Corporation ("OMC") acts as investment adviser to Strategic
Income Fund. Oppenheimer Funds Distributor, Inc. ("OFDI"), a
subsidiary of OMC, acts as the distributor of Strategic Income Fund's
shares. Additional information about Strategic Income Fund is set
forth below.
The Fund, a non-diversified investment company, is a series of Quest
for Value Global Funds, Inc. (the "Corporation"), an open-end,
management investment company organized as a Maryland corporation in
1991. The Fund is located at One World Financial Center, New York, New
York 10281. QVA acts as investment adviser to the Fund. QVD acts as
the distributor of the Fund's shares. QVA and QVD are majority-owned
subsidiaries of Oppenheimer Capital, an institutional investment
manager. OMC is not related to Oppenheimer Capital nor its affiliate
the brokerage firm Oppenheimer & Co., Inc. Additional information
about the Fund is set forth below.
The Reorganization
The Reorganization Agreement provides for the transfer of substantially
all the assets of the Fund to Strategic Income Fund in exchange for
Class A, Class B and Class C shares of Strategic Income Fund and the
assumption by Strategic Income Fund of certain liabilities of the Fund.
The Reorganization Agreement also provides for the distribution of
shares of Strategic Income Fund to the Fund shareholders in liquidation
of the Fund. As a result of the Reorganization, each Fund shareholder
will receive that number of full and fractional Strategic Income Fund
shares equal in value to such shareholder's pro rata interest in the
net assets transferred to Strategic Income Fund as of the Valuation
Date (as hereinafter defined). Holders of Class A, Class B and Class C
shares of the Fund will receive Class A, Class B and Class C shares,
respectively, of Strategic Income Fund. For further information about
the Reorganization see "Approval of the Reorganization" below.
For the reasons set forth below under "Approval of the Reorganization -
Reasons for the Reorganization," the Board, including the directors who
are not "interested persons" of the Corporation (the "Independent
Directors"), as that term is defined in the Investment Company Act of
1940, as amended (the "1940 Act"), has concluded that the
Reorganization is in the best interests of the Fund and its
shareholders and that the interests of existing Fund shareholders will
not be diluted as a result of the Reorganization, and recommends
approval of the Reorganization by Fund shareholders. The Board of
Trustees of Strategic Trust has also approved the Reorganization and
determined that the interests of existing Strategic Income Fund
shareholders will not be diluted as a result of the Reorganization. If
the Reorganization is not approved, the Fund will continue in existence
and the Board will determine whether to pursue alternative actions.
"Approval of the Reorganization" sets forth certain information with
respect to the background of the Reorganization, including other
transactions and agreements entered into, or contemplated to be entered
into, by OMC, QVA and their respective affiliates.
Approval of the Reorganization will require the affirmative vote of a
majority of the shares of the Fund outstanding and entitled to vote at
the Meeting. See "Information Concerning the Meeting - Record Date;
Vote Required; Share Information."
Tax Consequences of the Reorganization
As a condition to the closing of the Reorganization, the Fund and
Strategic Income Fund will have received an opinion to the effect that
the Reorganization will qualify as a tax-free reorganization for
Federal income tax purposes. As a result of such tax-free
reorganization, no gain or loss would be recognized by the Fund,
Strategic Income Fund, or the shareholders of either fund for Federal
income tax purposes. For further information about the tax
consequences of the Reorganization, see "Approval of the Reorganization
-Tax Aspects of the Reorganization" below.
Investment Objectives and Policies
As its investment objective, Strategic Income Fund seeks a high level
of current income by investing mainly in a diversified portfolio of
debt securities and by writing covered call options on them. Strategic
Income Fund does not invest with the objective of seeking capital
appreciation. The Fund seeks investment income as its primary
objective, with capital appreciation as a secondary objective, through
a non-diversified portfolio consisting primarily of debt securities.
Strategic Income Fund seeks its investment objective by investing
principally in three market sectors: (1) debt securities of foreign
governments and companies, (2) securities issued or guaranteed by the
U.S. Government or its agencies and instrumentalities ("U.S. Government
Securities"), and (3) lower-rated, high-yield debt securities of U.S.
companies. Under normal market conditions Strategic Income Fund will
invest in each of these three sectors, but from time to time OMC will
adjust the amounts Strategic Income Fund invests in each sector.
Because of the high-yield, lower-rated securities in which Strategic
Income Fund invests, and its ability to invest in such securities
without limit, Strategic Income Fund is considered a speculative
investment, and the value of a shareholder's shares of Strategic Income
Fund may decline in adverse market conditions. Strategic Income Fund
may also invest in dividend-paying common stocks issued by U.S.
companies, preferred stocks and participation interests.
The Fund seeks its investment objective by investing primarily in
investment-grade debt securities of foreign and domestic corporations
and foreign governments, or their agencies and instrumentalities, and
in U.S. Government Securities. The Fund may invest in high-yield
lower-rated debt securities of foreign issuers which may be located in
countries with "emerging markets". The Fund's current intention is to
limit its investment in these securities to up to 35% of its net
assets. Under normal circumstances the Fund will invest at least 65%
of its total assets in the securities of issuers located in not less
than three different countries, one of which may be the United States.
The Fund may also invest in preferred stocks, securities convertible
into common stock and short-term money market instruments. Investments
in preferred stocks and securities convertible into common stock will
be limited to 10% of the total assets of the Fund at the time of
purchase.
Strategic Income Fund may also write covered calls and use certain
derivative investments such as options and futures to enhance income.
The funds may use hedging instruments, including options and futures,
to try to manage investment risks.
Shareholders of the Fund should consider the differences in investment
objectives and policies of the funds, including the ability of
Strategic Income Fund to invest without limit in securities rated lower
than investment grade. Strategic Income Fund is a diversified
portfolio designed for investors willing to assume additional risk in
return for seeking high current income. See "Comparison Between
Strategic Income Fund and the Fund -Comparison of Investment
Objectives, Policies and Restrictions." For a detailed description of
the risks associated with an investment in high-yield, lower-rated
securities and a comparison of these risks as to each Fund, see
"Principal Risk Factors" below.
Investment Advisory and Distribution Plan Fees
The funds obtain investment management services from their investment
advisers pursuant to the terms of their respective investment advisory
agreements. The management fee is payable to the investment advisers
monthly and is computed on the net asset value of each fund as of the
close of business each day. Strategic Income Fund pays a management
fee which declines on additional assets as Strategic Income Fund
increases its asset base, at the annual rate of 0.75% of the first $200
million of net assets, 0.72% of the next $200 million, 0.69% of the
next $200 million, 0.66% of the next $200 million, 0.60% of the next
$200 million and 0.50% of net assets over $1 billion. The management
fee payable by the Fund to QVA is at an annual rate of 0.50% of net
assets. The administration fee payable by the Fund to QVA for certain
administrative services is at an annual rate of 0.25% of average daily
net assets of the Fund. QVA currently waives payment of the investment
advisory fee payable by the Fund. See "Comparative Fee Tables -
Expenses of Strategic Income and the Fund; Pro Forma Expenses."
Both Strategic Income Fund and the Fund have adopted separate
service and/or distribution plans pursuant to Rule 12b-1 under the 1940
Act for their respective Class A, Class B and Class C shares. Pursuant
to the plans, Class A, Class B and Class C shares of Strategic Income
Fund and the Fund are authorized to pay OFDI and QVD, respectively, in
connection with the distribution of shares and the servicing of
shareholder accounts that hold the fund's shares. The plans for
Strategic Income Fund and the Fund provide for payments at a fixed rate
to compensate OFDI and QVD, respectively, except for Strategic Income
Fund's Class A service plan, which provides for reimbursement of OFDI's
expenses. The current maximum annual fee payable by shares of
Strategic Income Fund and the Fund pursuant to their service and/or
distribution plans is (i) as to Class A shares, 0.25% (as a service
fee), (ii) as to Class B shares, 1.00% (consisting of a 0.25% service
fee and a 0.75% "asset-based sales charge") and (iii) as to Class C
shares, 1.00% (consisting of a 0.25% service fee and a 0.75% "asset-
based sales charge") respectively, of average annual net assets. Class
A shares of the Fund are also authorized to pay QVD a distribution fee
at an annual rate of 0.05% although the Board has set the maximum fee
under the Fund's Class A plan at .25%. Class B shares of Strategic
Income Fund automatically convert to Class A shares of Strategic Income
Fund six years after purchase. Class B shares of the Fund
automatically convert to Class A shares of the Fund eight years after
purchase. Accordingly, Class B shareholders of the Fund pay the asset-
based sales charge on their shares for a longer period than Strategic
Income Fund Class B shareholders.
Purchases, Exchanges and Redemptions
Purchases. Purchases of shares of Strategic Income Fund and the Fund
may be made directly through the distributor for Strategic Income Fund
or the transfer agent for the Fund, respectively, or through any
dealer, broker or financial institution that has a sales agreement with
the distributor for such fund (initial purchases of Fund shares must be
made through such dealer, broker or institution). In addition, a
shareholder of Strategic Income Fund may purchase shares automatically
from an account at a domestic bank or other financial institution under
the "OppenheimerFunds AccountLink" service. Class A shares of both
Strategic Income Fund and the Fund generally are sold subject to an
initial sales charge and Class B and Class C shares generally are sold
without a front-end sales charge but may be subject to a CDSC upon
redemption. See "Comparative Fee Tables -- Transaction Charges" above
for a complete description of such sales charges.
The Class A Strategic Income Fund shares to be issued under the
Reorganization Agreement will be issued by Strategic Income Fund at net
asset value without a sales charge. The sales charge on Class A shares
of Strategic Income Fund will only affect shareholders of the Fund to
the extent that they desire to make additional purchases of Class A
shares of Strategic Income Fund in addition to the shares which they
will receive as a result of the Reorganization. Future dividends and
capital gain distributions of Strategic Income Fund, if any, may be
reinvested without sales charge. The Class B and Class C shares of
Strategic Income Fund to be issued under the Reorganization Agreement
will be issued at net asset value and, along with the Class A shares of
Strategic Income Fund to be issued under the Reorganization Agreement
will be deemed aged to the same level as the shareholder's existing
Fund Class A, Class B and Class C shares. Strategic Income Fund has
undertaken that any Fund shareholders entitled to a waiver of or
exemption from sales charges pursuant to the policy stated in the
Fund's Prospectus dated March 1, 1995, as revised June 30, 1995, shall
continue to be entitled to such waiver or exemption as a shareholder of
Strategic Income Fund after the Reorganization so long as they continue
to meet the applicable eligibility criteria. Other Oppenheimer funds
shall also provide such waivers and exemptions upon implementation of
appropriate prospectus disclosure.
Exchanges. Shareholders of Strategic Income Fund and the Fund may
exchange their shares at net asset value for shares of the same class
of mutual funds distributed by OFDI and QVD, respectively, subject to
certain conditions. A Fund shareholder that exchanges Class A shares
of the Fund into another fund in the Quest Funds family within six
months of the purchase of such Class A Fund shares will have to pay the
difference between the sales charge paid on the purchase of Class A
shares of the Fund and the sales charge that would have been charged if
the shareholder had originally purchased Class A shares of the Quest
Fund into which the shareholder is exchanging. Strategic Income Fund
offers an automatic exchange plan providing for systematic exchanges
from Strategic Income Fund of a specified amount for shares of the same
class of other funds within the OppenheimerFunds family.
Redemptions. Class A shares of the funds may be redeemed without
charge at their respective net asset values per share calculated after
the redemption order is received and accepted; however, certain large
investments in Class A shares that were exempt from the front-end sales
charge upon purchase may be subject to a CDSC upon redemption. See
"Comparative Fee Tables -- Transaction Charges" above. Class B shares
of the funds may be redeemed at their net asset value per share,
subject to a maximum CDSC of 5.0% for redemptions occurring within six
years of purchase. Class C shares of both funds may be redeemed at
their net asset value per share, subject to a CDSC of 1.00% if such
shares are redeemed during the first 12 months following their
purchase.
Shareholders of Strategic Income Fund may reinvest redemption proceeds
of Class A shares on which an initial sales charge was paid, or Class A
or Class B shares on which a CDSC was paid, within six months of a
redemption at net asset value in Class A shares of Strategic Income
Fund or any of numerous mutual funds within the OppenheimerFunds
family. This privilege is not applicable to Class C Strategic Income
Fund shares. Shareholders of the Fund that reinvest redemption
proceeds of Class A, Class B or Class C shares in another fund in the
Quest Funds family within 60 days will be reinstated as a shareholder
with the same privileges regarding the non-payment of sales charges
that apply to exchanges. Shareholders of the funds may redeem their
shares by written request or by telephone request in certain stated
amounts, or they may arrange to have share redemption proceeds wired,
for a fee, to a pre-designated account at a U.S. bank or other
financial institution that is an automated clearing house ("ACH")
member. Checkwriting privileges on Class A shares of Strategic Income
Fund are also available. Strategic Income Fund may redeem accounts
valued at less than $200 if the account has fallen below such stated
amount for reasons other than market value fluctuations. The funds
offer automatic withdrawal plans providing for systematic withdrawals
of a specified amount from the fund account.
PRINCIPAL RISK FACTORS
In evaluating whether to approve the Reorganization and invest in
Strategic Income Fund, shareholders should carefully consider the
following summary of risk factors, relating to both Strategic Income
Fund and the Fund, in addition to the other information set forth in
this Proxy Statement and Prospectus. A complete description of risk
factors for each fund is set forth in the Prospectuses of the funds and
their respective Statements of Additional Information. There is no
assurance that either Strategic Income Fund or the Fund will achieve
its investment objective and investment in the funds is subject to
investment risks, including the possible loss of the principal
invested.
Strategic Income Fund is intended for investors seeking high current
income and not for investors seeking capital appreciation. Strategic
Income Fund is not a complete investment program and is designed for
investors willing to assume a higher degree of risk. Because of the
high-yield, lower-rated securities in which Strategic Income Fund
invests, and its ability to invest in such securities without limit,
Strategic Income Fund is considered a speculative investment, and the
value of a shareholder's shares of Strategic Income Fund may decline in
adverse market conditions.
Investment in Debt Securities
The funds both seek their investment objective through investments
primarily in debt securities. Debt securities are subject to interest
rate risk and credit risk. Interest rate risk relates to fluctuations
in market 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 value 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 a fund means 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 of a debt security to make
interest or principal payments on the security as they become due.
Strategic Income Fund and the Fund are permitted to invest a percentage
of their respective total assets (as to Strategic Income Fund, up to
100%, and as to the Fund, up to 35%) in debt securities rated less than
investment grade or, if unrated, judged by OMC or QVA to be of
comparable quality to such lower-rated debt securities (often called
"junk bonds"). Such securities are speculative and involve greater
credit risks, including risk of default, than higher-rated securities.
They also may be less liquid than higher-rated securities. If a fund
were forced to sell a lower-grade debt security during a period of
rapidly declining prices, it might experience significant losses
especially if a substantial number of other holders decide to sell at
the same time. Other risks may involve the default of the issuer or
price changes in the issuer's securities due to change in the issuer's
financial strength or economic conditions.
The funds may invest in mortgage-backed securities which securities are
subject to prepayment 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. This may result in
greater price and yield volatility than traditional fixed-income
securities that have a fixed maturity and interest rate. 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 period of declining
interest rates than conventional bonds with comparable stated
maturities. If the funds buy mortgage-backed securities at a premium,
prepayments of principal and foreclosures of mortgages may result in
some loss of the fund's principal investment to the extent of the
premium paid. 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.
Collateralized Mortgage Obligations. The funds may invest in
collateralized mortgage obligations ("CMOs"). CMOs may be issued in a
variety of classes or series ("tranches"). The principal value of
certain CMO tranches may be more volatile and less liquid than other
types of mortgage-related securities, because of the possibility that
the principal value of the CMOs may be prepaid earlier than the
maturity of the CMOs as a result of prepayments of the underlying
mortgage loans by the borrowers.
Stripped Mortgage-Backed Securities. Strategic Income Fund may also
invest in "stripped" mortgage-backed securities of CMOs. The Fund does
not invest in these securities. Stripped mortgage-backed securities
usually have two classes. The classes receive different proportions of
the interest and principal distributions on the pool of mortgage assets
that act as collateral for the security. In certain cases, one class
will receive all of the interest payments, while the other class will
receive all of the principal payments. The yield to maturity on the
class that receives only interest is extremely sensitive to the rate of
payment of the principal on the underlying mortgages. Principal
prepayments increase that sensitivity. Stripped securities that pay
"interest only" are therefore subject to greater price volatility when
interest rates change, and they have the additional risk that if the
underlying mortgages are prepaid, the fund will lose the anticipated
cash flow from the interest on the prepaid mortgages. That risk is
increased when general interest rates fall, and in times of rapidly
falling interest rates, the fund might receive back less than its
investment in such interest only security. The value of "principal
only" securities generally increases as interest rates decline and
prepayment rates rise. The price of these securities is typically more
volatile than that of coupon-bearing bonds of the same maturity.
Zero Coupon Securities. Strategic Income Fund may invest in zero
coupon Treasury and corporate securities. The Fund does not invest in
these securities. A zero coupon security pays no current interest and
trades at a deep discount from its face value and will be subject to
greater market fluctuations from changes in interest rates than
interest-paying securities. Strategic Income Fund accrues interest on
its holdings without receiving the actual cash. As a result, Strategic
Income Fund may be forced to sell portfolio securities to pay cash
dividends or meet redemptions. Zero coupon corporate securities have
an additional risk that the issuing company may fail to pay interest or
repay the principal on the obligation. Strategic Income Fund may
invest up to 50% of its total assets in zero coupon securities issued
by either the U.S. Government or U.S. companies.
Corporate Asset-Backed Securities. Strategic Income Fund may invest in
asset-backed securities. The Fund does not invest in these securities.
These securities are frequently supported by a credit enhancement, such
as a letter of credit, a guarantee or a preference right. However, the
extent of the credit enhancement may be different for different
securities and generally applies to only a fraction of the security's
value. These securities present special risks. For example, in the
case of credit card receivables, the issuer of the security may have no
security interest in the related collateral. Thus, the risks of
corporate asset-backed securities are ultimately dependent upon payment
of consumer loans by the individual borrowers.
Participation Interests. Strategic Income Fund may acquire
participation interests in loans that are made to U.S. or foreign
companies (the "borrower") although no more than 5% of Strategic Income
Fund's net assets can be invested in participation interests of the
same borrower. The Fund does not invest in these securities. The
value of loan participation interests depends primarily upon the
creditworthiness of the borrower, and its ability to pay interest and
principal. Borrowers may have difficulty making payments. If a
borrower fails to make scheduled interest or principal payments,
Strategic Income Fund could experience a decline in the net asset value
of its shares. Some borrowers may have senior securities rated as low
as "C" by Moody's or "D" by Standard & Poor's, but may be deemed
acceptable credit risks.
Foreign Securities
The funds may generally invest without limit in debt securities of
foreign governments and foreign companies (subject to the policy of
Strategic Income Fund to not invest more than 25% of its total assets
in government securities of any one foreign country). Under normal
circumstances the Fund will invest at least 65% of its total assets in
the securities of issuers located in not less than three different
countries, one of which may be the United States. There are certain
risks of foreign investing. For example, foreign issuers are not
required to use generally-accepted accounting principles. If foreign
securities are not registered for sale in the U.S. under U.S.
securities laws, the issuer does not have to comply with the disclosure
requirements of our laws, which are generally more stringent than
foreign laws. The values of foreign securities investments will be
affected by other factors, including exchange control regulations or
currency blockage and possible expropriation or nationalization of
assets. There are risks of changes in foreign currency values. The
funds may purchase securities denominated in foreign currencies;
accordingly, a change in value of a foreign currency against the U.S.
dollar will result in a change in the U.S. dollar value of a fund's
securities denominated in that currency. The currency rate change will
also affect its income available for distribution. Although the funds'
investment income from foreign securities may be received in foreign
currencies, the funds will be required to absorb the cost of currency
fluctuations. If a fund suffers a loss on foreign currencies after it
has distributed its income during the year, the fund may find that it
has distributed more income than was available from actual investment
income. There may also be changes in governmental administration or
economic or monetary policy in the U.S. or abroad that can affect
foreign investing. In addition, it is generally more difficult to
obtain court judgments outside the United States if the fund has to sue
a foreign broker or issuer. Additional costs may be incurred because
foreign broker commissions are generally higher than U.S. rates, and
there are additional custodial costs associated with holding securities
abroad.
The funds may invest in U.S. dollar-denominated foreign securities
referred to as "Brady Bonds." These are debt obligations of foreign
entities that may be fixed-rate par bonds or floating-rate discount
bonds and are generally collateralized in full as to principal due at
maturity by U.S. Treasury zero coupon obligations that have the same
maturity as the Brady Bonds. In the event of a default with respect to
collateralized Brady Bonds as a result of which the payment obligations
of the issuer are accelerated, the securities held as collateral will
not be distributed to investors, nor will such obligations be sold and
the proceeds distributed. Instead, the collateral will be held by the
collateral agent to the scheduled maturity of the defaulted Brady
Bonds, which will continue to be outstanding, at which time the face
amount of the collateral will equal the principal payments which would
have then been due on the Brady Bonds in the normal course. In
addition, in light of the residual risk of Brady Bonds and, among other
factors, the history of defaults with respect to commercial bank loans
by public and private entities of countries issuing Brady Bonds,
investments in Brady Bonds are to be viewed as speculative.
Repurchase Agreements; Reverse Repurchase Agreements
The funds may enter into repurchase agreements as described below.
Repurchase agreements must be fully collateralized. However, if the
vendor fails to pay the resale price on the delivery date, the funds
may experience costs or delays in disposing of the collateral and may
experience losses to the extent that the proceeds from the sale of the
collateral are less than the repurchase price.
The Fund may enter into reverse repurchase agreements. Reverse
repurchase agreements involve the risk that the market value of the
securities retained in lieu of sale by the Fund may decline more than
or appreciate less than the securities the Fund has sold but is
obligated to repurchase. In the event the buyer of securities under a
reverse repurchase agreement files for bankruptcy or becomes insolvent,
such buyer or its trustee or receiver may receive an extension of time
to determine whether to enforce the Fund's obligation to repurchase the
securities and the Fund's use of the proceeds of the reverse repurchase
agreements may effectively be restricted pending such decisions.
Reverse repurchase agreements create leverage, a speculative factor,
and will be considered borrowings by the Fund.
Options, Futures and Interest Rate Swaps; Derivatives
The funds may purchase and sell certain kinds of futures contracts,
put and call options, forward contracts, foreign currency exchange
contracts and options on futures, broadly-based securities indices (as
to Strategic Income Fund) and currencies for hedging purposes.
Strategic Income Fund may also enter into interest rate swap
agreements. The foregoing instruments, referred to as "hedging
instruments," may be considered derivative investments. Strategic
Income Fund may also invest in certain derivative investments to
enhance income. Hedging instruments and derivative investments and
their special risks are described below in "Comparison Between
Strategic Income Fund and the Fund."
Borrowing for Leverage
Purchasing securities with borrowed funds is a speculative investment
method known as leveraging. There are risks associated with leveraging
purchases of portfolio securities by borrowing, including a possible
reduction of income and increased fluctuation of net asset value per
share. As described below, Strategic Income Fund is permitted to
borrow for leveraging purposes although it presently does not engage in
this practice. The Fund is not permitted to borrow for leveraging
purposes.
Non-Diversification
The Fund is a non-diversified investment company but intends to
continue to qualify as a "regulated investment company" for Federal
income tax purposes. This means generally that more than 5% of the
Fund's total assets may be invested in any one issuer, but only if at
the close of each fiscal quarter the aggregate amount of such holdings
does not exceed 50% of the value of its total assets and no more than
25% of the value of its total assets is invested in the securities of a
single issuer. As a non-diversified investment company, the Fund may
present greater risks than diversified companies because the Fund can
invest in a smaller number of issuers. The Strategic Trust is a
diversified investment company.
APPROVAL OF THE REORGANIZATION
(The Proposal)
Background
Oppenheimer Capital, in the course of a review of its business,
recently concluded that it should concentrate on its core investment
management business and not continue in the retail distribution of
mutual funds. Oppenheimer Capital is the parent of QVA. The retail
mutual fund market requires significant assets per fund and in the
aggregate for a mutual fund family to cover normal costs, significant
capital investment in new products and services, financing for Class B
and Class C shares and sales support. Consequently, it has become
increasingly difficult for a relatively small mutual fund operation
with assets under $10 billion, to compete. Sometime after this
determination was made, representatives of OMC approached Oppenheimer
Capital about acquiring certain of its mutual fund assets.
Representatives of OMC, Oppenheimer Capital, QVD and QVA held meetings
beginning in April 1995. Following the negotiation of the terms of an
acquisition agreement and related agreements, an acquisition agreement
(the "Acquisition Agreement") was executed by OMC, Oppenheimer Capital,
QVD and QVA on August 17, 1995.
The Reorganization described in this Proxy Statement and Prospectus is
one aspect of the overall Acquisition (as hereinafter defined)
contemplated by the Acquisition Agreement described below. The
consummation of the Acquisition is one condition, among others, to the
closing of the Reorganization. Accordingly, unless the parties
otherwise agree, the Reorganization may not be effected, despite
shareholder approval, if the Acquisition does not close. In such case,
the Fund will continue in existence and the Board will take such
further action as it, in its sole discretion, deems necessary or
advisable. The description of the Acquisition Agreement set forth
below is a summary only.
Acquisition Agreement
The Acquisition Agreement contemplates the sale to OMC of substantially
all the assets (the "Purchased Assets") of QVA, QVD and Oppenheimer
Capital (collectively, the "Companies") relating to twelve Quest For
Value mutual funds (the "Acquired Funds") and the assumption by OMC of
certain liabilities of the Companies with respect to the Acquired Funds
(the "Assumed Liabilities") (the foregoing, the "Acquisition"). The
Acquisition Agreement contemplates that six of the Acquired Funds
(including the Fund) will be reorganized with certain mutual funds
currently advised by OMC (the "Reorganized Funds") and the remaining
six Acquired Funds will enter into investment advisory agreements with
OMC (or its designee) and OMC (or its designee) will thereupon enter
into subadvisory agreements with QVA for the benefit of each such fund
(the "Continuing Funds").
The purchase price for the Purchased Assets will be calculated
pursuant to the formula set forth on Exhibit B hereto. If the
Acquisition had been consummated on July 31, 1995, QVA estimates that
the purchase price (which includes the initial purchase payment payable
at the closing, the amount of certain assumed liabilities, certain
commissions and a deferred cash payment) would have been approximately
$50 million. The actual purchase price may be lower depending upon
changes in the net asset value of the Acquired Funds.
A condition to the obligation of OMC to close under the Acquisition
Agreement (the "Acquisition Closing") is the approval of the
reorganizations of the Reorganized Funds (including the Reorganization
described in this Proxy Statement and Prospectus) and the approval of
the investment advisory agreements and subadvisory agreements with the
Continuing Funds by shareholders that have in the aggregate at least
75% of the closing net assets of all Acquired Funds. A condition to
the obligation of the Companies to close under the Acquisition
Agreement (which condition has been satisfied) is that the directors or
trustees of the Continuing Funds and the Reorganized Funds have adopted
a resolution that for a period of three years after the Acquisition
Closing, at least 75% of the members of the board of each such fund
will not be "interested persons" (as defined in the 1940 Act of the
investment adviser or subadviser for such fund or "interested persons"
(as defined in the 1940 Act) of QVA, the predecessor investment adviser
as to the Continuing Funds. The Acquisition Agreement sets forth
certain other closing conditions.
The Companies have each agreed pursuant to an Agreement Not To
Compete, not to sponsor, manage or distribute any open- end or closed
end management investment company registered under the 1940 Act or any
similar law in Canada (except for certain identified investment
companies or types of investment companies) and not to sell, underwrite
or assist in the distribution of shares of any such funds for a period
to end on the earlier of (i) the third anniversary of the date on which
there is no effective sub-advisory agreement between OMC and QVA or
(ii) the eighth anniversary of the Acquisition Closing. OMC and the
Companies have agreed to indemnify the other for certain
liabilities.
Board Approval of the Reorganization
At its meeting on June 22, 1995, the Board, including the Independent
Directors, unanimously approved the Reorganization and the
Reorganization Agreement, determined that the Reorganization is in the
best interests of the Fund and its shareholders and resolved to
recommend that Fund shareholders vote for approval of the
Reorganization. The Board further determined that the Reorganization
would not result in dilution of the Fund's shareholders' interests.
In evaluating the Reorganization, the Board requested and reviewed,
with the assistance of independent legal counsel, materials furnished
by OMC and QVA. These materials included financial statements as well
as other written information regarding OMC and its personnel,
operations and financial condition. The Board also reviewed the same
type of information about QVA. Consideration was given to comparative
information concerning other mutual funds with similar investment
objectives to the Fund and Strategic Income Fund, including information
prepared by Lipper Analytical Services, Inc. and Management Practice
Inc. The Board also considered information with respect to the
relative historical performance of the funds. The Board also reviewed
and discussed the terms and provisions of the investment advisory
agreement pursuant to which OMC provides investment management services
to Strategic Income Fund and compared them to the existing management
arrangements for the Fund as well as the management arrangements of
other mutual funds, particularly with respect to the allocation of
various types of expenses, levels of fees and resulting expense ratios.
In reaching its determination, the Board gave careful consideration to
the following factors, among others: the Reorganization would afford
the shareholders of the Fund the capabilities and resources of OMC and
its affiliates in the area of investment management, distribution,
shareholder servicing and marketing; the ability of the shareholders of
the Fund to exchange their shares for a wider variety of portfolios
within the OppenheimerFunds family with differing investment objectives
than are currently available to shareholders of the Fund; the terms and
conditions of the Reorganization (including that there would be no
sales charge imposed in effecting the Reorganization, the
Reorganization was intended to qualify as a tax-free exchange and all
expenses of the Reorganization would be paid by QVA and OMC in the
amounts incurred by them and the respective fund); and the similarity
and differences of the investment objectives, policies and methods of
the Fund and Strategic Income Fund.
The Board also considered that the annual operating expenses of
Strategic Income Fund are lower, as a percentage of assets, and would
be lower on a pro forma basis after giving effect to the
Reorganization, than the operating expenses of the Fund, resulting in a
savings to Fund shareholders. For operating expenses and other expense
information relating to Strategic Income Fund and the Fund, see
"Comparative Fee Tables - Expenses of Strategic Income Fund and the
Fund; Pro Forma Expenses." Further, since Class B shares of Strategic
Income Fund automatically convert to Class A shares after six years, as
compared to a conversion of Class B shares of the Fund after eight
years, Class B Fund shareholders would benefit from the earlier
conversion to a Class that does not bear an annual asset-based sales
charge. In addition, the Board determined that the purchase, exchange
and redemption procedures and privileges provided by Strategic Income
Fund are comparable to those of the Fund and that Fund shareholders
currently exempt from payment of certain transaction-based sales
charges will continue to be so exempt as shareholders of Strategic
Income Fund.
The Strategic Trust Board of Trustees, including the trustees who
are not "interested persons" of Strategic Income Fund, unanimously
approved the Reorganization and the Reorganization Agreement and
determined that the Reorganization is in the best interests of
Strategic Income Fund and its shareholders. The Strategic Trust Board
further determined that the Reorganization would not result in dilution
of the Strategic Income Fund shareholders' interests. The Strategic
Trust Board considered, among other things, that an increase in
Strategic Income Fund's asset base as a result of the Reorganization
could benefit Strategic Income Fund shareholders due to the economies
of scale available to a larger fund.
The Reorganization
The following summary of the Reorganization Agreement is qualified
in its entirety by reference to the Reorganization Agreement (a copy of
which is set forth in full as Exhibit A to this Proxy Statement and
Prospectus). The Reorganization Agreement contemplates a
reorganization under which (i) substantially all of the assets of the
Fund would be transferred to Strategic Income Fund in exchange for
Class A, Class B and Class C shares of Strategic Income Fund and the
assumption by Strategic Income Fund of certain liabilities of the Fund,
(ii) the Class A, Class B and Class C shares would be distributed among
the respective Class A, Class B and Class C shareholders of the Fund in
liquidation of the Fund and (iii) the outstanding shares of the Fund
would be cancelled. Prior to the Closing Date (as hereinafter
defined), the Fund will endeavor to discharge all of its liabilities
and obligations when and as due prior to such date. Strategic Income
Fund will not assume any liabilities or obligations of the Fund other
than those reflected on an unaudited statement of assets and
liabilities of the Fund prepared as of the Valuation Date and that are
agreed to by Strategic Income Fund. In this regard, the Fund will
retain a cash reserve (the "Cash Reserve") in an amount which is deemed
sufficient in the discretion of the Board for the payment of (a) the
Fund's expenses of liquidation and (b) the Fund's liabilities, other
than those assumed by Strategic Income Fund. The number of full and
fractional Class A, Class B and Class C shares of Strategic Income Fund
to be issued to the Fund will be determined on the basis of Strategic
Income Fund's and the Fund's relative net asset values per Class A,
Class B and Class C shares, respectively, computed as of the close of
business of the New York Stock Exchange, Inc. on the business day
preceding the Closing Date (the "Valuation Date"). The Closing Date
for the Reorganization will be the date of the closing of the
Acquisition under the Acquisition Agreement (or such other day and time
as may be mutually agreed upon in writing).
OMC will utilize the valuation procedures set forth in the Prospectus
and Statement of Additional Information of Strategic Income Fund to
determine the value of the Fund's assets to be transferred to Strategic
Income Fund pursuant to the Reorganization, the value of Strategic
Income Fund's assets and the net asset value of each class of shares of
Strategic Income Fund. Such values will be computed by OMC as of the
Valuation Date in a manner consistent with its regular practice in
pricing Strategic Income Fund.
The Reorganization Agreement provides for coordination between the
funds as to their respective portfolios so that, on and after the
Closing Date, Strategic Income Fund will be in compliance with all of
its investment policies and restrictions. The Fund will recognize
capital gain or loss on any sales made pursuant to this condition. As
noted in "Tax Aspects of the Reorganization" below, if the Fund
realizes net gain from the sale of securities, such gain, to the extent
not offset by capital loss carry-forwards, will be distributed to
shareholders prior to the Closing Date and will be taxable to
shareholders as capital gain.
Contemporaneously with the closing, the Fund will be liquidated
(except for the Cash Reserve) and the Fund will distribute or cause to
be distributed pro rata to Fund shareholders of record as of the close
of business on the Valuation Date the full and fractional Strategic
Income Fund shares of each class received by the Fund. Upon such
liquidation all issued and outstanding shares of the Fund will be
cancelled on the Fund's books and Fund shareholders will have no
further rights as shareholders of the Fund. To assist the Fund in the
distribution of Strategic Income Fund shares, Strategic Income Fund
will, in accordance with a shareholder list supplied by the Fund, cause
Strategic Income Fund's transfer agent to credit and confirm an
appropriate number of shares of Strategic Income Fund to each
shareholder of the Fund. Certificates for shares of Strategic Income
Fund will be issued upon written request of a former shareholder of the
Fund but only for whole shares with fractional shares credited to the
name of the shareholder on the books of Strategic Income Fund. Former
shareholders of the Fund who wish certificates representing their
shares of Strategic Income Fund must, after receipt of their
confirmations, make a written request to Oppenheimer Shareholder
Services, P.O. Box 5270, Denver, Colorado 80217. Shareholders of the
Fund holding certificates representing their shares will not be
required to surrender their certificates to anyone in connection with
the Reorganization. After the Reorganization, however, it will be
necessary for such shareholders to surrender such certificates in order
to redeem, transfer, pledge or exchange any shares of Strategic Income
Fund. After the closing of the Reorganization, the Fund will not
conduct any business except in connection with the winding up of its
affairs. Under the Reorganization Agreement, within one year after the
Closing Date, the Fund shall: either (i) transfer any remaining amount
of the Cash Reserve to Strategic Income Fund, if such remaining amount
is not material (as defined below) or (ii) distribute such remaining
amount to the shareholders of the Fund who were such on the Valuation
Date. Such remaining amount shall be deemed to be material if the
amount to be distributed, after deducting the estimated expenses of the
distribution, equals or exceeds one cent per share of the number of
Fund shares outstanding on the Valuation Date.
The consummation of the Reorganization is subject to the conditions
set forth in the Reorganization Agreement, including, without
limitation, approval of the Reorganization by the Fund's shareholders.
Notwithstanding approval of the Fund's shareholders, the Reorganization
may be terminated at any time at or prior to the Closing Date (i) by
mutual written consent of the Corporation, on behalf of the Fund, and
Strategic Trust on behalf of Strategic Income Fund, (ii) by the
Corporation, on behalf of the Fund, or Strategic Trust on behalf of
Strategic Income Fund if the closing shall not have occurred on or
before February 29, 1996 or (iii) by the Corporation, on behalf of the
Fund, or Strategic Trust on behalf of Strategic Income Fund upon a
material breach by the other (and, with respect to Strategic Trust on
behalf of Strategic Income Fund, a material breach by QVA) of any
representation, warranty, covenant or agreement contained therein to be
performed on or prior to the Closing Date, if a condition therein
expressed to be precedent to the obligations of the terminating party
has not been met and it reasonably appears that it will not or cannot
be met prior to the Closing Date or the Acquisition is not consummated.
Termination of the Reorganization Agreement will terminate all
obligations of the parties thereto (other than a confidentiality
obligation of Strategic Income Fund with respect to information
relating to the Fund and the obligation of Strategic Income Fund to
return certain books and records to the Fund) without liability except,
in the event of a termination pursuant to (iii) above, any party in
breach (other than a breach due to the Fund's shareholders not
approving the Reorganization) of the Reorganization Agreement (or the
Acquisition Agreement, if applicable) will, upon demand, reimburse the
non-breaching party for all reasonable out-of-pocket fees and expenses
incurred in connection with the transactions contemplated by the
Reorganization Agreement.
Approval of the Reorganization will require the vote specified below in
"Information Concerning the Meeting - Record Date; Vote Required; Share
Information." If the Reorganization is not approved by the
shareholders of the Fund, the Directors of the Corporation will
consider other possible courses of action.
Tax Aspects of the Reorganization
At or prior to the Closing Date, the Fund will declare a dividend in an
amount large enough so that it will have declared a dividend of all of
its investment company taxable income and net capital gain, if any, for
the taxable period ending with its dissolution (determined without
regard to any deduction for dividends paid). Such dividends will be
included in the taxable income of the Fund's shareholders as ordinary
income and capital gain, respectively.
The exchange of the assets of the Fund for Class A, Class B and Class C
shares of Strategic Income Fund and the assumption by Strategic Income
Fund of certain liabilities of the Fund is intended to qualify for
Federal income tax purposes as a tax-free reorganization under Section
368(a)(1) of the Internal Revenue Code of 1986, as amended (the
"Code"). The Fund has represented to Price Waterhouse LLP, tax adviser
to the Fund, that, to the Fund's best knowledge, there is no plan or
intention by any Fund shareholder who owns 5% or more of the Fund's
outstanding shares, and, to the Fund's best knowledge, there is no plan
or intention on the part of the remaining Fund shareholders, to redeem,
sell, exchange or otherwise dispose of a number of Strategic Income
Fund shares received in the transaction that would reduce the Fund
shareholders' ownership of Strategic Income Fund Class A, Class B and
Class C shares to a number of shares having a value, as of the Closing
Date, of less than 50% of the value of all the formerly outstanding
Fund shares as of the same date. The Fund and Strategic Income Fund
have each further represented to Price Waterhouse LLP the fact that, as
of the Closing Date, the Fund and Strategic Income Fund will qualify as
regulated investment companies or will meet the diversification test of
Section 368(a)(2)(F)(ii) of the Code.
As a condition to the closing of the Reorganization, Strategic
Income Fund and the Fund will receive the opinion of Price Waterhouse
LLP to the effect that, based on the Reorganization Agreement, the
above representations and other representations as such firm shall
reasonably request, existing provisions of the Code, Treasury
Regulations issued thereunder, current Revenue Rulings, Revenue
Procedures and court decisions, for Federal income tax purposes:
1. The transfer of substantially all of the Fund's assets in
exchange for Class A, Class B and Class C shares of Strategic
Income Fund and the assumption by Strategic Income Fund of certain
identified liabilities of the Fund followed by the distribution by
the Fund of Class A, Class B and Class C shares of Strategic
Income Fund to the Fund shareholders in exchange for their Fund
shares will constitute a "reorganization" within the meaning of
Section 368(a)(1) of the Code and the Fund and Strategic Income
Fund will each be a "party to the reorganization" within the
meaning of Section 368(b) of the Code.
2. Pursuant to Section 1032 of the Code, no gain or loss will be
recognized by Strategic Income Fund upon the receipt of the assets
of the Fund solely in exchange for Class A, Class B and Class C
shares of Strategic Income Fund and the assumption by Strategic
Income Fund of the identified liabilities of the Fund.
3. Pursuant to Section 361(a) of the Code, no gain or loss will
be recognized by the Fund upon the transfer of the assets of the
Fund to Strategic Income Fund in exchange for Class A, Class B and
Class C shares of Strategic Income Fund and the assumption by
Strategic Income Fund of the identified liabilities of the Fund or
upon the distribution of Class A, Class B and Class C shares of
Strategic Income Fund to the Fund shareholders in exchange for the
Fund shares.
4. Pursuant to Section 354(a) of the Code, no gain or loss will
be recognized by the Fund shareholders upon the exchange of the
Fund shares for the Class A, Class B and Class C shares of
Strategic Income Fund.
5. Pursuant to Section 358 of the Code, the aggregate tax basis
for Class A, Class B and Class C shares of Strategic Income Fund
received by each Fund shareholder pursuant to the Reorganization
will be the same as the aggregate tax basis of the Fund shares
held by each such Fund shareholder immediately prior to the
Reorganization.
6. Pursuant to Section 1223 of the Code, the holding period of
Class A, Class B and Class C shares of Strategic Income Fund to be
received by each Fund shareholder will include the period during
which the Fund shares surrendered in exchange therefor were held
(provided such Fund shares were held as capital assets on the date
of the Reorganization).
7. Pursuant to Section 362(b) of the Code, the tax basis of the
assets of the Fund acquired by Strategic Income Fund will be the
same as the tax basis of such assets of the Fund immediately prior
to the Reorganization.
8. Pursuant to Section 1223 of the Code, the holding period of
the assets of the Fund in the hands of Strategic Income Fund will
include the period during which those assets were held by the
Fund.
9. Strategic Income Fund will succeed to and take into account
the items of the Fund described in Section 381(c) of the Code,
including the earnings and profits, or deficit in earnings and
profits, of the Fund as of the date of the transaction. Strategic
Income Fund will take these items into account subject to the
conditions and limitations specified in Sections 381, 382, 383 and
384 of the Code and applicable regulations thereunder.
Shareholders of the Fund should consult their tax advisors regarding
the effect, if any, of the Reorganization in light of their individual
circumstances. Since the foregoing discussion only relates to the
Federal income tax consequences of the Reorganization, shareholders of
the Fund should also consult their tax advisers as to state and local
tax consequences, if any, of the Reorganization.
Capitalization Table (Unaudited)
The table below sets forth the capitalization of Strategic Income Fund
and the Fund and indicates the pro forma combined capitalization as of
March 31, 1995 as if the Reorganization had occurred on that date.
Net Asset
Shares Value
Net Assets Outstanding Per Share
Oppenheimer Strategic
Income Fund*
Class A Shares $2,990,586,689 663,783,585 $4.51
Class B Shares 1,652,677,216 366,177,811 4.51
Global
Income Fund
Class A Shares 12,360,612 1,454,155 8.50
Class B Shares 1,118,930 131,603 8.50
Class C Shares 279,159 32,836 8.50
Pro Forma Combined
Fund**
Class A Shares 3,002,947,301 666,524,297 4.51
Class B Shares 1,653,796,146 366,425,911 4.51
Class C Shares 279,159 61,898 4.51
------------------
* Class C shares of Strategic Income Fund were first publicly offered
on May 26, 1995. Accordingly, information with respect to Class C
share of Strategic Income Fund is not reflected in this part of the
table above.
**Reflects issuance of 2,740,712 Class A shares, 248,100 Class B shares
and 61,898 Class C shares of Strategic Income Fund in a tax-free
exchange for the net assets of the Fund, aggregating $ 12,360,612, $
1,118,930 and $ 279,159 for Class A, Class B and Class C shares,
respectively, of the Fund.
The pro forma ratio of expenses to average annual net assets of the
combined fund at March 31, 1995 would have been 0.94%, 1.69% and 1.69%
of Class A, Class B and Class C shares, respectively.
COMPARISON BETWEEN STRATEGIC INCOME FUND AND THE FUND
Comparative information about Strategic Income Fund and the Fund is
presented below. More complete information about Strategic Income Fund
and the Fund is set forth in their respective Prospectuses (which, as
to Strategic Income Fund, accompanies this Proxy Statement and
Prospectus and is incorporated herein by reference) and Statements of
Additional Information. To obtain copies, see "Miscellaneous - Public
Information."
Comparison of Investment Objectives, Policies and Restrictions
Strategic Income Fund seeks a high level of current income by investing
mainly in debt securities and by writing covered call options on them.
Strategic Income Fund does not invest with the objective of seeking
capital appreciation. The Fund seeks investment income as its primary
objective, with capital appreciation as a secondary objective, through
investment in a non-diversified portfolio consisting primarily of debt
securities. In seeking their investment objectives, Strategic Income
Fund and the Fund employ the investment policies as described in detail
below.
Strategic Income Fund. Strategic Income Fund seeks its investment
objective by investing principally in three market sectors: (1) debt
securities of foreign governments and companies, (2) U.S. Government
Securities, and (3) lower-rated, high-yield debt securities of U.S.
companies. Under normal market conditions Strategic Income Fund will
invest in each of these three sectors, but from time to time OMC will
adjust the amounts Strategic Income Fund invests in each sector.
By investing in all three sectors, Strategic Income Fund seeks to
reduce the volatility of fluctuations in its net asset value per share,
because the overall securities price and interest rate movements in
each of the different sectors are not necessarily correlated with each
other. Changes in one sector may be offset by changes in another
sector that moves in a different direction. Therefore, this strategy
may help reduce some of the risks from negative market movements and
interest rate changes in any one sector. However, Strategic Income
Fund may invest up to 100% of its assets in any one sector if OMC
believes that in doing so Strategic Income Fund can achieve its
objective without undue risk to Strategic Income Fund's assets.
When investing Strategic Income Fund's assets, OMC considers many
factors, including general economic conditions in the U.S. and abroad,
prevailing interest rates, and the relative yields of U.S. and foreign
securities. While Strategic Income Fund may seek to earn income by
writing covered call options, market price movements may make it
disadvantageous to do so. Strategic Income Fund may also try to hedge
against losses by using hedging strategies described below. When market
conditions are unstable, Strategic Income Fund may invest substantial
amounts of its assets in money market instruments for defensive
purposes. These investments include U.S. Government Securities, bank
obligations, commercial paper, corporate obligations and other
instruments approved by the Board of Trustees of Strategic Trust.
In seeking high current income, Strategic Income Fund may invest in
higher-yielding, lower-rated debt securities, commonly known as "junk
bonds." There is no restriction on the amount of Strategic Income
Fund's assets that could be invested in these types of securities.
Lower-rated debt securities are those rated below "investment grade,"
such as debt securities that have a rating of "Baa" or lower by Moody's
Investors Service, Inc. ("Moody's") or "BBB" or lower by Standard &
Poor's Corporation ("S&P"). These securities may be rated as low as "C"
or "D" or may be in default at time of purchase. OMC does not rely
solely on ratings of securities by rating agencies when selecting
investments for Strategic Income Fund, but evaluates other economic and
business factors as well. Strategic Income Fund may invest in unrated
securities that OMC believes offer yields and risks comparable to rated
securities.
As of June 30, 1995, Strategic Income Fund's portfolio included
corporate bonds in the following S&P rating categories or if unrated,
determined by OMC to be comparable to the category indicated (the
amounts shown are dollar-weighted average values of the bonds in each
category measured as a percentage of Strategic Income Fund's total
assets): AAA, 0%; AA, 0%; A, 0.3%; BBB, 1.5%; BB, 3.9%; B, 18.3%; CCC,
3.4%; CC, 0%; C, 0%; D, 0.4%; unrated (by S&P or Moody's), 5.1%. The
Appendix to the Prospectus of Strategic Income Fund describes the
rating categories.
Strategic Income Fund may invest in debt securities issued or
guaranteed by foreign companies, "supranational" entities such as the
World Bank, and foreign governments or their agencies. These foreign
securities may include debt obligations such as government bonds,
debentures issued by companies, as well as notes. Strategic Income
Fund will not invest more than 25% of its total assets in government
securities of any one foreign country. Otherwise, Strategic Income Fund
is not restricted in the amount of its assets it may invest in foreign
countries or in which countries. Strategic Income Fund may buy or sell
foreign currencies and foreign currency forward contracts (agreements
to exchange one currency for another at a future date) to hedge
currency risks and to facilitate transactions in foreign investments.
Although currency forward contracts can be used to protect Strategic
Income Fund from adverse exchange rate changes, there is a risk of loss
if OMC fails to predict currency exchange movements correctly.
Strategic Income Fund may also invest in U.S. Government Securities
(including U.S. Government Securities that are issued or guaranteed by
federal agencies or government-sponsored entities but are not supported
by the full faith and credit of the U.S. Government, mortgage-backed
U.S. Government Securities and zero coupon Treasury securities), CMOs
and stripped mortgage-backed securities of CMOs.
Strategic Income Fund may also enter into "forward roll" transactions
with banks and dealers with respect to the mortgage-related securities
in which it can invest. These require Strategic Income Fund to secure
its obligation in the transaction by segregating assets with its
custodian bank equal in amount to its obligation under the roll.
Strategic Income Fund may write (that is, sell) covered call options on
debt securities to raise cash for income to distribute to shareholders
or for defensive reasons. When Strategic Income Fund writes a call, it
receives cash (called a premium). The call gives the buyer the ability
to buy the investment on which the call was written from Strategic
Income Fund at the call price during the period in which the call may
be exercised. If the value of the investment does not rise above the
call price, it is likely that the call will lapse without being
exercised, while Strategic Income Fund keeps the cash premium (and the
investment).
In addition to the foregoing, Strategic Income Fund may invest in debt
securities and dividend-paying common stocks issued by U.S. companies,
including bonds, debentures, notes, preferred stocks, zero coupon
securities, participation interests, asset-backed securities and
sinking fund and callable bonds. Strategic Income Fund may purchase
these securities in public offerings or through private placements.
Strategic Income Fund has no limitations on the maturity,
capitalization of the issuer or credit rating of the domestic and
foreign debt securities in which it invests, although it is expected
that most issuers will have total assets in excess of $100 million.
The Fund. The Fund seeks its investment objective by investing
primarily in investment-grade debt securities of foreign and domestic
corporations and foreign governments, or their agencies and
instrumentalities, and in U.S. Government Securities. Generally the
debt securities in which the Fund will invest will be those believed by
QVA to offer potential for capital appreciation in addition to
investment income, because of such factors as anticipated changes in
the comparative level of interest rates in different countries or
anticipated improvements in the issuer's credit rating. Under normal
circumstances the Fund will invest at least 65% of its total assets in
the securities of issuers located in not less than three different
countries, one of which may be the United States. The Fund may also
invest in preferred stocks, securities convertible into common stock
and short-term money market instruments. Investments in preferred
stocks and securities convertible into common stock will be limited to
10% of the total assets of the Fund at the time of purchase. The Fund
may invest in lower-quality high yielding debt securities (also known
as "junk bonds") of foreign issuers which may be located in countries
with "emerging markets". The Fund's current intention is to limit its
investment in these securities to up to 35% of its net assets. QVA
anticipates that the average dollar weighted maturity of the Fund will
be between 5 and 10 years.
Special Investment Methods
Strategic Income Fund and the Fund may use the special investment
methods summarized below.
Loans of Portfolio Securities. Both Strategic Income Fund and the Fund
may lend their portfolio securities to brokers, dealers and other
financial institutions, subject to certain conditions. As to Strategic
Income Fund, these loans are limited to not more than 25% of Strategic
Income Fund's total assets although it is not expected that such loans
will exceed 5% of the value of the total assets of Strategic Income
Fund. The Fund may commit up to 33-1/3% of the value of its total
assets to such loans, but has not entered into any to date.
Repurchase Agreements; Reverse Repurchase Agreements. Both Strategic
Income Fund and the Fund may enter into repurchase agreements. In a
repurchase transaction, the fund buys a security and simultaneously
sells it to the vendor for delivery at a future date. There is no
limit on the amount of either fund's net assets that may be subject to
repurchase agreements of seven days or less. Strategic Income Fund and
the Fund will not enter into a repurchase agreement that will cause
more than 10% (as to Strategic Income Fund, which limit could increase
to 15%) or 15% (as to the Fund) of its net assets to be subject to
repurchase agreements having a maturity beyond seven days. The Fund
may also enter into reverse repurchase agreements. Under a reverse
repurchase agreement the Fund sells securities and agrees to repurchase
them at a mutually agreed to date and price.
Hedging. Strategic Income Fund may purchase and sell: futures
contracts that relate to broadly-based securities indices and interest
rates; foreign currency exchange contracts ("forward contracts"); and
certain put and call options. Strategic Income Fund may also enter
into interest rate swap agreements. The Fund may purchase or sell
financial futures contracts (including bond futures contracts and index
futures contracts), forward contracts, foreign currency futures
contracts, options on futures contracts and options on currencies. The
Fund may also write covered call options; it is also authorized to
write covered put options but does not presently intend to do so.
These are all referred to as "hedging instruments." The funds do not
use hedging instruments for speculative purposes. Strategic Income
Fund may only purchase a call or put if, after such purchase, the value
of all call and put options held by Strategic Income Fund would not
exceed 5% of Strategic Income Fund's total assets. Other limits on the
use of hedging instruments are described in the funds' respective
Prospectuses and Statements of Additional Information.
Hedging instruments may be used to manage a fund's 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; to try to manage its
exposure to changing interest rates; to hedge the fund's portfolio
against price fluctuations; and to increase the fund's exposure to the
securities market. Forward contracts are used to try to manage foreign
currency risks on foreign investments. Foreign currency options are
used to try to protect against declines in the dollar value of foreign
securities a fund owns, or to protect against an increase in the dollar
cost of buying foreign securities.
The use of hedging instruments requires special skills and knowledge
of investment techniques that are different than those required for
normal portfolio management. If the investment adviser to the fund
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. Strategic Income Fund could be obligated to pay
more under its swap agreements than it receives under them, as a result
of interest rate changes. Interest rate swaps are subject to credit
risks (if the other party fails to meet its obligations) and also to
interest rate risks.
Derivative Investments. Strategic Income Fund can invest in a number
of different kinds of "derivative investments." Some types of
derivatives may be used for hedging purposes, as described above.
Strategic Income Fund may invest in others because they offer the
potential for increased income and principal value. Strategic Income
Fund may write covered call options to provide income for liquidity
purposes, defensive reasons, or to raise cash to distribute to
shareholders. In general, a "derivative investment" is a specially-
designed investment the performance of which is linked to the
performance of another investment or security, such as an option,
future, index, currency or commodity. In the broadest sense,
derivative investments include the hedging instruments in which the
funds may invest. Other types of derivatives in which Strategic Income
Fund may invest include index-linked or commodity-linked notes, debt
exchangeable for common stock, equity-linked debt securities and
currency indexed securities.
One risk of investing in derivative investments is that the company
issuing the instrument might not pay the amount due on the maturity of
the instrument. There is also the risk that the underlying investment
or security might not perform the way the investment adviser expected
it to perform. The performance of derivative investments may also be
influenced by interest rate changes in the U.S. and abroad. All of
these risks can mean that Strategic Income Fund will realize less
income than expected from its investments, or that it can lose part of
the value of its investments, which will affect Strategic Income Fund's
share price.
Borrowing for Leverage. Strategic Income Fund is permitted to
increase its ownership of securities by borrowing up to 50% of the
value of its net assets from banks on an unsecured basis and investing
the borrowed funds (on which Strategic Income Fund will pay interest),
subject to the 300% asset coverage requirement of the 1940 Act.
Purchasing securities with borrowed funds is a speculative investment
method known as leveraging. There are risks associated with leveraging
purchases of portfolio securities by borrowing, including a possible
reduction of income and increased fluctuation of net asset value per
share. To date, Strategic Income Fund has not borrowed money for
investing. The Fund may not borrow for leveraging purposes. Any
borrowings of money by the Fund may not exceed 33-1/3% of the value of
its total assets, and additional investments may not be made while such
borrowings exceed 5% of total assets.
Illiquid and Restricted Securities. Under the policies and procedures
established by Strategic Trust's Board of Trustees, OMC determines the
liquidity of certain of Strategic Income Fund's investments.
Investments may be illiquid because of the absence of an active trading
market, making it difficult to value them or dispose of them promptly
at an acceptable price. A restricted security is one that has a
contractual restriction on its resale or which cannot be sold publicly
until it is registered under the Securities Act of 1933. Strategic
Income Fund will not invest more than 10% of its net assets in illiquid
or restricted securities (that limit may increase to 15% if certain
state laws are changed or shares are no longer sold in those states).
Strategic Income Fund's percentage limitation on these investments does
not apply to certain restricted securities that are eligible for resale
to qualified institutional purchasers. As a matter of fundamental
policy the Fund may not invest more than 15% of its total assets in
illiquid securities including securities for which there is no readily
available market, repurchase agreement which have a maturity of longer
than seven days, securities subject to legal or contractual
restrictions and certain over-the-counter options.
Warrants and Rights. Warrants basically are options to purchase stock
at set prices that are valid for a limited period of time. Rights are
options to purchase securities, normally granted to current holders by
the issuer. The funds may invest up to 5% of their respective total
assets in warrants or rights. That 5% does not apply to warrants and
rights Strategic Income Fund acquired as part of units with other
securities or that were attached to other securities. No more than 2%
of Strategic Income Fund's assets may be invested in warrants that are
not listed on the New York or American Stock Exchanges.
"When-Issued" and Delayed Delivery Transactions. The funds may
purchase securities on a "when-issued" basis and may purchase or sell
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. There may be a risk of
loss to the fund if the value of the security declines prior to the
settlement date.
Investment Restrictions
Both Strategic Income Fund and Fund have certain investment
restrictions that, together with their respective investment
objectives, are fundamental policies changeable only by shareholder
approval. The investment restrictions of Strategic Income Fund and the
Fund are substantially the same except as set forth below.
Strategic Income Fund cannot (1) as to 75% of its total assets, buy
securities issued or guaranteed by a single issuer if, as a result,
Strategic Income Fund would have invested more than 5% of its assets in
the securities of that issuer, or would own more than 10% of that
issuer's voting securities (purchases of U.S. Government Securities are
not restricted by this policy); (2) make loans except by purchasing
debt obligations in accordance with its investment objectives and
policies, or by entering into repurchase agreements or as described in
"Loans of Portfolio Securities" in its Prospectus; and (3) buy
securities of an issuer which, together with any predecessor, has been
in operation for less than three years if, as a result, the aggregate
of such investments would exceed 5% of the value of the Fund's total
assets. The Fund has an investment restriction similar to the
foregoing "(3)", but it is not fundamental.
The Fund cannot: (1) invest in securities of other investment companies
except in connection with a merger, consolidation, reorganization or
acquisition of assets, (2) invest more than 15% of its total assets in
illiquid securities including securities for which there is no readily
available market, repurchase agreements which have a maturity of longer
than seven days, securities subject to legal or contractual
restrictions and certain over-the counter options; (3) as to 75% of its
total assets, purchase more than 10% of the voting securities of any
one issuer; (4) 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; (5) invest more than 10% of its assets in
securities of other investment companies or more than 5% of its assets
in the securities of one investment company or more 3% of the
outstanding voting securities of such company,provided that the
foregoing restrictions on investment company purchases and holding are
inapplicable to acquisition in connection with a merger, consolidation,
reorganization or acquisition of assets (except that the Fund may in
the future invest all of its investable assets in an open end
management invest company with substantially the same investment
objective and restrictions as the Fund); (6) pledge its assets or
assign or otherwise encumber its assets in excess of 33 1/3% 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
Fund's Prospectus; and (7) make short sales of securities (including
"short sales against-the-box").
Strategic Income Fund Performance
During Strategic Income Fund's fiscal year ended September 30, 1994,
Strategic Income Fund attempted to pay dividends on its Class A shares
at a constant level. That was done keeping in mind the amount of net
investment income and other distributable income available from
Strategic Income Fund's portfolio investments. However, the amount of
each dividend can change from time to time (or there might not be a
dividend at all on any class) depending on market conditions, Strategic
Income Fund's expenses, and the composition of Strategic Income Fund's
portfolio. Attempting to pay dividends at a constant level required
OMC to monitor Strategic Income Fund's income stream from its
investments and at times to select higher yielding securities
(appropriate to Strategic Income Fund's objectives and investment
restrictions) to maintain income at the required level. This practice
did not affect the net asset values of any class of shares. The Board
of Trustees of Strategic Trust may change or end Strategic Income
Fund's targeted dividend level for Class A shares at any time. There
is no targeted dividend level for Class B or Class C shares.
During the past fiscal year, Strategic Income Fund's performance was
affected by the rise in short-term interest rates, both in the U.S. and
abroad. As interest rates rose, the bond market declined. In response
to rising interest rates in the U.S., OMC reduced Strategic Income
Fund's exposure to long-term U.S. government bonds, as well as high
yield corporate bonds issued by companies whose earnings are sensitive
to interest rate changes. The proceeds from the sale of those
investments were used to increase Strategic Income Fund's investment in
higher- yielding, lower-rated corporate bonds issued by companies whose
earnings tend to rise in the middle-to-late stages of an economic
expansion. In addition, OMC used futures to hedge against interest
rate risk and thus avoided the sale of interest bearing securities. As
foreign interest rates rose and the dollar weakened against major
currencies, OMC reduced Strategic Income Fund's investments in Latin
America and other emerging markets which tend to perform poorly in a
rising interest rate environment. OMC increased Strategic Income
Fund's investments in foreign government bonds which OMC believed would
benefit from economic growth.
Included in the Prospectus for Strategic Income Fund, a copy of which
accompanies this Proxy Statement and Prospectus, in the section
entitled "Performance of the Fund" is a performance graph which depicts
the performance of a hypothetical $10,000 investment in Class A and
Class B shares of Strategic Income Fund from the inception of each
respective Class held through September 30, 1994, with all dividends
and capital gains distributions reinvested in additional shares. The
graph reflects the deduction of the 4.75% maximum initial sales charge
on Class A shares and the maximum applicable contingent deferred sales
charge for Class B shares. Class C shares were not publicly offered
during the fiscal year ended September 30, 1994. Accordingly, no
information is presented on Class C shares in the graph.
Because Strategic Income Fund invests in a variety of debt securities
in domestic and foreign markets, Strategic Income Fund's performance is
compared to the performance of The Lehman Brothers Aggregate Bond Index
and The Salomon Brothers World Government Bond Index. The Lehman
Brothers Aggregate Bond Index is a broad-based, unmanaged index of U.S.
corporate bond issues, U.S. government securities and mortgage-backed
securities widely regarded as a measure of the performance of the
domestic debt securities market. The Salomon Brothers World Government
Bond Index is an unmanaged index of fixed-rate bonds having a maturity
of one year or more, widely regarded as a benchmark of fixed income
performance on a world-wide basis. Index performance reflects the
reinvestment of income, but not capital gains or transaction costs, and
none of the data shows the effect of taxes. Also, Strategic Income
Fund's performance data reflects the effect of Strategic Income Fund
business and operating expenses. While index comparisons may be useful
to provide a benchmark for Strategic Income Fund's performance, it must
be noted that Strategic Income Fund's investments are not limited to
the securities in any one index. Moreover, the index data does not
reflect any assessment of the risk of the investments included in the
index.
Information on Fund performance is set forth in the Fund's Annual
Report as of November 30, 1994, which may be obtained without charge as
set forth in "Miscellaneous - Public Information."
Additional Comparative Information
General
For a discussion of the organization and operation of Strategic
Income Fund, including brokerage practices, see "Investment Objective
and Policies" and "How the Fund is Managed" in Strategic Income Fund's
current Prospectus and "Brokerage Policies of the Fund" in the
Strategic Income Fund Additional Statement. For a discussion of the
organization and operation of the Fund, including brokerage practices,
see "Investment Objectives of the Fund," "Investment Restrictions and
Techniques," "Investment Management Agreement" and "Additional
Information" in the Fund's current Prospectus.
Financial Information
For certain financial information about Strategic Income Fund and the
Fund, see (as to Strategic Income Fund) "Financial Highlights" and
"Performance of the Fund" in the Strategic Income Fund current
Prospectus and (as to the Fund) "Financial Highlights" in the Fund
current Prospectus.
Management of Strategic Income Fund and the Fund
For information about the management of Strategic Income Fund and the
Fund, including their respective Boards of Trustees, investment
advisers, portfolio managers and distributors, see (as to Strategic
Income Fund) "Expenses" and "How the Fund is Managed" in the Strategic
Income Fund current Prospectus and Strategic Income Fund Additional
Statement and (as to the Fund) "Investment Management Agreement,"
Distribution Plan," "Portfolio Transactions and Turnover" and
"Additional Information" in the Fund current Prospectus.
Description of Shares of Strategic Income Fund and the Fund
The Fund is a series of the Corporation, a company organized as a
Maryland corporation, and is subject to the Maryland Corporation code
and its governing documents, its Articles of Incorporation and by-laws.
Strategic Income Fund, which is organized as a series of Strategic
Trust, a Massachusetts business trust, is governed principally by its
governing documents, its Declaration of Trust and by-laws. The
shareholders of each have certain rights to call a meeting of
shareholders; see the Strategic Income Fund Additional Statement and
the Fund Additional Statement. Amendments to the Declaration of Trust
require the approval of a "majority of the outstanding voting
securities" (as defined in the 1940 Act) of Strategic Trust whereas
amendments to the Corporation's Articles of Incorporation must be
approved by a majority of the shares outstanding and entitled to vote.
Under certain circumstances, a shareholder of Strategic Income Fund may
be held personally liable as a partner for the obligations of Strategic
Income Fund, and under the Declaration of Trust for Strategic Trust,
such a shareholder is entitled to indemnification rights by Strategic
Income Fund; the risk of a shareholder incurring any such loss is
limited to the remote circumstances in which Strategic Income Fund is
unable to meet its obligations.
Each share of Strategic Income Fund represents an interest in
Strategic Income Fund proportionately equal to the interest of each
other share of the same class and entitles the holder to one vote per
share (and a fractional vote for a fractional share) on matters
submitted to a vote at shareholder meetings. Shares of Strategic
Income Fund and of Strategic Trust's other series vote together in the
aggregate on certain matters at shareholder meetings, such as the
election of Trustees and ratification of appointment of auditors.
Shareholders of a particular series or class vote separately on
proposals which affect that series or class, and shareholders of a
series or class which are not affected by that matter are not entitled
to vote on the proposal. Strategic Income Fund is not required to
hold, and does not plan to hold, regular annual meetings of
shareholders. Shareholders of Strategic Income Fund have the right,
under certain circumstances, to remove a Trustee and will be assisted
in communicating with other shareholders for such purpose.
Strategic Income Fund is authorized to issue an unlimited number of
shares of beneficial interest. Shares are freely transferrable and do
not have cumulative voting rights or preemptive or subscription rights.
Strategic Income Fund is governed by a Board of Trustees that has the
power, without shareholder approval, to establish and designate one or
more series and to divide unissued shares into two or more classes.
The Board of Trustees has established three classes of shares, Class A,
Class B and Class C. Each class invests 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.
Under certain circumstances, a shareholder of Strategic Income Fund may
be held personally liable as a partner for the obligations of Strategic
Income Fund, and under the Declaration of Trust for Strategic Income
Fund, such a shareholder is entitled to indemnification rights by
Strategic Income Fund; the risk of a shareholder incurring any such
loss is limited to the remote circumstances in which Strategic Income
Fund is unable to meet its obligations.
For further information about the shares of Strategic Income Fund,
and for a description of the classes of shares of Strategic Income Fund
and the Fund, including voting rights, restrictions on disposition and
potential liability associated with their ownership, see (as to
Strategic Income Fund) "How the Fund is Managed" in the Strategic
Income Fund current Prospectus and Strategic Income Fund Additional
Statement and (as to the Fund) "Additional Information" in the Fund
current Prospectus.
Dividends, Distributions and Taxes
Both funds declare dividends from net investment income on each regular
business day, distribute dividends monthly and distribute net long-term
capital gains annually. Strategic Income Fund distributes net short-
term capital gains annually and the Fund distributes such gains
quarterly. For a discussion of the policies of Strategic Income Fund
and the Fund with respect to dividends and distributions, and a
discussion of the tax consequences of an investment in Strategic Income
Fund and the Fund, see (as to Strategic Income Fund) "Dividends,
Capital Gains and Taxes" in the Strategic Income Fund current
Prospectus and (as to the Fund) "Dividends and Distributions" and "Tax
Status" in the Fund current Prospectus.
Purchases, Redemptions and Exchanges of Shares
For a discussion of how shares of Strategic Income Fund and the Fund
may be purchased, redeemed and exchanged, see (as to Strategic Income
Fund) "How to Buy Shares," "How to Sell Shares," "Exchanges of Shares,"
"Special Investor Services," "Service Plan for Class A Shares,"
"Distribution and Service Plan for Class B Shares" and "Distribution
and Service Plan for Class C Shares" in the Strategic Income Fund
current Prospectus; and see "How to Buy Shares," "How to Redeem
Shares," "Exchanging Shares" and "Additional Information" in the Fund
current Prospectus.
Shareholder Inquiries
For a description of how shareholder inquiries should be made, see (as
to Strategic Income Fund) "How the Fund is Managed" in the Strategic
Income Fund current Prospectus and (as to the Fund) "Additional
Information" in the Fund current Prospectus.
INFORMATION CONCERNING THE MEETING
The Meeting
The Meeting will be held at One World Financial Center, New York, New
York 10281 on the 40th Floor at 10:00 A.M., New York time, on November
16, 1995 and any adjournments thereof. At the Meeting, shareholders of
the Fund will be asked to consider and vote upon approval of the
Reorganization Agreement, and the transactions contemplated thereby,
including the transfer of substantially all the assets of the Fund in
exchange for Class A, Class B and Class C shares of Strategic Income
Fund and the assumption by Strategic Income Fund of certain liabilities
of the Fund, the distribution of such shares to the shareholders of the
Fund in liquidation of the Fund and the cancellation of the outstanding
shares of the Fund.
Record Date; Vote Required; Share Information
The Board has fixed the close of business on September 25, 1995 as the
record date (the "Record Date") for the determination of shareholders
entitled to notice of, and to vote at, the Meeting. The affirmative
vote of a majority of the shares of the Fund outstanding and entitled
to vote at the Meeting is required for approval of the Proposal. Each
shareholder will be entitled to one vote for each share and a
fractional vote for each fractional share held of record at the close
of business on the Record Date. For purposes of voting with respect to
the Reorganization, the Class A, Class B and Class C shares of the Fund
shall vote together as a single class. Only shareholders of the Fund
will vote on the Reorganization. The vote of shareholders of Strategic
Income Fund is not being solicited to approve the Reorganization
Agreement.
At the close of business on the Record Date, there were approximately
_____________ Class A, ___________ Class B and _____________ Class C
shares of the Fund issued and outstanding. The presence in person or
by proxy of the holders of a majority of such shares constitutes a
quorum for the transaction of business at the Meeting. As of the close
of business on the Record Date, there were approximately _____________
Class A, _______________ Class B and ______________ Class C shares of
Strategic Income Fund issued and outstanding. (To the knowledge of the
Fund, as of the Record Date, no person owned of record or beneficially
5% or more of the outstanding Class A, Class B or Class C Fund shares
or 5% or more of the outstanding shares of the Fund.) To the knowledge
of Strategic Trust as of the Record Date, no person owned of record or
beneficially 5% or more of the outstanding Class A, Class B or Class C
Strategic Income Fund shares or 5% or more of the outstanding shares of
Strategic Income Fund. (As of the Record Date, the officers and
Trustees of Strategic Income Fund, and the officers and Trustees of the
Trust, beneficially owned as a group less than 1% of the outstanding
shares of each class of Strategic Income Fund and the Fund,
respectively, and of Strategic Income Fund and the Fund, respectively.)
In the event a quorum does not exist on the date originally
scheduled for the Meeting, or, subject to approval of the Board, for
other reasons, one or more adjournments of the Meeting may be sought by
the Board. Any adjournment would require a vote in favor of the
adjournment by the holders of a majority of the shares present at the
Meeting (or any adjournment thereof) in person or by proxy. The
persons named as proxies will vote all shares represented by proxies
which they are required to vote in favor of the Proposal, in favor of
an adjournment, and will vote all shares which they are required to
vote against the Proposal, against an adjournment.
Proxies
The enclosed form of proxy, if properly executed and returned, will
be voted (or counted as an abstention or withheld from voting) in
accordance with the choices specified thereon, and will be included in
determining whether there is quorum to conduct the Meeting. If a
shareholder executes and returns a proxy but fails to indicate how the
votes should be cast, the proxy will be voted in favor of the
Proposal.
Shares owned of record by broker-dealers for the benefit of their
customers ("street account shares") will be voted by the broker-dealer
based on instructions received from its customers. If no instructions
are received, the broker-dealer may (if permitted under applicable
stock exchange rules), as record holder, vote such shares on the
Proposal in the same proportion as that broker-dealer votes street
account shares for which voting instructions were received in time to
be voted ("broken non-votes"). Abstentions and broker non-votes will
be counted as present for purposes of determining a quorum and will
have the same effect as a vote against the Proposal. The proxy may be
revoked at any time prior to the voting thereof by: (i) writing to the
Secretary of the Corporation at One World Financial Center, New York,
New York 10281; (ii) attending the Meeting and voting in person; or
(iii) signing and returning a new proxy (if returned and received in
time to be voted).
Costs of the Solicitation and the Reorganization
All expenses of this solicitation, including the cost of printing
and mailing this Proxy Statement and Prospectus, will be evenly
apportioned between QVA and OMC. Any documents such as existing
prospectuses or annual reports that are included in that mailing will
be a cost of the fund issuing the document. In addition to the
solicitation of proxies by mail, proxies may be solicited by officers
and employees of QVA, the Corporation's investment adviser, or QVA's
affiliates, personally or by telephone or telegraph. In addition, QVA
has retained D.F. King & Co., Inc., 77 Water Street, New York, New York
10005 to assist in the solicitation of proxies primarily by contacting
shareholders by telephone and telegram for a fee not to exceed $____,
plus reasonable out-of-pocket expenses. The cost for such proxy
solicitor will be shared by QVA and OMC. D.F. King & Co., Inc. may
call shareholders to ask if they would be willing to have their votes
recorded by telephone. The telephone voting procedure is designed to
authenticate shareholders' identities, to allow shareholders to
authorize the voting of their shares in accordance with their
instructions and to confirm that their instructions have been recorded
properly. The Trust has been advised by counsel that these procedures
are consistent with the requirements of applicable law. Shareholders
voting by telephone would be asked for their social security number or
other identifying information and would be given an opportunity to
authorize proxies to vote their shares in accordance with their
instructions. To ensure that the shareholders' instructions have been
recorded correctly they will receive a confirmation of their
instructions in the mail. A special toll-free number will be available
in case the information contained in the confirmation is incorrect.
Although a shareholder's vote may be taken by telephone, each
shareholder will receive a copy of this Proxy Statement and Prospectus
and may vote by mail using the enclosed proxy card. Brokerage houses,
banks and other fiduciaries may be requested to forward soliciting
material to the beneficial owners of shares of the Fund and to obtain
authorization for the execution of proxies. For those services, if
any, they will be reimbursed by the Corporation for their reasonable
out-of-pocket expenses.
With respect to the Reorganization, OMC and QVA will share the cost of
the tax opinion. Any other out-of-pocket expenses of Strategic Income
Fund and the Fund associated with the Reorganization, including fund,
accounting and transfer agent expenses, will be borne by OMC and QVA,
respectively, in the amounts so incurred by the respective fund.
MISCELLANEOUS
Financial Information
The Reorganization will be accounted for by Strategic Income Fund in
its financial statements similar to a pooling without restatement.
Further financial information as to the Fund is contained in its
current Prospectus, which is available without charge upon written
request to Quest for Value Distributors, at P.O. Box 3567, Church
Street Station, New York, New York 10277-1296, and is incorporated
herein, and in its audited financial statements as of November 30, 1994
and unaudited financial statements as of May 31, 1995, which are
included in the Additional Statement. Financial information for
Strategic Income Fund is contained in its current Prospectus
accompanying this Proxy Statement and Prospectus and incorporated
herein, and in its audited financial statements as of December 31, 1994
which are included in the Additional Statement.
Public Information
Additional information about Strategic Income Fund and the Fund is
available, as applicable, in the following documents: (i) Strategic
Income Fund's Prospectus dated May 26, 1995, supplemented July 14,
1995, accompanying this Proxy Statement and Prospectus and incorporated
herein by reference; (ii) the Fund's Prospectus dated March 1, 1995 as
revised June 30, 1995, which may be obtained without charge by writing
to QVD at the address indicated above; (iii) Strategic Income Fund's
Annual Report as of September 30, 1994 and Semi-Annual Report as of
March 31, 1995, which may be obtained without charge by writing to OSS
at the address on the cover of this Proxy Statement and Prospectus; and
(iv) the Fund's Annual Report as of November 30, 1994, and Semi-Annual
Report as of May 31, 1995 which may be obtained without charge by
writing to QVD. All of the foregoing documents and the Statements of
Additional Information referred to below may be obtained by calling the
toll-free number for Strategic Income Fund or the Fund, as applicable,
on the cover of this Proxy Statement and Prospectus.
Additional information about the following matters is contained in
the Additional Statement, which is incorporated by reference and
includes the Strategic Income Fund Additional Statement, the Fund's
Prospectus dated March 1, 1995, as revised June 30, 1995, the Fund
Additional Statement and the Annual and Semi-Annual Reports described
in the preceding paragraph: the organization and operation of Strategic
Income Fund and the Fund; more information on investment policies,
practices and risks; information about Strategic Income Fund's and the
Fund's respective Boards of Trustees and their responsibilities; a
further description of the services provided by Strategic Income Fund's
and the Fund's investment adviser, distributor, and transfer and
shareholder servicing agent; dividend policies; tax matters; an
explanation of the method of determining the offering price of the
shares of Strategic Income Fund and the Fund; purchase, redemption and
exchange programs; and distribution arrangements.
Strategic Income Fund and the Fund are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended, and in
accordance therewith, file reports and other information with the SEC.
Proxy material, reports and other information about Strategic Income
Fund and the Fund which are of public record can be inspected and
copied at public reference facilities maintained by the SEC in
Washington, D.C. and certain of its regional offices, and copies of
such materials can be obtained at prescribed rates from the Public
Reference Branch, Office of Consumer Affairs and Information Services,
SEC, Washington, D.C. 20549.
OTHER BUSINESS
Management of the Fund knows of no business other than the matters
specified above which will be presented at the Meeting. Since matters
not known at the time of the solicitation may come before the Meeting,
the proxy as solicited confers discretionary authority with respect to
such matters as properly come before the Meeting, including any
adjournment or adjournments thereof, and it is the intention of the
persons named as attorneys-in-fact in the proxy to vote this proxy in
accordance with their judgment on such matters.
By Order of the Board of Directors
Deborah Kaback, Secretary
_______, 1995285
MERGE/231proxy.QF5
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as
of this ____ day of September, 1995, by and among Oppenheimer Strategic
Funds Trust, a Massachusetts business trust ("Oppenheimer Trust"), on
behalf of Oppenheimer Strategic Income Fund ("Oppenheimer Fund"), a
series of Oppenheimer Trust, Quest for Value Global Funds, Inc., a
Maryland corporation ("Quest For Value"), on behalf of Quest for Value
Global Income Fund ("Quest Portfolio"), a series of Quest For Value,
and Quest for Value Advisors ("Quest Advisors"), a Delaware general
partnership which serves as investment adviser to the Quest
Portfolio.
This Agreement is intended to be and is adopted as a "plan of
reorganization", within the meaning of Treas. Reg. Section 1.368-2(g),
for a reorganization under Section 368(a)(1) of the Internal Revenue
Code of 1986, as amended ("Code"). The reorganization
("Reorganization") will consist of the transfer to the Oppenheimer Fund
of substantially all of the assets of the Quest Portfolio in exchange
for the assumption by the Oppenheimer Fund of such stated liabilities
of the Quest Portfolio as shall be agreed to by the Oppenheimer Fund
and the issuance by the Oppenheimer Fund of shares of beneficial
interest of the Oppenheimer Fund ("shares") of Class A, Class B and
Class C to be distributed contemporaneously with the Closing Date (as
hereinafter defined), to the shareholders of the Quest Portfolio in
liquidation of the Quest Portfolio as provided herein, all upon the
terms and conditions hereinafter set forth in this Agreement. To the
extent necessary to effectuate the transactions contemplated by this
Agreement, or as the context of representations, warranties, covenants
and other agreements set forth in this Agreement may require, all
references in this Agreement to the Quest Portfolio shall include Quest
For Value and all references to the Oppenheimer Fund shall include the
Oppenheimer Trust.
In consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree
as follows:
1. THE REORGANIZATION AND LIQUIDATION OF THE QUEST PORTFOLIO
1.1 Subject to the terms and conditions herein set forth and on
the basis of the representations and warranties contained herein, on
the Closing Date, the Quest Portfolio will assign, deliver and
otherwise transfer its assets as set forth in paragraph 1.2 ("Quest
Portfolio Assets") to the Oppenheimer Fund, and the Oppenheimer Fund
will in exchange therefor assume Quest Portfolio's stated liabilities
on the Closing Date as set forth in paragraph 1.3 and deliver to the
Quest Portfolio the number of each class of shares of the Oppenheimer
Fund, including fractional Oppenheimer Fund shares, determined by
dividing the value of the Quest Portfolio Assets, net of such stated
liabilities, represented by shares of each class of the Quest Portfolio
computed in the manner and as of the time and date set forth in
paragraph 2.1, by the net asset value of each class of shares of the
Oppenheimer Fund, computed in the manner and as of the time and date
set forth in paragraph 2.2. Such transactions shall take place at the
closing provided for in paragraph 3.1 ("Closing").
1.2 (a) The Quest Portfolio Assets shall consist of all property
and rights, including without limitation all cash, cash equivalents,
securities and dividend and interest receivables owned by the Quest
Portfolio, and any deferred or prepaid expenses shown as an asset on
the Quest Portfolio's books on the Closing Date. Notwithstanding the
foregoing, the Quest Portfolio Assets shall exclude a cash reserve (the
"Cash Reserve") to be retained by the Quest Portfolio sufficient in its
discretion for the payment of the expenses of the Quest Portfolio's
dissolution and its liabilities, but not in excess of the amount
contemplated by paragraph 7.11.
(b) Promptly following the signing of this Agreement, the
Quest Portfolio will provide the Oppenheimer Fund with a list of its
assets as of the most reasonably practical date. On the Closing Date,
the Quest Portfolio will provide the Oppenheimer Fund with a list of
the Quest Portfolio Assets to be assigned, delivered and otherwise
transferred to the Oppenheimer Fund and of the stated liabilities to be
assumed by the Oppenheimer Fund pursuant to this Agreement.
1.3 The Quest Portfolio will endeavor to discharge all of its
liabilities and obligations when and as due prior to the Closing Date.
An unaudited Statement of Assets and Liabilities of the Quest Portfolio
will be prepared by the Treasurer of the Quest Portfolio, as of the
Valuation Date, which Statement shall be prepared in conformity with
generally accepted accounting principles consistently applied from the
prior audited period. On the Closing Date, the Oppenheimer Fund shall
assume such stated liabilities, expenses, costs, charges and reserves
set forth on such Statement as shall be agreed to by the Oppenheimer
Fund.
1.4 In order for the Quest Portfolio to comply with Section
852(a)(1) of the Code and to avoid having any investment company
taxable income or net capital gain (as defined in Section 852(b)(2) and
1222(11) of the Code, respectively) in the short taxable year ending
with its dissolution, the Quest Portfolio will on or before the Closing
Date (a) declare a dividend in an amount large enough so that it will
have declared dividends of all of its investment company taxable income
and net capital gain, if any, for such taxable year (determined without
regard to any deduction for dividends paid) and (b) distribute such
dividend.
1.5 Contemporaneously with the Closing, the Quest Portfolio will
be liquidated (except for the Cash Reserve) and the Quest Portfolio
will distribute or cause to be distributed the Oppenheimer Fund shares
of each class received by the Quest Portfolio pursuant to paragraph 1.1
pro rata to the appropriate shareholders of record of each class
determined as of the close of business on the Valuation Date as defined
in paragraph 2.1. Upon such liquidation all issued and outstanding
shares of the Quest Portfolio will be cancelled on the Quest
Portfolio's books and the Quest Portfolio Shareholders will have no
further rights as such Shareholders. The Oppenheimer Fund will not
issue certificates representing the shares of the Oppenheimer Fund in
connection with such exchange.
1.6 After the Closing, the Quest Portfolio shall not conduct any
business except in connection with the winding up of its affairs and
shall file, or make provision for filing of, all reports it is required
by law to file. After the Closing, Quest For Value may be dissolved
and deregistered as an investment company under the Investment Company
Act of 1940, as amended (the "1940 Act"). Within one year after the
Closing, the Quest Portfolio shall (a) either pay or make provision for
payment of all of its liabilities and taxes, and (b) either (i)
transfer any remaining amount of the Cash Reserve to the Oppenheimer
Fund, if such remaining amount (as reduced by the estimated cost of
distributing it to shareholders) is not material (as defined below) or
(ii) distribute such remaining amount to the shareholders of the Quest
Portfolio on the Valuation Date. Such remaining amount shall be deemed
to be material if the amount to be distributed, after deduction of the
estimated expenses of the distribution, equals or exceeds one cent per
share of the Quest Portfolio outstanding on the Valuation Date.
1.7 Copies of all books and records of or pertaining to the Quest
Portfolio, including those in connection with its obligations under the
1940 Act, the Code, State blue sky laws or otherwise in connection with
this Agreement, will promptly after the Closing be delivered to
officers of the Oppenheimer Fund or their designee. Quest For Value
and Quest Advisors shall have access to such books and records upon
reasonable request during normal business hours.
2. THE CALCULATION
2.1 The value of the Quest Portfolio Assets shall be the value of
such assets computed as of the close of business of the New York Stock
Exchange on the business day preceding the Closing Date (such time and
date being hereinafter called the "Valuation Date"), using the
valuation procedures set forth in the Oppenheimer Fund's then current
prospectus and statement of additional information.
2.2 The net asset value of each class of shares of the
Oppenheimer Fund shall be the net asset value per share computed on the
Valuation Date, using the valuation procedures set forth in the
Oppenheimer Fund's then current prospectus and statement of additional
information.
2.3 The number of each class of Oppenheimer Fund shares
(including fractional shares, if any) to be issued hereunder shall be
determined by dividing the value of the Quest Portfolio Assets, net of
the liabilities assumed by the Oppenheimer Fund pursuant to paragraph
1.1 attributable to that class, determined in accordance with paragraph
2.1, by the net asset value of an Oppenheimer Fund share of a similar
class determined in accordance with paragraph 2.2.
2.4 All computations of value shall be made by Oppenheimer
Management Corporation in accordance with its regular practice in
pricing the Oppenheimer Fund. The Oppenheimer Fund shall cause
Oppenheimer Management Corporation to deliver to the Quest Portfolio a
copy of its valuation report at the Closing.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date hereunder (the "Closing Date") shall be the
date of the closing of the acquisition contemplated by that certain
Acquisition Agreement (the "Acquisition Agreement") dated August 17,
1995 between Oppenheimer Management Corporation, Quest Advisors, Quest
for Value Distributors and Oppenheimer Capital (or such other day and
time as may be mutually agreed upon in writing). The Closing shall be
held in a location mutually agreeable to all the parties hereto. All
acts taking place at the Closing shall be deemed to take place
simultaneously as of 9:00 a.m. Eastern time on the Closing Date unless
otherwise agreed by the parties.
3.2 Portfolio securities held by the Quest Portfolio and
represented by a certificate or written instrument shall be presented
by it or on its behalf to The Bank of New York (the "Custodian"),
custodian for the Oppenheimer Fund, for examination no later than five
business days preceding the Valuation Date. Such portfolio securities
(together with any cash or other assets) shall be delivered by the
Quest Portfolio to the Custodian for the account of the Oppenheimer
Fund on or before the Closing Date in conformity with applicable
custody provisions under the 1940 Act and duly endorsed in proper form
for transfer in such condition as to constitute good delivery thereof
in accordance with the custom of brokers. The portfolio securities
shall be accompanied by all necessary federal and state stock transfer
stamps or a check for the appropriate purchase price of such stamps.
Portfolio securities and instruments deposited with a securities
depository, as defined in Rule 17f-4 under the 1940 Act, or with a
qualified foreign custodian under Rule 17f-5 of the 1940 Act shall be
delivered on or before the Closing Date by book entry in accordance
with customary practices of such depositories and the Custodian. The
cash delivered shall be in the form of a Federal Funds wire, payable to
the order of "The Bank of New York, Custodian for Oppenheimer Strategic
Income Fund."
3.3 In the event that on the Valuation Date (a) the New York
Stock Exchange shall be closed to trading or trading thereon shall be
restricted or (b) trading or the reporting of trading on such Exchange
or elsewhere shall be disrupted so that, in the judgment of both the
Oppenheimer Fund and the Quest Portfolio, accurate appraisal of the
value of the net assets of the Oppenheimer Fund or the Quest Portfolio
Assets is impracticable, the Valuation Date shall be postponed until
the first business day after the day when trading shall have been fully
resumed without restriction or disruption and reporting shall have been
restored.
3.4 The Quest Portfolio shall deliver to the Oppenheimer Fund or
its designee (a) at the Closing a list, certified by its Secretary, of
the names, addresses and taxpayer identification numbers of the Quest
Portfolio Shareholders (as hereinafter defined) and the number of each
class of outstanding Quest Portfolio shares owned by each such
shareholder, all as of the Valuation Date (the "Quest Portfolio
Shareholders"), and (b) as soon as practicable after the Closing all
original documentation (including Internal Revenue Service forms,
certificates, certifications and correspondence) relating to the Quest
Portfolio Shareholders' taxpayer identification numbers and their
liability for or exemption from back-up withholding. The Oppenheimer
Fund shall issue and deliver to Quest Portfolio a confirmation
evidencing delivery of each class of Oppenheimer Fund shares to be
credited on the Closing Date to the Quest Portfolio or provide evidence
reasonably satisfactory to the Quest Portfolio that such Oppenheimer
Fund shares have been credited to Quest Portfolio's account on the
books of the Oppenheimer Fund. At the Closing each party shall deliver
to the other such bills of sale, assignments, assumption agreements,
receipts or other documents as such other party or its counsel may
reasonably request to effect the consummation of the transactions
contemplated by the Agreement.
4. COVENANTS OF THE OPPENHEIMER FUND AND THE QUEST PORTFOLIO
4.1 The Oppenheimer Fund will operate its business in the
ordinary course between the date hereof and the Closing Date, it being
understood that such ordinary course of business will include customary
dividends and other distributions and such changes that have been
approved by shareholders of the Oppenheimer Fund at a shareholders
meeting prior to the Closing of which Quest Portfolio has been advised.
4.2 The Oppenheimer Fund will prepare and file with the
Securities and Exchange Commission ("Commission") a registration
statement on Form N-14 under the Securities Act of 1933, as amended
("1933 Act"), relating to the Oppenheimer Fund shares to be issued to
the Quest Portfolio Shareholders pursuant to the Reorganization
("Registration Statement"). The Quest Portfolio will provide the
Oppenheimer Fund with the Proxy Materials as described in paragraph 4.3
below, for inclusion in the Registration Statement. The Quest
Portfolio will further provide the Oppenheimer Fund with such other
information and documents relating to the Quest Portfolio as are
reasonably necessary for the preparation of the Registration Statement.
4.3 The Quest Portfolio will call a meeting of its shareholders
to consider and act upon the Reorganization, including this Agreement,
and take all other action necessary to obtain approval of the
transactions contemplated herein. The Quest Portfolio will prepare,
with such assistance from the Oppenheimer Fund as may be mutually
agreed to, the notice of meeting, form of proxy and proxy statement and
prospectus (collectively "Proxy Materials") to be used in connection
with such meeting provided that the Oppenheimer Fund will furnish the
Quest Portfolio with a current effective prospectus relating to the
Oppenheimer Fund shares for inclusion in the Proxy Materials and with
such other information relating to the Oppenheimer Fund as is
reasonably necessary for the preparation of the Proxy Materials.
4.4 Prior to the Closing Date, the Quest Portfolio will assist
the Oppenheimer Fund in obtaining such information as the Oppenheimer
Fund reasonably requests concerning the beneficial ownership of the
shares of the Quest Portfolio.
4.5 Subject to the provisions of this Agreement, the Oppenheimer
Fund and the Quest Portfolio will each take, or cause to be taken, all
action, and do or cause to be done, all things reasonably necessary,
proper or advisable to consummate and make effective the transactions
contemplated by this Agreement.
4.6 As promptly as practicable, but in any case within 60 days
after the Closing Date, the Quest Portfolio shall furnish or cause to
be furnished to the Oppenheimer Fund, such information as the
Oppenheimer Fund reasonably requests to enable the Oppenheimer Fund to
determine the Quest Portfolio's earnings and profits for federal income
tax purposes that will be carried over to the Oppenheimer Fund pursuant
to Section 381 of the Code.
4.7 As soon after the Closing Date as is reasonably practicable,
Quest for Value shall prepare and file all federal and other tax
returns and reports of the Quest Portfolio required by law to be filed
with respect to all periods ending through and after the Closing Date
but not theretofore filed.
4.8 The Oppenheimer Fund agrees to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933 Act, the
1940 Act and such of the state Blue Sky and securities laws as it may
deem appropriate in order to continue its operations after the Closing
Date.
4.9 Until the third anniversary of the Closing Date, the
Oppenheimer Fund will use its best efforts to assure that at least 75%
of the Trustees of the Oppenheimer Fund will not be "interested
persons" of the investment adviser for the Oppenheimer Fund or Quest
Advisors, as the term "interested person" is defined by the 1940 Act.
5. REPRESENTATIONS AND WARRANTIES
5.1 Oppenheimer Trust, on behalf of the Oppenheimer Fund
represents and warrants to the Quest Portfolio as follows:
(a) The Oppenheimer Fund is a series of Oppenheimer Trust, an
unincorporated voluntary association validly existing and in good
standing under the laws of the Commonwealth of Massachusetts, and has
the power and authority to own its properties and to carry on its
business as it is now conducted;
(b) Oppenheimer Trust is a duly registered, open-end, management
investment company, and its registration with the Commission as an
investment company under the 1940 Act and the registration of its
shares under the 1933 Act are in full force and effect;
(c) All of the issued and outstanding shares of each class of the
Oppenheimer Fund have been offered and sold in compliance in all
material respects with applicable registration requirements of the 1933
Act and state securities laws. Shares of each class of the Oppenheimer
Fund are registered in all jurisdictions in which they are required to
be registered under state securities laws and other laws, and said
registrations, including any periodic reports or supplemental filings,
are complete and current, all fees required to be paid have been paid,
and the Oppenheimer Fund is not subject to any stop order and is fully
qualified to sell its shares in each state in which its shares have
been registered;
(d) The current prospectus and statement of additional
information of the Oppenheimer Fund conform in all material respects to
the applicable requirements of the 1933 Act and the 1940 Act and the
regulations thereunder and do not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(e) At the Closing Date, the Oppenheimer Fund will have title to
the Oppenheimer Fund's assets, subject to no liens, security interests
or other encumbrances except those incurred in the ordinary course of
business.
(f) The Oppenheimer Fund is not, and the execution, delivery and
performance of this Agreement will not result, in a material violation
of any provision of the Oppenheimer Trust's Declaration of Trust or By-
Laws or of any material agreement, indenture, instrument, contract,
lease or other undertakings to which the Oppenheimer Fund is a party or
by which it is bound;
(g) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or, to its knowledge, threatened against the Oppenheimer Fund
or any of its properties or assets, except as previously disclosed in
writing to the Quest Portfolio. The Oppenheimer Fund knows of no facts
that might form the basis for the institution of such proceedings and
is not a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially and
adversely affects, or is reasonably likely to materially and adversely
affect, its business or its ability to consummate the transactions
contemplated herein;
(h) The Statement of Assets and Liabilities, Statement of
Operations and Statement of Changes in Net Assets as of September 30,
1994 of the Oppenheimer Fund examined by Deloitte & Touche LLP (a copy
of which has been furnished to the Quest Portfolio), fairly present, in
all material respects, the financial condition of the Oppenheimer Fund
as of such date in conformity with generally accepted accounting
principles consistently applied, and as of such date there were no
known liabilities of the Oppenheimer Fund (contingent or otherwise) not
disclosed therein that would be required in conformity with generally
accepted accounting principles to be disclosed therein;
(i) All issued and outstanding Oppenheimer Fund shares of each
class are, and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable with no personal liability
attaching to the ownership thereof except as otherwise set forth in the
current statement of additional information for the Oppenheimer Fund
under "How the Fund is Managed - Organization and History;"
(j) Oppenheimer Trust has the power to enter into this Agreement
and carry out its obligations hereunder. The execution, delivery and
performance of this Agreement have been duly authorized by all
necessary corporate action on the part of Oppenheimer Trust, and this
Agreement constitutes a valid and binding obligation of the Oppenheimer
Trust enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors rights and to general
equity principles;
(k) The Oppenheimer Fund shares of each class to be issued and
delivered to the Quest Portfolio, for the account of the Quest
Portfolio Shareholders, pursuant to the terms of this Agreement will at
the Closing Date have been duly authorized and, when so issued and
delivered, will be duly and validly issued Oppenheimer Fund shares, and
will be fully paid and non-assessable with no personal liability
attaching to the ownership thereof except as otherwise set forth in the
current statement of additional information for the Oppenheimer Fund
under "How the Fund is Managed - Organization and History," and no
shareholder of Oppenheimer Fund will have any preemptive right or right
of subscription or purchase in respect thereof;
(l) Since September 30, 1994, there has not been (i) any material
adverse change in the Oppenheimer Fund's financial condition, assets,
liabilities or business other than changes occurring in the ordinary
course of business, or that have been approved by shareholders of the
Oppenheimer Fund or (ii) any incurrence by the Oppenheimer Fund of any
indebtedness except indebtedness incurred in the ordinary course of
business. For the purposes of this subparagraph, neither a decline in
net asset value per share of any class of the Oppenheimer Fund nor the
redemption of Oppenheimer Fund shares by Oppenheimer Fund shareholders,
shall constitute a material adverse change;
(m) All material Federal and other tax returns and reports of the
Oppenheimer Fund required by law to have been filed, have been filed,
and all Federal and other taxes shown as due or required to be shown as
due on said returns and reports have been paid or provision has been
made for the payment thereof, and to the best of the Oppenheimer Fund's
knowledge no such return is currently under audit and no assessment has
been asserted with respect to such returns;
(n) For each taxable year of its operation, the Oppenheimer Fund
has met the requirements of Subchapter M of the Code for qualification
and treatment as a regulated investment company and neither the
execution or delivery of nor the performance of its obligations under
this Agreement will adversely affect, and no other events are
reasonably likely to occur which will adversely affect the ability of
the Oppenheimer Fund to continue to meet the requirements of Subchapter
M of the Code;
(o) Since September 30, 1994, there has been no change by the
Oppenheimer Fund in accounting methods, principles, or practices,
including those required by generally accepted accounting principles,
except as disclosed in writing to the Quest Portfolio or as set forth
in the financial statements of the Oppenheimer Fund covering such
period;
(p) The information furnished or to be furnished by the
Oppenheimer Fund for use in registration statements, proxy materials
and other documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete in all
material respects and shall comply in all material respects with
Federal securities and other laws and regulations applicable thereto;
and
(q) The Proxy Statement and Prospectus to be included in the
Registration Statement (only insofar as it relates to the Oppenheimer
Fund) will, on the effective date of the Registration Statement and on
the Closing Date, not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which such statements were made, not materially misleading.
5.2 Quest for Value, on behalf of the Quest Portfolio, represents and
warrants to the Oppenheimer Fund as follows:
(a) The Quest Portfolio is a series of Quest For Value, a
corporation validly existing and in good standing under the laws of
State of Maryland;
(b) Quest For Value is a duly registered, open-end, management
investment company, its registration with the Commission as an
investment company under the 1940 Act is in full force and effect and
its current Prospectus and Statement of Additional Information conform
in all material respects to the requirements of the 1933 Act and the
1940 Act and the regulations thereunder and do not include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
(c) All of the issued and outstanding shares of each class of the
Quest Portfolio have been offered and sold in compliance in all
material respects with applicable registration requirements of the 1933
Act and state securities laws. Shares of each class of the Quest
Portfolio are registered in all jurisdictions in which they are
required to be registered under state securities laws and other laws,
and said registrations, including any periodic reports or supplemental
filings, are complete and current, all fees required to be paid have
been paid, and the Quest Portfolio is not subject to any stop order and
is fully qualified to sell its shares in each state in which its shares
have been registered;
(d) The Quest Portfolio is not, and the execution, delivery
and performance of this Agreement will not result, in a violation of
(i) any provision of Quest For Value's Articles of Incorporation or By-
Laws or (ii) of any agreement, indenture, instrument, contract, lease
or other undertaking to which the Quest Portfolio is a party or by
which it is bound (other than any violations that individually or in
the aggregate would not have a material adverse effect on the Quest
Portfolio);
(e) The Quest Portfolio has no material contracts or other
commitments (other than this Agreement) that will be terminated with
liability to it prior to or as of the Closing Date;
(f) Except as otherwise disclosed in writing to and acknowledged
by the Oppenheimer Fund prior to the date of this Agreement, no
litigation, administrative proceeding, investigation, examination or
inquiry of or before any court or governmental body is presently
pending, or to its knowledge, threatened relating to the Quest
Portfolio or any of its properties or assets which, if adversely
determined, would materially and adversely affect its financial
condition or the conduct of its business. The Quest Portfolio knows of
no facts that might form the basis for the institution of such
proceedings and is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body that
materially and adversely affects, or is likely to materially and
adversely affect, its business or its ability to consummate the
transactions herein contemplated;
(g) The Statements of Assets and Liabilities, Statements of
Operations and Statements of Changes in Net Assets of the Quest
Portfolio as of November 30, 1994 (audited), examined by Price
Waterhouse LLP, and May 31, 1995 (unaudited) (copies of each of which
have been furnished to the Oppenheimer Fund) fairly present, in all
material respects, the Quest Portfolio's financial condition as of such
dates, its results of operations for such periods and changes in its
net assets for such periods in conformity with generally accepted
accounting principles consistently applied, and as of such dates there
were no known liabilities of the Quest Portfolio (contingent or
otherwise) not disclosed therein that would be required in conformity
with generally accepted accounting principles to be disclosed therein.
All liabilities (contingent and otherwise) as of the Closing Date known
to the Quest Portfolio will be set forth on the unaudited Statement of
Assets and Liabilities referred to in paragraph 1.3.
(h) Since the date of the most recent audited financial
statements, there has not been any material adverse change in the Quest
Portfolio's financial condition, assets, liabilities or business, other
than changes occurring in the ordinary course of business, or any
incurrence by the Quest Portfolio of indebtedness maturing more than
one year from the date such indebtedness was incurred, except as
otherwise disclosed in writing to and acknowledged by the Oppenheimer
Fund prior to the date of this Agreement and prior to the Closing Date.
All liabilities of the Quest Portfolio (contingent and otherwise) are
reflected in the unaudited statement described in paragraph 1.3 above.
For the purpose of this subparagraph (h), neither a decline in the
Quest Portfolio's net asset value per share nor a decrease in the Quest
Portfolio's size due to redemptions by Quest Portfolio shareholders
shall constitute a material adverse change;
(i) All federal and other tax returns and reports of the Quest
Portfolio required by law to be filed shall have been filed, there are
no claims, levies, liabilities or amounts due for corporate, excise,
income or other federal, state or local taxes outstanding or threatened
against Quest Portfolio (other than those reflected on its most recent
financial statements) and to the best of Quest For Value's knowledge
there are no facts that might form the basis for such proceedings, no
such return is currently under audit and no assessment has been
asserted with respect to any such return and to the extent such tax
returns with respect to the taxable year of the Quest Portfolio ended
November 30, 1994 have not been filed, such returns will be filed when
required and the amount of tax shown as due thereon shall be paid when
due;
(j) For each taxable year since its inception, the Quest
Portfolio has met all the requirements of Subchapter M of the Code for
qualification and treatment as a "regulated investment company" as
defined therein and will be in compliance with said requirements at and
as of the Closing Date;
(k) All issued and outstanding shares of each class of the Quest
Portfolio are, and at the Closing Date will be, duly and validly issued
and outstanding, fully paid and non-assessable with no personal
liability attaching to the ownership thereof. All such shares of each
class will, at the time of Closing, be held by the persons and in the
amounts set forth in the list of shareholders submitted to the
Oppenheimer Fund pursuant to paragraph 3.4. The Quest Portfolio does
not have outstanding any options, warrants or other rights to subscribe
for or purchase any of its shares of any class, nor is there
outstanding any security convertible into any of its shares of any
class except for class B shares of the Quest Portfolio which convert
into class A shares of the Quest Portfolio as described in the current
prospectus of the Quest Portfolio.
(l) At the Closing Date, the Quest Portfolio will have title to
the Quest Portfolio Assets, subject to no liens, security interests or
other encumbrances, and full right, power and authority to assign,
deliver and otherwise transfer the Quest Portfolio Assets hereunder,
and upon delivery and payment for the Quest Portfolio Assets, the
Oppenheimer Fund will acquire title thereto, subject to no restrictions
on the full transfer thereof, including such restrictions as might
arise under the 1933 Act;
(m) Quest For Value has the power to enter into this Agreement
and carry out its obligations hereunder. The execution, delivery and
performance of this Agreement will have been duly authorized prior to
the Closing Date by all necessary action on the part of Quest For
Value, and subject to the approval of Quest Portfolio's shareholders,
this Agreement constitutes a valid and binding obligation of Quest For
Value, enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors rights and to general
equity principles. No other consents, authorizations or approvals are
necessary in connection with the performance of this Agreement.
(n) On the effective date of the Registration Statement, at the
time of the meeting of Quest Portfolio's shareholders and on the
Closing Date, the Proxy Materials (exclusive of the currently effective
Oppenheimer Fund prospectus and statement of additional information
incorporated therein) will (i) comply in all material respects with the
provisions of the 1933 Act, the Securities Exchange Act of 1934 ("1934
Act") and the 1940 Act and the regulations thereunder and (ii) not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statement therein, in light of the circumstances under which such
statements were made, not misleading. Any other information furnished
or to be furnished by Quest Portfolio for use in the Registration
Statement or in any other manner that may be necessary in connection
with the transactions contemplated hereby shall be accurate and
complete and shall comply in all material respects with applicable
federal securities and other laws and all regulations thereunder;
(o) Quest Portfolio will, on or prior to the Closing Date,
declare one or more dividends or other distributions to shareholders
that, together with all previous dividends and other distributions to
shareholders, shall have the effect of distributing to the shareholders
all of its investment company taxable income and net capital gain, if
any, through the Closing Date (computed without regard to any deduction
for dividends paid);
(p) Quest Portfolio has maintained or has caused to be maintained
on its behalf all books and accounts as required of a registered
investment company in compliance with the requirements of Section 31 of
the 1940 Act and the Rules thereunder;
(q) Quest Portfolio is not acquiring Oppenheimer Fund shares to
be issued hereunder for the purpose of making any distribution thereof
other than in accordance with the terms of this Agreement;
(r) As of the Closing Date no violation of applicable federal,
state and local statute, law or regulation, exists that individually,
or in the aggregate, would have a material adverse effect on the
business or operations of Quest Portfolio;
(s) As of the Closing Date the Quest Portfolio is in compliance
with its investment objective(s), policies and restrictions as
described in its current prospectus and statement of additional
information;
(t) There are no unresolved or outstanding shareholder claims or
complaints related to Quest Portfolio and there will be no such claims
or complaints as of the Closing Date other than as disclosed by Quest
Advisors in writing to Oppenheimer Fund prior to the Closing Date;
(u) Except as previously disclosed to Oppenheimer Fund in
writing, and except as have been fully corrected, there have been no
miscalculations of the net asset value of Quest Portfolio during the
twelve-month period preceding the Closing Date and all such
calculations have been done in accordance with the provisions of Rule
2a-4 under the 1940 Act.
5.3 Quest Advisors represents and warrants to the Oppenheimer
Fund as follows:
(a) To the best knowledge of Quest Advisors after due inquiry, as
of the Closing Date no violation of applicable federal, state and local
statute, law or regulation, exists that individually, or in the
aggregate, would have a material adverse effect on the business or
operations of Quest Portfolio.
(b) To the best knowledge of Quest Advisors after due inquiry,
assuming fulfillment of the conditions precedent to the consummation of
the Reorganization, Quest Portfolio has the right, power, legal
capacity and authority to enter into the Reorganization contemplated by
this Agreement.
(c) To the best knowledge of Quest Advisors after due inquiry, as
of the Closing Date Quest Portfolio is in compliance with its
investment objective(s), policies and restrictions as described in its
current prospectus and statement of additional information.
(d) To the best knowledge of Quest Advisors after due inquiry, as
of the Closing Date there are no outstanding breaches by Quest
Portfolio of any agreement, indenture, instrument, contract, lease or
other undertaking to which it is a party, or by which it is bound
(other than any breaches that individually or in the aggregate would
not have a material adverse effect on the Quest Portfolio).
(e) To the best knowledge of Quest Advisors upon due inquiry,
there are no unresolved or outstanding shareholder claims or inquiries
related to Quest Portfolio and there will be no such claims or
inquiries as of the Closing Date other than as disclosed by Quest
Advisors in writing to Oppenheimer Fund prior to the Closing Date.
(f) Quest Advisors is not aware of any threatened or pending
litigation, administrative proceeding, investigation, examination or
inquiry of or before any court or governmental body relating to the
Quest Portfolio or any of its properties or assets which, if adversely
determined, would materially and adversely affect the Quest Portfolio's
business or its ability to consummate the transactions herein
contemplated.
(g) Quest Advisors is not aware of any outstanding or threatened
private claims or litigation relating to Quest Portfolio. Quest
Advisors knows of no facts that might form the basis for such
proceedings.
(h) Except as previously disclosed to Oppenheimer Fund in
writing, and except as have been fully corrected, there have been no
miscalculations of the net asset value of Quest Portfolio during the
twelve-month period preceding the Closing Date and all such
calculations have been done in accordance with the provisions of Rule
2a-4 under the 1940 Act.
(i) There are no claims, levies or liabilities for corporate,
excise, income or other federal, state or local taxes outstanding or
threatened against Quest Portfolio, other than those reflected in its
most recent audited financial statements. Quest Advisors knows of no
facts that might form the basis for such proceedings.
(j) To the best knowledge of Quest Advisors after due inquiry,
there have been no material adverse changes in Quest Portfolio's
financial condition, assets, liabilities or business, other than those
reflected in its most recent audited financial statements and all
liabilities of Quest Portfolio (contingent and otherwise) known to
Quest Advisors have been reported in writing to the Oppenheimer Fund
prior to the date of this Agreement and prior to the Closing Date. A
reduction in net assets due to shareowner redemptions will not be
deemed to be a material adverse change.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE QUEST PORTFOLIO
The obligations of Quest Portfolio to consummate the transactions
provided for herein shall be subject, at its election, to the
performance by Oppenheimer Fund of all the obligations to be performed
by it hereunder on or before the Closing Date and, in addition thereto,
the following conditions:
6.1 All representations and warranties of Oppenheimer Trust, on
behalf of Oppenheimer Fund, contained in this Agreement shall be true
and correct in all material respects as of the date hereof and, except
as they may be affected by the transactions contemplated by this
Agreement, as of the Closing Date with the same force and effect as if
made on and as of the Closing Date.
6.2 Oppenheimer Fund shall have delivered to Quest Portfolio a
certificate executed in Oppenheimer Fund's name by Oppenheimer Fund's
President, Vice President or Secretary and, Treasurer or Assistant
Treasurer, in a form reasonably satisfactory to Quest Portfolio and
dated as of the Closing Date, to the effect that the representations
and warranties of Oppenheimer Trust, on behalf of Oppenheimer Fund made
in this Agreement are true and correct at and as of the Closing Date,
except as they may be affected by the transactions contemplated by this
Agreement, and as to such other matters as Quest Portfolio shall
reasonably request;
6.3 Quest Portfolio shall have received a favorable opinion from
Myer, Swanson, Adams & Wolf, P.C., counsel to the Oppenheimer Fund,
dated as of the Closing Date, in a form reasonably satisfactory to
Gordon Altman Butowsky Weitzen Shalov & Wein, counsel to Quest
Portfolio, covering the following points:
That (a) Oppenheimer Fund is a series of Oppenheimer Trust, an
unincorporated voluntary association duly organized, validly
existing and in good standing under the laws of the Commonwealth
of Massachusetts, and has the power to own all of its properties
and assets and to carry on its business as presently conducted
(Massachusetts counsel may be relied upon in delivering such
opinion); (b) Oppenheimer Trust is a duly registered, open-end,
management investment company and its registration with the
Commission as an investment company under the 1940 Act is in full
force and effect; (c) this Agreement has been duly authorized,
executed and delivered by the Oppenheimer Trust, on behalf of
Oppenheimer Fund, and assuming due authorization, execution and
delivery of this Agreement by Quest Portfolio, is a valid and
binding obligation of Oppenheimer Trust enforceable against
Oppenheimer Trust in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium
and other laws relating to or affecting creditors rights and to
general equity principles; (d) Oppenheimer Fund shares to be
issued to Quest Portfolio shareholders as provided by this
Agreement are duly authorized and upon delivery of such shares to
Quest Portfolio will be validly issued and outstanding and fully
paid and non-assessable (except as otherwise set forth in the
current statement of additional information for the Oppenheimer
Fund under "How the Fund is Managed - Organization and History")
and no shareholder of Oppenheimer Fund has any preemptive rights
to subscription or purchase in respect thereof (Massachusetts
counsel may be relied upon in delivering such opinion); (e) the
execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not,
violate Oppenheimer Trust's Declaration of Trust and By-Laws or
any provision of any material agreement (known to such counsel) to
which Oppenheimer Fund is a party or by which it is bound or, to
the knowledge of such counsel, result in the acceleration of any
material obligation or the imposition of any material penalty
under any agreement, judgment or decree to which Oppenheimer Fund
is a party or by which it is bound; (f) to the knowledge of such
counsel, no consent, approval, authorization or order of any court
or governmental authority of the United States or any state is
required for the consummation by Oppenheimer Fund of the
transactions contemplated herein, except such as have been
obtained under the 1933 Act , the 1934 Act and the 1940 Act and
such as may be required under state securities laws; (g) only
insofar as they relate to Oppenheimer Fund, the descriptions in
the Proxy Materials of statutes, legal and governmental
proceedings and contracts and other documents, if any, are
accurate and fairly present the information required to be shown;
(h) such counsel does not know of any legal or governmental
proceedings, only insofar as they relate to Oppenheimer Fund,
existing on or before the date of mailing of the Proxy Materials
or the Closing Date that are required to be described in the
Registration Statement or in any documents that are required to be
filed as exhibits to the Registration Statement that are not
described as required; and (i) to the best knowledge of such
counsel, no material litigation or administrative proceedings or
investigation of or before any court or governmental body is
presently pending or overtly threatened as to Oppenheimer Fund or
any of its properties or assets and Oppenheimer Fund is not a
party to or subject to the provisions of any order, decree or
judgment of any court or governmental body that materially and
adversely affects its business, other than as previously disclosed
in the Registration Statement.
6.4 All proceedings taken by Oppenheimer Trust and Oppenheimer
Fund in connection with the transactions contemplated by this Agreement
and all documents incidental thereto shall be satisfactory in form and
substance to Quest Portfolio and its counsel, Gordon Altman Butowsky
Weitzen Shalov & Wein.
6.5 As of the Closing Date, there shall be no material change in
the investment objective, policies and restrictions nor any increase in
the investment management fees, fees payable pursuant to Oppenheimer
Fund's 12b-1 plans of distribution or sales loads of Oppenheimer Fund
from those described in the Prospectus and Statement of Additional
Information of Oppenheimer Fund dated May 30, 1995 as supplemented July
14, 1995, except as may have been approved by shareholders of the
Oppenheimer Fund.
6.6 The Cash Reserve shall not exceed 10% of the value of the net
assets, nor 30% in value of the gross assets, of the Quest Portfolio at
the close of business on the Valuation Date.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF OPPENHEIMER FUND
The obligations of Oppenheimer Fund to complete the transactions
provided for herein shall be subject, at its election, to the
performance by Quest Portfolio of all the obligations to be performed
by it hereunder on or before the Closing Date and, in addition thereto,
the following conditions:
7.1 All representations and warranties of Quest For Value, on
behalf of Quest Portfolio, and Quest Advisors contained in this
Agreement shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same
force and effect as if made on and as of the Closing Date;
7.2 Quest Portfolio shall have delivered to Oppenheimer Fund a
statement of Quest Portfolio Assets and its liabilities, together with
a list of Quest Portfolio's securities and other assets showing the
respective adjusted bases and holding periods thereof for income tax
purposes, as of the Closing Date, certified by the Treasurer of Quest
Portfolio;
7.3 Quest Portfolio shall have delivered to Oppenheimer Fund at
the Closing a certificate executed in Quest For Value's name by the
President, Vice President or Secretary and the Treasurer or Assistant
Treasurer of Quest For Value, in form and substance satisfactory to
Oppenheimer Fund and dated as of the Closing Date, to the effect that
the representations and warranties of Quest for Value, on behalf of
Quest Portfolio, made in this Agreement are true and correct at and as
of the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters as
Oppenheimer Fund shall reasonably request. Such a certificate shall
also be delivered to Oppenheimer Fund as executed by Quest Advisors
with respect to its representations and warranties made in paragraph
5.3.
7.4 Oppenheimer Fund shall have received at the Closing a
favorable opinion dated as of the Closing Date of Gordon Altman
Butowsky Weitzen Shalov & Wein, counsel to Quest For Value, in a form
satisfactory to Myer, Swanson, Adams & Wolf, P.C., counsel to
Oppenheimer Fund covering the following points:
That (a) Quest Portfolio is a series of Quest For Value, a
corporation duly organized, validly existing and in good standing
under the laws of the State of Maryland and has the power to own
all of its properties and assets and to carry on its business as
presently conducted (Maryland counsel may be relied upon in
delivering such opinion); (b) Quest For Value is registered as an
investment company under the 1940 Act, and its registration with
the Commission as an investment company under the 1940 Act is in
full force and effect; (c) this Agreement has been duly
authorized, executed and delivered by Quest For Value on behalf of
Quest Portfolio and, assuming due authorization, execution and
delivery of this Agreement by Oppenheimer Fund, is a valid and
binding obligation of Quest For Value enforceable against Quest
For Value in accordance with its terms, subject as to enforcement,
to bankruptcy, insolvency, reorganization, moratorium and other
laws relating to or affecting creditors rights and to general
equity principles; (d) the execution and delivery of this
Agreement did not, and the consummation of the transactions
contemplated hereby will not, violate Quest For Value's Articles
of Incorporation or By-Laws or any provision of any material
agreement (known to such counsel) to which Quest For Value is a
party or by which it is bound or, to the knowledge of such
counsel, result in the acceleration of any material obligation or
the imposition of any material penalty under any agreement,
judgment or decree to which Quest For Value is a party or by which
it is bound; (e) to the knowledge of such counsel, no consent,
approval, authorization or order of any court or governmental
authority of the United States or any state is required for the
consummation by Quest For Value of the transactions contemplated
herein, except such as have been obtained under the 1933 Act, the
1934 Act and the 1940 Act and such as may be required under state
securities laws; (f) only insofar as they relate to Quest For
Value, the descriptions in the Proxy Materials of statutes,
legal and governmental proceedings and contracts and other
documents, if any, are accurate and fairly present the information
required to be shown; (g) such counsel does not know of any legal
or governmental proceedings, only insofar as they relate to Quest
For Value, existing on or before the date of mailing the Proxy
Materials or the Closing Date that are required to be described in
the Registration Statement or in any documents that are required
to be filed as exhibits to the Registration Statement that are not
described as required; and (h) to the best knowledge of such
counsel, no material litigation or administrative proceedings or
investigation of or before any court or governmental body is
presently pending or overtly threatened as to Quest For Value or
any of its properties or assets and Quest Portfolio is not a party
to or subject to the provisions of any order, decree or judgment
of any court or governmental body that materially and adversely
affects its business, other than as previously disclosed in the
Registration Statement.
7.5 Between the date hereof and the Closing Date, Quest For Value
shall provide Oppenheimer Fund and its representatives reasonable
access during regular business hours and upon reasonable notice to the
books and records of or relating to Quest Portfolio, including without
limitation the books and records of Quest For Value, as Oppenheimer
Fund may reasonably request. All such information obtained by
Oppenheimer Fund and its representatives shall be held in confidence
and may not be used for any purpose other than in connection with the
transaction contemplated hereby. In the event that the transaction
contemplated by this Agreement is not consummated, Oppenheimer Fund
and its representatives will promptly return to Quest For Value all
documents and copies thereof with respect to Quest Portfolio obtained
from Quest For Value during the course of such investigation.
7.6 Quest For Value, on behalf of Quest Portfolio shall have
delivered to Oppenheimer Fund, pursuant to paragraph 5.2(g), copies of
the most recent financial statements of Quest Portfolio certified by
Price Waterhouse LLP.
7.7 On the Closing Date, the Quest Portfolio Assets shall include
no assets that Oppenheimer Fund, by reason of charter limitations or
otherwise, may not properly acquire.
7.8 All proceedings taken by Quest For Value and Quest Portfolio
in connection with the transactions contemplated by the Agreement and
all documents incidental thereto shall be reasonably satisfactory in
form and substance to Oppenheimer Fund and its counsel, Myer, Swanson,
Adams & Wolf, P.C.
7.9 The stated liabilities, expenses, costs, charges and reserves
reflected on the unaudited Statement of Assets and Liabilities of the
Quest Portfolio referred to in paragraph 1.3 shall have been agreed to
by the Oppenheimer Fund.
7.10 The Registration Statement, including the Proxy Materials,
but only insofar as it relates to the Oppenheimer Fund, filed as a part
thereof, shall have been approved by the Board of Trustees of the
Oppenheimer Fund.
7.11 The Cash Reserve shall not exceed 10% of the value of the net
assets, nor 30% in value of the gross assets, of the Quest Portfolio at
the close of business on the Valuation Date.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF OPPENHEIMER FUND
AND QUEST PORTFOLIO
The obligations of Quest Portfolio and Oppenheimer Fund hereunder
are each subject to the further conditions that on or before the
Closing Date:
8.1 This Agreement and the transactions contemplated herein shall
have been approved by the requisite vote of the holders of the
outstanding shares of Quest Portfolio and certified copies of the
resolutions evidencing such approval shall have been delivered to
Oppenheimer Fund;
8.2 On the Closing Date, no action, suit or other proceeding
shall be pending before any court or governmental agency in which it is
sought to restrain or prohibit, or obtain damages or other relief in
connection with, this Agreement or the transactions contemplated
herein;
8.3 All consents of other parties and all other consents, orders
and permits of federal, state and local regulatory authorities
(including those of the Commission and of state Blue Sky and securities
authorities, including "no-action" positions or any exemptive orders
from such federal and state authorities) deemed necessary by
Oppenheimer Fund or Quest For Value on behalf of Quest Portfolio to
permit consummation, in all material respects, of the transactions
contemplated herein shall have been obtained, except where failure to
obtain any such consent, order or permit would not involve risk of a
material adverse effect on the assets or properties of Oppenheimer Fund
or Quest Portfolio.
8.4 The Registration Statement on Form N-14 shall have become
effective under the 1933 Act, no stop orders suspending the
effectiveness thereof shall have been issued and, to the best knowledge
of the parties hereto, no investigation or proceeding for that purpose
shall have been instituted or be pending, threatened or contemplated
under the 1933 Act;
8.5 Quest Portfolio shall have declared and paid a dividend or
dividends and/or other distributions that, together with all previous
such dividends or distributions, shall have the effect of distributing
to the Quest Portfolio Shareholders all of Quest Portfolio's investment
company taxable income (computed without regard to any deduction for
dividends paid) and all of its net capital gain (after reduction for
any capital loss carry-forward and computed without regard to any
deduction for dividends paid) for all taxable years ending on or before
the Closing Date; and
8.6 The parties shall have received a favorable opinion from
Price Waterhouse LLP (based on such representations as such firm shall
reasonably request), addressed to Oppenheimer Fund and Quest Portfolio,
which opinion may be relied upon by the shareholders of Oppenheimer
Fund and Quest Portfolio, substantially to the effect that, for federal
income tax purposes:
(a) The transfer of substantially all of Quest Portfolio's assets
in exchange for Oppenheimer Fund shares and the assumption by
Oppenheimer Fund of certain identified liabilities of Quest
Portfolio followed by the distribution by Quest Portfolio of
Oppenheimer Fund shares to the Quest Portfolio Shareholders in
exchange for their Quest Portfolio shares will constitute a
"reorganization" within the meaning of Section 368(a)(1) of the
Code and Quest Portfolio and Oppenheimer Fund will each be a
"party to the reorganization" within the meaning of Section 368(b)
of the Code;
(b) Pursuant to Section 1032 of the Code, no gain or loss will be
recognized by Oppenheimer Fund upon the receipt of the assets of
Quest Portfolio solely in exchange for Oppenheimer Fund shares and
the assumption by Oppenheimer Fund of the identified liabilities
of Quest Portfolio;
(c) Pursuant to Section 361(a) of the Code, no gain or loss will
be recognized by Quest Portfolio upon the transfer of the assets
of Quest Portfolio to Oppenheimer Fund in exchange for Oppenheimer
Fund shares and the assumption by Oppenheimer Fund of the
identified liabilities of Quest Portfolio, or upon the
distribution of Oppenheimer Fund shares to the Quest Portfolio
Shareholders in exchange for the Quest Portfolio shares;
(d) Pursuant to Section 354(a) of the Code, no gain or loss will
be recognized by the Quest Portfolio Shareholders upon the
exchange of the Quest Portfolio shares for the Oppenheimer Fund
shares;
(e) Pursuant to Section 358 of the Code, the aggregate tax basis
for Oppenheimer Fund shares received by each Quest Portfolio
Shareholder pursuant to the Reorganization will be the same as the
aggregate tax basis of the Quest Portfolio shares held by each
such Quest Portfolio Shareholder immediately prior to the
Reorganization;
(f) Pursuant to Section 1223 of the Code, the holding period of
Oppenheimer Fund shares to be received by each Quest Portfolio
Shareholder will include the period during which the Quest
Portfolio shares surrendered in exchange therefor were held
(provided such Quest Portfolio shares were held as capital
assets on the date of the Reorganization);
(g) Pursuant to Section 362(b) of the Code, the tax basis of the
assets of Quest Portfolio acquired by Oppenheimer Fund will be the
same as the tax basis of such assets to Quest Portfolio
immediately prior to the Reorganization;
(h) Pursuant to Section 1223 of the Code, the holding period of
the assets of Quest Portfolio in the hands of Oppenheimer Fund
will include the period during which those assets were held by
Quest Portfolio; and
(i) Oppenheimer Fund will succeed to and take into account the
items of Quest Portfolio described in Section 381(c) of the Code,
including the earnings and profits, or deficit in earnings and
profits, of Quest Portfolio as of the date of the transaction.
Oppenheimer Fund will take those items into account subject to the
conditions and limitations specified in Sections 381, 382, 383 and
384 of the Code and applicable regulations thereunder.
Notwithstanding anything herein to the contrary, neither Oppenheimer
Fund nor Quest Portfolio may waive the material conditions set forth in
this paragraph 8.6 although the actual wording of such opinion may
differ to the extent agreed to by Oppenheimer Fund and Quest Portfolio.
9. BROKERAGE FEES AND EXPENSES
9.1 Oppenheimer Fund and Quest For Value on behalf of Quest
Portfolio each represents and warrants to the other that there are no
brokers or finders entitled to receive any payments in connection with
the transactions provided for herein.
9.2 (a) Oppenheimer Management Corporation shall bear the
expenses of Oppenheimer Fund incurred in connection with entering into
and carrying out the provisions of this Agreement, including legal,
accounting and Commission registration fees and Blue Sky expenses.
Quest Advisors (or a party other than Oppenheimer Fund) shall bear
Quest Portfolio's expenses incurred in connection with entering into
and carrying out the provisions of this Agreement, including legal and
accounting fees, and portfolio transfer taxes (if any) incurred in
connection with the consummation of the transactions contemplated
herein. Notwithstanding the foregoing, expenses incurred with respect
to the tax opinion referenced in paragraph 8.6 and expenses of the
proxy solicitation, including the cost of printing and mailing the
Proxy Materials, will be evenly apportioned between Quest Advisors and
Oppenheimer Management Corporation.
(b) In the event the transactions contemplated herein are not
consummated by reason of Quest Portfolio's being either unwilling or
unable to go forward (other than by reason of the nonfulfillment or
failure of any condition to Quest Portfolio's obligations specified in
this Agreement), Quest Advisors' (or a party other than Oppenheimer
Fund) only obligation hereunder shall be to reimburse Oppenheimer Fund
(or Oppenheimer Management Corporation) for all reasonable out-of-
pocket fees and expenses incurred by Oppenheimer Fund (or Oppenheimer
Management Corporation) in connection with those transactions,
including legal, accounting and filing fees.
(c) In the event the transactions contemplated herein are not
consummated by reason of Oppenheimer Fund's being either unwilling or
unable to go forward (other than by reason of the nonfulfillment or
failure of any condition to Oppenheimer Fund's obligations specified in
the Agreement), Oppenheimer Fund's only obligations hereunder shall be
to reimburse Quest Portfolio (or Quest Advisors) for all reasonable
out-of-pocket fees and expenses incurred by Quest Portfolio (or Quest
Advisors) in connection with those transactions, including legal,
accounting and filing fees, and to comply with the provisions of
paragraph 7.5 hereof.
10. ENTIRE AGREEMENT: SURVIVAL OF WARRANTIES
10.1 Oppenheimer Trust, on behalf of Oppenheimer Fund, Quest For
Value, on behalf of Quest Portfolio and Quest Advisors agree that no
party has made any representation, warranty or covenant not set forth
herein and that this Agreement constitutes the entire agreement between
the parties.
10.2 The representations, warranties and covenants contained in
this Agreement or in any document delivered pursuant hereto or in
connection herewith shall survive the consummation of the transactions
contemplated herein.
11. TERMINATION
11.1 This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing:
(a) by the mutual written consent of Quest For Value, on behalf
of Quest Portfolio, and Oppenheimer Trust, on behalf of Oppenheimer
Fund;
(b) by either Oppenheimer Trust, on behalf of Oppenheimer Fund or
Quest For Value, on behalf of Quest Portfolio, by notice to the other,
without liability to the terminating party on account of such
termination (providing the termination party is not otherwise in
default or in breach of this Agreement) if the Closing shall not have
occurred on or before February 29, 1996; or
(c) by either Oppenheimer Trust, on behalf of Oppenheimer Fund or
Quest For Value, on behalf of Quest Portfolio, in writing without
liability of the terminating party on account of such termination
(provided the terminating party is not otherwise in material default or
breach of the Agreement), if (i) the other party shall fail to perform
in any material respect its agreements contained herein required to be
performed on or prior to the Closing Date, (ii) Quest Advisors, Quest
For Value or the Quest Portfolio, or Oppenheimer Trust or the
Oppenheimer Fund, respectively, materially breaches or shall have
breached any of its representations, warranties or covenants contained
herein, (iii) the Quest Portfolio Shareholders fail to approve the
Agreement, (iv) any other condition herein expressed to be precedent to
the obligations of the terminating party has not been met and it
reasonably appears that it will not or cannot be met or (v) the
acquisition contemplated by the Acquisition Agreement is not
consummated.
11.2 (a) Termination of this Agreement pursuant to paragraphs
11.1(a) or (b) shall terminate all obligations of the parties hereunder
(other than Oppenheimer Fund's obligations under paragraph 7.5) and
there shall be no liability for damages on the part of Oppenheimer
Trust, the Oppenheimer Fund, Quest Portfolio or Quest Advisors or the
trustees, directors or officers of Oppenheimer Trust, Quest Portfolio
or Quest Advisors, to any other party or its trustees, directors or
officers.
(b) Termination of this Agreement pursuant to paragraph
11.1(c) shall terminate all obligations of the parties hereunder (other
than Oppenheimer Fund's obligations under paragraph 7.5) and there
shall be no liability for damages on the part of Oppenheimer Fund,
Quest Portfolio or Quest Advisors or the trustees, directors or
officers of Oppenheimer Trust, Quest Portfolio or Quest Advisors, to
any other party or its trustees, directors or officers, except that any
party in breach of this Agreement (or, as to a termination pursuant to
paragraph 11.1(c)(v), in breach of the Acquisition Agreement) shall,
upon demand, reimburse the non-breaching party or parties for all
reasonable out-of-pocket fees and expenses incurred in connection with
the transactions contemplated by this Agreement, including legal,
accounting and filing fees. For the purposes of this paragraph
11.2(b), the non-fulfillment of the condition set forth in paragraph
8.1 shall not be deemed a breach entitling a party to reimbursement of
expenses and fees.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the authorized
officers of Quest For Value, Oppenheimer Trust and Quest Advisors;
provided, however, that following the meeting of Quest Portfolio's
shareholders called by Quest Portfolio pursuant to paragraph 4.2, no
such amendment may have the effect of changing the provisions for
determining the number of Oppenheimer Fund Shares to be issued to the
Quest Portfolio Shareholders under this Agreement to the detriment of
such Shareholders without their further approval.
13. INDEMNIFICATION
13.1 Oppenheimer Trust will indemnify and hold harmless, Quest For
Value, Quest Portfolio and Quest Advisors, and their respective
trustees, directors, officers and shareholders against any and all
claims to the extent such claims are based upon, arise out of or relate
to any untruthful or inaccurate representations made by Oppenheimer
Trust on behalf of Oppenheimer Fund in this Agreement or any breach by
Oppenheimer Fund of any warranty or any failure to perform or comply
with any of its obligations, covenants, conditions or agreements set
forth in this Agreement, including those set forth in paragraph
1.3.
13.2 Quest Advisors will indemnify and hold harmless Quest For
Value, Oppenheimer Trust and Oppenheimer Fund, and their respective
trustees, officers and shareholders against any and all claims to the
extent such claims are based upon, arise out of or relate to any
untruthful or inaccurate representation made by Quest For Value on
behalf of Quest Portfolio or Quest Advisors in this Agreement or any
breach by Quest Portfolio or Quest Advisors of any warranty or any
failure by Quest Portfolio to perform or comply with any of its
obligations, covenants, conditions or agreements set forth in this
Agreement.
13.3 As used in this section 13, the word "claim" means any and
all liabilities, obligations, losses, damages, deficiencies, demands,
claims, penalties, assessments, judgments, actions, proceedings and
suits of whatever kind and nature and all costs and expenses
(including, without limitation, reasonable attorneys' fees).
13.4 Promptly after the receipt by any party (the "Indemnified
Party"), of notice of any claim by a third party which may give rise to
indemnification hereunder, the Indemnified Party shall notify the party
against whom a claim for indemnification may be made hereunder (the
"Indemnifying Party"), in reasonable detail of the nature and amount of
the claim. The Indemnifying Party shall be entitled to assume, at its
sole cost and expense (unless it is subsequently determined that the
Indemnifying Party did not have the obligation to indemnify the
Indemnified Party under such circumstances), and shall have sole
control of the defense and settlement of such action or claim;
provided, however, that:
(a) the Indemnified Party shall be entitled to participate in the
defense of such claim and, in connection therewith, to employ counsel
at its own expense; and
(b) without the prior written consent of the Indemnified Party
which shall not be unreasonably withheld, the Indemnifying Party shall
not consent to the entry of any judgment or enter into any settlement
that requires any action other than the payment of money.
In the event the Indemnifying Party elects to assume control of the
defense of any such action in accordance with the foregoing provisions,
(i) the Indemnifying Party shall not be liable to Indemnified Party
for any legal fees, costs and expenses incurred by the Indemnified
Party in connection with the defense thereof arising after the date the
Indemnifying Party elects to assume control of such defense and (ii)
Indemnified Party shall fully cooperate with the Indemnifying Party in
such defense. If the Indemnifying Party does not assume control of
the defense of such claim in accordance with the foregoing provisions,
the Indemnified Party shall have the right to defend such claim, in
which case the Indemnifying Party shall pay all reasonable costs and
expenses of such defense plus interest on the cost of defense from the
date paid at a rate equal to the prime commercial rate of interest as
in effect from time to time at Citibank, N.A. The Indemnified Party
shall conduct such defense in good faith and shall have the right to
settle the matter with the prior written consent of the Indemnifying
Party which shall not be reasonably withheld.
14. NOTICES
Any notice, report, statement or demand required or permitted by
any provisions of this Agreement shall be in writing and shall be given
by prepaid telegraph, telecopy, certified mail or overnight express
courier addressed to Oppenheimer Management Corporation at Two World
Trade Center, 34th Floor, New York, New York 10048-0203 Attention:
Andrew J. Donohue with a copy to Allan Adams, Esq. at Myer, Swanson,
Adams & Wolf, P.C., 1600 Broadway, Denver, Colorado 80202; to Quest For
Value at One World Financial Center, New York, New York 10281
Attention: Thomas Duggan, with a copy to Stuart Strauss, Esq. at Gordon
Altman Butowsky Weitzen Shalov & Wein, 114 West 47th Street, New York,
New York 10036.
15. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF
LIABILITY
15.1 The article and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
15.2 This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
15.3 This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
15.4 This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations hereunder
shall be made by any party without the written consent of the other
parties. Except as provided in the following sentence, nothing herein
expressed or implied is intended or shall be construed to confer upon
or give any person, firm or corporation, other than the parties hereto
and their respective successors and assigns, any rights or remedies
under or by reason of this Agreement. A shareholder of Quest Portfolio
who becomes a shareholder of Oppenheimer Fund on the Closing Date and
continues to be a shareholder of Oppenheimer Fund, shall be entitled to
the benefits and may enforce the provisions of paragraph 4.9 hereof
except insofar as paragraph 4.9 relates to the election of trustees;
and the persons designated in paragraphs 13.1 and 13.2 hereof shall be
entitled to the benefits and may enforce the provisions of section 13
hereof.
15.5 The obligations and liabilities of Oppenheimer Trust, on
behalf of Oppenheimer Fund, hereunder are solely those of Oppenheimer
Fund and not of any other series of Oppenheimer Trust. It is expressly
agreed that shareholders, trustees, nominees, officers, agents or
employees of Oppenheimer Trust and Oppenheimer Fund shall not be
personally liable hereunder. Quest For Value and Quest Advisors
acknowledge that each has notice of the provisions of Oppenheimer
Trust's Declaration of Trust disclaiming shareholder and trustee
liability for acts and obligations of the Oppenheimer Trust. The
execution and delivery of this Agreement have been authorized by the
trustees of Oppenheimer Trust and signed by the officers of Oppenheimer
Trust acting as such, and neither such authorization by such trustees
nor such execution and delivery by such officers shall be deemed to
have been made by any of the, individually or to impose any liability
on any of them personally.
15.6 The obligations and liabilities of the Quest For Value on
behalf of Quest Portfolio hereunder are solely those of the Quest
Portfolio and not of any other series of Quest For Value. It is
expressly agreed that shareholders, trustees, nominees, officers,
agents, or employees of Quest For Value and Quest Portfolio shall not
be personally liable hereunder. The execution and delivery of this
Agreement have been authorized by the directors of Quest For Value and
signed by officers of Quest For Value acting as such, and neither such
authorization by such directors nor such execution and delivery by such
officers shall be deemed to have been made by any of them individually
or to impose any liability on any of them personally.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officer.
OPPENHEIMER STRATEGIC FUNDS TRUST
By: ________________________________
QUEST FOR VALUE GLOBAL FUNDS, INC.
By: ____________________________
QUEST FOR VALUE ADVISORS
By: ____________________________
<PAGE>
EXHIBIT B
The aggregate purchase price for the Purchased Assets and Assumed
Liabilities will be an amount equal to the sum of (i) the Initial
Purchase Payment (as hereinafter defined) payable in cash at the
Acquisition Closing, (ii) the aggregate amount of all unamortized
prepaid commissions as of the business day immediately preceding the
Acquisition Closing which relate to the Acquired Funds (excluding those
with respect to Citibank, N.A.) payable in cash at the Acquisition
Closing, (iii) the amount payable by OMC in respect of the right, title
and interest of Citibank, N.A. to certain commissions, (iv) the
Deferred Purchase Payment (as hereinafter defined) and (v) the
aggregate amount of the Assumed Liabilities.
The "Initial Purchase Payment" shall be an amount equal to the sum of
(x) 225% of the Annualized Fee Amount (as hereinafter defined) of each
Reorganized Fund and (y) 270% of the Annualized Fee Amount of each
Continuing Fund (excluding the Quest for Value Officers Fund). The
"Annualized Fee Amount" of an Acquired Fund shall equal the product of
(i) such Acquired Fund's Closing Net Assets (as hereinafter defined)
and (ii) the annual advisory fee payable to QVA by such Acquired Fund
at the rate indicated in the most recent prospectus for such Acquired
Fund at the Acquisition Closing (plus any applicable annual
administrative fee) "Closing Net Assets" for an Acquired Fund shall
mean the aggregate net asset value of such Acquired Fund as of the
close of business on the last business date preceding the Acquisition
Closing.
The "Deferred Purchase Payment" shall be an amount equal to the
aggregate amounts determined for all Reorganized Funds pursuant to the
following formula: the Closing Payment (as hereinafter defined) times
the Applicable Percentage (as hereinafter defined). The "Closing
Payment" shall be the aggregate amount calculated for all Reorganized
Funds pursuant to clause (x) of the Initial Purchase Payment formula.
The "Applicable Percentage" shall be 100% if the Continuing Net Asset
Percentage (as hereinafter defined) is 75% or more, 0% if the
Continuing Net Asset Percentage is 50% or less and the percentage
determined in accordance with the following formula if the Continuing
Net Asset Percentage is between 75% and 50%: 100% - (4) (75% -
Continuing Net Asset Percentage). The "Continuing Net Asset
Percentage" shall equal the percentage obtained by dividing the
Anniversary Net Assets (as hereinafter defined) by the Closing Net
Assets. The "Anniversary Net Assets" shall mean the most recently
determined aggregate net asset values of all Reorganized Funds as of
8:00 p.m. on the first anniversary of the Acquisition Closing of each
account of the Reorganized Funds which are eligible to be included in
Anniversary Net Assets in accordance with the principles set forth in
the Acquisition Agreement.
<PAGE>
Preliminary Copy
QUEST FOR VALUE GLOBAL FUNDS, INC.
QUEST FOR VALUE GLOBAL INCOME FUND - CLASS A SHARES
PROXY FOR SPECIAL SHAREHOLDERS MEETING
TO BE HELD November 16, 1995
The undersigned shareholder of Quest for Value Global Income Fund (the
"Fund"), a series of Quest for Value Global Funds, Inc. (the
"Corporation"), does hereby appoint Thomas E. Duggan and Maria Camacho,
and each of them, as attorneys-in-fact and proxies of the undersigned,
with full power of substitution, to attend the Special Meeting of
Shareholders of the Fund to be held on November 16, 1995, at One World
Financial Center, New York, New York 10281 on the 40th Floor at 10:00
A.M., New York time, and at all adjournments thereof, and to vote the
shares held in the name of the undersigned on the record date for said
meeting on the Proposal specified on the reverse side. Said attorneys-
in-fact shall vote in accordance with their best judgment as to any
other matter.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, WHO RECOMMENDS A
VOTE FOR THE PROPOSAL ON THE REVERSE SIDE. THE SHARES REPRESENTED
HEREBY WILL BE VOTED AS INDICATED ON THE REVERSE SIDE OR FOR IF NO
CHOICE IS INDICATED.
Please mark your proxy, date and sign it on the reverse side and return
it promptly in the accompanying envelope, which requires no postage if
mailed in the United States.
The Proposal:
To approve an Agreement and Plan of Reorganization dated as of
_______________, 1995 by and among Oppenheimer Strategic Funds
Trust, on behalf of Oppenheimer Strategic Income Fund, the
Corporation, on behalf of the Fund, and Quest for Value Advisors,
and the transactions contemplated thereby, including the transfer
of substantially all the assets of the Fund in exchange for Class
A, Class B and Class C shares of Oppenheimer Strategic Income Fund
and the assumption by Oppenheimer Strategic Income Fund of certain
liabilities of the Fund, the distribution of such shares to the
shareholders of the Fund in liquidation of the Fund and the
cancellation of the outstanding shares of the Fund.
FOR____ AGAINST____ ABSTAIN____
Dated:________________________, 1995
(Month) (Day)
______________________________
Signature(s)
______________________________
Signature(s)
Please read both sides of this ballot.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON. When signing
as custodian, attorney, executor, administrator, trustee, etc., please
give your full title as such. All joint owners should sign this proxy.
If the account is registered in the name of a corporation, partnership
or other entity, a duly authorized individual must sign on its behalf
and give his or her title.
<PAGE>
Preliminary Copy
QUEST FOR VALUE GLOBAL FUNDS, INC.
QUEST FOR VALUE GLOBAL INCOME FUND - CLASS B SHARES
PROXY FOR SPECIAL SHAREHOLDERS MEETING
TO BE HELD November 16, 1995
The undersigned shareholder of Quest for Value Global Income Fund (the
"Fund"), a series of Quest for Value Global Funds, Inc. (the
"Corporation"), does hereby appoint Thomas E. Duggan and Maria Camacho,
and each of them, as attorneys-in-fact and proxies of the undersigned,
with full power of substitution, to attend the Special Meeting of
Shareholders of the Fund to be held on November 16, 1995, at One World
Financial Center, New York, New York 10281 on the 40th Floor at 10:00
A.M., New York time, and at all adjournments thereof, and to vote the
shares held in the name of the undersigned on the record date for said
meeting on the Proposal specified on the reverse side. Said attorneys-
in-fact shall vote in accordance with their best judgment as to any
other matter.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, WHO RECOMMENDS A
VOTE FOR THE PROPOSAL ON THE REVERSE SIDE. THE SHARES REPRESENTED
HEREBY WILL BE VOTED AS INDICATED ON THE REVERSE SIDE OR FOR IF NO
CHOICE IS INDICATED.
Please mark your proxy, date and sign it on the reverse side and return
it promptly in the accompanying envelope, which requires no postage if
mailed in the United States.
The Proposal:
To approve an Agreement and Plan of Reorganization dated as of
_______________, 1995 by and among Oppenheimer Strategic Funds
Trust, on behalf of Oppenheimer Strategic Income Fund, the
Corporation, on behalf of the Fund, and Quest for Value Advisors,
and the transactions contemplated thereby, including the transfer
of substantially all the assets of the Fund in exchange for Class
A, Class B and Class C shares of Oppenheimer Strategic Income Fund
and the assumption by Oppenheimer Strategic Income Fund of certain
liabilities of the Fund, the distribution of such shares to the
shareholders of the Fund in liquidation of the Fund and the
cancellation of the outstanding shares of the Fund.
FOR____ AGAINST____ ABSTAIN____
Dated:________________________, 1995
(Month) (Day)
______________________________
Signature(s)
______________________________
Signature(s)
Please read both sides of this ballot.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON. When signing
as custodian, attorney, executor, administrator, trustee, etc., please
give your full title as such. All joint owners should sign this proxy.
If the account is registered in the name of a corporation, partnership
or other entity, a duly authorized individual must sign on its behalf
and give his or her title.
<PAGE>
Preliminary Copy
QUEST FOR VALUE GLOBAL FUNDS, INC.
QUEST FOR VALUE GLOBAL INCOME FUND - CLASS C SHARES
PROXY FOR SPECIAL SHAREHOLDERS MEETING
TO BE HELD November 16, 1995
The undersigned shareholder of Quest for Value Global Income Fund (the
"Fund"), a series of Quest for Value Global Funds, Inc. (the
"Corporation"), does hereby appoint Thomas E. Duggan and Maria Camacho,
and each of them, as attorneys-in-fact and proxies of the undersigned,
with full power of substitution, to attend the Special Meeting of
Shareholders of the Fund to be held on November 16, 1995, at One World
Financial Center, New York, New York 10281 on the 40th Floor at 10:00
A.M., New York time, and at all adjournments thereof, and to vote the
shares held in the name of the undersigned on the record date for said
meeting on the Proposal specified on the reverse side. Said attorneys-
in-fact shall vote in accordance with their best judgment as to any
other matter.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, WHO RECOMMENDS A
VOTE FOR THE PROPOSAL ON THE REVERSE SIDE. THE SHARES REPRESENTED
HEREBY WILL BE VOTED AS INDICATED ON THE REVERSE SIDE OR FOR IF NO
CHOICE IS INDICATED.
Please mark your proxy, date and sign it on the reverse side and return
it promptly in the accompanying envelope, which requires no postage if
mailed in the United States.
The Proposal:
To approve an Agreement and Plan of Reorganization dated as of
_______________, 1995 by and among Oppenheimer Strategic Funds
Trust, on behalf of Oppenheimer Strategic Income Fund, the
Corporation, on behalf of the Fund, and Quest for Value Advisors,
and the transactions contemplated thereby, including the transfer
of substantially all the assets of the Fund in exchange for Class
A, Class B and Class C shares of Oppenheimer Strategic Income Fund
and the assumption by Oppenheimer Strategic Income Fund of certain
liabilities of the Fund, the distribution of such shares to the
shareholders of the Fund in liquidation of the Fund and the
cancellation of the outstanding shares of the Fund.
FOR____ AGAINST____ ABSTAIN____
Dated:________________________, 1995
(Month) (Day)
______________________________
Signature(s)
______________________________
Signature(s)
Please read both sides of this ballot.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON. When signing
as custodian, attorney, executor, administrator, trustee, etc., please
give your full title as such. All joint owners should sign this proxy.
If the account is registered in the name of a corporation, partnership
or other entity, a duly authorized individual must sign on its behalf
and give his or her title.
<PAGE>
<PAGE>
Oppenheimer Strategic Income Fund
Prospectus dated May 26, 1995
Oppenheimer Strategic Income Fund (the "Fund") is a mutual fund
that seeks a high level of current income by investing mainly in debt
securities and by writing covered call options on them. The Fund
invests principally in (1) debt securities of foreign governments and
companies, (2) U.S. Government securities, and (3) lower-rated, high-
yield debt securities of U.S. companies, commonly known as "junk
bonds." The Fund may invest some or all of its assets in any of these
three market sectors at any time. When it invests in more than one
sector, the Fund may reduce some of the risks of investing in only one
market sector, which may help to reduce the fluctuations in its net
asset value per share.
The Fund may invest up to 100% of its assets in "junk bonds," or
foreign debt securities rated below investment grade, which are
securities that are speculative and involve greater risks, including
risk of default, than higher-rated securities. The Fund is a
diversified portfolio designed for investors willing to assume
additional risk in return for seeking high current income. You should
carefully review the risks associated with an investment in the Fund.
Please refer to "Special Risks of Lower-Rated Securities" on page 17.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read it carefully and keep it for future
reference. You can find more detailed information about the Fund in the
May 26, 1995, Statement of Additional Information. For a free copy,
call Oppenheimer Shareholder 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 ("SEC") 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, nor are
they guaranteed by any bank or insured by the F.D.I.C. or any other
agency, and involve investment risks including the possible loss of the
principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents
ABOUT THE FUND
Expenses
Overview of the Fund
Financial Highlights
Investment Objective and Policies
How the Fund is Managed
Performance of the Fund
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange
Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
Checkwriting
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Appendix: Description of Ratings Categories
<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 September 30,
1994.
- Shareholder Transaction Expenses are charges you pay when you
buy or sell shares of the Fund. Please refer to "About Your Account,"
from pages __ through __ for an explanation of how and when these
charges apply.
Class A Class B Class C
Shares Shares Shares
Maximum Sales 4.75% None None
Charge on
Purchases (as a %
of offering price)
Sales Charge on None None None
Reinvested
Dividends
Deferred Sales None(1) 5% in the 1% if
Charge (as a % first year, shares are
of the lower declining redeemed
of the original to 1% in the within 12
purchase price sixth year and months of
or redemption eliminated purchase(2)
proceeds) thereafter(2)
Exchange Fee None None None
Redemption Fee None(3) None(3) None(3)
(1) If you invest more than $1 million in Class A shares, you may have
to pay a sales charge of up to 1% if you sell your shares within 18
calendar months from the end of the calendar month during which you
purchased those shares. See "How to Buy Shares - Class A Shares,"
below.
(2) See "How to Buy 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 check or by ACH wire
through AccountLink, or for which checkwriting privileges are used (see
"How to Sell Shares").
- Annual Fund Operating Expenses are paid out of the Fund's
assets and represent the Fund's expenses in operating its business.
For example, the Fund pays management fees to its investment adviser,
Oppenheimer Management Corporation (which is referred to in this
Prospectus as the "Manager"). The rates of the Manager's fees are set
forth in "How the Fund is Managed" below. The Fund has other regular
expenses for services, such as transfer agent fees, custodial fees paid
to the bank that holds its portfolio securities, audit fees and legal
expenses. Those expenses are detailed in the Fund's Financial
Statements in the Statement of Additional Information.
The numbers in the table below are projections of the Fund's
business expenses based on the Fund's expenses in its last fiscal year.
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. For Class B and Class C
shares, the 12b-1 Distribution Plan Fees are service fees and asset-
based sales charges. The service fee for each class is 0.25% of
average annual net assets of the class and the asset-based sales charge
for Class B and Class C shares is 0.75%. 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 table, depending on a number of
factors, including the actual value of the Fund's assets represented by
each class of shares. Class C shares were not publicly offered during
the fiscal year ended September 30, 1994. Therefore, the Annual Fund
Operating Expenses for Class C shares are estimates based on amounts
that would have been payable in that period assuming that Class C
shares were outstanding during such fiscal year.
Class A Class B Class C
Shares Shares Shares
-----------------------------------------------------------------------
Management Fees 0.54% 0.54% 0.54%
-----------------------------------------------------------------------
12b-1 Distribution Plan Fees 0.25% 1.00% 1.00%
-----------------------------------------------------------------------
Other Expenses 0.16% 0.17% 0.17%
-----------------------------------------------------------------------
Total Fund Operating 0.95% 1.71% 1.71%
Expenses
- Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples shown
below. Assume that you make a $1,000 investment in each class of
shares of the Fund, 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 table above. If you were to redeem your shares at
the end of each period shown below, your investment would incur the
following expenses by the end of 1, 3, 5 and 10 years:
1 year 3 years 5 years 10 years*
Class A Shares $57 $76 $98 $159
Class B Shares $67 $84 $113 $163
Class C Shares $27 $54 $93 $202
If you did not redeem your investment, it would incur the
following expenses:
1 year 3 years 5 years 10 years*
Class A Shares $57 $76 $98 $159
Class B Shares $17 $54 $93 $163
Class C Shares $17 $54 $93 $202
* 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 asset-
based sales charge and the contingent deferred sales charge on Class B
and Class C shares, long-term Class B and Class C shareholders could
pay the economic equivalent of an amount greater than the maximum
front-end sales charge allowed under applicable regulatory
requirements. 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" for more
information.
These examples show the effect of expenses on an investment, but
are not meant to state or predict actual or expected costs or
investment returns of the Fund, all of which will vary.
<PAGE>
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. Keep the
Prospectus for reference after you invest, particularly for information
about your account, such as how to sell or exchange shares.
- What Is The Fund's Investment Objective? The Fund's investment
objective is to seek a high level of current income by investing mainly
in debt securities and by writing covered call options on them.
- What Does the Fund Invest In? The Fund invests primarily in
debt securities of foreign governments and companies, U.S. Government
securities, and lower-rated high yield debt securities of U.S.
companies. The Fund may also write covered calls and use derivative
investments to enhance income, and may use hedging instruments,
including some derivative investments, to try to manage investment
risks. These investments are more fully explained in "Investment
Objective and Policies," starting on page __.
- Who Manages the Fund? The Fund's investment advisor is
Oppenheimer Management Corporation, which (including a subsidiary)
advises investment company portfolios having over $30 billion in
assets. The Fund's portfolio managers, who are primarily responsible
for the selection of the Fund's securities, are David Negri and Arthur
Steinmetz. The Manager is paid an advisory fee by the Fund, based on
its assets. The Board of Trustees, elected by shareholders, oversees
the investment advisor and the portfolio manager. Please refer to "How
the Fund is Managed," starting on page __ for more information about
the Manager and its fees.
- How Risky is the Fund? All investments carry risks to some
degree. The Fund's investments in foreign securities, especially those
issued by underdeveloped countries, generally involve special risks.
The value of foreign securities 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 transactions, changes in governmental, economic or monetary
policy in the U.S. or abroad, or other political or economic factors.
The Fund's investments in lower-rated securities are considered
speculative, involve greater risks and may be less liquid than higher-
rated securities. In addition, the Fund's investments in U.S.
Government securities and bonds are subject to changes in their value
from a number of factors such as changes in general bond and stock
market movements, the change in value of particular stocks or bonds
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. In the OppenheimerFunds
spectrum, the Fund is generally not as risky as aggressive growth
funds, but is more aggressive than money market or investment grade
bond funds. While the Manager tries to reduce risks by diversifying
investments, by carefully researching securities before they are
purchased for the portfolio, and in some cases by using hedging
techniques, there is no guarantee of success in achieving the Fund's
objectives and your shares may be worth more or less than their
original cost when you redeem them. Please refer to "Investment
Objective and Policies" starting on page ___ for a more complete
discussion.
- How Can I Buy Shares? You can buy shares through your dealer
or financial institution, or you can purchase shares directly through
the Distributor by completing an Application or by using an Automatic
Investment Plan under AccountLink. Please refer to "How To Buy Shares"
on page ___ for more details.
- Will I Pay a Sales Charge to Buy Shares? The Fund has three
classes of shares. Class A shares are offered with a front-end sales
charge, starting at 4.75%, 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 on Class B and Class C shares. Please
review "How To Buy Shares" starting on page ___ for more details,
including a discussion about which class may be appropriate for you.
- How Can I Sell My Shares? Shares can be redeemed by mail, by
telephone call to the Transfer Agent on any business day, or through
your dealer, by writing a check against your Fund account (available
for Class A shares only) or by wire to a previously designated bank
account. Please refer to "How To Sell Shares" on page ___. The Fund
also offers exchange privileges to other OppenheimerFunds, described in
"How to Exchange Shares" on page ____.
- How Has the Fund Performed? The Fund measures its performance
by quoting its dividend yield, distribution return, average annual
total return and cumulative total return, which measure historical
performance. The Fund's yield and returns can be compared to the yield
and returns (over similar periods) of other funds. Of course, other
funds may have different objectives, investments, and levels of risk.
The Fund's performance can also be compared to broad market indices,
which we have done on page ___. Please remember that past performance
does not guarantee future results.
<PAGE>
Financial Highlights
The table on the following pages presents selected financial
information about the Fund, including per share data and expense ratios
and other data based on the Fund's average net assets. This
information has been audited by Deloitte & Touche LLP, the Fund's
independent auditors, whose report on the Fund's financial statements
for the fiscal year ended September 30, 1994, is included in the
Statement of Additional Information. Class B shares were publicly
offered only during a portion of that period, commencing November 30,
1992. Class C shares were not publicly offered during the fiscal year
ended September 30, 1994. Accordingly, no information on Class C
shares is reflected in the table below or in the Fund's other financial
statements.
Financial Highlights September 30, 1993
<TABLE>
<CAPTION>
Class A Class B
------- -------
Year Ended Year Ended
September 30, September 30,
1994 1993 1992 1991 1990(2) 1994 1993(1)
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
<C>
Per Share Operating Data:
Net asset value, beginning of period $5.21 $5.07 $5.01 $4.87 $5.00 $5.22
$4.89
----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .45 .48 .46 .56 .59 .42 .36
Net realized and unrealized gain (loss)
on investments, options written
and foreign currency transactions (.35) .17 .14 .21 (.10) (.36) .34
------ ------ ------ ------ ------ ------ ------
Total income from investment
operations .10 .65 .60 .77 .49 .06 .70
----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment income (.43) (.50) (.46) (.57) (.57) (.39) (.36)
Distributions from net realized gain
on investments, options written
and foreign currency transactions -- (.01) (.08) (.06) (.05) -- (.01)
Distributions in excess of net
realized gain on investments,
options written and foreign
currency transactions (.12) -- -- -- -- (.12) --
Tax return of capital (.01) -- -- -- -- (.01) --
------ ------ ------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (.56) (.51) (.54) (.63) (.62) (.52) (.37)
----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.75 $5.21 $5.07 $5.01 $4.87 $4.76
$5.22
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
----------------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value(3) 1.85% 13.30% 12.56% 16.97% 10.20% 1.07%
13.58%
----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period
(in millions) $3,143 $2,754 $1,736 $560 $177 $1,586 $695
----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $3,082 $2,107 $1,084 $311 $93 $1,236
$276
----------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding
at end of period (in thousands) 661,897 528,587 342,034 111,739 36,418 333,489
133,235
----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 8.72% 9.78% 9.39% 11.82% 12.79%(4) 7.90%
8.13%(4)
Expenses .95% 1.09% 1.16%(5) 1.27%(5) 1.36%(4) 1.71%
1.80%(4)
----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 119.0% 148.6% 208.2% 194.7% 424.6% 119.0%
148.6%
</TABLE>
<PAGE>
Investment Objective and Policies
Objective. The Fund seeks a high level of current income mainly from
interest on debt securities and also seeks to enhance its income by
writing covered call options on debt securities. The Fund does not
invest with the objective of seeking capital appreciation.
Investment Policies and Strategies. The Fund seeks its investment
objective by investing principally in three market sectors: (1) debt
securities of foreign governments and companies, (2) U.S. Government
securities, and (3) lower-rated, high-yield debt securities of U.S.
companies. Under normal market conditions the Fund will invest in each
of these three sectors, but from time to time the Manager will adjust
the amounts the Fund invests in each sector.
By investing in all three sectors, the Fund seeks to reduce the
volatility of fluctuations in its net asset value per share, because
the overall securities price and interest rate movements in each of the
different sectors are not necessarily correlated with each other.
Changes in one sector may be offset by changes in another sector that
moves in a different direction. Therefore, this strategy may help
reduce some of the risks from negative market movements and interest
rate changes in any one sector. However, the Fund may invest up to
100% of its assets in any one sector if the Manager believes that in
doing so the Fund can achieve its objective without undue risk to the
Fund's assets.
When investing the Fund's assets, the Manager considers many
factors, including general economic conditions in the U.S. and abroad,
prevailing interest rates, and the relative yields of U.S. and foreign
securities. While the Fund may seek to earn income by writing covered
call options, market price movements may make it disadvantageous to do
so. The Fund may also try to hedge against losses by using hedging
strategies described below. When market conditions are unstable, the
Fund may invest substantial amounts of its assets in money market
instruments for defensive purposes. These strategies are described in
greater detail below and also in the Statement of Additional
Information under the same headings.
The amount of income the Fund may earn to distribute to
shareholders will fluctuate, depending on the securities the Fund owns
and the sectors in which it invests. The Fund is not a complete
investment program and is designed for investors willing to assume a
higher degree of risk. There is no assurance that the Fund will be
able to achieve its investment objective. Because of the high-yield,
lower-rated securities in which the Fund invests, the Fund is
considered a speculative investment, and the value of your shares may
decline in adverse market conditions.
- Special Risks of Lower-Rated Securities. In seeking high
current income, the Fund may invest in higher-yielding, lower-rated
debt securities, commonly known as "junk bonds." There is no
restriction on the amount of the Fund's assets that could be invested
in these types of securities. Lower-rated debt securities are those
rated below "investment grade," such as debt securities that have a
rating of "Baa" or lower by Moody's Investors Service, Inc. ("Moody's")
or "BBB" or lower by Standard & Poor's Corporation ("S&P"). These
securities may be rated as low as "C" or "D" or may be in default at
time of purchase.
The Manager does not rely solely on ratings of securities by
rating agencies when selecting investments for the Fund, but evaluates
other economic and business factors as well. The Fund may invest in
unrated securities that the Manager believes offer yields and risks
comparable to rated 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 ("credit risk"). All corporate debt
securities (whether foreign or domestic) are subject to some degree of
credit risk.
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. The
Fund is not obligated to dispose of securities when issuers are in
default or if the rating of the security is reduced. These risks are
discussed in more detail in the Statement of Additional Information.
- Portfolio Turnover. The length of time the Fund has held a
security is not generally a consideration in investment decisions. A
change in the securities held by the Fund is known as "portfolio
turnover." As a result of the Fund's investment policies and market
factors, the Fund will trade its portfolio actively to try to benefit
from short-term yield differences among debt securities and as a result
the Fund's portfolio turnover may be higher than other mutual funds.
This strategy may involve greater transaction costs from brokerage
commissions and dealer mark-ups. Additionally, high portfolio turnover
may result in increased short-term capital gains and affect the ability
of the Fund to qualify for tax deductions for payments made to
shareholders as a "regulated investment company" under the Internal
Revenue Code. The Fund qualified in its last fiscal year and intends to
do so in the coming year, although it reserves the right not to
qualify.
- How the Fund's Portfolio Securities Are Rated. As of September
30, 1994, the Fund's portfolio included corporate bonds in the
following S&P rating categories or if unrated, determined by the
Manager to be comparable to the category indicated (the amounts shown
are dollar-weighted average values of the bonds in each category
measured as a percentage of the Fund's total assets): AAA, 0.80%; AA,
0.00%; A, 0.07%; BBB, 1.59%; BB, 4.29%; B, 22.66%; CCC, 4.37%; CC,
0.71%; C, 0.46%; D, 0.69%. The Appendix to this Prospectus describes
the rating categories. The allocation of the Fund's assets in
securities in the different rating categories will vary over time.
- Interest Rate Risks. In addition to credit risk, described
above, debt securities are subject to changes in value due to changes
in prevailing interest rates. When prevailing interest rates fall, the
values of outstanding debt securities generally rise. Conversely, when
interest rates rise, the values of outstanding debt securities
generally decline. The magnitude of these fluctuations will be greater
when the average maturity of the portfolio securities is longer.
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.
- Can the Fund's Investment Objective and Policies Change? The
Fund has an investment objective, which is described above, as well as
investment policies that it follows to try to achieve its objective.
Additionally, it uses certain investment techniques and strategies in
carrying out those investment policies. The Fund's investment policies
and techniques are not "fundamental" unless a particular policy is
identified in this Prospectus or in the Statement of Additional
Information as "fundamental." The Fund's investment objective is a
fundamental policy.
The Fund's Board of Trustees may change non-fundamental policies,
strategies and techniques without shareholder approval, although
significant changes will be described in amendments to this Prospectus.
Fundamental policies are those that cannot be changed without the
approval of a "majority" of the Fund's outstanding voting shares. The
term "majority" is defined in the Investment Company Act to be a
particular percentage of outstanding voting shares (and this term is
explained in the Statement of Additional Information).
Debt Securities of Foreign Governments and Companies. The Fund may
invest in debt securities issued or guaranteed by foreign companies,
"supranational" entities such as the World Bank, and foreign
governments or their agencies. These foreign securities may include
debt obligations such as government bonds, debentures issued by
companies, as well as notes. Some of these debt securities may have
variable interest rates or "floating" interest rates that change in
different market conditions. Those changes will affect the income the
Fund receives. The Fund can also invest in preferred stocks and "zero
coupon" securities, which have similar features to the ones described
below in "Debt Securities of U.S. Companies." Preferred stocks and
zero coupon securities are described in more detail in the Statement of
Additional Information.
The Fund will not invest more than 25% of its total assets in
government securities of any one foreign country. Otherwise, the Fund
is not restricted in the amount of its assets it may invest in foreign
countries or in which countries and has no limitations on the maturity
or capitalization of the issuer of the foreign debt securities in which
it invests, although it is expected that most issuers will have total
assets or capitalization in excess of $100 million. However, if the
Fund's assets are held abroad, the countries in which they are held and
the sub-custodians holding them must be approved by the Fund's Board of
Trustees.
The Fund may buy or sell foreign currencies and foreign currency
forward contracts (agreements to exchange one currency for another at a
future date) to hedge currency risks and to facilitate transactions in
foreign investments. Although currency forward contracts can be used to
protect the Fund from adverse exchange rate changes, there is a risk of
loss if the Manager fails to predict currency exchange movements
correctly.
- Risks of Foreign Securities. Investing in foreign securities,
especially those issued in underdeveloped countries, generally involves
special risks. For example, foreign issuers are not subject to the
same accounting and disclosure requirements that U.S. companies are
subject to. The value of foreign investments may be affected by
changes in foreign currency rates, exchange control regulations,
expropriation or nationalization of a company's assets, foreign taxes,
delays in settlement of transactions, changes in governmental economic
or monetary policy in the U.S. or abroad, or other political and
economic factors. If the Fund distributes more income during a period
than it earns because of unfavorable currency exchange rates, those
dividends may later have to be considered a return of capital. Some of
the foreign debt securities the Fund may invest in, such as emerging
market debt, have speculative characteristics. More information about
the risks and potential rewards of foreign securities is contained in
the Statement of Additional Information.
U.S. Government Securities. The Fund may invest in debt securities
issued or guaranteed by the U.S. Government or its agencies and
instrumentalities ("U.S. Government Securities"). Certain U.S.
Government Securities, including U.S. Treasury bills, notes and bonds,
and mortgage participation certificates guaranteed by the Government
National Mortgage Association ("Ginnie Mae") are supported by the full
faith and credit of the U.S. Government. Ginnie Mae certificates are
one type of mortgage-related U.S. Government Security the Fund invests
in. Other mortgage-related U.S. Government Securities the Fund invests
in that are issued or guaranteed by federal agencies or government-
sponsored entities are not supported by the full faith and credit of
the U.S. Government. Those securities include obligations supported by
the right of the issuer to borrow from the U.S. Treasury, such as
obligations of Federal Home Loan Mortgage Corporation ("Freddie Mac")
and obligations supported only by the credit of the instrumentality,
such as Federal National Mortgage Association ("Fannie Mae"). Other
U.S. Government Securities the Fund invests in may be zero coupon
Treasury securities and collateralized mortgage obligations ("CMOs").
Although U.S. Government Securities involve little credit risk,
their values will fluctuate depending on prevailing interest rates.
Because the yields on U.S. Government Securities are generally lower
than on corporate debt securities, when the Fund holds U.S. Government
Securities it may attempt to increase the income it can earn from them
by writing covered call options against them when market conditions are
appropriate. Writing covered calls is explained below, under "Other
Investment Techniques and Strategies."
- Zero Coupon Treasury Securities. Zero coupon Treasury
securities generally are U.S. Treasury notes or bonds that have been
"stripped" of their interest coupons, U.S. Treasury bills issued
without interest coupons, or certificates representing an interest in
the stripped securities. A zero coupon Treasury security pays no
current interest and trades at a deep discount from its face value and
will be subject to greater market fluctuations from changes in interest
rates than interest-paying securities. The Fund accrues interest on its
holdings without receiving the actual cash. As a result, the Fund may
be forced to sell portfolio securities to pay cash dividends or meet
redemptions. The Fund may invest up to 50% of its total assets in zero
coupon securities issued by either the U.S. Government or U.S.
companies.
- Mortgage-Backed U.S. Government Securities and CMOs. Certain
mortgage-backed U.S. Government securities "pass-through" to investors
the interest and principal payments generated by a pool of mortgages
assembled for sale by government agencies. Pass-through mortgage-backed
securities entail the risk that principal may be repaid at any time
because of prepayments on the underlying mortgages. That may result in
greater price and yield volatility than traditional fixed-income
securities that have a fixed maturity and interest rate.
The Fund may also invest in CMOs, which generally are obligations
fully collateralized by a portfolio of mortgages or mortgage-related
securities. Payment of the interest and principal generated by the
pool of mortgages is passed through to the holders as the payments are
received. CMOs are issued with a variety of classes or series which
have different maturities. Certain CMOs may be more volatile and less
liquid than other types of mortgage-related securities, because of the
possibility of the prepayment of principal due to prepayments on the
underlying mortgage loans.
The Fund may also enter into "forward roll" transactions with
banks and dealers with respect to the mortgage-related securities in
which it can invest. These require the Fund to secure its obligation in
the transaction by segregating assets with its custodian bank equal in
amount to its obligation under the roll.
The Fund may invest in CMOs that are "stripped"; that is, the
security is divided into two parts, one of which receives some or all
of the principal payments and the other of which receives some or all
of the interest. Stripped securities that receive interest only are
subject to increased volatility in price due to interest rate changes
and have the additional risk that if the principal underlying the CMO
is prepaid (which is more likely to happen if interest rates fall), the
Fund will lose the anticipated cash flow from the interest on the
mortgages that were prepaid. Stripped securities that receive
principal payments only are also subject to increased volatility in
price due to interest rate changes and have the additional risk that
the security will be less liquid during demand or supply imbalances.
See "Mortgage-backed Securities" in the Statement of Additional
Information for more details.
Debt Securities of U.S. Companies. The Fund may invest in debt
securities and dividend-paying common stocks issued by U.S. companies,
including bonds, debentures, notes, preferred stocks, zero coupon
securities, participation interests, asset-backed securities and
sinking fund and callable bonds.The Fund may purchase these securities
in public offerings or through private placements. The Fund has no
limitations on the maturity, capitalization of the issuer or credit
rating of the domestic debt securities in which it invests, although it
is expected that most issuers will have total assets in excess of $100
million.
- Zero Coupon Corporate Securities. Zero coupon corporate
securities are similar to U.S. Government zero coupon Treasury
securities but are issued by companies. They have an additional risk
that the issuing company may fail to pay interest or repay the
principal on the obligation.
- Corporate Asset-Backed Securities. Asset-backed securities are
fractional interests in pools of consumer loans and other trade
receivables, similar to mortgage-backed securities. They are issued by
trusts and special purpose corporations. They are backed by a pool of
assets, such as credit card or auto loan receivables, which are the
obligations of a number of different parties. The income from the
underlying pool is passed through to holders, such as the Fund. These
securities are frequently supported by a credit enhancement, such as a
letter of credit, a guarantee or a preference right. However, the
extent of the credit enhancement may be different for different
securities and generally applies to only a fraction of the security's
value. These securities present special risks. For example, in the
case of credit card receivables, the issuer of the security may have no
security interest in the related collateral. Thus, the risks of
corporate asset-backed securities are ultimately dependent upon payment
of consumer loans by the individual borrowers.
- Participation Interests. The Fund may acquire participation
interests in loans that are made to U.S. or foreign companies (the
"borrower"). They may be interests in, or assignments of, the loan and
are acquired from banks or brokers that have made the loan or are
members of the lending syndicate. No more than 5% of the Fund's net
assets can be invested in participation interests of the same borrower.
The Manager has set certain creditworthiness standards for issuers of
loan participations, and monitors their creditworthiness. The value of
loan participation interests depends primarily upon the
creditworthiness of the borrower, and its ability to pay interest and
principal. Borrowers may have difficulty making payments. If a
borrower fails to make scheduled interest or principal payments, the
Fund could experience a decline in the net asset value of its shares.
Some borrowers may have senior securities rated as low as "C" by
Moody's or "D" by Standard & Poor's, but may be deemed acceptable
credit risks. Participation interests are subject to the Fund's
limitations on investments in illiquid securities. See "Illiquid and
Restricted Securities".
- Special Risks - Borrowing for Leverage. The Fund may borrow up
to 50% of the value of its net assets from banks to buy securities.
The Fund will borrow only if it can do so without putting up assets as
security for a loan. This is a speculative investment method known as
"leverage." This investing technique may subject the Fund to greater
risks and costs than funds that do not borrow. These risks may include
the possibility that the Fund's net asset value per share will
fluctuate more than the net asset value of funds that don't borrow,
since the Fund pays interest on borrowings and interest expense affects
the Fund's share price and yield. Borrowing for leverage is subject to
limits under the Investment Company Act, described in more detail in
"Borrowing for Leverage" in the Statement of Additional Information.
Other Investment Techniques and Strategies. The Fund may also use the
investment techniques and strategies described below. These techniques
involve certain risks. The Statement of Additional Information
contains more detailed information about these practices, including
limitations on their use that are designed to reduce some of the risks.
For more information, please refer to the description of these
techniques under the same headings in "Other Investment Techniques and
Strategies" in the Statement of Additional Information.
- Temporary Defensive Investments. In times of unstable economic
or market conditions, the Manager may determine that it is appropriate
for the Fund to assume a temporary defensive position by investing some
of its assets (there is no limit on the amount) in short-term money
market instruments. These include U.S. Government Securities, bank
obligations, commercial paper, corporate obligations and other
instruments approved by the Fund's Board of Trustees.
- Loans of Portfolio Securities. To attempt to increase its
income, the Fund may lend its portfolio securities amounting to not
more than 25% of its total assets to brokers, dealers and other
financial institutions, subject to certain conditions described in the
Statement of Additional Information. The Fund presently does not
intend to lend its portfolio securities, but if it does, the value of
securities loaned is not expected to exceed 5% of the value of its
total assets.
- Repurchase Agreements. The Fund may enter into repurchase
agreements. In a repurchase transaction, the Fund buys a security and
simultaneously sells it to the vendor for delivery at a future date.
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 must be fully collateralized. However, if the vendor fails
to pay the re-sale price on the delivery date, the Fund may experience
costs in disposing of the collateral and losses if there is any delay
in doing so.
- Illiquid and Restricted Securities. Under the policies and
procedures established by the Fund's Board of Trustees, the Manager
determines the liquidity of certain of the Fund's investments.
Investments may be illiquid because of the absence of an active trading
market, making it difficult to value them or dispose of them promptly
at an acceptable price. A restricted security is one that has a
contractual restriction on its resale or which cannot be sold publicly
until it is registered under the Securities Act of 1933. The Fund
will not invest more than 10% of its net assets in illiquid or
restricted securities (that limit may increase to 15% if certain state
laws are changed or the Fund's shares are no longer sold in those
states). The Fund's percentage limitation on these investments does
not apply to certain restricted securities that are eligible for resale
to qualified institutional purchasers.
- Warrants and Rights. Warrants basically are options to
purchase stock at set prices that are valid for a limited period of
time. Rights are options to purchase securities, normally granted to
current holders by the issuer. The Fund may invest up to 5% of its
total assets in warrants or rights. That 5% does not apply to warrants
and rights the Fund acquired as part of units with other securities or
that were attached to other securities. No more than 2% of the Fund's
assets may be invested in warrants that are not listed on the New York
or American Stock Exchanges. For further details about these
investments, please refer to "Warrants and Rights" in the Statement of
Additional Information.
- "When-Issued" and Delayed Delivery Transactions. The Fund may
purchase securities on a "when-issued" basis and may purchase or sell
securities on a "delayed delivery" basis. These terms refer to
securities that have been created and for which a market exists, but
which are not available for immediate delivery. There may be a risk of
loss to the Fund if the value of the security declines prior to the
settlement date.
- 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 securities indices, or enter into interest
rate swap agreements. 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 defensive reasons
or to raise cash to distribute to shareholders.
Futures. The Fund may buy and sell futures contracts that relate
to (1) broadly-based securities indices (these are referred to as Stock
Index Futures and Bond Index Futures), and (2) interest rates (these
are referred to as Interest Rate Futures). All of these futures are
described in "Hedging With Options and Futures Contracts" in the
Statement of Additional Information. The Fund does not use futures and
options on futures for speculative purposes.
Put and Call Options. The Fund may buy and sell certain kinds of
put options (puts) and call options (calls).
The Fund may purchase calls on (1) debt securities, (2) Futures,
(3) broadly-based securities indices and (4) foreign currencies, or to
terminate its obligation on a call the Fund previously wrote. The Fund
may write (that is, sell) covered call options on debt securities to
raise cash for income to distribute to shareholders or for defensive
reasons. When the Fund writes a call, it receives cash (called a
premium). The call gives the buyer the ability to buy the investment
on which the call was written from the Fund at the call price during
the period in which the call may be exercised. If the value of the
investment does not rise above the call price, it is likely that the
call will lapse without being exercised, while the Fund keeps the cash
premium (and the investment).
The Fund may purchase put options. Buying a put on an investment
gives the Fund the right to sell the investment at a set price to a
seller of a put on that investment. The Fund can purchase those puts
that relate to (1) debt securities, (2) Interest Rate Futures, (3)
Stock or Bond Index Futures or (4) foreign currencies. The Fund may
purchase puts on investments it does not own. Writing puts requires
the segregation of liquid assets to cover the put. The Fund will not
write a put if it will require more than 50% of the Fund's net assets
to be segregated to cover the put obligation.
The Fund may buy or sell foreign currency puts and calls only if
they are traded on a securities or commodities exchange or on the over-
the-counter market, or are quoted by recognized dealers in those
options. 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 increases in the dollar cost of buying foreign
securities.
The Fund may buy and sell calls if certain conditions are met: (1)
the calls must be listed on a domestic or foreign securities or
commodities exchange or quoted on the Automated Quotation System of the
National Association of Securities Dealers, Inc. or on the over-the-
counter market; and (2) each call must be "covered" while it is
outstanding; that means the Fund must own the securities on which the
call is written or it must own other securities that are acceptable for
the escrow arrangements required for calls. There is no limit on the
amount of the Fund's total assets that may be subject to covered calls.
The Fund can also write calls on foreign currencies (discussed below).
The Fund may also write covered calls on Futures Contracts it owns, but
these calls must be covered by securities or other liquid assets the
Fund owns and segregates to enable it to satisfy its obligations if the
call is exercised. A call or put option may not be purchased if the
value of all of the Fund's put and call options would exceed 5% of the
Fund's total assets.
Forward Contracts. Forward contracts are foreign currency
exchange contracts. They are used to buy or sell foreign currency for
future delivery at a fixed price. The Fund uses them to "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 losses from changes
in the relative values of the U.S. dollar and a foreign currency. The
Fund may also use "cross hedging," where the Fund hedges against
changes in currencies other than the currency in which a security it
holds is denominated.
Interest Rate Swaps. In an interest rate swap, the Fund and
another party exchange their right to receive or their obligation to
pay interest on a security. For example, they may swap a right to
receive floating rate payments for fixed rate payments. The Fund
enters into swaps only on securities it owns. The Fund may not enter
into swaps with respect to more than 25% of its total assets. Also,
the Fund will segregate liquid assets (such as cash or U.S. Government
securities) to cover any amounts it could owe under swaps that exceed
the amounts it is entitled to receive, and it will adjust that amount
daily, as needed.
Hedging instruments can be volatile investments and may involve
special risks. The use of hedging instruments requires special skills
and knowledge of investment techniques that are different than what is
required for normal portfolio management. If the Manager uses a
hedging instrument at the wrong time or judges market conditions
incorrectly, hedging strategies may reduce the Fund's return. The Fund
could also experience losses if the prices of its futures and options
positions were not correlated with its other investments or if it could
not close out a position because of an illiquid market for the future
or option.
Options trading involves the payment of premiums and has special
tax effects on the Fund. There are also special risks in particular
hedging strategies. If a covered call written by the Fund is exercised
on a security that has increased in value, the Fund will be required to
sell the security at the call price and will not be able to realize any
profit if the security has increased in value above the call 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. To limit its exposure in foreign currency exchange
contracts, the Fund limits its exposure to the amount of its assets
denominated in the foreign currency. Interest rate swaps are subject
to credit risks (if the other party fails to meet its obligations) and
also to interest rate risks. The Fund could be obligated to pay more
under its swap agreements than it receives under them, as a result of
interest rate changes. These risks are described in greater detail in
the Statement of Additional Information.
- Derivative Investments. The Fund can invest in a number of
different kinds of "derivative investments." The Fund may use some
types of derivatives for hedging purposes, and may invest in others
because they offer the potential for increased income and principal
value. In general, a "derivative investment" is a specially-designed
investment whose performance is linked to the performance of another
investment or security, such as an option, future, index or currency.
In the broadest sense, derivative investments include exchange-traded
options and futures contracts (please refer to "Hedging").
One risk of investing in derivative investments is that the
company issuing the instrument might not pay the amount due on the
maturity of the instrument. There is also the risk that the underlying
investment or security might not perform the way the Manager expected
it to perform. The performance of derivative investments may also be
influenced by interest rate changes in the U.S. and abroad. All of
these risks can mean that the Fund will realize less income than
expected from its investments, or that it can lose part of the value of
its investments, which will affect the Fund's share price. Certain
derivative investments held by the Fund may trade in the over-the-
counter markets and may be illiquid. If that is the case, the Fund's
investment in them will be limited, as discussed in "Illiquid and
Restricted Securities".
Another type of derivative the Fund may invest in is an "index-
linked" note. On the maturity of this type of debt security, payment
is made based on the performance of an underlying index, rather than
based on a set principal amount for a typical note. Another derivative
investment the Fund may invest in is a currency-indexed security.
These are typically short-term or intermediate-term debt securities.
Their value at maturity or the interest rates at which they pay income
are determined by the change in value of the U.S. dollar against one or
more foreign currencies or an index. In some cases, these securities
may pay an amount at maturity based on a multiple of the amount of the
relative currency movements. This variety of index security offers the
potential for greater income but at a greater risk of loss.
Other derivative investments the Fund may invest in include "debt
exchangeable for common stock" of an issuer or "equity-linked debt
securities" of an issuer. At maturity, the debt security is exchanged
for common stock of the issuer or is payable in an amount based on the
price of the issuer's common stock at the time of maturity. In either
case there is a risk that the amount payable at maturity will be less
than the principal amount of the debt (because the price of the
issuer's common stock is not as high as was expected).
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: (1) as to 75% of its
total assets, the Fund may not buy securities issued or guaranteed by a
single issuer if, as a result, the Fund would have invested more than
5% of its assets in the securities of that issuer or would own more
than 10% of the voting securities of that issuer (purchases of U.S.
Government Securities are not restricted by this policy); (2) the Fund
may not borrow money in excess of 50% of the value of its total assets
(as a non-fundamental policy, that limit is applied to the Fund's net
assets), and it may borrow only subject to the restrictions described
under "Borrowing for Leverage," in the Statement of Additional
Information; (3) the Fund may not invest more than 25% of its total
assets in any one industry (this limit does not apply to U.S.
Government Securities but each foreign government is treated as an
"industry," and utilities are divided according to the services they
provide); and (4) the Fund may not invest more than 5% of its total
assets in securities of issuers (including their predecessors) that
have been in operation less than three years.
All of the percentage limitations described above and elsewhere in
this Prospectus and Statement of Additional Information apply only at
the time the Fund purchases a security, and the Fund need not dispose
of a security merely because the size of the Fund's assets has changed
or the security has increased in value relative to the size of the
Fund. There are other fundamental policies discussed in the Statement
of Additional Information.
How the Fund is Managed
Organization and History. The Fund was organized in 1989 as a
Massachusetts business trust with one series, but in December 1993,
that business trust was reorganized to become a multi-series business
trust called Oppenheimer Strategic Funds Trust (the "Trust"), and the
Fund became a series of it. The Trust is an open-end, diversified
management investment company, with an unlimited number of authorized
shares of beneficial interest.
The Board of Trustees has the power, without shareholder approval,
to divide unissued shares of this 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. Each class has its own dividends and
distributions and pays certain expenses which may be different for the
different classes. Each class may have a different net asset value.
Each share has one vote at shareholder meetings, with fractional shares
voting proportionally. Only shares of a particular class vote together
on matters that affect that class alone. Shares are freely
transferrable.
The Fund is governed by a Board of Trustees, which is responsible
for protecting the interests of shareholders under Massachusetts law.
The Trustees meet periodically throughout the year to oversee the
Fund's activities, review its performance, and review the actions of
the Manager. "Trustees and Officers of the Fund" in the Statement of
Additional Information names the Trustees and provides more information
about them and the officers of the Fund. Although the Fund is not
required by law to hold annual meetings, it may hold shareholder
meetings from time to time on important matters, and shareholders have
the right to call a meeting to remove a Trustee or to take other action
described in the Fund's Declaration of Trust.
The Manager and its Affiliates. The Fund is managed by the Manager,
Oppenheimer Management Corporation, which is responsible for selecting
the Fund's investments 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 which states
the Manager's responsibilities. The Agreement sets forth the fees paid
by the Fund to the Manager and describes the expenses that the Fund is
responsible to pay to conduct its business.
The Manager has operated as an investment adviser since 1959. The
Manager (including a subsidiary) currently manages investment
companies, including other OppenheimerFunds, with assets of more than
$30 billion as of March 31, 1995, and with more than 2.4 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, a mutual life insurance company.
- Portfolio Managers. The Portfolio Managers of the Fund are
Arthur P. Steinmetz and David P. Negri. They have been the individuals
principally responsible for the day-to-day management of the Fund's
portfolio since November 1989. Mr. Steinmetz, a Senior Vice President
of the Manager, and Mr. Negri, a Vice President of the Manager, are
Vice Presidents of the Trust. They each serve as officers and
portfolio managers of other OppenheimerFunds.
- Fees and Expenses. Under the Investment Advisory Agreement,
the Fund pays the Manager the following annual fees, which decline on
additional assets as the Fund grows: 0.75% of the first $200 million of
the Fund's average annual net assets, 0.72% of the next $200 million,
0.69% of the next $200 million, 0.66% of the next $200 million, 0.60%
of the next $200 million, and 0.50% of net assets in excess of $1
billion. The Fund's management fee for its last fiscal year was 0.54%
of average annual net assets for Class A shares and 0.54% for Class B
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, legal and
auditing costs. 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.
There is also information about the Fund's brokerage policies and
portfolio transactions in "Brokerage Policies of the Fund" in the
Statement of Additional Information. Because the Fund purchases most
of its portfolio securities directly from the sellers and not through
brokers, it therefore incurs relatively little expense for brokerage.
From time to time it may use brokers when buying portfolio securities.
When deciding which brokers to use in those cases, the investment
advisory agreement allows the Manager to consider whether brokers have
sold shares of the Fund or any other funds for which the Manager also
serves as investment adviser.
- The Distributor. The Fund's shares are sold through dealers or
brokers that have a sales agreement with Oppenheimer Funds Distributor,
Inc., a subsidiary of the Manager that acts as the Distributor. The
Distributor also distributes the shares of other mutual funds managed
by the Manager (the "OppenheimerFunds") and is sub-distributor for
funds managed by a subsidiary of the Manager.
- The Transfer Agent. The Fund's transfer agent is Oppenheimer
Shareholder Services, a division of the Manager, which acts as the
shareholder servicing agent for the Fund and the other OppenheimerFunds
on an "at-cost" basis. Shareholders should direct inquiries about their
accounts to the Transfer Agent at the address and toll-free numbers
shown below in this Prospectus and on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms "total
return," "average annual total return" and "yield" to illustrate its
performance. The performance of each class of shares is shown
separately, because the performance of each class will usually be
different, as a result of the different kinds of expenses each class
bears. This performance information may be useful to help you see how
well your investment has done and to compare it to other funds or
market indices, as we have done below.
It is important to understand that the Fund's yields and 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
and yields are calculated is contained in the Statement of Additional
Information, which also contains information about indices and other
ways to measure and compare the Fund's performance. The Fund's
investment performance will vary over time, depending on market
conditions, the composition of the portfolio, expenses and which class
of shares you purchase.
- Total Returns. There are different types of "total returns"
used to measure the Fund's performance. Total return is the change in
value of a hypothetical investment in the Fund over a given period,
assuming that all dividends and capital gains distributions are
reinvested in additional shares. The cumulative total return measures
the change in value over the entire period (for example, ten years).
An average annual total return shows the average rate of return for
each year in a period that would produce the cumulative total return
over the entire period. However, average annual total returns do not
show the Fund's actual year-by-year performance.
When total returns are quoted for Class A shares, they reflect the
payment of the current maximum initial sales charge. When total
returns are shown for Class B shares, they reflect the effect of the
contingent deferred sales charge that applies to the period for which
total return is shown. When total returns are shown for a one-year
period for Class C shares, they reflect the effect of the contingent
deferred sales charge. Total returns may also be quoted "at net asset
value," without considering the effect of the sales charge, and those
returns would be reduced if sales charges were deducted.
- Yield. Each class of shares calculates its yield by dividing
the annualized net investment income per share on the portfolio during
a 30-day period by the maximum offering price on the last day of the
period. The yield of each class will differ because of the different
expenses of each class of shares. The yield data represents a
hypothetical investment return on the portfolio, and does not measure
an investment return based on dividends actually paid to shareholders.
To show that return, a dividend yield may be calculated. Dividend
yield is calculated by dividing the dividends of a class derived from
net investment income during a stated period by the maximum offering
price on the last day of the period. Yields and dividend yields for
Class A shares reflect the deduction of the maximum initial sales
charge, but may also be shown based on the Fund's net asset value per
share. Yields for Class B and Class C shares do not reflect the
deduction of the contingent deferred sales charge.
How Has the Fund Performed? Below is a discussion by the Manager of
the Fund's performance during its last fiscal year ended September 30,
1994, followed by a graphical comparison of the Fund's performance to
an appropriate broad-based market index.
- Management's Discussion of Performance. During the past fiscal
year, the Fund's performance was affected by the rise in short-term
interest rates, both in the U.S. and abroad. As interest rates rose,
the bond market declined. In response to rising interest rates in the
U.S., the Manager reduced the Fund's exposure to long-term U.S.
government bonds, as well as high yield corporate bonds issued by
companies whose earnings are sensitive to interest rate changes. The
proceeds from the sale of those investments were used to increase the
Fund's investment in higher- yielding, lower-rated corporate bonds
issued by companies whose earnings tend to rise in the middle-to-late
stages of an economic expansion. In addition, the Manager used futures
to hedge against interest rate risk and thus avoided the sale of
interest bearing securities. As foreign interest rates rose and the
dollar weakened against major currencies, the Manager reduced the
Fund's investments in Latin America and other emerging markets which
tend to perform poorly in a rising interest rate environment. The
Manager increased the Fund's investments in foreign government bonds
which the Manager believed would benefit from economic growth.
- Comparing the Fund's Performance to the Market. The chart
below shows the performance of a hypothetical $10,000 investment in
Class A and Class B shares of the Fund from the inception of each
respective Class held through September 30, 1994, with all dividends
and capital gains distributions reinvested in additional shares. The
graph reflects the deduction of the 4.75% maximum initial sales charge
on Class A shares and the maximum 5% contingent deferred sales charge
for Class B shares. Class C shares were not publicly offered during
the fiscal year ended September 30, 1994. Accordingly, no information
is presented on Class C shares in the graph below.
Because the Fund invests in a variety of debt securities in
domestic and foreign markets, the Fund's performance is compared to the
performance of The Lehman Brothers Aggregate Bond Index and The Salomon
Brothers World Government Bond Index. The Lehman Brothers Aggregate
Bond Index is a broad-based, unmanaged index of U.S. corporate bond
issues, U.S. government securities and mortgage-backed securities
widely regarded as a measure of the performance of the domestic debt
securities market. The Salomon Brothers World Government Bond Index is
an unmanaged index of fixed-rate bonds having a maturity of one year or
more, widely regarded as a benchmark of fixed income performance on a
world-wide basis. Index performance reflects the reinvestment of
income, but not capital gains or transaction costs, and none of the
data below shows the effect of taxes. Also, the Fund's performance
data 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 any one index. Moreover, the index
data does not reflect any assessment of the risk of the investments
included in the index.
Oppenheimer Strategic Income Fund
Comparison of Change in Value
of $10,000 Hypothetical Investment to
Lehman Brothers Aggregate Bond Index and
Salomon Brothers World Government Bond Index
(Graph)
Past Performance is not predictive of future performance.
Oppenheimer Strategic Income Fund
Average Annual Total Returns at 9/30/94
1 Year Life of Class*
Class A: -2.98% 9.93%
Class B: -3.49% 6.49%
_________________
* Class A shares were first publicly offered on 10/16/89.
Class B shares were first publicly offered on 11/30/92.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors three different classes of
shares. The different classes of shares represent investments in the
same portfolio of securities but are subject to different expenses and
will likely have different share prices.
- Class A Shares. If you buy Class A shares, you pay an initial
sales charge (on investments up to $1 million). If you purchase Class A
shares as part of an investment of at least $1 million in shares of one
or more OppenheimerFunds, you will not pay an initial sales charge but
if you sell any of those shares within 18 months after your purchase,
you may pay a contingent deferred sales charge, which will vary
depending on the amount you invested. Sales charges are described
below.
- Class B Shares. If you buy Class B shares, you pay no sales
charge at the time of purchase, but if you sell your shares within six
years, you will normally pay a contingent deferred sales charge that
varies depending on how long you own your shares. It is described
below.
- Class C Shares. If you buy Class C shares, you pay no sales
charge at the time of purchase, but if you sell your shares within 12
months of buying them, you will normally pay a contingent deferred
sales charge of 1%.
Which Class of Shares Should You Choose? Once you decide that the Fund
is an appropriate investment for you, the decision as to which class of
shares is better suited to your needs depends on a number of factors
which you should discuss with your financial advisor. The Fund's
operating costs that apply to a class of shares and the effect of the
different types of sales charges on your investment will vary your
investment results over time. The most important factors are how much
you plan to invest, how long you plan to hold your investment, and
whether you anticipate exchanging your shares for shares of other
OppenheimerFunds (not all of which currently offer Class B and Class C
shares). If your goals and objectives change over time and you plan to
purchase additional shares, you should re-evaluate those factors to see
if you should consider another class of shares.
In the following discussion, to help provide you and your
financial advisor with a framework in which to choose a class, we have
made some assumptions using a hypothetical investment in the Fund. We
used the sales charge rates that apply to each class, and considered
the effect of the asset-based sales charges on Class B and Class C
expenses (which will affect your investment return). For the sake of
comparison, we have assumed that there is a 10% rate of appreciation in
the investment each year. Of course, the actual performance of your
investment cannot be predicted and will vary, based on the Fund's
actual investment returns and the operating expenses borne by each
class of shares, and which class you invest in. The factors discussed
below are not intended to be investment advice or recommendations,
because each investor's financial considerations are different.
- How Long Do You Expect to Hold Your Investment? The Fund is
designed for long-term 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 invest.
Investing for the Short Term. If you have a short term horizon
(that is, you plan to hold your shares less than six years), you should
probably consider purchasing Class C shares rather than Class A or
Class B shares. This is 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 $250,000 for a period
less than six years, Class C shares might not be as advantageous as
Class A shares. This is because the annual asset-based sales charge on
Class C shares (and the contingent deferred sales charges that apply if
you redeem Class C shares within a year of purchase) might have a
greater impact on your account during the period than the initial sales
charge that would apply if Class A shares were purchased instead at the
applicable reduced Class A sales charge rate.
For most investors who invest $500,000 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, or orders for more than $1 million of Class C shares from a single
investor.
Investing for the Longer Term. If you are investing for the
longer term, for example, for retirement, and do not expect to need
access to your money for seven years or more, Class A shares will
likely be more advantageous than Class B or Class C shares. This is
because of the effect of 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. Class B shares
may be appropriate for smaller investments held for the longer term
because there is no initial sales charge on Class B shares and Class B
shares held six years following their purchase convert into Class A
shares.
Of course, all of 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 you should analyze your options carefully.
- Are There Differences in Account Features That Matter to You?
Because some account features (such as checkwriting) may not be
available to Class B or Class C shareholders, or other features (such
as Automatic Withdrawal Plans) might 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 to buy. Additionally, dividends payable to Class
B and Class C shareholders will be reduced by the additional expenses
borne by those classes that are not borne by Class A, such as the Class
B and Class C asset-based sales charges described below and in the
Statement of Additional Information.
Also, because not all OppenheimerFunds currently offer Class B and
Class C shares, and because exchanges are permitted only to the same
class of shares in other OppenheimerFunds, you should consider how
important the exchange privilege is likely to be for you.
- 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 or servicing one class of shares than another class. It is
important that investors understand that the purpose of the contingent
deferred sales charge and asset-based sales charge 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: to compensate the Distributor for
commissions it pays to dealers and financial institutions for selling
shares.
How Much Must You Invest? You can open a Fund account with a minimum
initial investment of $1,000 and make additional investments at any
time with as little as $25. There are reduced minimum investments under
special investment plans:
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7)
custodial plans and military allotment plans, you can make initial and
subsequent investments of as little as $25; and subsequent purchases of
at least $25 can be made by telephone through AccountLink.
Under pension and profit-sharing plans and Individual Retirement
Accounts (IRAs), you can make an initial investment of as little as
$250 (if your IRA is established under an Asset Builder Plan, the $25
minimum applies), and subsequent investments may be as little as $25.
There is no minimum investment requirement if you are buying
shares by reinvesting dividends from the Fund or other OppenheimerFunds
(a list of them appears in the Statement of Additional Information, or
you can ask your dealer or call the Transfer Agent), or by reinvesting
distributions from unit investment trusts that have made arrangements
with the Distributor.
- How Are Shares Purchased? You can buy shares several ways --
through any dealer, broker or financial institution that has a sales
agreement with the Distributor, or directly through the Distributor, or
automatically from your bank account through an Asset Builder Plan
under the OppenheimerFunds AccountLink service. When you buy shares, be
sure to specify Class A, Class B or Class C shares. If you do not
choose, your investment will be made in Class A shares.
- Buying Shares Through Your Dealer. Your dealer will place your
order with the Distributor on your behalf.
- Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "Oppenheimer Funds Distributor, Inc." Mail it to P.O. Box
5270, Denver, Colorado 80217. If you don't list a dealer on the
application, the Distributor will act as your agent in buying the
shares. However, we recommend that you discuss your investment first
with a financial advisor, to be sure it is appropriate for you.
- Buying Shares Through OppenheimerFunds AccountLink. You can
use AccountLink to link your Fund account with an account at a U.S.
bank or other financial institution that is an
Automated Clearing House (ACH) member. You can then transmit funds
electronically to purchase shares, to receive redemption proceeds, and
to transmit dividends and distributions.
Shares are purchased for your account on AccountLink on the
regular business day the Distributor is instructed by you to initiate
the ACH transfer to buy shares. You can provide those instructions
automatically, under an Asset Builder Plan, described below, or by
telephone instructions using OppenheimerFunds PhoneLink, also described
below. You should request AccountLink privileges on the application or
dealer settlement instructions used to establish your account. Please
refer to "AccountLink" below for more details.
- Asset Builder Plans. You may purchase shares of the Fund (and
up to four other OppenheimerFunds) automatically each month from your
account at a bank or other financial institution under an Asset Builder
Plan with AccountLink. Details are on the Application and in the
Statement of Additional Information.
- At What Prices Are Shares Sold? Shares are sold at the public
offering price based on the net asset value (and any initial sales
charge that applies) that is next determined after the Distributor
receives the purchase order in Denver, Colorado. In most cases, to
enable you to receive that day's offering price, the Distributor must
receive your order by the time of day The New York Stock Exchange
closes, which is normally 4:00 P.M., New York time, but may be earlier
on some days (all references to time in this Prospectus mean "New York
time"). The net asset value of each class of shares is determined as
of that time on each day The New York Stock Exchange is open (which is
a "regular business day").
If you buy shares through a dealer, the dealer must receive your
order by the close of The New York Stock Exchange, on a regular
business day and transmit it to the Distributor so that it is received
before the Distributor's close of business that day, which is normally
5:00 P.M. The Distributor may reject any purchase order for the Fund's
shares, in its sole discretion.
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 Front-End
Sales Charge Sales Charge
As a As a Commission as
Percentage of Percentage of Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
_______________________________________________________________________
Less than $50,000 4.75% 4.98% 4.00%
$50,000 or more but
less than $100,000 4.50% 4.71% 3.75%
$100,000 or more but
less than $250,000 3.50% 3.63% 2.75%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
_______________________________________________________________________
The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter"
under Federal securities laws.
- Class A Contingent Deferred Sales Charge. There is no initial
sales charge on purchases of Class A shares of any one or more
OppenheimerFunds aggregating $1 million or more (shares of the Fund and
other OppenheimerFunds that offer only one class of shares that have no
class designation are considered "Class A shares" for this purpose).
However, the Distributor pays dealers of record commissions on such
purchases in an amount equal to the sum of 1.0% of the first $2.5
million, plus 0.50% of the next $2.5 million, plus 0.25% of share
purchases over $5 million. That commission will be paid only on the
amount of those purchases in excess of $1 million that were not
previously subject to a front-end sales charge and dealer commission.
If you redeem any of those shares within 18 months of the end of
the calendar month of their purchase, a contingent deferred sales
charge (called the "Class A contingent deferred sales charge") will be
deducted from the redemption proceeds. That sales charge may be equal
to 1.0% of the aggregate net asset value of either (1) the redeemed
shares (not including shares purchased by reinvestment of dividends or
capital gain distributions) or (2) the original cost of the shares,
whichever is less. The Class A contingent deferred sales charge will
not exceed the aggregate commissions the Distributor paid to your
dealer on all Class A shares of all OppenheimerFunds you purchased
subject to the Class A contingent deferred sales charge.
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 sales charge will apply.
- Special Arrangements With Dealers. The Distributor may advance
up to 13 months' commissions to dealers that have established special
arrangements with the Distributor for Asset Builder Plans for their
clients. Dealers whose sales of Class A shares of OppenheimerFunds
(other than money market funds) under OppenheimerFunds-sponsored
403(b)(7) custodial plans exceed $5 million per year (calculated per
quarter), will receive monthly one-half of the Distributor's retained
commissions on those sales, and if those sales exceed $10 million per
year, those dealers will receive the Distributor's entire retained
commission on those sales.
Reduced Sales Charges for Class A Share Purchases. You may be eligible
to buy Class A shares at reduced sales charge rates in one or more of
the following ways:
- Right of Accumulation. To qualify for the lower sales charge
rates that apply to larger purchases for Class A shares, you and your
spouse can add together Class A shares you purchase for your individual
accounts, or jointly, or on behalf of your children who are minors,
under trust or custodial accounts. 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
shares of the Fund and other OppenheimerFunds with Class A shares of
OppenheimerFunds you previously purchased subject to a sales charge,
provided that you still hold your investment in one of the
OppenheimerFunds; the value of those shares will be based on the
greater of the amount you paid for the shares or their current value
(at offering price). The OppenheimerFunds are listed in "Reduced Sales
Charges" in the Statement of Additional Information, or a list can be
obtained from the Transfer Agent. The reduced sales charge will apply
only to current purchases and must be requested when you buy your
shares.
- Letter of Intent. Under a Letter of Intent, you may purchase
Class A shares of the Fund and other OppenheimerFunds during a 13-
month period at the reduced sales charge rate that applies to the total
amount of the intended purchases. This can include purchases made up
to 90 days before the date of the Letter. More information is
contained in the Application and in "Reduced Sales Charges" in the
Statement of Additional Information.
- Waivers of Class A Sales Charges. No sales charge is imposed
on sales of Class A shares to the following investors: (1) the Manager
or its affiliates; (2) 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; (3) registered management investment
companies, or separate accounts of insurance companies having an
agreement with the Manager or the Distributor for that purpose; (4)
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; (5) 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); (6)
dealers, brokers or registered investment advisers that have entered
into an agreement with the Distributor providing specifically for the
use of shares of the Fund in particular investment products made
available to their clients; and (7) dealers, brokers or registered
investment advisers that have entered into an agreement with the
Distributor to sell shares to defined contribution employee retirement
plans for which the dealer, broker or investment adviser provides
administration services.
Additionally, no sales charge is imposed on shares that are (a)
issued in plans of reorganization, such as mergers, asset acquisitions
and exchange offers, to which the Fund is a party or (b) purchased by
the reinvestment of loan repayments by a participant in a retirement
plan for which the Manager or its affiliates acts as sponsor, or (c)
purchased by the reinvestment of dividends or other distributions
reinvested from the Fund or other OppenheimerFunds (other than
Oppenheimer Cash Reserves) or unit investment trusts for which
reinvestment arrangements have been made with the Distributor, or (d)
purchased and paid for with proceeds of shares redeemed in the prior 12
months from a mutual fund on which an initial sales charge or
contingent deferred sales charge was paid (other than a fund managed by
the Manager or any of its affiliates); 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.
There is a further discussion of this policy in "Reduced Sales Charges"
in the Statement of Additional Information.
The Class A contingent deferred sales charge does not apply to
purchases of Class A shares at net asset value described above and is
also waived if shares are redeemed in the following cases: (1)
retirement distributions or loans to participants or beneficiaries from
qualified retirement plans, deferred compensation plans or other
employee benefit plans ("Retirement Plans"), (2) returns of excess
contributions made to Retirement Plans, (3) Automatic Withdrawal Plan
payments that are limited to no more than 12% of the original account
value annually, (4) involuntary redemptions of shares by operation of
law or under the procedures set forth in the Fund's Declaration of
Trust or adopted by the Board of Trustees, and (5) if at the time an
order is placed for Class A shares that would otherwise be subject to
the Class A contingent deferred sales charge, the dealer agrees to
accept the dealer's portion of the commission payable on the sale in
installments of 1/18th of the commission per month (with no further
commission payable if the shares are redeemed within 18 months of
purchase).
- Service Plan for Class A Shares. The Fund has adopted a
Service Plan for Class A shares to reimburse the Distributor for a
portion of its costs incurred in connection with the personal service
and maintenance of accounts that hold Class A shares. Reimbursement is
made quarterly at an annual rate that may not exceed 0.25% of the
average annual net assets of Class A shares of the Fund. The
Distributor uses all of those fees 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 and to reimburse itself (if the
Fund's Board of Trustees authorizes such reimbursements, which it has
not yet done) 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.
Payments are made by the Distributor quarterly at an annual rate not to
exceed 0.25% of the average annual net assets of Class A shares held in
accounts of the dealer or its customers. 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.
Class B Shares. Class B shares are sold at net asset value per share
without an initial sales charge. However, if Class B shares are
redeemed within 6 years of their purchase, a contingent deferred sales
charge will be deducted from the redemption proceeds. That sales
charge will not apply to shares purchased by the reinvestment of
dividends or capital gains distributions. The charge will be assessed
on the lesser of the net asset value of the shares at the time of
redemption or the original purchase price. The contingent deferred
sales charge is not imposed on the amount of your account value
represented by the increase in net asset value over the initial
purchase price (including increases due to the reinvestment of
dividends and capital gains distributions). The Class B contingent
deferred sales charge is paid to the Distributor to reimburse its
expenses of providing distribution-related services to the Fund in
connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge applies
to a redemption, the Fund redeems shares in the following order: (1)
shares acquired by reinvestment of dividends and capital gains
distributions, (2) shares held for over 6 years, and (3) shares held
the longest during the 6-year period.
The amount of the contingent deferred sales charge will depend on
the number of years since you invested and the dollar amount being
redeemed, according to the following schedule:
Years Since Contingent Deferred Sales Charge
Beginning of Month In Which on Redemptions in that Year
Purchase Order was Accepted (As % of Amount Subject to Charge)
0 - 1 5.0%
1 - 2 4.0%
2 - 3 3.0%
3 - 4 3.0%
4 - 5 2.0%
5 - 6 1.0%
6 and following None
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of the
month in which the purchase was made.
- Waivers of Class B Sales Charge. The Class B contingent
deferred sales charge will be waived if the shareholder requests it for
any of the following redemptions: (1) 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) of the participant or beneficiary; (2)
redemptions from accounts other than Retirement Plans following the
death or disability of the shareholder (the disability must have
occurred after the account was established and you must provide
evidence of a determination of disability by the Social Security
Administration); (3) returns of excess contributions to Retirement
Plans; and (4) distributions from IRAs (including SEP-IRAs and SAR/SEP
accounts) before the participant is age 59 1/2, and distributions from
403(b)(7) custodial plans or pension or profit sharing plans before the
participant is age 59 1/2 but only after the participant has separated
from service, if the distributions are made in substantially equal
periodic payments over the life (or life expectancy) of the participant
or the joint lives (or joint life and last survivor expectancy) of the
participant and the participant's designated beneficiary (and the
distributions must comply with the other requirements for such
distributions under the Internal Revenue Code and may not exceed 10% of
the account value annually, measured from the date the Transfer Agent
receives the request).
The contingent deferred sales charge is also waived on Class B
shares in the following cases: (i) shares sold to the Manager or its
affiliates; (ii) 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; (iii)
shares issued in plans of reorganization to which the Fund is a party;
and (iv) shares redeemed in involuntary redemptions as described below.
Further details about this policy are contained in "Reduced Sales
Charges" in the Statement of Additional Information.
- 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 Plan, described below. The conversion is based
on the relative net asset value of the two classes, and no sales load
or other charge is imposed. When Class B shares convert, any other
Class B shares that were acquired by the reinvestment of dividends and
distributions on the converted shares will also convert to Class A
shares. The conversion feature is subject to the continued availability
of a tax ruling described in "Alternative Sales Arrangements - Class A,
Class B and Class C Shares" in the Statement of Additional Information.
- Distribution and Service Plan for Class B Shares. The Fund has
adopted a Distribution and Service Plan for Class B shares to
compensate the Distributor for its services and costs in distributing
Class B shares and servicing accounts. Under the Plan, the Fund pays
the Distributor an annual "asset-based sales charge" of 0.75% per year
on Class B shares that are outstanding for 6 years or less. The
Distributor also receives a service fee of 0.25% per year. Both fees
are computed on the average annual net assets of Class B shares,
determined as of the close of each regular business day. The asset-
based sales charge allows investors to buy Class B shares without a
front-end sales charge while allowing the Distributor to compensate
dealers that sell Class B shares.
The Distributor uses the service fee to compensate dealers for
providing personal service for accounts that hold Class B shares.
Those services are similar to those provided under the Class A Service
Plan, described above. The asset-based sales charge and service fee
increase Class B expenses by up to 1.00% of average net assets per
year.
The Distributor pays the 0.25% service fee to dealers in advance
for the first year after Class B shares have been sold by the dealer.
After the shares have been held for a year, the Distributor pays the
fee on a quarterly basis. The Distributor pays sales commissions of
3.75% of the purchase price to dealers from its own resources at the
time of sale. The Distributor retains the asset-based sales charge to
recoup the sales commissions it pays, the advances of service fee
payments it makes, and its financing costs.
The Distributor's actual expenses in selling Class B 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 Plan for Class B shares. Therefore, those
expenses may be carried over and paid in future years. At September
30, 1994, the end of the Plan year, the Distributor had incurred
unreimbursed expenses under the Plan of $64,673,369 (equal to 4.08% of
the Fund's net assets represented by Class B shares on that date),
which have been carried over into the present Plan year. If the Plan is
terminated by the Fund, the Board of Trustees may allow the Fund to
continue payments of the asset-based sales charge to the Distributor
for expenses it incurred before the Plan was terminated.
Class C Shares. Class C shares are sold at net asset value per
share without an initial sales charge. However, if Class C shares are
redeemed within 12 months of their purchase, a contingent deferred
sales charge of 1.0% will be deducted from the redemption proceeds.
That sales charge will not apply to shares purchased by the
reinvestment of dividends or capital gains distributions. The charge
will be assessed on the lesser of the net asset value of the shares at
the time of redemption or the original purchase price. The contingent
deferred sales charge is not imposed on the amount of your account
value represented by the increase in net asset value over the initial
purchase price (including increases due to the reinvestment of
dividends and capital gains distributions). The Class C contingent
deferred sales charge is paid to the Distributor to reimburse its
expenses of providing distribution-related services to the Fund in
connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge applies
to a redemption, the Fund redeems shares in the following order: (1)
shares acquired by reinvestment of dividends and capital gains
distributions, (2) shares held for over 12 months, and (3) shares held
the longest during the 12-month period.
- Waivers of Class C Sales Charge. The Class C contingent
deferred sales charge will be waived if the shareholder requests it for
any of the redemptions or circumstances described above under "Waivers
of Class B Sales Charge."
- Distribution and Service Plan for Class C Shares. The Fund has
adopted a Distribution and Service Plan for Class C shares to
compensate the Distributor for distributing Class C shares and
servicing accounts. Under the Plan, the Fund pays the Distributor an
annual "asset-based sales charge" of 0.75% per year on Class C shares.
The Distributor also receives a service fee of 0.25% per year. Both
fees are computed on the average annual net assets of Class C shares,
determined as of the close of each regular business day. The asset-
based sales charge allows investors to buy Class C shares without a
front-end sales charge while allowing the Distributor to compensate
dealers that sell Class C shares.
The Distributor uses the service fee to compensate dealers for
providing personal services for accounts that hold Class C shares.
Those services are similar to those provided under the Class A Service
Plan, described above. The asset-based sales charge and service fees
increase Class C expenses by 1.00% of average net assets per year.
The Distributor pays the 0.25% service fee to dealers in advance
for the first year after Class C shares have been sold by the dealer.
After the shares have been held for a year, the Distributor pays the
service fee on a quarterly basis. The Distributor pays sales
commissions of 0.75% of the purchase price to dealers from its own
resources at the time of sale. The total up-front commission paid by
the Distributor to the dealer at the time of sale of Class C shares is
1.00% of the purchase price. The Distributor plans to pay the asset-
based sales charge as an ongoing commission to the dealer on Class C
shares that have been outstanding for a year or more.
The Fund pays the asset-based sales charge to the Distributor for
its services rendered in connection with the distribution of Class C
shares. Those payments are at a fixed rate which is not related to the
Distributor's expenses. The services rendered by the Distributor
include paying and financing the payment of sales commissions, service
fees, and other costs of distributing and selling Class C shares,
including compensating personnel of the Distributor who support
distribution of Class C shares. If the Plan is terminated by the Fund,
the Board of Trustees may allow the Fund to continue payments of the
asset-based sales charge to the Distributor for distributing Class C
shares before the Plan was terminated.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account to
your account at your bank or other financial institution to enable you
to send money electronically between those accounts to perform a number
of types of account transactions. These include purchases of shares by
telephone (either through a service representative or by PhoneLink,
described below), automatic investments under Asset Builder Plans, and
sending dividends and distributions or Automatic Withdrawal Plan
payments directly to your bank account. Please refer to the Application
for details or call the Transfer Agent for more information.
AccountLink privileges must be requested on the Application you
use to buy shares, or on your dealer's settlement instructions if you
buy your shares through your dealer. After your account is established,
you can request AccountLink privileges on signature-guaranteed
instructions to the Transfer Agent. AccountLink privileges will apply
to each shareholder listed in the registration on your account as well
as to your dealer representative of record unless and until the
Transfer Agent receives written instructions terminating or changing
those privileges. After you establish AccountLink for your account, any
change of bank account information must be made by signature-guaranteed
instructions to the Transfer Agent signed by all shareholders who own
the account.
- Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase
shares in amounts up to $250,000 through a telephone representative,
call the Distributor at 1-800-852-8457. The purchase payment will be
debited from your bank account.
- PhoneLink. PhoneLink is the OppenheimerFunds automated
telephone system that enables shareholders to perform a number of
account transactions automatically using a touch-tone phone. PhoneLink
may be used on already-established Fund accounts after you obtain a
Personal Identification Number (PIN), by calling the special PhoneLink
number: 1-800-533-3310.
- Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have
established AccountLink privileges to link your bank account with the
Fund, to pay for these purchases.
- Exchanging Shares. With the OppenheimerFunds Exchange
Privilege, described below, you can exchange shares automatically by
phone from your Fund account to another
OppenheimerFunds account you have already established by calling the
special PhoneLink number. Please refer to "How to Exchange Shares,"
below, for details.
- Selling Shares. You can redeem shares by telephone
automatically by calling the PhoneLink number and the Fund will send
the proceeds directly to your AccountLink bank account. Please refer
to "How to Sell Shares," below, for details.
Automatic Withdrawal and Exchange Plans. The Fund has several plans
that enable you to sell shares automatically or exchange them to
another OppenheimerFunds account on a regular basis:
- Automatic Withdrawal Plans. If your Fund account is 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 Application and Statement of Additional Information for more
details.
- Automatic Exchange Plans. You can authorize the Transfer Agent
to automatically exchange an amount you establish in advance for shares
of up to five other OppenheimerFunds on a monthly, quarterly, semi-
annual or annual basis under an Automatic Exchange Plan. The minimum
purchase for each OppenheimerFunds account is $25. These exchanges are
subject to the terms of the Exchange Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Fund shares,
you have up to 6 months to reinvest all or part of the redemption
proceeds in Class A shares of the Fund or other OppenheimerFunds
without paying a sales charge. This privilege applies only to
redemptions of Class A shares or to redemptions of Class B shares of
the Fund that you purchased by reinvesting dividends or distributions
or on which you paid a contingent deferred sales charge when your
redeemed them. It also applies to shares on which you paid a contingent
deferred sales charge when you redeemed them. You must be sure to ask
the Distributor for this privilege when you send your payment. Please
consult the Statement of Additional Information for more details.
Retirement Plans. Fund shares are available as an investment for your
retirement plans. If you participate in a plan sponsored by your
employer, the plan trustee or administrator must make the
purchase of shares for your retirement plan account. The Distributor
offers a number of different retirement plans that can be used by
individuals and employers:
- Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
- 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
- SEP-IRAs (Simplified Employee Pension Plans) for small business
owners or people with income from self-employment, including SAR/SEP-
IRAs
- Pension and Profit-Sharing Plans for self-employed persons and
other small business owners
Please call the Distributor for the OppenheimerFunds plan
documents, which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account on any regular
business day by selling (redeeming) some or all of your shares. Your
shares will be sold at the next net asset value calculated after your
order is received and accepted by the Transfer Agent. The Fund offers
you a number of ways to sell your shares: in writing, by using the
Fund's checkwriting privilege or by telephone. You can also set up
Automatic Withdrawal Plans to redeem shares on a regular basis, as
described above. If you have questions about any of these procedures,
and especially if you are redeeming shares in a special situation, such
as due to the death of the owner, or from a retirement plan, please
call the Transfer Agent first, at 1-800-525-7048, for assistance.
- Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must
submit a withholding form with your request to avoid delay. If your
retirement plan account is held for you by your employer, you must
arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the
Statement of Additional Information.
- Certain Requests Require a Signature Guarantee. To protect you
and the Fund from fraud, certain redemption requests must be in writing
and must include a signature guarantee in the following situations
(there may be other situations also requiring a signature guarantee):
- You wish to redeem more than $50,000 worth of shares and
receive a check
- A redemption check is not payable to all shareholders listed on
the account statement
- A redemption check is not sent to the address of record on your
statement
- Shares are being transferred to a Fund account with a different
owner or name
- Shares are redeemed by someone other than the owners (such as
an Executor)
- Where Can I Have My Signature Guaranteed? The Transfer Agent
will accept a guarantee of your signature by a number of financial
institutions, including: a U.S. bank, trust company, credit union or
savings association, or from a foreign bank that has a U.S.
correspondent bank, or from a U.S. registered dealer or broker in
securities, municipal securities or government securities, or from a
U.S. national securities exchange, a registered securities association
or a clearing agency. If you are signing on behalf of a corporation,
partnership or other business, or as a fiduciary, you must also include
your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that
includes:
- Your name
- The Fund's name
- Your Fund account number (from your statement)
- The dollar amount or number of shares to be redeemed
- Any special payment instructions
- Any share certificates for the shares you are selling, and
- Any special requirements or documents requested by the Transfer
Agent to assure proper authorization of the person asking to sell
shares.
Use the following address for requests by mail: Send courier or
Express Mail requests to:
Oppenheimer Shareholder Services Oppenheimer Shareholder Services
P.O. Box 5270, 10200 E. Girard Avenue,
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. You
may not redeem shares held in an OppenheimerFunds retirement plan or
under a share certificate by telephone.
- To redeem shares through a service representative, call 1-800-
852-8457
- To redeem shares automatically on PhoneLink, call 1-800-533-
3310
Whichever method you use, you may have a check sent to the address
on the account statement, or, if you have linked your Fund account to
your bank account on AccountLink, you may have the proceeds wired to
that bank account.
- Telephone Redemptions Paid by Check. Up to $50,000 may be
redeemed by telephone in any 7-day period. The check must be payable
to all owners of record of the shares and must be sent to the address
on the account statement. This service is not available within 30 days
of changing the address on an account.
- Telephone Redemptions Through AccountLink or by Wire. There
are no dollar limits on telephone redemption proceeds sent to a bank
account designated when you establish AccountLink. Normally the ACH
wire to your bank is initiated on the business day after the
redemption. You do not receive dividends on the proceeds of the shares
you redeemed while they are waiting to be wired.
Shareholders may also have the Transfer Agent send redemption
proceeds of $2,500 or more by Federal Funds wire to a designated
commercial bank account. The bank must be a member of the Federal
Reserve wire system. There is a $10 fee for each Federal Funds wire.
To place a wire redemption request, call the Transfer Agent at 1-800-
852-8457. The wire will normally be transmitted on the next bank
business day after the shares are redeemed. There is a possibility
that the wire may be delayed up to seven days to enable the Fund to
sell securities to pay the redemption proceeds. No dividends are
accrued or paid on the proceeds of shares that have been redeemed and
are awaiting transmittal by wire. To establish wire redemption
privileges on an account that is already established, please contact
the Transfer Agent for instructions.
Selling Shares Through Your Dealer. The Distributor has made
arrangements to repurchase Fund shares from dealers and brokers on
behalf of their customers. Brokers or dealers may charge for that
service. Please refer to "Special Arrangements for Repurchase of
Shares from Dealers and Brokers" in the Statement of Additional
Information for more details.
Checkwriting. To be able to write checks against your Fund account,
you may request that privilege on your account Application or you can
contact the Transfer Agent for signature cards, which must be signed
(with a signature guarantee) by all owners of the account and returned
to the Transfer Agent so that checks can be sent to you to use.
Shareholders with joint accounts can elect in writing to have checks
paid over the signature of one owner.
- Checks can be written to the order of whomever you wish, but
may not be cashed at the Fund's bank or custodian.
- Checkwriting privileges are not available for accounts holding
Class B shares, or Class C or Class A shares that are subject to a
contingent deferred sales charge.
- Checks must be written for at least $100.
- Checks cannot be paid if they are written for more than your
account value.
Remember: your shares fluctuate in value and you should not write a
check close to the total account value.
- You may not write a check that would require the Fund to redeem
shares that were
purchased by check or Asset Builder Plan payments within the prior 10
days.
- Don't use your checks if you changed your Fund account number.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain
OppenheimerFunds at net asset value per share at the time of exchange,
without sales charge. To exchange shares, you must meet several
conditions:
- Shares of the fund selected for exchange must be available for
sale in your state of residence
- The prospectuses of this Fund and the fund whose shares you
want to buy must offer the exchange privilege
- You must hold the shares you buy when you establish your
account for at least 7 days before you can exchange them; after the
account is open 7 days, you can exchange shares every regular business
day
- You must meet the minimum purchase requirements for the fund
you purchase by exchange
- Before exchanging into a fund, you should obtain and read its
prospectus
Shares of a particular class may be exchanged only for shares of
the same class in the other OppenheimerFunds. For example, you can
exchange Class A shares of this Fund only for Class A shares of another
fund. At present, not all of the OppenheimerFunds offer the same
classes of shares. If a fund has only one class of shares that does
not have a class designation, they are "Class A" shares for exchange
purposes. Certain OppenheimerFunds offer Class A and Class B or Class
C shares, and a list can be obtained by calling the Distributor at 1-
800-525-7048. In some cases, sales charges may be imposed on exchange
transactions. Please refer to "How to Exchange Shares" in the
Statement of Additional Information for more details.
Exchanges may be requested in writing or by telephone:
- Written Exchange Requests. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the
Transfer Agent at the addresses listed in "How to Sell Shares."
- Telephone Exchange Requests. Telephone exchange requests may be
made either by calling a service representative at 1-800-852-8457 or by
using PhoneLink for automated exchanges, by calling 1-800-533-3310.
Telephone exchanges may be made only between accounts that are
registered with the same name(s) and address. Shares held under
certificates may not be exchanged by telephone.
You can find a list of OppenheimerFunds currently available for
exchanges in the Statement of Additional Information or by calling a
service representative at 1-800-525-7048. Exchanges of shares involve a
redemption of the shares of the fund you own and a purchase of shares
of the other fund.
There are certain exchange policies you should be aware of:
- Shares are normally redeemed from one fund and purchased from
the other fund in the exchange transaction on the same regular business
day on which the Transfer Agent receives an exchange request that is in
proper form by the close of The New York Stock Exchange that day, which
is normally 4:00 P.M. but may be earlier on some days. However, either
fund may delay the purchase of shares of the fund you are exchanging
into if it determines it would be disadvantaged by a same-day transfer
of the proceeds to buy shares. For example, the receipt of multiple
exchange requests from a dealer in a "market-timing" strategy might
require the disposition of portfolio securities at a time or price
disadvantageous to the Fund.
- Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange
request that will disadvantage it, or to refuse multiple exchange
requests submitted by a shareholder or dealer.
- The Fund may amend, suspend or terminate the exchange privilege
at any time. Although the Fund will attempt to provide you notice
whenever it is reasonably able to do so, it may impose these changes at
any time.
- If the Transfer Agent cannot exchange all the shares you
request because of a restriction cited above, only the shares eligible
for exchange will be exchanged.
Shareholder Account Rules and Policies
- Net Asset Value Per Share is determined for each class of
shares as of the close of The New York Stock Exchange on each regular
business day, 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,
obligations for which market values cannot be readily
obtained, and call options and hedging instruments. These procedures
are described more completely in the Statement of Additional
Information.
- The offering of shares may be suspended during any period in
which the determination of net asset value is suspended, and the
offering may be suspended by the Board of Trustees at any time the
Board believes it is in the Fund's best interest to do so.
- Telephone Transaction Privileges for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Fund at any
time. If an account has more than one owner, the Fund and the Transfer
Agent may rely on the instructions of any one owner. Telephone
privileges apply to each owner of the account and the dealer
representative of record for the account unless and until the Transfer
Agent receives cancellation instructions from an owner of the account.
- The Transfer Agent will record any telephone calls to verify
data concerning transactions and has adopted other procedures to
confirm that telephone instructions are genuine, by requiring callers
to provide tax identification numbers and other account data or by
using PINs, and by confirming such transactions in writing. If the
Transfer Agent does not use reasonable procedures it may be liable for
losses due to unauthorized transactions, but otherwise neither the
Transfer Agent nor the Fund will be liable for losses or expenses
arising out of telephone instructions reasonably believed to be
genuine. If you are unable to reach the Transfer Agent during periods
of unusual market activity, you may not be able to complete a telephone
transaction and should consider placing your order by mail.
- Redemption or transfer requests will not be honored until the
Transfer Agent receives all required documents in proper form. From
time to time, the Transfer Agent in its discretion may waive certain of
the requirements for redemptions stated in this Prospectus.
- Dealers that can perform account transactions for their clients
by participating in NETWORKING through the National Securities
Clearing Corporation are responsible for obtaining their clients'
permission to perform those transactions and are responsible to their
clients who are shareholders of the Fund if the dealer performs any
transaction erroneously or improperly.
- The redemption price for shares will vary from day to day
because the value of the securities in the Fund's portfolio fluctuates,
and the redemption price, which is the net asset value
per share, will normally be different for Class A, Class B and Class C
shares. Therefore, the redemption value of your shares may be more or
less than their original cost.
- Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the
shareholder under the redemption procedures described above) within 7
days after the Transfer Agent receives redemption instructions in
proper form, except under unusual circumstances determined by the
Securities and Exchange Commission delaying or suspending such
payments. Effective June 7, 1995, for accounts registered in the name
of a broker-dealer, payment will be forwarded within 3 business days.
The Transfer Agent may delay forwarding a check or processing a payment
via AccountLink for recently purchased shares, but only until the
purchase payment has cleared. That delay may be as much as 10 days
from the date the shares were purchased. That delay may be avoided if
you purchase shares by certified check or arrange with your bank to
provide telephone or written assurance to the Transfer Agent that your
purchase payment has cleared.
- Involuntary redemptions of small accounts may be made by the
Fund if the account value has fallen below $200 for reasons other than
the fact that the market value of shares has
dropped, and in some cases involuntary redemptions may be made to repay
the Distributor for losses from the cancellation of share purchase
orders.
- Under unusual circumstances, shares of the Fund may be redeemed
"in kind," which means that the redemption proceeds will be paid with
securities from the Fund's portfolio. Please refer to "How to Sell
Shares" in the Statement of Additional Information for more details.
- "Backup Withholding" of Federal income tax may be applied at
the rate of 31% from dividends, distributions and redemption proceeds
(including exchanges) if you fail to furnish the Fund a certified
Social Security or Employer Identification Number when you sign your
application, or if you violate Internal Revenue Service regulations on
tax reporting of dividends.
- The Fund does not charge a redemption fee, but if your dealer
or broker handles your redemption, they may charge a fee. That fee can
be avoided by redeeming your Fund shares directly through the Transfer
Agent. Under the circumstances described in "How To Buy Shares," you
may be subject to a contingent deferred sales charges when redeeming
certain Class A, Class B and Class C shares.
- To avoid sending duplicate copies of materials to households,
the Fund will mail only one copy of each annual and semi-annual report
to shareholders having the same last name and address on the Fund's
records. However, each shareholder may call the Transfer Agent at 1-
800-525-7048 to ask that copies of those materials be sent personally
to that shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A, Class B
and Class C shares from net investment income each regular business day
and pays those dividends to shareholders monthly. Normally, dividends
are paid on the 25th day of each month (or the prior regular business
day if the 25th is not a regular business day), but the Board of
Trustees can change that date. Distributions may be made monthly from
any net short-term capital gains the Fund realizes in selling
securities. It is expected that distributions paid with respect to
Class A
shares will generally be higher than for Class B or Class C shares
because expenses allocable to Class B and Class C shares will generally
be higher.
During the Fund's fiscal year ended September 30, 1994, the Fund
attempted to pay dividends on its Class A shares at a constant level.
That was done keeping in mind the amount of net investment income and
other distributable income available from the Fund's portfolio
investments. However, the amount of each dividend can change from time
to time (or there might not be a dividend at all on either class)
depending on market conditions, the Fund's expenses, and the
composition of the Fund's portfolio. Attempting to pay dividends at a
constant level required the Manager to monitor the Fund's income stream
from its investments and at times to select higher yielding securities
(appropriate to the Fund's objectives and investment restrictions) to
maintain income at the required level. This practice did not affect
the net asset values of either class of shares. The Board of Trustees
may change or end the Fund's targeted dividend level for Class A shares
at any time. There is no targeted dividend level for Class B or Class
C shares.
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. Long-term capital gains will be separately
identified in the tax information the Fund sends you after the end of
the year. Short-term capital gains are treated as dividends for tax
purposes. There can be no assurance that the Fund will pay any capital
gains distributions in a particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are reinvested.
For other accounts, you have four options:
- Reinvest All Distributions in the Fund. You can elect to
reinvest all dividends and long-term capital gains distributions in
additional shares of the Fund.
- Reinvest Long-Term Capital Gains Only. You can elect to
reinvest long-term capital gains in the Fund while receiving dividends
by check or sent to your bank account on AccountLink.
- Receive All Distributions in Cash. You can elect to receive a
check for all dividends and long-term capital gains distributions or
have them sent to your bank on AccountLink.
- Reinvest Your Distributions in Another OppenheimerFunds
Account. You can reinvest all distributions in another OppenheimerFunds
account you have established.
Taxes. If your account is not a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the
Fund. Long-term capital gains are taxable as long-term capital gains
when distributed to shareholders. It does not matter how long you held
your shares. Dividends paid from short-term capital gains and net
investment income are taxable as ordinary income. Distributions are
subject to federal income tax and may be subject to state or local
taxes. Your distributions are taxable when paid, whether you reinvest
them in additional shares or take them in cash. Every year the Fund
will send you and the IRS a statement showing the amount of each
taxable distribution you received in the previous year.
- "Buying a Dividend": When a fund goes ex-dividend, its share
price is reduced by the amount of the distribution. If you buy shares
on or just before the ex-dividend date, or just before the Fund
declares a capital gains distribution, you will pay the full price for
the shares and then receive a portion of the price back as a taxable
dividend or capital gain.
- Taxes on Transactions: Share redemptions, including redemptions
for exchanges, are subject to capital gains tax. Generally speaking, a
capital gain or loss is the difference between the price you paid for
the shares and the price you received when you sold them.
- Returns of Capital: If distributions made by the Fund must be
recharacterized at the end of a fiscal year because of the Fund's
investment policies (for example, due to losses on foreign currency
exchange), shareholders may have a non-taxable return of capital. If
this occurs, it will be identified in notices to shareholders. A non-
taxable return of capital may reduce the 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.
Appendix: Description of Ratings Categories of Rating Services
Description of Moody's Investors Service, Inc. Bond Ratings
Aaa: Bonds 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 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 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 rated "Baa" are considered medium grade obligations,
that is, 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 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 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 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 rated "Ca" represent obligations which are speculative
in a high degree and are often in default or have other marked
shortcomings.
C: Bonds rated "C" can be regarded as having extremely poor
prospects of ever attaining any real investment standing.
Description of Standard & Poor's Bond Ratings
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.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER STRATEGIC INCOME FUND
Graphic material included in Prospectus of Oppenheimer Strategic
Income Fund: "Comparison of Total Return of Oppenheimer Strategic
Income Fund with The Lehman Aggregate Bond Index and The Salomon
Brothers World Government Bond Index - Change in Value of a $10,000
Hypothetical Investment"
A linear graph will be included in the Prospectus of Oppenheimer
Strategic Income Fund (the "Fund") depicting the initial account value
and subsequent account value of a hypothetical $10,000 investment in
the Fund during each of the Fund's fiscal years since the commencement
of the Fund's operations as to Class A shares (October 16, 1989) and
Class B shares (November 30, 1992) and comparing such values with the
same investments over the same time periods with The Lehman Aggregate
Bond Index and The Salomon World Government Bond 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 Lehman Brothers Aggregate Bond Index and The
Salomon Brothers World Government Bond Index, is set forth in the
Prospectus under "Fund Performance Information - Management's
Discussion of Performance."
Oppenheimer Lehman Bros. Salomon Brothers
Fiscal Year Strategic Aggregate World Government
(Period) Ended Income Fund A Bond Index Bond Index
10/16/89(1) $ 9,525 $10,000 $10,000
09/30/90 $10,489 $10,498 $10,664
09/30/91 $12,258 $12,177 $12,268
09/30/92 $13,794 $13,705 $14,513
09/30/93 $15,666 $15,072 $15,991
09/30/94 $15,988 $14,586 $16,126
Oppenheimer Lehman Bros. Salomon Brothers
Fiscal Year Strategic Aggregate World Government
(Period) Ended Income Fund B Bond Index Bond Index
11/30/92(2) $10,000 $10,000 $10,000
09/30/93 $11,468 $11,141 $11,509
09/30/94 $11,222 $10,782 $11,606
----------------------
(1) The Fund commenced operations on October 16, 1989.
(2) Class B shares of the Fund were first publicly offered on November
30, 1992.
<PAGE>
Oppenheimer Strategic Income Fund
3410 South Galena Street
Denver, CO 80231
Telephone: 1-800-525-7048
Investment Advisor
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
Deloitte & Touche LLP
1560 Broadway
Denver, Colorado 80202
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202
No dealer, broker, salesperson or any other person has been authorized
to give any information or to make any representations other than those
contained in this Prospectus or the Statement of Additional
Information, and if given or made, such information and representations
must not be relied upon as having been authorized by the Fund,
Oppenheimer Management Corporation, Oppenheimer Funds Distributor,
Inc., or any affiliate thereof. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any state to any person to whom it is
unlawful to make such offer in such state.
PR0230.001.0595 * Printed on recycled paper
<PAGE>
OPPENHEIMER STRATEGIC FUNDS TRUST
3410 SOUTH GALENA STREET, DENVER, COLORADO 80231-5099
1-800-525-7048
PART B
STATEMENT OF ADDITIONAL INFORMATION
September 27, 1995
___________________________________
This Statement of Additional Information of Oppenheimer Strategic
Funds Trust consists of this cover page and the following documents:
1. Statement of Additional Information of Oppenheimer Strategic Income
Fund dated May 26, 1995, supplemented July 14, 1995, previously filed
and incorporated herein by reference.
2. Oppenheimer Strategic Income Fund's Annual Report as of September
30, 1994 and its Semi-Annual Report as of March 31, 1995, previously
filed and incorporated herein by reference.
3. Prospectus of Quest for Value Global Income Fund dated March 1,
1995, as revised June 30, 1995, previously filed and incorporated
herein by reference.
4. Statement of Additional Information of Quest for Value Global Income
Fund dated March 1, 1995, previously filed and incorporated herein by
reference.
5. Quest for Value Global Income Fund's Annual Report as of November
30, 1994 and its Semi-Annual Report as of May 31, 1995, previously
filed and incorporated herein by reference.
This Statement of Additional Information (the "Additional
Statement") is not a Prospectus. This Additional Statement should be
read in conjunction with the Proxy Statement and Prospectus, which may
be obtained by written request to Oppenheimer Shareholder Services
("OSS"), P.O. Box 5270, Denver, Colorado 80217, or by calling OSS at
the toll-free number shown above.
<PAGE>
Independent Auditors' Report
The Board of Trustees and Shareholders of Oppenheimer Strategic Income
Fund:
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Oppenheimer Strategic Income
Fund as of September 30, 1994, the related statement of operations for the
year then ended,the statements of changes in net assets for the years
ended September 30, 1994 and 1993, and the financial highlights for the
period October 16, 1989 (commencement of operations) to September 30,
1994. These financial statementsand financial highlights are the
responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An
audit also includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned at September 30, 1994 by
correspondence with the custodian and brokers; where replies were not
received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Oppenheimer Strategic Income Fund at September 30, 1994, the results of
its operations, the changes in its net assets, and the financial
highlights for the respective stated periods, in conformity with generally
accepted accounting principles.
Deloitte & Touche
/s/ Deloitte & Touche
Denver, Colorado
October 21, 1994
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
of Global Income Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of Global
Income Fund (a series of Quest for Value Global Funds, Inc. hereafter
referred to as the "Fund") at November 30, 1994, the results of its
operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended and the financial highlights for
each of the two years in the period then ended and for the period December
2, 1991 (commencement of operations) to November 30, 1992, in conformity
with generally accepted accounting principles. These financial statements
and financial highlights (hereafter referred to as "financial statements")
are the responsiblilty of the Fund's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at November 30, 1994
by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
PRICE WATERHOUSE LLP
/s/ PRICE WATERHOUSE LLP
1177 Avenue of Americas
New York, New York
January 25, 1995
<PAGE>
APPENDIX TO 1994 ANNUAL REPORT OF
GLOBAL INCOME FUND
Graphic material included in 1994 Annual Report of Global Income
Fund: "Comparison of Change in Value of $10,000 Investment* in Quest for
Value Global Income Fund (Class A) from 12/31/91 through 11/30/94 and
Total Return on Lehman Global Intermediate Bond Index and Salomon Brothers
Hedged World Government Bond Index."
A linear graph is included in the 1994 Annual Report of Global Income
Fund (the "Fund") depicting the initial account value and subsequent
account value of a hypothetical $10,000 investment in Class A shares of
the Fund held from 12/31/91 until 11/30/94, and comparing such values with
the same investments over the same time periods in the Lehman Global
Intermediate Bond Index and Salomon Brothers Hedged World Government Bond
Index. Set forth below are the relevant data points that appear on the
linear graph.
<TABLE>
<S> <C> <C> <C>
Lehman Salomon
Fiscal Year Global Income Global Int. Hedged World
(Period) Ended Fund (Class A) Bond Index Bond Index
12/31/91 $9,700 $10,000 $10,000
11/30/92 $9,123 $10,363 $10,651
11/30/93 $10,053 $11,394 $11,966
11/30/94 $9,727 $11,857 $11,640
</TABLE>
----------------------
* After taking into account maximum sales charge.
<PAGE>
OPPENHEIMER STRATEGIC FUNDS TRUST
FORM N-14
PART C
OTHER INFORMATION
Item 15. Indemnification
Reference is made to Article Ninth of Registrant's Agreement and
Declaration of Trust filed as Exhibit 24(b)(1) to Registrant's
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 16. Exhibits
(1) Amended and Restated Declaration of Trust dated March 16, 1995:
Filed with Registrant's Post-Effective Amendment No. 10, 3/26/95, and
incorporated herein by reference.
(2) By-Laws as amended through 6/26/90: Filed with Post-Effective
Amendment No. 9, 1/31/95, and incorporated herein by reference.
(3) Not applicable.
(4) Agreement and Plan of Reorganization: See Exhibit A to Part
A of this Registration Statement.
(5) (i) Oppenheimer Strategic Income Fund ("OSIF") Specimen
Class A Share Certificate: Filed with Registrant's Post-Effective
Amendment No. 8, 2/1/94, and incorporated herein by reference.
(ii) OSIF Specimen Class B Share Certificate: Filed with
Registrant's Post-Effective Amendment No. 8, 2/1/94, and incorporated
herein by reference.
(iii) OSIF Specimen Class C Share Certificate: Previously
filed with Registrant's Post-Effective Amendment No. 10, 3/26/95, and
incorporated herein by reference.
(iv) Oppenheimer Strategic Diversified Income Fund ("OSDIF")
Specimen Class C Share Certificate: Previously filed with Registrant's
Post-Effective Amendment No. 8, 2/1/94, and incorporated herein by
reference.
(6) (i) Investment Advisory Agreement for OSIF dated 10/22/90:
Filed with Registrant's Post-Effective Amendment No. 9, 1/31/95, and
incorporated herein by reference.
(ii) Investment Advisory Agreement for OSDIF dated 2/1/94:
Filed with Registrant's Post-Effective Amendment No. 8, 2/1/94, and
incorporated herein by reference.
(7) (i) (a) General Distributor's Agreement for OSIF dated
10/13/92: Filed with Post-Effective Amendment No. 9, 1/31/95, and
incorporated herein by reference.
(b) General Distributor's Agreement for OSDIF dated
2/1/94: Filed with Registrant's Post-Effective Amendment No. 8, 2/1/94,
and incorporated herein by reference.
(ii) Form of Oppenheimer Funds Distributor, Inc. Dealer
Agreement: Filed with Post-Effective Amendment No. 14 to the Registration
Statement of Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850),
9/30/94, and incorporated herein by reference.
(iii) Form of Oppenheimer Funds Distributor, Inc. Broker
Agreement: Filed with Post-Effective Amendment No. 14 to the Registration
Statement of Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850),
9/30/94, and incorporated herein by reference.
(iv) Form of Oppenheimer Funds Distributor, Inc. Agency
Agreement - Filed with Post-Effective Amendment No. 14 to the Registration
Statement of Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850),
9/30/94, and incorporated herein by reference.
(v) Broker Agreement between Oppenheimer Fund Management,
Inc. and Newbridge Securities, Inc. dated 10/1/86: Previously filed with
Post-Effective Amendment No. 25 to the Registration Statement 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.
(8) (i) Form of prototype Standardized and Non-Standardized
Profit-Sharing Plans and Money Purchase Pension Plans 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.
(ii) Form of Individual Retirement Account Trust Agreement:
Filed with Post-Effective Amendment No. 21, of Oppenheimer U.S. Government
Trust (Reg. No. 2-76645), 8/25/93, and incorporated herein by reference.
(iii) Form of Tax Sheltered Retirement Plan and Custody
Agreement for employees of public schools and tax- exempt organizations:
Previously filed with Post- Effective Amendment No. 47 of Oppenheimer
Growth Fund (File No. 2-45272), 10/21/94, and incorporated herein by
reference.
(iv) Form of Simplified Employee Pension IRA: Previously
filed with Post-Effective Amendment No. 36 to the Registration Statement
of Oppenheimer Equity Income Fund (Reg. No. 2-33043), 10/23/91, refiled
with Post-Effective Amendment No. 42 to the Registration Statement of
Oppenheimer Equity Income Fund (Reg. No. 2-33043), 10/28/94, pursuant to
Item 102 of Regulation S-T, and incorporated herein by reference.
(v) Form of SAR-SEP Simplified Employee Pension IRA: Filed
with Post-Effective Amendment No. 15 to the Registration Statement of
Oppenheimer Mortgage Income Fund (File No. 33-6614), 1/20/95, and
incorporated herein by reference.
(9) Custody Agreement dated 10/6/92: Filed with Post-Effective
Amendment No. 9, 1/31/95, and incorporate herein by reference.
(10) (i) Service Plan and Agreement for Class A shares of OSIF
under Rule 12b-1 dated 6/22/93: Filed with Registrant's Post-Effective
Amendment No. 8, 2/1/94, and incorporated herein by reference.
(ii) Distribution and Service Plan and Agreement for Class
B shares of OSIF under Rule 12b-1 dated 6/22/93: Filed with Registrant's
Post-Effective Amendment No. 8, 2/1/94, and incorporated herein by
reference.
(iii) Distribution and Service Plan and Agreement for Class
C shares of OSDIF under Rule 12b-1 dated 2/1/94: Filed with Registrant's
Post-Effective Amendment No. 8, 2/1/94, and incorporated herein by
reference.
(iv) Form of Class C Distribution and Service Plan for
Oppenheimer Strategic Income Fund dated 5/26/95: Filed with Registrant's
Post-Effective Amendment No. 11, 5/26/95, and incorporated herein by
reference.
(11) (i) Opinion and Consent of Counsel for OSIF dated 8/30/89:
Previously filed with Registrant's Pre-Effective Amendment No. 9, 1/31/95,
and incorporated herein by reference.
(ii) Opinion and Consent of Counsel for OSDIF dated 1/31/94:
Filed with Registrant's Post-Effective Amendment No. 8, 2/1/94, and
incorporated herein by reference.
(12) Tax Opinion Relating to the Reorganization: Previously filed
with this Registration Statement.
(13) Not applicable.
(14) (i) Consent of Deloitte & Touche LLP: Filed herewith.
(ii) Consent of Price Waterhouse LLP: Filed herewith.
(15) Not applicable.
(16) Not applicable.
(17) (i) Declaration of Registrant under Rule 24f-2: Previously
filed with this Registration Statement.
(ii)Financial Data Schedules: Previously filed with this
Registration Statement.
Item 17. Undertakings
(1) Not applicable.
(2) Not applicable.
<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 Denver and State of Colorado on
the 20th day of September, 1995.
OPPENHEIMER STRATEGIC FUNDS TRUST
By: /s/ James C. Swain
----------------------------------
James C. Swain, Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities on the dates indicated:
Signatures Title Date
/s/ James C. Swain Chairman of the
------------------ Board of Trustees September 20, 1995
James C. Swain
/s/ Jon S. Fossel Chief Executive
-------------------- Officer and September 20, 1995
Jon S. Fossel Trustee
/s/ George C. Bowen Chief Financial
------------------- and Accounting September 20, 1995
George C. Bowen Officer
/s/ Robert G. Avis Trustee September 20, 1995
------------------
Robert G. Avis
/s/ William A. Baker Trustee September 20, 1995
--------------------
William A. Baker
/s/ Charles Conrad, Jr. Trustee September 20, 1995
-----------------------
Charles Conrad, Jr.
/s/ Raymond J. Kalinowski Trustee September 20, 1995
-------------------------
Raymond J. Kalinowski
/s/ C. Howard Kast Trustee September 20, 1995
------------------
C. Howard Kast
/s/ Robert M. Kirchner Trustee September 20, 1995
----------------------
Robert M. Kirchner
/s/ Ned M. Steel Trustee September 20, 1995
----------------
Ned M. Steel
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OPPENHEIMER STRATEGIC FUNDS TRUST
EXHIBIT INDEX
Exhibit Description
16(14)(i) Consent of Deloitte & Touche LLP
16(14)(ii) Consent of Price Waterhouse LLP
INDEPENDENT AUDITORS' CONSENT
We consent to use in this Pre-effective Amendment No.1 to Registration
Statement No. 33-62153 of Oppenheimer Strategic Funds Trust on Form N-14
of our report dated October 21, 1994, appearing in the September 30, 1994
Annual Report of Oppenheimer Strategic Income Fund (a series of
Oppenheimer Strategic Funds Trust), included as part of the Statement of
Additional Information, which is a part of such Registration Statement.
DELOITTE & TOUCHE LLP
/s/ Deloitte & Touche
Denver, Colorado
September 21, 1995
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Consent of Independent Accountants
We hereby consent to the use in the Statement of Additional Information
constituting part of this registration statement on Form N-14 (the "N-14
Registration Statement") of our report dated January 25, 1995, relating
to the financial statements and financial highlights of Quest For Value
Global Funds, Inc. - Global Income Fund (the "Fund"), which appears in
such Statement of Additional Information and to the incorporation by
reference of our report into the Proxy Statement and Prospectus which
constitutes part of this N-14 Registration Statement. We also consent to
the use of our report and to the reference to us under the heading
"Additional Information-Independent Accountants" in the Statement of
Additional Information constituting part of Post-Effective Amendment No.
9 to the registration statement on Form N-1A of the Fund (the "N-1A
Registration Statement"), which is included in the Statement of Additional
Information of such N-14 Registration Statement and incorporated by
reference in the Proxy Statement and Prospectus constituting part of such
N-14 Registration Statement. We also consent to the reference to us under
the heading "Financial Highlights" in the Prospectus of such N-1A
Registration Statement, which is incorporated by reference in the Proxy
Statement and Prospectus of the N-14 Registration Statement.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
September 6, 1995
merge\231pw.con
