Filed Per Rule 497(c)
File No. 33-62153
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 9:00 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 September 26, 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 complete liquidation of the Fund
(excluding a cash reserve), 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
September 28, 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 substantially
all the assets of the Quest for Value Global Income Fund (the "Fund")
to the Oppenheimer Strategic Income Fund ("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.
The number of shares of 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 Strategic Income Fund and the Fund.
Although the number of shares of 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 Strategic Income
Fund issued in the Reorganization will be equal to the value of the
shares previously held in the Fund. Holders of Class A, Class B and
Class C shares of the Fund will receive Class A, Class B and Class C
shares of Strategic Income Fund, respectively, in the Reorganization.
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.
OMC is discussed in greater detail below.
Shareholders are directed to read the accompanying Proxy Statement and
Prospectus for further information about the Reorganization and related
matters. Additional information about Strategic Income Fund is set
forth in its accompanying Prospectus.
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 Trustees of the Fund determined that, among other things,
the Reorganization would afford the shareholders of the Fund: 1) the
capabilities and resources of OMC and its affiliates in the area of
fixed income investment management, distribution, shareholder services
and marketing; and 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.
4.Who is paying the expenses of the Reorganization?
All expenses of the Reorganization will be paid by Quest for Value
Advisors and OMC and not the Fund or Strategic Income Fund
shareholders.
5.Who is Oppenheimer Management Corporation?
OMC and its subsidiaries are engaged principally in the business of
managing, distributing and servicing registered investment companies.
OMC has operated as an investment adviser since 1959. OMC 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 $38 billion under management in more
than 45 mutual funds.
6.Do the Oppenheimer funds have a sales charge?
Yes, other than their money market funds. However, there will be no
commission or initial sales charge of any kind charged on Strategic
Income Fund shares received in the Reorganization. The full value of
your shares in the Fund will be exchanged for shares of Strategic
Income Fund. However, any contingent deferred sales charge which is
applicable to a Fund shareholder's investment will continue to apply.
Also, purchases of Class A shares of Strategic Income Fund in addition
to those received in the Reorganization will be assessed any applicable
sales charge. See the accompany documents for further details.
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 current prospectus will 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 will also
provide such waivers and exemptions upon implementation of appropriate
prospectus disclosure. For example, those shareholders who, because
they were shareholders of the AMA Family of Funds or the Unified Funds
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 such Oppenheimer funds without a sales charge.
7.May I exchange between other Oppenheimer funds without charge?
Yes. As a shareholder of an Oppenheimer fund, you will be able to make
exchanges into any of the other Oppenheimer funds without charge. The
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 Oppenheimer
funds?
Call OppenheimerFunds at 1-(800) 255-2755. They will be pleased to
supply you with additional information, including other prospectuses.
9.After the Reorganization, who do I contact about my new Strategic
Income Fund account or to initiate a transaction in that account?
Once the reorganization is approved and effected, you will become a
shareholder of Strategic Income Fund. For information about your new
Strategic Income Fund account or to initiate a transaction in that
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 Fund,
Strategic Income Fund or to me as a shareholder?
The Reorganization is intended to qualify for Federal income tax
purposes as a tax-free reorganization. Accordingly, no gain or loss
will be recognized by Fund shareholders upon the exchange of Fund
shares for shares of Strategic Income Fund. The aggregate tax basis of
Strategic Income Fund shares received by you will be the same as the
aggregate tax basis of your Fund shares immediately prior to the
Reorganization. The holding period of the shares of the Strategic
Income Fund to be received by you will include the period during which
the Fund shares surrendered in exchange therefore were held.
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 only relates to the Federal income
tax consequences of the Reorganization, shareholders of the Fund should
also consult their tax advisors as to state and local tax consequences,
if any, of the Reorganization.
<PAGE>
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 9:00 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
October 5, 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 September 26, 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 complete
liquidation of the Fund (excluding the Cash Reserve (as hereinafter
defined)) 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 initial 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 (information about the Fund is incorporated
herein by reference from the Fund's Prospectus); 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 September
28, 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 September 28, 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)
Background
Acquisition Agreement
Board Approval of 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
The Meeting
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 September
26, 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.
Oppenheimer Strategic
Income Fund
Class A Class B Class 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.
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%
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
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%
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)
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
certain of 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 expense limitation, 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.
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 complete
liquidation of the Fund (excluding the Cash Reserve). 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 at a rate not to exceed a fixed rate. 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 an asset-based sales charge at an annual rate of
0.05% although the Board has set the maximum fee under the Fund's Class
A plan at 0.25%. 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 changes 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 periods 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 at least 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 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, 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 Strategic
Income Fund Prospectus and Strategic Income Fund Additional Statement
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 Class A shareholders of
the Fund who wish certificates representing their Class A 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. Share certificates are not available for Class
B or Class C Strategic Income Fund shares. 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 advisors 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
shares 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 agreements 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 the 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 Strategic Income
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 than 3% of the
outstanding voting securities of such company, provided that the
foregoing restrictions on investment company purchases and holdings are
inapplicable to acquisitions 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. Strategic Income Fund's investment
performance will vary over time, depending on market conditions, the
composition of the portfolio, expenses and which class of shares an
investor owns. Past performance should not be considered a prediction
of future performance.
Included in the Prospectus for Strategic Income Fund, a copy of which
accompanies this Proxy Statement and Prospectus and is incorporated
herein by reference, 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. 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." Such information is
incorporated herein by reference.
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 the Strategic Income Fund
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 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 and Directors,
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 "How the Fund is Managed,"
"Trustees and Officers of the Fund," and "The Manager and Its
Affiliates" in the 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 and "Trustees and Officers" in the Fund
Additional Statement.
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 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 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 9:00 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
523,635.368 Class A, 133,741.364 Class B and 33,134.972 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 688,392,697.363
Class A, 414,276,029.339 Class B and 14,224,487.615 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
more than 5% of the outstanding Class A, Class B or Class C Fund shares
or more than 5% of the outstanding shares of the Fund except for: (i)
Unified Management Corp. Omnibus Account, 429 N. Pennsylvania Street,
Indianapolis, Indiana 46204, which held of record but not beneficially
for the benefit of clients 149,426.542 Class A shares of the Fund
(approximately 28.54% of such outstanding shares); (ii) Oppenheimer
Group Profit Sharing Plan Omnibus Account, Oppenheimer Tower, World
Financial Center, New York, New York 10281, which held of record (and
has voting but not dispositive rights with respect to) 67,840.538 Class
A shares of the Fund (approximately 12.96% of such outstanding shares);
(iii) Oppenheimer & Co., Inc., P.O. Box 3484, Church Street Station,
New York, New York 10008, which held of record but not beneficially for
the benefit of two separate clients 23,589.779 Class B shares and
2,941.837 Class C shares of the Fund (approximately 17.64% and 8.88%,
respectively, of such outstanding shares); (iv) Rauscher Pierce Refsnes
FBO Healy and Beal P.C. Defined Benefit Pension Plan FBO Robert L.
Beal, 310 N. Indian House Road, Tucson, Arizona 85711, which held of
record and beneficially 2,474.107 Class C shares of the Fund
(approximately 7.47% of such outstanding shares); (v) Oppenheimer
Capital, 33 Maiden Lane, New York, New York 10038, which held of record
and beneficially 11,881.750 Class C shares of the Fund (approximately
35.66% of such outstanding shares); (vi) State Street Bank and Trust as
Custodian for the IRA of Harold D. Persons, 48-05 Browvale Lane, Little
Neck, New York 11362, which held of record and beneficially 4,968.026
Class C shares of the Fund (approximately 14.99% of such outstanding
shares); (vii) State Street Bank and Trust as Custodian for the SARSEP
of San Bernardino County Medical Society, Inc. FBO Linda K. Stratton,
101 Chisholm Trail, Redlands, California, 92373 which held of record
and beneficially 1,681.796 Class C shares of the Fund (approximately
5.08% of such outstanding shares); and (viii) Modern Technologies Inc.
401(k) Plan & Trust, 6801 Kenilworth Avenue, Riverdale Maryland 20737,
which held of record and beneficially 1,820.896 Class C shares of the
Fund (approximately 5.50% of such outstanding shares). As to shares of
the Fund held of record, but not beneficially, by the foregoing
entities, to the knowledge of the Fund no beneficial owner on whose
behalf such shares are held owned more than 5% of the outstanding
shares of the specified class as of the Record Date. The foregoing
percentages are based on shares of the indicated class outstanding as
of the Record Date. To the knowledge of Strategic Trust as of the
Record Date, no person owned of record or beneficially more than 5% of
the outstanding Class A, Class B or Class C Strategic Income Fund
shares or more than 5% of the outstanding shares of Strategic Income
Fund. As of the Record Date, the officers and Trustees of Strategic
Trust, 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 ("broker 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 for the Meeting and the other shareholder
meetings contemplated by the Acquisition primarily by contacting
shareholders by telephone and telegram for a fee not to exceed $25,000
plus reasonable out-of-pocket expenses. With respect to a telephone
solicitation by such firm, additional expenses would include the
following: $5.00 per telephone vote transacted, $2.75 per outbound
telephone contact and costs related to obtaining shareholder telephone
numbers. 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.
Expenses of the Reorganization will be paid as set forth in the
Reorganization Agreement. 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 in its audited
financial statements as of November 30, 1994 and unaudited financial
statements as of May 31, 1995, all of 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 September 30, 1994 and unaudited financial
statements as of March 31, 1995 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 Directors 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
September 28, 1995285
MERGE/231proxy.QF6
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as
of this 26th 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
defined in Section 3.1 below), 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 (as defined in Section 2.1 below), 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
Valuation 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 has prepared and filed with the
Securities and Exchange Commission ("Commission") a registration
statement on Form N-14 under the Securities Act of 1933, as amended
("1933 Act"), and will prepare and file with the Commission any
amendments thereto, 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 (audited) 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, 1995 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 good and
valid 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, to the knowledge of such
counsel, 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 in all material respects 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 actions 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, to the knowledge of
such counsel, 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 in all
material respects 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 actions 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 filing of the Registration Statement 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 Management Corporation 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 Fund 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: /s/ Andrew J. Donohue
Andrew J. Donohue
Vice President
QUEST FOR VALUE GLOBAL FUNDS, INC.
By: /s/ Bernard H. Garil
Bernard H. Garil
Vice President
QUEST FOR VALUE ADVISORS
By: /s/ Bernard H. Garil
Bernard H. Garil
President
EXHIBIT B
The aggregate purchase price for the Purchased Assets 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, and (iv) the Deferred Purchase Payment (as hereinafter
defined).
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>
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 9:00
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
September 26, 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.
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 9:00
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
September 26, 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>
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 9:00
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
September 26, 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.
