Oppenheimer Quest Global Value Fund, Inc.
Prospectus dated November 24, 1995
Oppenheimer Quest Global Value Fund, Inc. (the "Fund") is a mutual
fund that seeks long-term capital appreciation through pursuit of a global
investment strategy primarily involving equity securities. Under normal
circumstances, at least 65% of the Fund's total assets will be invested
in equity securities in at least three different countries, one of which
may be the United States. The Fund may invest up to 35% of its total
assets in debt obligations with remaining maturities of one year or more
of U.S. or foreign corporate, governmental or bank issuers. Please refer
to "Investment Restrictions and Techniques" and "Risk Factors" for more
information about the types of securities the Fund invests in and the
risks of investing in the Fund.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and keep it
for future reference. You can find more detailed information about the
Fund in the November 24, 1995 Statement of Additional Information. For
a free copy, call Oppenheimer Shareholder Services, the Fund's Transfer
Agent, at 1-800-525-7048, or write to the Transfer Agent at the address
on the back cover. The Statement of Additional Information has been filed
with the Securities and Exchange Commission and is incorporated into this
Prospectus by reference (which means that it is legally part of this
Prospectus).
(OppenheimerFunds logo)
Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the F.D.I.C. or any other
agency, and involve investment risks, including the possible loss of the
principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents
ABOUT THE FUND
Expenses
A Brief Overview of the Fund
Financial Highlights
Investment Objective and Policies of the Fund
Risk Factors
Investment Restrictions and Techniques
Investment Management Agreement
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends and Distributions
Additional Information
Appendix A: Sales Charges and Waivers for Certain Former Quest
Shareholders, and for Certain Shares Purchased Prior to the Date of
this Prospectus
<PAGE>
ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for management of its
assets, administration, distribution of its shares and other services, and
those expenses are subtracted from the Fund's assets to calculate the
Fund's net asset value per share. All shareholders therefore pay those
expenses indirectly. Shareholders pay other expenses directly, such as
sales charges and account transaction charges. The following tables are
provided to help you understand your direct expenses of investing in the
Fund and your share of the Fund's business operating expenses that you
might expect to bear indirectly, based upon the Fund's fees and expenses
in effect as of the date of this Prospectus after giving effect to the
acquisition by Oppenheimer Management Corporation described below.
- Shareholder Transaction Expenses are charges you pay when you buy
or sell shares of the Fund. Please refer to "About Your Account," from
pages 20 through 40, for an explanation of how and when these charges
apply.
<TABLE>
<CAPTION>
Class Class Class
A Shares B Shares C Shares
<S> <C> <C> <C>
Maximum Sales Charge
on Purchases
(as a % of
offering price) 5.75% None None
Sales Charge on
Reinvested Dividends None None None
Deferred Sales Charge
(as a % of the
lower of the
original purchase
price or redemption
proceeds) None(1) 5% in the first 1% if
year, declining redeemed
to 1% in the within
sixth year and 12 months
eliminated of
thereafer(2) purchase(2)
Redemption Fee None None None
Exchange Fee None None None
</TABLE>
(1) If you invest $1 million or more ($500,000 or more for purchases by
OppenheimerFunds prototype 401(k) plans) in Class A shares, you may
have to pay a sales charge of up to 1% if you sell your shares
within 12, 18 or 24 calendar months from the end of the calendar
month during which you purchased those shares, depending upon when
you purchased such shares. See "How to Buy Shares - Class A
Shares," below.
(2) See "How to Buy Shares - Class B Shares" and "How to Buy Shares -
Class C Shares" below, for more information on the contingent
deferred sales charges.
- Annual Fund Operating Expenses are paid out of the Fund's assets
and represent the Fund's expenses in operating its business. For example,
the Fund pays management fees to its investment adviser, Oppenheimer
Management Corporation (referred to in this Prospectus as the "Manager").
The rates of the Manager's fees are set forth in "Investment Management
Agreement," below. The Fund has other regular expenses for services, such
as transfer agent fees, custodial fees paid to the bank that holds its
portfolio securities, audit fees and legal expenses. Those expenses are
detailed in the Fund's Financial Statements in the Statement of Additional
Information.
The numbers in the table below are projections of the Fund's
business expenses based on the Fund's expenses in its last fiscal year.
These amounts are shown as a percentage of the average net assets of each
class of the Fund's shares for that year. The "Management Fees" and Total
Fund Operating Expenses" have been restated to reflect the elimination on
January 11, 1994 of a voluntary management fee waiver by the former
investment adviser to the Fund. Had the voluntary fee waiver remained in
effect, the "Management Fees" for Class A and Class B shares would each
have been 0.74% and "Total Fund Operating Expenses" would have been 1.92%
and 2.50% for Class A and Class B shares, respectively.
The 12b-1 Fees for Class A shares are service fees (the maximum fee
is 0.25% of average annual net assets of that class) and the asset-based
sales charge of 0.25% of the average annual net assets of that class. For
Class B and Class C shares, the 12b-1 Fees are the service fees (the
maximum fee is 0.25% of average annual net assets of those classes) and
the annual asset-based sales charge of 0.75% of the average annual net
assets of the class. These plans are described in greater detail in "How
to Buy Shares." "Other Expenses" below includes an administration fee of
0.25% of average net assets payable to the Manager.
The actual expenses for each class of shares in future years may be
more or less than the numbers in the table, depending on a number of
factors, including changes in the actual value of the Fund's assets
represented by each class of shares.
<TABLE>
<CAPTION>
Class Class Class
A Shares B Shares C Shares
<S> <C> <C> <C>
Management Fees 0.75% 0.75% 0.75%
12b-1 Distribution
Plan Fees 0.50% 1.00% 1.00%
Other Expenses 0.68% 0.76% 0.91%
----- ----- -----
Total Fund Operating 1.93% 2.51% 2.66%
Expenses
</TABLE>
- Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples shown
below. Assume that you make a $1,000 investment in each class of shares
of the Fund, and the Fund's annual return is 5%, and that its operating
expenses for each class are the ones shown in the Annual Fund Operating
Expenses table above and that Class B shares automatically convert into
Class A shares six years after their purchase. If you were to redeem your
shares at the end of each period shown below, your investment would incur
the following expenses by the end of 1, 3, 5 and 10 years:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years*
<S> <C> <C> <C> <C>
Class A Shares $76 $115 $156 $270
Class B Shares $75 $108 $154 $257
Class C Shares $37 $83 $141 $299
If you did not redeem your investment, it would incur the following
expenses:
Class A Shares $76 $115 $156 $270
Class B Shares $25 $78 $134 $257
Class C Shares $27 $83 $141 $299
</TABLE>
*The Class B expenses in years 7 through 10 are based on the Class A
expenses shown above, because the Fund automatically converts your Class
B shares into Class A shares after 6 years. Because of the asset-based
sales charge and the contingent deferred sales charge on Class B and Class
C shares, long term Class B and Class C shareholders could pay the
economic equivalent of more than the maximum front-end sales charge
allowed under applicable regulations. For Class B shareholders, the
automatic conversion of Class B shares to Class A shares is designed to
minimize the likelihood that this will occur. Please refer to "How to Buy
Shares - Class B Shares" for more information.
These examples show the effect of expenses on an investment, but are
not meant to state or predict actual or expected costs or investment
returns of the Fund, all of which will vary.
<PAGE>
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized below,
with references to the section of this Prospectus where more complete
information can be found. You should carefully read the entire Prospectus
before making a decision about investing in the Fund. Keep the Prospectus
for reference after you invest, particularly for information about your
account, such as how to sell or exchange shares.
- What Is the Fund's Investment Objective? The investment
objective of the Fund is long-term capital appreciation through pursuit
of a global investment strategy primarily involving equity securities.
The Fund may invest anywhere in the world with no requirement that any
specific percentage of its assets be committed to any given country. Under
normal circumstances, at least 65% of the Fund's total assets will be
invested in equity securities in at least three different countries, one
of which may be the United States. The Fund may invest up to 35% of its
total assets in debt obligations with remaining maturities of one year or
more of U.S. or foreign corporate, governmental or bank issuers.
- Who Manages the Fund? The Fund's investment adviser (the
"Manager") is Oppenheimer Management Corporation, which (including a
subsidiary) manages investment companies currently having over $38 billion
in assets. The Manager is paid an advisory fee by the Fund, based on its
net assets. The Fund's subadvisor is OpCap Advisors (the "Sub-Adviser"),
a subsidiary of Oppenheimer Capital, which is paid a fee by the Manager.
The Fund's portfolio managers are employed by the Sub-Adviser and are
primarily responsible for the selection of the Fund's securities. The
Fund's Board of Directors, elected by shareholders, oversees the Manager,
the Sub-Adviser and the portfolio managers. Please refer to "Investment
Management Agreement," starting on page ___ for more information about the
Manager and its fees.
- How Can I Buy Shares? You can buy shares through your dealer or
financial institution, or you can purchase shares directly through the
Distributor by completing an Application or by using an Automatic
Investment Plan under AccountLink. Please refer to "How To Buy Shares"
on page ___ for more details.
- Will I Pay A Sales Charge to Buy Shares? The Fund has three
classes of shares. All classes have the same investment portfolio but
different expenses. Class A shares are offered with a front-end sales
charge, starting at 5.75%, and reduced for larger purchases. Purchases
of $1 million or more of Class A shares have no initial sales charge but
are subject to a contingent deferred sales charge of up to 1% if held for
less than 12, 18 or 24 months, depending upon when you purchased such
shares. Class B shares are offered without a front-end sales charge, but
if you sell your shares within six years of buying them, you will normally
pay a contingent deferred sales charge that varies depending on how long
you owned your shares. Class C shares are offered without a front-end
sales charge, but may be subject to a contingent deferred sales charge of
1% if redeemed within one year of buying them. There is also an annual
asset-based sales charge on each class of shares. Please review "How To
Buy Shares" starting on page ___ for more details, including a discussion
about factors you and your financial advisor should consider in
determining which class may be appropriate for you.
- How Can I Sell My Shares? Shares can be redeemed by mail or by
telephone call to the Transfer Agent on any business day, or through your
dealer. Please refer to "How To Sell Shares" on page ___. The Fund also
offers exchange privileges with other Oppenheimer funds, described in "How
To Exchange Shares" on page __.
- How Has the Fund Performed? The Fund measures performance by
quoting its average annual total return and cumulative total return, which
measure historical performance. Those returns can be compared to the
returns (over similar periods) of other funds. Of course, other funds may
have different objectives, investments, and levels of risk. Please
remember that past performance does not guarantee future results.
Financial Highlights
The table on the following pages presents selected financial
information about the Fund, including per share data, expense ratios and
other data based on the Fund's average net assets. This information has
been audited by Price Waterhouse LLP, the Fund's independent auditors,
whose report on the Fund's financial statements for the fiscal year ended
November 30, 1994 (audited) is included in the Statement of Additional
Information, along with the Fund's financial statements for the six months
ended May 31, 1995 (unaudited).
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS DIVIDENDS AND
DISTRIBUTIONS
-------------------------------------- -------------------------------------------------------
NET REALIZED DIVIDENDS TO DISTRIBUTIONS TO
NET ASSET NET AND SHAREHOLDERS SHAREHOLDERS TAX
TOTAL
VALUE, INVESTMENT UNREALIZED TOTAL FROM FROM NET FROM NET
RETURN DIVIDENDS
BEGINNING INCOME GAIN (LOSS) INVESTMENT INVESTMENT REALIZED GAIN
OF AND
OF PERIOD (LOSS) ON INVESTMENTS OPERATIONS INCOME ON INVESTMENTS
CAPITAL DISTRIBUTIONS
<S> <C> <C> <C> <C> <C> <C> <C>
<C>
GLOBAL EQUITY FUND
CLASS A
YEAR ENDED
NOVEMBER 30,
1994 $13.54 $ 0.01 $1.10 $1.11 -- ($0.49) -- ($0.49)
1993 12.30 -- 2.26 2.26 ($0.12) (0.90) -- (1.02)
1992 11.25 0.12 0.93 1.05 -- -- -- --
1991 10.57 (0.04) 0.85 0.81 (0.05) (0.80) -- (0.13)
JULY 2, 1990 (3)
TO NOV. 30, 1990 12.05(4) 0.05 (1.53) (1.48) -- -- -- --
CLASS B
YEAR ENDED
NOV. 30, 1994 13.52 (0.06) 1.10 1.04 -- (0.49) -- (0.49)
SEPT. 2, 1993 (5)
TO NOV. 30, 1993 13.75(4) (0.02) (0.21) (0.23) -- -- -- --
CLASS C
YEAR ENDED
NOV. 30, 1994 13.52 (0.08) 1.11 1.03 -- (0.49) -- (0.49)
SEPT. 2, 1993 (5)
TO NOV. 30, 1993 13.75(4) (0.02) (0.21) (0.23) -- -- -- --
RATIOS
-----------------------------------------
RATIO OF NET RATIO OF NET
NET ASSET NET ASSETS OPERATING INVESTMENTS
VALUE, END OF EXPENSES INCOME (LOSS) PORTFOLIO
END OF TOTAL PERIOD TO AVERAGE TO AVERAGE TURNOVER
PERIOD RETURN* (000'S) NET ASSETS NET ASSETS RATE
<S> <C> <C> <C> <C> <C> <C>
GLOBAL EQUITY FUND
CLASS A
YEAR ENDED
NOVEMBER 30,
1994 $14.16 8.37% $148,044 1.92%(1,2) 0.05%(1,2) 70%
1993 13.54 19.72% 135,616 1.76% 0.04%(2) 46%
1992 12.30 9.33% 111,207 1.76%(2) 0.72%(2) 62%
1991 11.25 7.72% 46,937 2.09% (0.27%) 41%
JULY 2, 1990 (3)
TO NOV. 30, 1990 10.57 (12.28%) 58,087 2.11%(6) 0.92% 2%
CLASS B
YEAR ENDED
NOV. 30, 1994 14.07 7.84% 10,268 2.50%(1,2) (0.44%)(1,2) 70%
SEPT. 2, 1993 (5)
TO NOV. 30, 1993 13.52 (1.67%) 1,676 2.26%(2,6) (0.76%)(2,6) 46%
CLASS C
YEAR ENDED
NOV. 30, 1994 14.06 7.77% 2,415 2.66%(1,2) (0.59%)(1,2) 70%
SEPT. 2, 1993 (5)
TO NOV. 30, 1993 13.52 (1.67%) 244 2.26%(2,6) (0.69%)(2,6) 46%
<FN>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED NOVEMBER 30, 1994 FOR CLASS A, CLASS
B AND CLASS C WERE $148,460,823, $5,982,186 AND $1,150,224, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED A
PORTION OF ITS FEES. IF SUCH WAIVERS HAD NOT BEEN IN EFFECT, THE RATIOS
OF NET OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET
INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS FOR CLASS A WOULD HAVE
BEEN 1.93% AND 0.04%, RESPECTIVELY, FOR THE YEAR ENDED NOVEMBER 30, 1994,
1.91% AND (0.11%), RESPECTIVELY, FOR THE YEAR ENDED NOVEMBER 30, 1993 AND
1.84% AND 0.64%, RESPECTIVELY, FOR THE YEAR ENDED NOVEMBER 30, 1992. THE
RATIOS OF NET OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF
NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS WOULD HAVE BEEN 2.51%
AND (0.45%), RESPECTIVELY, FOR CLASS B AND 2.66% AND (0.59%), RESPECTIVELY,
FOR CLASS C, FOR THE YEAR ENDED NOVEMBER 30, 1994 AND 2.32% AND (0.82%),
ANNUALIZED, RESPECTIVELY, FOR CLASS B AND 2.35% AND (0.78%), ANNUALIZED,
RESPECTIVELY, FOR CLASS C, FOR THE PERIOD SEPTEMBER 2, 1993 (INITIAL
OFFERING) TO NOVEMBER 30, 1993.
(3) COMMENCEMENT OF OPERATIONS.
(4) INITIAL OFFERING PRICE.
(5) INITIAL OFFERING OF CLASS B AND CLASS C SHARES, RESPECTIVELY.
(6) ANNUALIZED.
- ----------------
* Assumes reinvestment of all dividends and distributions, but does not reflect
deductions for sales charges. Aggregate (not annualized) total return is
shown for any period shorter than one year.
</TABLE>
<PAGE>
Investment Objective And Policies Of The Fund
OpCap Advisors (formerly known as Quest for Value Advisors)
manages the portfolio of the Fund in accordance with the Fund's investment
objective and policies described below pursuant to a Subadvisory Agreement
with the Manager.
The Fund seeks long-term capital appreciation through pursuit of a
global investment strategy primarily involving equity securities. The Fund
may invest anywhere in the world with no requirement that any specific
percentage of its assets be committed to any given country. Under normal
circumstances, at least 65% of the Fund's total assets will be invested
in equity securities in at least three different countries, one of which
may be the United States. Opportunities for capital appreciation may also
be presented by debt securities. The Fund may invest up to 35% of its
total assets in debt obligations with remaining maturities of one year or
more of U.S. or foreign corporate, governmental or bank issuers. It is the
present intention of the Fund, although not a fundamental policy, not to
invest more than 5% of its total assets in debt securities rated below
investment-grade. Domestic investments of the Fund are managed by Richard
J. Glasebrook II, Managing Director of Oppenheimer Capital. Mr. Glasebrook
has been portfolio manager of the Fund since 1991. The Fund's investments
in foreign securities are managed by Pierre Daviron, President and Chief
Investment Officer of Oppenheimer Capital International, a division of
Oppenheimer Capital created in 1993. Mr. Daviron was named portfolio
manager of the Fund in 1993. Previously, he was Chairman and Chief
Executive Officer at Indosuez Gartmore Asset Management, a division of
Banque Indosuez, Paris, France. Prior thereto he was a Managing Director
in Mergers and Acquisitions at J.P. Morgan. The Sub-Adviser's equity
investment policy is overseen by George Long, Managing Director and Chief
Investment Officer for Oppenheimer Capital, the parent of OpCap Advisors.
Mr. Long has been with Oppenheimer Capital since 1982.
To provide liquidity for the purchase of new instruments and to
effect redemptions of shares, the Fund typically invests a part of its
assets in various types of U.S. government securities and high quality,
short-term debt securities with remaining maturities of one year or less
such as government obligations, certificates of deposit, bankers'
acceptances, commercial paper, short-term corporate securities and
repurchase agreements ("money market instruments"). For temporary
defensive purposes, the Fund may invest up to 100% of its assets in such
securities. At any time that the Fund for temporary defensive purposes
invests in such securities, to the extent of such investments, it is not
pursuing its investment objective. Such money market instruments may be
issued by entities organized in the U.S. or any foreign country,
denominated in dollars or in the currency of any foreign country.
Except as indicated, the investment objective and policies described
above are fundamental and may not be changed without a vote of the
shareholders. It is anticipated that the Fund will have an annual turnover
rate (excluding turnover of securities having a maturity of one year or
less) of 100% or less. To the extent that higher portfolio turnover
increases capital gains, more taxes will be payable.
Risk Factors
The value of the Fund's shares will fluctuate and on redemption the
value of your shares may be more or less than your investment.
There are two types of risk generally associated with owning equity
securities: market risk and financial risk. Market risk is the risk
associated with the movement of the stock market in general. Financial
risk is associated with the financial condition and profitability of the
underlying company. Smaller capitalization companies may experience higher
growth rates and higher failure rates than do larger capitalization
companies. The trading volume of securities of smaller capitalization
companies is normally less than that of larger capitalization companies
and, therefore, may disproportionately affect their market price, tending
to make them rise more in response to buying demand and fall more in
response to selling pressure than is the case with larger capitalization
companies.
There are two types of risk associated with owning debt securities:
interest rate risk and credit risk. Interest rate risk relates to
fluctuations in market value arising from changes in interest rates. If
interest rates rise, the value of debt securities will normally decline
and if interest rates fall, the value of debt securities will normally
increase. All debt securities, including U.S. government securities, which
are generally considered to be the most creditworthy of all debt
obligations, are subject to interest rate risk. Securities with longer
maturities generally will have a more pronounced reaction to interest rate
changes than shorter term securities.
Credit risk relates to the ability of the issuer to make periodic
interest payments and ultimately repay principal at maturity. Bonds rated
Baa3 by Moody's Investors Services, Inc. ("Moody's") or BBB- by Standard
& Poor's Corporation ("S&P") which the Fund may acquire, are described by
those rating agencies as having speculative elements. If a debt security
is rated below investment grade by one rating agency and as investment
grade by a different rating agency, the Sub-Adviser will make a
determination as to the debt security's investment grade quality. It is
the present intention of the Fund to invest no more than 5% of its assets
in bonds rated below Baa3 by Moody's or BBB- by S&P (commonly known as
"high yield" or "junk bonds"). In the event that the Fund intends in the
future to invest more than 5% of its assets in such bonds, appropriate
disclosures will be made to existing and prospective shareholders.
Securities rated Ba by Moody's are judged to have speculative elements;
their future cannot be considered as well assured and often the protection
of interest and principal payments may be very moderate. Securities rated
BB by S&P are regarded as having predominantly speculative characteristics
and, while such obligations have less near-term vulnerability to default
than other speculative grade debt, they face major ongoing uncertainties
or exposure to adverse business, financial or economic conditions which
could lead to inadequate capacity to meet timely interest and principal
payment. Securities rated Caa by Moody's or CCC by S&P are considered to
have predominantly speculative characteristics with respect to capacity
to pay interest and repay principal and to be of poor standing. Securities
rated Ca by Moody's are speculative to a high degree; such issues are
often in default or have other marked shortcomings. A security rated C by
Moody's has extremely poor prospects of ever attaining any real investment
standing. Securities rated CI by S&P are income bonds on which no interest
is being paid, and securities rated D by S&P are in payment default. Debt
obligations of issuers outside the United States and its territories are
rated on substantially the same basis as domestic corporate and municipal
issues. The ratings measure the creditworthiness of the issuer but do not
take into account potential actions by the government controlling the
currency of denomination which might have a negative effect on exchange
rates. See the Appendix in the Statement of Additional Information
("SAI") for a more complete general description of Moody's and S&P
ratings. The ratings of Moody's and S&P represent their opinions as to the
quality of the obligations which they undertake to rate. It should be
emphasized, however, that ratings are relative and subjective and although
ratings may be useful in evaluating the safety of interest and principal
payments, they do not evaluate the market risk of these securities.
Therefore, although these ratings may be an initial criterion for
selection of such investments, the Sub-Adviser also will evaluate these
securities and the ability of the issuers of such securities to pay
interest and principal. The market price and yield of securities rated Ba
or lower by Moody's and BB or lower by S&P are more volatile than those
of higher rated securities. The market values of certain lower rated debt
securities tend to reflect individual corporate developments to a greater
extent than do higher rated securities, which react primarily to
fluctuations in the general level of interest rates, and tend to be more
sensitive to economic conditions than higher rated securities. Companies
that issue such securities are often highly leveraged and may not have
available to them more traditional methods of financing. Consequently, the
risk associated with acquiring the securities of such issuers is greater
than with higher rated securities. The Fund is not obliged to dispose of
securities due to changes by the rating agencies. Although there is no
minimum rating for the investments of the Fund, the Fund does not intend
to invest in bonds which are in default.
Higher portfolio turnover can be expected to result in a higher
incidence of short-term capital gains upon which taxes will be payable and
will also result in correspondingly higher transaction costs.
Additional Risks of Foreign Securities: The Fund may purchase
foreign securities that are listed on a domestic or foreign securities
exchange, traded in domestic or foreign over-the counter markets or
represented by American Depository Receipts. There is no limit to the
amount of such foreign securities the Fund may acquire. It will be the
general practice of the Fund to invest in foreign equity securities.
Certain factors and risks are presented by investment in foreign
securities which are in addition to the usual risks inherent in domestic
securities. Foreign companies are not necessarily subject to uniform
accounting, auditing and financial reporting standards or other regulatory
requirements comparable to those applicable to U.S. companies. Thus, there
may be less available information concerning non-U.S. issuers of
securities held by the Fund than is available concerning U.S. companies.
In addition, with respect to some foreign countries, there is the
possibility of nationalization, expropriation or confiscatory taxation;
income earned in the foreign nation being subject to taxation, including
withholding taxes on interest and dividends (see "Shareholder Account
Rules and Policies"), or other taxes imposed with respect to investments
in the foreign nation; limitations on the removal of securities, property
or other assets of a fund; difficulties in pursuing legal remedies and
obtaining judgments in foreign courts, or political or social instability
or diplomatic developments which could affect U.S. investments in those
countries. For a description of the risks of possible losses through
holding of securities in foreign custodian banks and depositories, see
"Risk Factors and Special Considerations" in the SAI.
Securities of many non-U.S. companies may be less liquid and their
prices more volatile than securities of comparable U.S. companies.
Non-U.S. stock exchanges and brokers are generally subject to less
governmental supervision and regulation than in the U.S. and commissions
on foreign stock exchanges are generally higher than negotiated
commissions on U.S. transactions. In addition, there may in certain
instances be delays in the settlement of non-U.S. stock exchange
transactions. Certain countries restrict foreign investments in their
securities markets. These restrictions may limit or preclude investment
in certain countries, industries or market sectors, or may increase the
cost of investing in securities of particular companies. Purchasing the
shares of investment companies which invest in securities of a given
country may be the only or the most efficient way to invest in that
country. This may require the payment of a premium above the net asset
value of such investment companies and the return will be reduced by the
operating expenses of those investment companies.
A decline in the value of the U.S. dollar against the value of any
particular currency will cause an increase in the U.S. dollar value of the
Fund's holdings denominated in such currency. Conversely, a decline in the
value of any particular currency against the U.S. dollar will cause a
decline in the U.S. dollar value of the Fund's holdings of securities
denominated in such currency. Some foreign currency values may be volatile
and there is the possibility of governmental controls on currency exchange
or governmental intervention in currency markets which could adversely
affect the Fund. The Fund does not intend to speculate in foreign currency
in connection with the purchase or sale of securities on a foreign
securities exchange but may enter into foreign currency contracts to hedge
their foreign currency exposure. While those transactions may minimize the
impact of currency appreciation and depreciation, the Fund will bear a
cost for entering into the transaction and such transactions do not
protect against a decline in the security's value relative to other
securities denominated in that currency.
The Fund may invest its assets in American Depository Receipts
("ADRs"), European Depository Receipts ("EDRs") or Global Depository
Receipts ("GDRs") which are U.S. dollar-denominated receipts that
represent and may be converted into the underlying foreign security. ADRs,
GDRs or EDRs are issued by persons other than the underlying issuer,
typically a domestic bank or trust company. Issuers of the stock of ADRs,
EDRs or GDRs sponsored by banks or trust companies are not obligated to
disclose material information in the United States and therefore, there
may not be a correlation between such information and the market value of
such ADRs, GDRs or EDRs.
- Emerging Market Countries: Certain developing countries may have
relatively unstable governments, economies based on only a few industries
that are dependent upon international trade and reduced secondary market
liquidity. Foreign investment in certain emerging market countries is
restricted or controlled in varying degrees. In the past, securities in
these countries have experienced greater price movement, both positive and
negative, than securities of companies located in developed countries.
Lower-rated high-yielding emerging market securities may be considered to
have speculative elements.
- Sovereign Debt Obligations: The Fund may purchase sovereign debt
instruments issued or guaranteed by foreign governments or their agencies,
including those located in emerging market countries. Sovereign debt may
be in the form of conventional securities or other types of debt
instruments such as loans or loan participations. Sovereign debt of
emerging market countries may involve a high degree of risk and may be in
default or present the risk of default. Certain emerging market countries
have historically experienced, and may continue to experience, high
inflation and interest rates, large fluctuations in exchange rates, large
amounts of external debt, trade difficulties and extreme poverty and
unemployment. Governmental entities responsible for repayment of the debt
may be unable or unwilling to repay principal and interest when due. In
the event of a default, the Fund may have limited legal recourse against
the issuer or guarantor. Remedies must in some cases be pursued in the
courts of the defaulting party itself and the ability of holders of
foreign government debt securities to obtain recourse may depend on the
political climate in the relevant country. No assurance can be given that
the holders of commercial bank debt will not contest payments to holders
of other sovereign debt obligations in the event of a default under their
commercial bank loan agreements.
- Eastern Europe: The Fund presently intends not to invest more
than 5% of its net assets in companies located in Eastern European
countries, but may invest in companies located outside of such countries
which conduct business in such countries.
Options and Futures: Different uses of futures and options have
different risk and return characteristics. Generally, selling futures
contracts, purchasing put options and writing call options are strategies
designed to protect against falling security prices and can limit
potential gains if prices rise. Purchasing futures contracts, purchasing
call options and writing put options are strategies whose returns tend to
rise and fall together with securities prices and can cause losses if
prices fall. If securities prices remain unchanged over time, option
writing strategies tend to be profitable while option buying strategies
tend to be unprofitable. The Fund intends to engage only in futures
contracts, options on futures contracts or options on stock indexes for
bona fide hedging or other non-speculative purposes. The Fund will not
enter into any leveraged futures transactions.
Repurchase Agreements: The Fund may acquire securities subject to
repurchase agreements. Repurchase agreements involve certain risks.
For a further description of options and futures, repurchase
agreements and other investment techniques used by the Fund, see
"Investment Restrictions and Techniques," below.
Investment Restrictions And Techniques
The Fund is subject to certain investment restrictions which are
fundamental policies changeable only by shareholder vote. The restrictions
in a and b below do not apply to U.S. government securities. The Fund may
not: (a) Purchase more than 10% of the voting securities of any one issuer
(with respect to 75% of its total assets); (b) Concentrate its investments
in any particular industry, but if deemed appropriate for attaining its
investment objective, the Fund may invest up to 25% of its total assets
(valued at the time of investment) in any one industry classification used
by the Fund for investment purposes (for this purpose, a foreign
government is considered an industry). Concentration of investment in
securities of one issuer may tend to increase the Fund's financial risk
(See "Risk Factors," p. _); (c) Borrow money in excess of 33 1/3% of the
value of the Fund's total assets; the Fund may borrow only from banks and
only as a temporary measure for extraordinary or emergency purposes and
will make no additional investments while such borrowings exceed 5% of the
total assets; (d) Invest more than 15% of the Fund's total assets in
illiquid securities, including securities for which there is no readily
available market, repurchase agreements which have a maturity of longer
than seven days, securities subject to legal or contractual restrictions
and certain over-the-counter options (it is the opinion of the Wisconsin
Securities Commission that investments in restricted securities in excess
of 5% of the Fund's total assets may be considered a speculative activity
and therefore involve greater risk and increase the Fund's expenses; to
comply with Wisconsin's securities laws, the Fund has agreed to limit
investments in restricted securities to 5% of its total assets, although
the restriction is not a fundamental policy of the Fund); and (e) Invest
more than 5% of the Fund's total assets in securities of issuers having
a record, together with predecessors, of less than three years of
continuous operation. (This restriction is not a fundamental policy of the
Fund, but was adopted to comply with a state's securities laws).
Notwithstanding investment restriction (d) above, the Fund may
purchase securities which are not registered under the Securities Act of
1933 ("1933 Act") but which can be sold to "qualified institutional
buyers" in accordance with Rule 144A under the 1933 Act. Any such security
will not be considered illiquid so long as it is determined by the Board
of Directors or the Sub-Adviser, acting under guidelines approved and
monitored by the Board, which has the ultimate responsibility for any
determination regarding liquidity, that an adequate trading market exists
for that security. This investment practice could have the effect of
increasing the level of illiquidity in the Fund during any period that
qualified institutional buyers become uninterested in purchasing these
restricted securities. The ability to sell to qualified institutional
buyers under Rule 144A is a relatively recent development and it is not
possible to predict how this market will develop. The Board will carefully
monitor any investments by the Fund in these securities. Other investment
restrictions are described in the SAI.
The investment techniques or instruments described below are used
for investment programs of the Fund.
- Repurchase Agreements. The Fund may acquire securities subject
to repurchase agreements. Under a typical repurchase agreement, the Fund
acquires a debt security for a relatively short period (usually for one
day and very seldom for more than one week) subject to an obligation of
the seller to repurchase (and the Fund's obligation to resell) the
security at an agreed-upon higher price, thereby establishing a fixed
investment return during the holding period. Pending such repurchase, the
seller of the instrument maintains securities as collateral equal in
market value to the repurchase price.
In the event a seller defaulted on its repurchase obligation, the
Fund might suffer a loss to the extent that the proceeds from the sale of
the collateral were less than the repurchase price. In the event of a
seller's bankruptcy, the Fund might be delayed in, or prevented from,
selling the collateral for the Fund's benefit. The Fund's Board of
Directors has established procedures, which are periodically reviewed by
the Board, pursuant to which the Sub-Adviser will monitor the
creditworthiness of the dealers and banks with which the Fund enters into
repurchase agreement transactions.
- Loans of Portfolio Securities. The Fund may lend portfolio
securities if collateral (cash, U.S. Government or agency obligations or
letters of credit) securing such loans is maintained daily in an amount
at least equal to the market value of the securities loaned and if the
Fund does not incur any fees (except transaction fees of the custodian
bank) in connection with such loans. The Fund may call the loan at any
time on five days' notice and reacquire the loaned securities. The Fund
would receive the cash equivalent of the interest or dividends paid by the
issuer on the securities loan and would have the right to receive the
interest on investment of the cash collateral in short-term debt
instruments. A portion of either or both kinds of such interest may be
paid to the borrower of such securities. The Fund would continue to retain
any voting rights with respect to the securities. The value of the
securities loaned, if any, is not expected to exceed 33 1/3% of the value
of the total assets of the Fund. There is a risk that the borrower of the
securities may default and the Fund may have difficulty in reacquiring the
loaned securities.
- Brady Bonds. The Fund may purchase Brady Bonds and other
sovereign debt of countries that have restructured or are in the process
of restructuring their sovereign debt. Brady Bonds are debt securities
issued under the Brady Plan, a mechanism whereby debtor nations can
restructure their indebtedness by negotiating with lenders and exchanging
existing commercial bank debt for Brady Bonds. Brady Bonds may also be
issued in respect of new money being advanced by existing lenders in
connection with the debt restructuring. The Brady Plan only sets forth
general guidelines for economic reform and debt reduction, emphasizing
that solutions must be negotiated on a case-by-case basis between debtor
nations and their creditors. Brady Bonds have been issued only recently
and consequently do not have a long payment history. The principal of
certain Brady Bonds has been collateralized by Treasury zero coupon bonds
with maturities equal to the final maturity of such Brady Bonds. In
addition, the first two or three interest payments on certain Brady Bonds
may be collateralized by cash or securities agreed upon by creditors. See
"Risk Factors and Special Considerations" in the SAI for a more complete
description of Brady Bonds.
- Options and Futures. The Fund may purchase and sell financial
futures contracts (including bond futures contracts and index futures
contracts), foreign currency forward contracts, foreign currency futures
contracts, options on futures contracts and options on currencies. When
the Fund anticipates a significant market or market sector advance, the
purchase of a futures contract affords a hedge against not participating
in the advance at a time when the Fund is not fully invested
("anticipatory hedge"). Such a purchase of a futures contract would serve
as a temporary substitute for the purchase of individual securities, which
may be purchased in an orderly fashion once the market has stabilized. As
individual securities are purchased, an equivalent amount of futures
contracts could be terminated by offsetting sales. The Fund may sell
futures contracts in anticipation of or in a general market or market
sector decline or increase in interest rates that may adversely affect the
market value of the Fund's securities ("defensive hedge"). To the extent
that the Fund's portfolio of securities changes in value in correlation
with the underlying security or index, the sale of futures contracts would
substantially reduce the risk to the Fund of a market decline and by so
doing, provide an alternative to the liquidation of securities positions
in the Fund with attendant transaction costs. All options purchased or
sold by the Fund will be traded on a U.S. or foreign commodities exchange
or will result from separate, privately negotiated transactions with a
primary government securities dealer recognized by the Board of Governors
of the Federal Reserve System or with other broker-dealers approved by the
Fund's Board. Options on securities, futures contracts and options on
futures contracts that are traded on foreign exchanges are subject to the
risk of governmental action affecting trading in or the prices of foreign
currencies or securities. The value of such positions also could be
adversely affected by (i) other complex foreign political and economic
factors, (ii) lesser availability than in the United States of data on
which to make trading decisions, (iii) delays in the Fund's ability to act
upon economic events occurring in foreign markets during nonbusiness hours
in the United States, (iv) the imposition of different exercise and
settlement terms and procedures and margin requirements than in the United
States, (v) lesser trading volume and (vi) in certain circumstances,
currency fluctuations.
So long as Commodities Futures Trading Commission rules so require,
the Fund will not enter into any financial futures or options contract
unless such transactions are for bona-fide hedging purposes or for other
purposes only if the aggregate initial margins and premiums required to
establish such non-hedging positions would not exceed 5% of the
liquidation value of the Fund's total assets. A call option written by
the Fund is "covered" if the Fund owns the underlying security covered by
the call or has an absolute and immediate right to acquire that security
without additional cash consideration (or for additional cash
consideration held in a segregated account by its custodian) upon
conversion or exchange of other securities held in its portfolio. A call
option is also covered if the Fund holds a call on the same security and
in the same principal amount as the call written where the exercise price
of the call held (a) is equal to or less than the exercise price of the
call written or (b) is greater than the exercise price of the call written
if the difference is maintained by the Fund in cash, U.S. Government
Securities or other liquid high-grade debt securities in a segregated
account with its custodian. A put option written by the Fund is "covered"
if the Fund maintains cash, U.S. Government securities or other liquid
high-grade debt securities with a value equal to the exercise price in a
segregated account with its custodian, or else holds a put on the same
security and in the same principal amount as the put written where the
exercise price of the put held is equal to or greater than the exercise
price of the put written. As a result, the Fund forgoes the opportunity
of trading the segregated assets or writing calls against those assets.
There may not be a complete correlation between the price of options or
futures and the market prices of the underlying securities. The Fund may
lose the ability to profit from an increase in the market value of the
underlying securities or may lose its premium payment. If due to a lack
of a market the Fund could not effect a closing purchase transaction with
respect to an OTC option, it would have to hold the callable securities
until the call lapsed or was exercised.
- When-Issued and Delayed Delivery Securities and Firm Commitments.
The Fund may purchase securities on a "when-issued" or "delayed delivery"
basis or may either purchase or sell securities on a "firm commitment
basis", whereby the price is fixed at the time of commitment but delivery
and payment may be as much as a month or more later. The underlying
securities are subject to market fluctuations and no interest accrues
prior to delivery of the securities.
- Rights and Warrants. The Fund may invest up to 5% of its total
assets in rights or warrants which entitle the holder to buy equity
securities at a specific price for a specific period of time. The 5%
limitation is not a fundamental policy for the Fund.
Investment Management Agreement
The Fund is managed by the Manager, Oppenheimer Management
Corporation, which supervises the Fund's investment program and handles
its day-to-day business. The Manager carries out its duties, subject to
the policies established by the Board of Directors, under an Investment
Advisory Agreement with the Fund which states the Manager's
responsibilities. The Agreement sets forth the fees paid by the Fund to
the Manager and describes the expenses that the Fund pays to conduct its
business.
The Manager has operated as an investment adviser since 1959.
The Manager (including a subsidiary) currently manages investment
companies, including other Oppenheimer funds, with assets of more than $38
billion as of September 30, 1995, and with more than 2.8 million
shareholder accounts. The Manager is owned by Oppenheimer Acquisition
Corp., a holding company that is owned in part by senior officers of the
Manager and controlled by Massachusetts Mutual Life Insurance Company.
For its services under the Investment Advisory Agreement, the
Fund pays the Manager the following annual fees based on the Fund's daily
net assets: 0.75% of the first $400 million of net assets, 0.70% of the
next $400 million of net assets and 0.65% of net assets over $800 million.
The Manager has retained the Sub-Adviser to provide day-to-day
portfolio management of the Fund. The Sub-Adviser, OpCap Advisors, is a
majority-owned subsidiary of Oppenheimer Capital, a registered investment
advisor, whose employees perform all investment advisory services provided
to the Fund by the Sub-Adviser. The Manager will pay the Sub-Adviser an
annual fee based on the average daily net assets of the Fund equal to 40%
of the advisory fee (and the administration fee, described below)
collected by the Manager based on the total net assets of the Fund as of
November 22, 1995 (the "Base Amount") plus 30% of the investment advisory
fee (and administration fee) collected by the Manager based on the total
net assets of the Fund that exceed the base amount. Oppenheimer Financial
Corp., a holding company holds a 33% interest in Oppenheimer Capital, and
Oppenheimer Capital, L.P., a Delaware limited partnership whose units are
traded on the New York Stock Exchange and of which Oppenheimer Financial
Corp. is the sole general partner, owns the remaining 67% interest.
Oppenheimer Capital has operated as an investment advisor since 1968.
Prior to the date of this Prospectus, the Sub-Adviser was named
Quest for Value Advisors and was the investment adviser to the Fund.
Effective the date of this Prospectus, the Manager acquired the investment
advisory and other contracts and business relationships and certain assets
and liabilities of Quest for Value Advisors, Quest for Value Distributors
and Oppenheimer Capital relating to twelve Quest for Value mutual funds,
including the Fund. Pursuant to this acquisition and Fund shareholder
approval received on November 3, 1995, the Fund entered into the following
agreements, effective the date of this Prospectus: the Investment Advisory
Agreement and Administration Agreement, each between the Fund and the
Manager, and the distribution and service plans and agreements between the
Fund and the Distributor. Further, the Manager entered into a subadvisory
agreement with the Sub-Adviser for the benefit of the Fund. The
Administration Agreement and distribution and service plans are described
below.
OpCap Advisors may select its affiliate Oppenheimer & Co., Inc.
("Opco"), a registered broker-dealer to execute transactions for the Fund,
provided that the commissions, fees or other remuneration received by Opco
are reasonable and fair compared to those paid to other brokers in
connection with comparable transactions. When selecting broker-dealers
other than Opco, OpCap Advisors may consider their record of sales of
shares of the Fund.
Pursuant to an Administration Agreement with the Fund, the Manager
provides administrative services and manages the business affairs of the
Fund. Such services include maintenance of the Fund's books and records,
monitoring the activities of entities providing services to the Fund,
furnishing office space, facilities, equipment, clerical help and
bookkeeping and legal services required in the conduct of the Fund's
business, including the preparation of proxy statements and reports filed
with federal and state securities commissions (except to the extent that
the participation of independent accountants and attorneys is, in the
opinion of the Manager, necessary or desirable). The Manager bears the
cost of telephone service, heat, light, power and other utilities provided
to the Fund. For these services, the Fund pays the Manager a fee at the
annual rate of .25% of average daily net assets of the Fund.
The Fund is responsible for bearing certain expenses attributable
to the Fund but not to a particular class ("Fund Expenses"), including
deferred organization expenses; taxes; registration fees; typesetting of
prospectuses and financial reports required for distribution to
shareholders; brokerage commissions; fees and related expenses of
directors who are not interested persons; legal, accounting and audit
expenses; custodian fees; insurance premiums; and trade association dues.
Fund Expenses will be allocated based on the total net assets of each
class. Each class of shares of the Fund will also be responsible for
certain expenses attributable only to that class ("Class Expenses"). These
Class Expenses may include distribution and service fees, transfer and
shareholder servicing agent fees, professional fees, printing and postage
expenses for materials distributed to current shareholders, state
registration fees and shareholder meeting expenses. Such items are
considered Class Expenses provided such fees and expenses relate solely
to such Class. A portion of printing expenses, such as typesetting costs,
will be divided equally among the Fund, while other printing expenses,
such as the number of copies printed, will be considered Class Expenses.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors three different classes of
shares. The different classes of shares represent investments in the same
portfolio of securities but are subject to different expenses and will
likely have different share prices.
- Class A Shares. If you buy Class A shares, you may pay an initial
sales charge on investments up to $1 million (up to $500,000 for purchases
by OppenheimerFunds prototype 401(k) plans). If you purchase Class A
shares as part of an investment of at least $1 million ($500,000 for
OppenheimerFunds prototype 401(k) plans) in shares of one or more
OppenheimerFunds or former Quest Funds, you will not pay an initial sales
charge, but if you sell any of those shares within 12, 18 or 24 months of
buying them, you may pay a contingent deferred sales charge that depends
upon when you bought such shares. The amount of that sales charge will
vary depending on the amount you invested. Sales charges are described
in "Buying Class A Shares" below.
- Class B Shares. If you buy Class B shares, you pay no sales
charge at the time of purchase, but if you sell your shares within six
years you will normally pay a contingent deferred sales charge that
varies, depending on how long you have owned your shares. It is described
in "Buying Class B Shares" below.
- Class C Shares. When you buy Class C shares, you pay no sales
charge at the time of purchase, but if you sell your shares within 12
months of buying them, you will normally pay a contingent deferred sales
charge of 1%. It is described in "Buying Class C Shares" below.
Which Class of Shares Should You Choose? Once you decide that a Fund is
an appropriate investment for you, the decision as to which class of
shares is better suited to your needs depends on a number of factors which
you should discuss with your financial advisor. The Fund's operating
costs that apply to a class of shares and the effect of the different
types of sales charges on your investment will vary your investment
results over time. The most important factors are how much you plan to
invest, how long you plan to hold your investment, and whether you
anticipate exchanging your shares for shares of other Oppenheimer funds
(not all of which currently offer Class B and Class C shares). If your
goals and objectives change over time and you plan to purchase additional
shares, you should re-evaluate those factors to see if you should consider
another class of shares.
In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund. We used the
sales charge rates that apply to each class, and considered the effect of
the asset-based sales charges on Class B and Class C expenses (which will
affect your investment return). For the sake of comparison, we have
assumed that there is a 10% rate of appreciation in the investment each
year. Of course, the actual performance of your investment cannot be
predicted and will vary, based on the Fund's actual investment returns and
the operating expenses borne by each class of shares, and which class you
invest in.
The factors discussed below are not intended to be investment advice
or recommendations, because each investor's financial considerations are
different. The discussion below of the factors to consider in purchasing
a particular class of shares assumes that you will purchase only one class
of shares and not a combination of shares of different classes.
- How Long Do You Expect to Hold Your Investment? While future
financial needs cannot be predicted with certainty, knowing how long you
expect to hold your investment will assist you in selecting the
appropriate class of shares. Because of the effect of class-based
expenses, your choice will also depend on how much you plan to invest.
For example, the reduced sales charges available for larger purchases of
Class A shares may, over time, offset the effect of paying an initial
sales charge on your investment (which reduces the amount of your
investment dollars used to buy shares for your account), compared to the
effect over time of higher class-based expenses on Class B or C shares for
which no initial sales charge is paid.
Investing for the Short Term. If you have a short-term investment
horizon (that is, you plan to hold your shares for not more than six
years), you should probably consider purchasing Class A or Class C shares
rather than Class B shares, because of the effect of the Class B
contingent deferred sales charge if you redeem within 6 years, as well as
the effect of the Class B asset-based sales charge on the investment
return for that class in the short-term. Class C shares might be the
appropriate choice (especially for investments of less than $100,000),
because there is no initial sales charge on Class C Shares, and the
contingent deferred sales charge does not apply to amounts you sell after
holding them one year.
However, if you plan to invest more than $100,000 for the shorter
term, then the more you invest and the more your investment horizon
increases toward six years, Class C shares might not be as advantageous
as Class A shares. That is because the annual asset-based sales charge
on Class C shares will have a greater impact on your account over the
longer term than the reduced front-end sales charge available for larger
purchases of Class A shares. For example, Class A might be more
advantageous than Class C (as well as Class B) for investments of more
than $100,000 expected to be held for 5 or 6 years (or more). For
investments over $250,000 expected to be held 4 to 6 years (or more),
Class A shares may become more advantageous than Class C (and B). If
investing $500,000 or more, Class A may be more advantageous as your
investment horizon approaches 3 years or more.
And for most investors who invest $1 million or more, in most cases
Class A shares will be the most advantageous choice, no matter how long
you intend to hold your shares. For that reason, the Distributor normally
will not accept purchase orders of $500,000 or $1 million or more of Class
B or C shares, respectively, from a single investor.
Investing for the Longer Term. If you are investing for the longer
term, for example, for retirement, and do not expect to need access to
your money for seven years or more, Class B shares may be an appropriate
consideration, if you plan to invest less than $100,000. If you plan to
invest more than $100,000 over the long term, Class A shares will likely
be more advantageous than Class B shares or C shares, as discussed above,
because of the effect of the expected lower expenses for class A shares
and the reduced initial sales charges available for larger investments in
Class A shares under the Funds' Right of Accumulation.
Of course, these examples are based on approximations of the effect
of current sales charges and expenses on a hypothetical investment over
time, using the assumed annual performance return stated above, and
therefore should not be relied on as rigid guidelines.
- Are There Differences in Account Features That Matter to You?
Because some account features may not be available for Class B or Class
C shareholders, you should carefully review how you plan to use your
investment account before deciding which class of shares is better for
you. For example, share certificates are not available for Class B or
Class C shares, and if you are considering using your shares as collateral
for a loan, that may be a factor to consider. Additionally, dividends
payable to Class B and Class C shareholders will be reduced by the
additional expenses borne solely by those classes, such as the asset-based
sales charges described below and in the Statement of Additional
Information.
- How Does It Affect Payments to My Broker? A salesperson, such as
a broker, or any other person who is entitled to receive compensation for
selling Fund shares may receive different compensation for selling one
class rather than another class. It is important that investors
understand that the purpose of the contingent deferred sales charges and
asset-based sales charges for Class B and Class C shares are the same as
the purpose of the front-end sales charge on sales of Class A shares: to
compensate the Distributor for commissions it pays to dealers and
financial institutions for selling shares.
How Much Must You Invest? You can open a Fund account with a minimum
initial investment of $1,000 and make additional investments at any time
with as little as $25. There are reduced minimum investments under special
investment plans:
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7)
custodial plans and military allotment plans, you can make initial and
subsequent investments of as little as $25; and subsequent purchases of
at least $25 can be made by telephone through AccountLink.
Under pension and profit-sharing plans and Individual Retirement
Accounts (IRAs), you can make an initial investment of as little as $250
(if your IRA is established under an Asset Builder Plan, the $25 minimum
applies), and subsequent investments may be as little as $25.
There is no minimum investment requirement if you are buying shares
by reinvesting dividends from the Fund or other OppenheimerFunds (a list
of them appears in the Statement of Additional Information, or you can ask
your dealer or call the Transfer Agent), or by reinvesting distributions
from unit investment trusts that have made arrangements with the
Distributor.
- How Are Shares Purchased? You can buy shares several ways: through
any dealer, broker or financial institution that has a sales agreement
with the Distributor, directly through the Distributor, or automatically
from your bank account through an Asset Builder Plan under the
OppenheimerFunds AccountLink service. When you buy shares, be sure to
specify Class A, Class B or Class C shares. If you do not choose, your
investment will be made in Class A shares.
- Buying Shares Through Your Dealer. Your dealer will place your
order with the Distributor on your behalf.
- Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "Oppenheimer Funds Distributor, Inc." Mail it to P.O. Box 5270,
Denver, Colorado 80217. If you don't list a dealer on the application,
the Distributor will act as your agent in buying the shares. However, we
recommend that you discuss your investment first with a financial advisor,
to be sure it is appropriate for you.
- Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or
other financial institution that is an Automated Clearing House (ACH)
member, to transmit funds electronically to purchase shares, to have the
Transfer Agent send redemption proceeds, or to transmit dividends and
distributions.
Shares are purchased for your account on the regular business day
the Distributor is instructed by you to initiate the ACH transfer to buy
shares. You can provide those instructions automatically, under an Asset
Builder Plan, described below, or by telephone instructions using
OppenheimerFunds PhoneLink, also described below. You should request
AccountLink privileges on the application or dealer settlement
instructions used to establish your account. Please refer to "AccountLink"
below for more details.
- Asset Builder Plans. You may purchase shares of the Fund (and up
to four other OppenheimerFunds) automatically each month from your account
at a bank or other financial institution under an Asset Builder Plan with
AccountLink. Details are on the Application and in the Statement of
Additional Information.
- At What Price Are Shares Sold? Shares are sold at the public
offering price based on the net asset value (and any initial sales charge
that applies) that is next determined after the Distributor receives the
purchase order in Denver. In most cases, to enable you to receive that
day's offering price, the Distributor must receive your order by the time
of day the New York Stock Exchange closes, which is normally 4:00 P.M.,
New York time, but may be earlier on some days (all references to time in
this Prospectus mean "New York time"). The net asset value of each class
of shares is determined as of that time on each day the New York Stock
Exchange is open (which is a "regular business day").
If you buy shares through a dealer, the dealer must receive your
order by the regular close of business of the New York Stock Exchange on
a regular business day and transmit it to the Distributor so that it is
received before the Distributor's close of business that day, which is
normally 5:00 P.M. The Distributor may reject any purchase order for the
Fund's shares, in its sole discretion.
Buying Class A Shares. Class A shares are sold at their offering price,
which is normally net asset value plus an initial sales charge. However,
in some cases, described below, where purchases are not subject to an
initial sales charge, the offering price may be net asset value. In some
cases, reduced sales charges may be available, as described below. Out
of the amount you invest, the Fund receives the net asset value to invest
for your account. The sales charge varies depending on the amount of your
purchase. A portion of the sales charge may be retained by the
Distributor and allocated to your dealer as commission. The current sales
charge rates and commissions paid to dealers and brokers are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
Front-End Sales Charge Commission
As a Percentage of as Percentage
Offering Amount of Offering
Amount of Purchase Price Invested Price
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
</TABLE>
The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter"
under Federal securities laws.
- Class A Contingent Deferred Sales Charge. There is no initial
sales charge on purchases of Class A shares of any one or more of the
OppenheimerFunds in the following cases:
- Purchases aggregating $1 million or more, or
- Purchases by an OppenheimerFunds prototype 401(k) plan that: (1)
buys shares costing $500,000 or more, or (2) has, at the time of
purchase, 100 or more eligible participants, or (3) certifies that it
projects to have annual plan purchases of $200,00 or more.
Shares of any of the Oppenheimer funds that offer only one class of
shares that has no designation are considered "Class A shares" for this
purpose. The Distributor pays dealers of record commissions on those
purchases in an amount equal to the sum of 1.0% of the first $2.5 million,
plus 0.50% of the next $2.5 million, plus 0.25% of purchases over $5
million. That commission will be paid only on the amount of those
purchases in excess of $1 million ($500,000 for purchases by
OppenheimerFunds 401(k) prototype plans) that were not previously subject
to a front-end sales charge and dealer commission.
If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge
(called the "Class A contingent deferred sales charge") will be deducted
from the redemption proceeds. That sales charge will be equal to 1.0% of
(1) the aggregate net asset value of the redeemed shares (not including
shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original cost of the shares, whichever is less.
However, the Class A contingent deferred sales charge will not exceed the
aggregate commissions the Distributor paid to your dealer on all Class A
shares of all Oppenheimer funds you purchased subject to the Class A
sales charge. Class A shares of the Fund purchased without a sales charge
on or prior to the date of this Prospectus will be subject to a contingent
deferred sales charge at the applicable rate set forth in Appendix A to
this Prospectus.
In determining whether a contingent deferred sales charge is payable,
the Fund will first redeem shares that are not subject to the sales
charge, including shares purchased by reinvestment of dividends and
capital gains, and then will redeem other shares in the order that you
purchased them. The Class A contingent deferred sales charge is waived
in certain cases described in "Waivers of Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges
of shares under the Fund's exchange privilege (described below). However,
if the shares acquired by exchange are redeemed within 12, 18 or 24 months
of the end of the calendar month of the purchase of the exchanged shares,
depending upon the date of purchase, the sales charge will apply.
- Special Arrangements With Dealers. The Distributor may advance up
to 13 months' commissions to dealers that have established special
arrangements with the Distributor for Asset Builder Plans for their
clients. Dealers whose sales of Class A shares of OppenheimerFunds (other
than money market funds) under OppenheimerFunds-sponsored 403(b)(7)
custodial plans exceed $5 million per year (calculated per quarter), will
receive monthly one-half of the Distributor's retained commissions on
those sales, and if those sales exceed $10 million per year, those dealers
will receive the Distributor's entire retained commission on those sales.
Reduced Sales Charges for Class A Share Purchases. You may be eligible
to buy Class A shares at reduced sales charge rates in one or more of the
following ways:
- Right of Accumulation. To qualify for the lower sales charge rates
that apply to larger purchases of Class A shares, you and your spouse can
add together Class A and Class B shares you purchase for your individual
accounts, or jointly, or for trust or custodial accounts on behalf of your
children who are minors. A fiduciary can cumulate shares purchased for
a trust, estate or other fiduciary account (including one or more employee
benefit plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class A and
Class B shares of the Fund and other Oppenheimer funds to reduce the sales
charge rate that applies to current purchases of Class A shares. You can
also count Class A and Class B shares of Oppenheimer funds you previously
purchased subject to an initial or contingent deferred sales charge to
reduce the sales charge rate for current purchases of Class A shares,
provided that you still hold that investment in one of the Oppenheimer
funds. The value of those shares will be based on the greater of the
amount you paid for the shares or their current value (at offering price).
The Oppenheimer funds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from the
Transfer Agent. The reduced sales charge will apply only to current
purchases and must be requested when you buy your shares.
- Letter of Intent. Under a Letter of Intent, if you purchase Class
A shares or Class A and Class B shares of the Fund and other Oppenheimer
funds during a 13-month period, you can reduce the sales charge rate that
applies to your purchases of Class A shares. The total amount of your
intended purchases of both Class A and Class B shares will determine the
reduced sales charge rate for the Class A shares purchased during that
period. This can include purchases made up to 90 days before the date of
the Letter. More information is contained in the Application and in
"Reduced Sales Charges" in the Statement of Additional Information.
- Waivers of Class A Sales Charges. The Class A sales charges are
not imposed in the circumstances described below. There is an explanation
of this policy in "Reduced Sales Charges" in the Statement of Additional
Information.
Waivers of Initial and Contingent Deferred Sales Charges for Certain
Purchasers. Class A shares purchased by the following investors are not
subject to any Class A sales charges:
- the Manager or its affiliates;
- present or former officers, directors, trustees and employees (and
their "immediate families" as defined in "Reduced Sales Charges" in the
Statement of Additional Information) of the Fund, the Manager and its
affiliates, and retirement plans established by them for their employees;
- registered management investment companies, or separate accounts
of insurance companies having an agreement with the Manager or the
Distributor for that purpose;
- dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
- employees and registered representatives (and their spouses) of
dealers or brokers described above or financial institutions that have
entered into sales arrangements with such dealers or brokers (and are
identified to the Distributor) or with the Distributor; the purchaser must
certify to the Distributor at the time of purchase that the purchase is
for the purchaser's own account (or for the benefit of such employee's
spouse or minor children);
- dealers, brokers or registered investment advisers that have
entered into an agreement with the Distributor providing specifically for
the use of shares of the Fund in particular investment products made
available to their clients;
- dealers, brokers or registered investment advisers that have
entered into an agreement with the Distributor to sell shares of defined
contribution employee retirement plans for which the dealer, broker or
investment adviser provides administrative services;
- directors, trustees, officers or full time employees of the Sub-
Adviser or its affiliates, their relatives or any trust, pension, profit
sharing or other benefit plan for any of them;
- accounts advised by Oppenheimer Capital or persons who are
directors or trustees of such accounts;
- purchases made with the proceeds of maturing principal of any
Qualified Unit Investment Liquid Trust Series;
- any unit investment trust that has entered into an appropriate
agreement with the Distributor; or
- purchases by a Quest-sponsored TRAC-2000 401(k) plan that
originally purchased Class B or Class C shares of a former Quest fund and
which shares were exchanged for Class A shares at net asset value due to
the termination of the Class B and Class C shares TRAC-2000 program (any
such TRAC-2000 shareholder on the date of this Prospectus will be assessed
an administrative fee equal to 1.0% of their account value on the date of
this prospectus).
See Appendix A for further details regarding sales charge waivers on
purchases by certain shareholders of the former Quest for Value funds.
Waivers of Initial and Contingent Deferred Sales Charges in Certain
Transactions. Class A shares issued or purchased in the following
transactions are not subject to Class A sales charges:
- shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party;
- shares purchased by the reinvestment of loan repayments by a
participant in a retirement plan for which the Manager or its affiliates
acts as sponsor;
- shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds (other
than Oppenheimer Cash Reserves) or unit investment trusts for which
reinvestment arrangements have been made with the Distributor; or
- shares purchased and paid for with the proceeds of shares redeemed
in the prior 12 months from a mutual fund (other than a fund managed by
the Manager or any of its subsidiaries) on which an initial sales charge
or contingent deferred sales charge was paid (this waiver also applies to
shares purchased by exchange of shares of Oppenheimer Money Market Fund,
Inc. that were purchased and paid for in this manner); this waiver must
be requested when the purchase order is placed for your shares of the
Fund, and the Distributor may require evidence of your qualification for
this waiver.
See Appendix A for further details regarding sales charge waivers in
certain transactions involving shareholders of the former Quest for Value
funds.
Waivers of the Class A Contingent Deferred Sales Charge for Certain
Redemptions. The Class A contingent deferred sales charge does not apply
to purchases of Class A shares at net asset value without sales charge as
described in the two sections above. It is also waived if shares that
would otherwise be subject to the contingent deferred sales charge are
redeemed in the following cases:
- for retirement distributions or loans to participants or
beneficiaries from qualified retirement plans, deferred compensation plans
or other employee benefit plans, including OppenheimerFunds prototype
401(k) plans (these are all referred to as "Retirement Plans");
- to return excess contributions made to Retirement Plans;
- to make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the original account value;
- involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see "Shareholder Account Rules
and Policies," below);
- if, at the time a purchase order is placed for Class A shares that
would otherwise be subject to the Class A contingent deferred sales
charge, the dealer agrees to accept the dealer's portion of the commission
payable on the sale in installments of 1/18th of the commission per month
(and no further commission will be payable if the shares are redeemed
within 18 months of purchase); or
- for distributions from OppenheimerFunds prototype 401(k) plans for
any of the following cases or purposes: (1) following the death or
disability (as defined in the Internal Revenue Code) of the participant
or beneficiary (the death or disability must occur after the participant's
account was established); (2) hardship withdrawals, as defined in the
plan; (3) under a Qualified Domestic Relations Order, as defined in the
Internal Revenue Code; (4) to meet the minimum distribution requirements
of the Internal Revenue Code; (5) to establish "substantially equal
periodic payments" as described in Section 72(t) of the Internal Revenue
Code, or (6) separation from service.
The Class A contingent deferred sales charge will be waived for
certain additional types of redemptions, if the shares were purchased
prior to the date of this Prospectus, as set forth in Appendix A to this
Prospectus.
- Distribution and Service Plan for Class A Shares. The Fund has
adopted a Distribution and Service Plan for Class A shares to reimburse
the Distributor for a portion of its costs incurred in connection with the
personal service and maintenance of shareholder accounts that hold Class
A shares. Under the Plan, the Fund pays an annual asset-based sales
charge to the Distributor of 0.25% of the average annual net assets of the
class. The Fund also pays a service fee to the Distributor of 0.25% of
the average annual net assets of the class. The Distributor uses all of
the service fee and a portion of the asset-based sales charge (equal to
0.15% annually for Class A shares purchased prior to September 1, 1993 and
0.10% annually for Class A shares purchased after September 1, 1993) to
compensate dealers, brokers, banks and other financial institutions
quarterly for providing personal service and maintenance of accounts of
their customers that hold Class A shares. The Distributor retains the
balance of the asset-based sales charge to reimburse itself for its other
expenditures under the Plan.
Services to be provided include, among others, answering customer
inquiries about the Fund, assisting in establishing and maintaining
accounts in the Fund, making the Fund's investment plans available and
providing other services at the request of the Fund or the Distributor.
The payments under the Plan increase the annual expenses of Class A
shares. For more details, please refer to "Distribution and Service Plans"
in the Statement of Additional Information.
Buying Class B Shares. Class B shares are sold at net asset value per
share without an initial sales charge. However, if Class B shares are
redeemed within 6 years of their purchase, a contingent deferred sales
charge will be deducted from the redemption proceeds. That sales charge
will not apply to shares purchased by the reinvestment of dividends or
capital gains distributions. The charge will be assessed on the lesser of
the net asset value of the shares at the time of redemption or the
original purchase price. The contingent deferred sales charge is not
imposed on the amount of your account value represented by the increase
in net asset value over the initial purchase price (including increases
due to the reinvestment of dividends and capital gains distributions). The
Class B contingent deferred sales charge is paid to the Distributor to
reimburse its expenses of providing distribution-related services to the
Fund in connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge applies to
a redemption, the Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over 6 years, and (3) shares held the longest during the
6-year period.
The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule:
<TABLE>
<CAPTION>
Years Since Contingent Deferred Sales Charge
Beginning of Month In Which on Redemptions in that Year
Purchase Order was Accepted (As % of Amount Subject to Charge)
<S> <C>
0 - 1 5.0%
1 - 2 4.0%
2 - 3 3.0%
3 - 4 3.0%
4 - 5 2.0%
5 - 6 1.0%
6 and following None
</TABLE>
In the table, a "year" is a 12-month period. All purchases are considered
to have been made on the first regular business day of the month in which
the purchase was made.
- Automatic Conversion of Class B Shares. Six years after you
purchase Class B shares, those shares will automatically convert to Class
A shares. This conversion feature relieves Class B shareholders of the
asset-based sales charge that applies to Class B shares under the Class
B Distribution Plan, described below. The conversion is based on the
relative net asset value of the two classes, and no sales load or other
charge is imposed. When Class B shares convert, any other Class B shares
that were acquired by the reinvestment of dividends and distributions on
the converted shares will also convert to Class A shares. The conversion
feature is subject to the continued availability of a tax ruling described
in "Alternative Sales Arrangements - Class A, Class B and Class C Shares"
in the Statement of Additional Information.
- Distribution and Service Plan for Class B Shares. The Fund has
adopted a Distribution and Service Plan for Class B shares to compensate
the Distributor for distributing Class B shares and servicing accounts.
Under the Plan, the Fund pays the Distributor an annual "asset-based sales
charge" of 0.75% per year on Class B shares that are outstanding for 6
years or less. The Distributor also receives a service fee of 0.25% per
year. Both fees are computed on the average annual net assets of Class
B shares, determined as of the close of each regular business day. The
asset-based sales charge allows investors to buy Class B shares without
a front-end sales charge while allowing the Distributor to compensate
dealers that sell Class B shares.
The Distributor uses the service fee to compensate dealers for
providing personal services for accounts that hold Class B shares. Those
services are similar to those provided under the Class A Service Plan,
described above. The asset-based sales charge and service fee increase
Class B expenses by 1.00% of average net assets per year.
The Distributor pays the 0.25% service fee to dealers in advance for
the first year after Class B shares have been sold by the dealer. After
the shares have been held for a year, the Distributor pays the fee on a
quarterly basis. The Distributor pays sales commissions of 3.75% of the
purchase price to dealers from its own resources at the time of sale.
The Fund pays the asset-based sales charge to the Distributor for its
services rendered in connection with the distribution of Class B shares.
Those payments, retained by the Distributor, are at a fixed rate which is
not related to the Distributor's expenses. The services rendered by the
Distributor include paying and financing the payment of sales commissions,
service fees, and other costs of distributing and selling Class B shares.
If the Plan is terminated by the Fund, the Board of Directors may allow
the Fund to continue payments of the service fee and/or asset-based sales
charge to the Distributor for distributing Class B shares before the Plan
was terminated.
- Waivers of Class B Sales Charges. The Class B contingent deferred
sales charge will not apply to shares purchased in certain types of
transactions, nor will it apply to shares redeemed in certain
circumstances, as described below under "Buying Class C Shares - Waivers
of Class B and Class C Sales Charges."
Buying Class C Shares. Class C shares are sold at net asset value per
share without an initial sales charge. However, if Class C shares are
redeemed within 12 months of their purchase, a contingent deferred sales
charge of 1.0% will be deducted from the redemption proceeds. That sales
charge will not apply to shares purchased by the reinvestment of dividends
or capital gains distributions. The charge will be assessed on the lesser
of the net asset value of the shares at the time of redemption or the
original purchase price. The contingent deferred sales charge is not
imposed on the amount of your account value represented by the increase
in net asset value over the initial purchase price (including increases
due to the reinvestment of dividends and capital gains distributions). The
Class C contingent deferred sales charge is paid to the Distributor to
reimburse its expenses of providing distribution-related services to the
Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge applies to
a redemption, the Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over 12 months, and (3) shares held the longest during the
12-month period.
- Distribution and Service Plan for Class C Shares. The Fund has
adopted a Distribution and Service Plan for Class C shares to compensate
the Distributor for distributing Class C shares and servicing accounts.
Under the Plan, the Fund pays the Distributor an annual "asset-based sales
charge" of 0.75% per year on Class C shares. The Distributor also
receives a service fee of 0.25% per year. Both fees are computed on the
average annual net assets of Class C shares, determined as of the close
of each regular business day. The asset-based sales charge allows
investors to buy Class C shares without a front-end sales charge while
allowing the Distributor to compensate dealers that sell Class C shares.
The Distributor uses the service fee to compensate dealers for
providing personal services for accounts that hold Class C shares. Those
services are similar to those provided under the Class A Service Plan,
described above. The asset-based sales charge and service fees increase
Class C expenses by 1.00% of average net assets per year.
The Distributor pays the 0.25% service fee to dealers in advance for
the first year after Class C shares have been sold by the dealer. After
the shares have been held for a year, the Distributor pays the fee on a
quarterly basis. The Distributor pays sales commissions of 0.75% of the
purchase price to dealers from its own resources at the time of sale. The
total up-front commission paid by the Distributor to the dealer at the
time of sale of Class C shares is 1.00% of the purchase price. The
Distributor plans to pay the asset-based sales charge as an ongoing
commission to the dealer on Class C shares that have been outstanding for
a year or more.
The Fund pays the asset-based sales charge to the Distributor for its
services rendered in connection with the distribution of Class C shares.
Those payments are at a fixed rate which is not related to the
Distributor's expenses. The services rendered by the Distributor include
paying and financing the payment of sales commissions, service fees, and
other costs of distributing and selling Class C shares, including
compensation of personnel of the Distributor who support distribution of
Class C shares. If the Plan is terminated by the Fund, the Board of
Directors may allow the Fund to continue payments of the service fee
and/or asset-based sales charge to the Distributor for distributing Class
C shares before the plan was terminated.
- Waivers of Class B and Class C Sales Charges. The Class B and
Class C contingent deferred sales charges will not be applied to shares
purchased in certain types of transactions nor will it apply to shares
redeemed in certain circumstances as described below. The reasons for
this policy are in "Reduced Sales Charges" in the Statement of Additional
Information.
Waivers for Redemptions in Certain Cases. The Class B and Class C
contingent deferred sales charges will be waived for redemptions of shares
in the following cases:
- distributions to participants or beneficiaries from Retirement
Plans, if the distributions are made (a) under an Automatic Withdrawal
Plan after the participant reaches age 59-1/2, as long as the payments are
no more than 10% of the account value annually (measured from the date the
Transfer Agent received the request), or (b) following the death or
disability (as defined in the Internal Revenue Code ("IRC")) of the
participant or beneficiary (the death or disability must have occurred
after the account was established);
- redemptions from accounts other than Retirement Plans following the
death or disability of the last surviving shareholder (the death or
disability must have occurred after the account was established, and for
disability you must provide evidence of a determination of disability by
the Social Security Administration);
- returns of excess contributions to Retirement Plans;
- distributions from IRAs (including SEP-IRAs and SAR/SEP accounts)
before the participant is age 59-1/2, and distributions from 403(b)(7)
custodial plans or pension or profit sharing plans before the participant
is age 59-1/2 but only after the participant has separated from service,
if the distributions are made in substantially equal periodic payments
over the life (or life expectancy) of the participant or the joint lives
(or joint life and last survivor expectancy) of the participant and the
participant's designated beneficiary (and the distributions must comply
with other requirements for such distributions under the IRC and may not
exceed 10% of the account value annually, measured from the date the
Transfer Agent received the request);
- shares redeemed involuntarily, as described in "Shareholder Account
Rules and Policies," below; or
- distributions from OppenheimerFunds prototype 401(k) plans: (1)
for hardship withdrawals; (2) under a Qualified Domestic Relations
Order, as defined in the IRC; (3) to meet minimum distribution
requirements as defined in the IRC; (4) to make "substantially equal
periodic payments" as described in Section 72(t) of the IRC; (5) for
separation from service.
Waivers for Shares Sold or Issued in Certain Transactions. The
contingent deferred sales charge is also waived on Class B and Class C
shares sold or issued in the following cases:
- shares sold to the Manager or its affiliates;
- shares sold to registered management investment companies or
separate accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose; or
- shares issued in plans or reorganization to which the Fund is a
party.
The Class B and Class C contingent deferred sales charge will be
waived for certain additional types of redemptions, if the shares were
purchased prior to the date of this Prospectus, as set forth in Appendix
A to this Prospectus.
Special Investors Services
AccountLink. OppenheimerFunds AccountLink links your Fund account to your
account at your bank or other financial institution to enable you to send
money electronically between those accounts to perform a number of types
of account transactions. These include purchases of shares by telephone
(either through a service representative or by PhoneLink, described
below), automatic investments under Asset Builder Plans, and sending
dividends and distributions or Automatic Withdrawal Plan payments directly
to your bank account. Please refer to the Application for details or call
the Transfer Agent for more information.
AccountLink privileges must be requested on the Application you use
to buy shares, or on your dealer's settlement instructions if you buy your
shares through your dealer. After your account is established, you can
request AccountLink privileges on signature-guaranteed instructions to the
Transfer Agent. AccountLink privileges will apply to each shareholder
listed in the registration on your account as well as to your dealer
representative of record unless and until the Transfer Agent receives
written instructions terminating or changing those privileges. After you
establish AccountLink for your account, any change of bank account
information must be made by signature-guaranteed instructions to the
Transfer Agent signed by all shareholders who own the account.
- Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase shares
in amounts up to $250,000 through a telephone representative, call the
Distributor at 1-800-852-8457. The purchase payment will be debited from
your bank account.
- PhoneLink. PhoneLink is the OppenheimerFunds automated telephone
system that enables shareholders to perform a number of account
transactions automatically using a touch-tone phone. PhoneLink may be used
on already-established Fund accounts after you obtain a Personal
Identification Number (PIN), by calling the special PhoneLink number: 1-
800-533-3310.
- Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have established
AccountLink privileges to link your bank account with the Fund, to pay for
these purchases.
- Exchanging Shares. With the OppenheimerFunds exchange privilege,
described below, you can exchange shares automatically by phone from your
Fund account to another Oppenheimer funds account you have already
established by calling the special PhoneLink number. Please refer to "How
to Exchange Shares," below, for details.
- Selling Shares. You can redeem shares by telephone automatically
by calling the PhoneLink number and the Fund will send the proceeds
directly to your AccountLink bank account. Please refer to "How to Sell
Shares," below, for details.
Automatic Withdrawal and Exchange Plans. The Fund has several plans that
enable you to sell shares automatically or exchange them to another
Oppenheimer funds account on a regular basis:
- Automatic Withdrawal Plans. If your Fund account is $5,000 or more,
you can establish an Automatic Withdrawal Plan to receive payments of at
least $50 on a monthly, quarterly, semi-annual or annual basis. The checks
may be sent to you or sent automatically to your bank account on
AccountLink. You may even set up certain types of withdrawals of up to
$1,500 per month by telephone. You should consult the Application and
Statement of Additional Information for more details.
- Automatic Exchange Plans. You can authorize the Transfer Agent to
exchange an amount you establish in advance automatically for shares of
up to five other Oppenheimer funds on a monthly, quarterly, semi-annual
or annual basis under an Automatic Exchange Plan. The minimum purchase
for each other Oppenheimer funds account is $25. These exchanges are
subject to the terms of the Exchange Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class A shares,
you have up to 6 months to reinvest all or part of the redemption proceeds
in Class A shares of a Fund or other Oppenheimer funds without paying a
sales charge. This privilege applies to Class A shares that you purchased
subject to an initial sales charge and to Class A shares on which you paid
a contingent deferred sales charge when you redeemed them. It does not
apply to Class C shares. Please consult the Statement of Additional
Information for more details.
Retirement Plans. Fund shares are available as an investment for your
retirement plans. If you participate in a plan sponsored by your employer,
the plan trustee or administrator must make the purchase of shares for
your retirement plan account. The Distributor offers a number of different
retirement plans that can be used by individuals and employers:
- Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
- 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
- SEP-IRAs (Simplified Employee Pension Plans) for small business
owners or people with income from self-employment, including SAR/SEP IRAs
- Pension and Profit-Sharing Plans for self-employed persons and
small business owners
- 401(k) prototype retirement plans for businesses
Please call the Distributor for the OppenheimerFunds plan documents,
which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account on any regular
business day by selling (redeeming) some or all of your shares. Your
shares will be sold at the next net asset value calculated after your
order is received and accepted by the Transfer Agent. The Fund offers you
a number of ways to sell your shares in writing or by telephone. You can
also set up Automatic Withdrawal Plans to redeem shares on a regular
basis, as described above. If you have questions about any of these
procedures, and especially if you are redeeming shares in a special
situation, such as due to the death of the owner, or from a retirement
plan, please call the Transfer Agent first, at 1-800-525-7048, for
assistance.
- Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must submit
a withholding form with your request to avoid delay. If your retirement
plan account is held for you by your employer, you must arrange for the
distribution request to be sent by the plan administrator or trustee.
There are additional details in the Statement of Additional Information.
- Certain Requests Require A Signature Guarantee. To protect you and
the Fund from fraud, certain redemption requests must be in writing and
must include a signature guarantee in the following situations (there may
be other situations also requiring a signature guarantee):
- You wish to redeem more than $50,000 worth of shares and receive
a check
- The redemption check is not payable to all shareholders listed on
the account statement
- The redemption check is not sent to the address of record on your
statement
- Shares are being transferred to a Fund account with a different
owner or name
- Shares are redeemed by someone other than the owners (such as an
Executor)
- Where Can I Have My Signature Guaranteed? The Transfer Agent will
accept a guarantee of your signature by a number of financial
institutions, including: a U.S. bank, trust company, credit union or
savings association, or by a foreign bank that has a U.S. correspondent
bank, or by a U.S. registered dealer or broker in securities, municipal
securities or government securities, or by a U.S. national securities
exchange, a registered securities association or a clearing agency. If you
are signing as a fiduciary or on behalf of a corporation, partnership or
other business, you must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that includes:
- Your name
- The Fund's name
- Your Fund account number (from your account statement)
- The dollar amount or number of shares to be redeemed
- Any special payment instructions
- Any share certificates for the shares you are selling
- The signatures of all registered owners exactly as the account is
registered, and
- Any special requirements or documents requested by the Transfer
Agent to assure proper authorization of the person asking to sell shares.
Use the following address for Send courier or Express Mail
request by mail: requests to:
Oppenheimer Shareholder Services Oppenheimer Shareholder
Services
P.O. Box 5270 10200 E. Girard Avenue, Building D
Denver, Colorado 80217 Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of record
may also sell your shares by telephone. To receive the redemption price
on a regular business day, your call must be received by the Transfer
Agent by the close of The New York Stock Exchange that day, which is
normally 4:00 P.M. but may be earlier on some days. Shares held in an
OppenheimerFunds retirement plan or under a share certificate may not be
redeemed by telephone.
- To redeem shares through a service representative, call 1-800-852-
8457
- To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address
on the account statement, or, if you have linked your Fund account to your
bank account on AccountLink, you may have the proceeds wired to that bank
account.
- Telephone Redemptions Paid by Check. Up to $50,000 may be redeemed
by telephone, once in each 7-day period. The check must be payable to all
owners of record of the shares and must be sent to the address on the
account. This service is not available within 30 days of changing the
address on an account.
- Telephone Redemptions Through AccountLink. There are no dollar
limits on telephone redemption proceeds sent to a bank account designated
when you establish AccountLink. Normally the ACH wire to your bank is
initiated on the business day after the redemption. You do not receive
dividends on the proceeds of the shares you redeemed while they are
waiting to be wired.
Selling Shares Through Your Dealer. The Distributor has made arrangements
to repurchase Fund shares from dealers and brokers on behalf of their
customers. Brokers or dealers may charge for that service. Please refer
to "Special Arrangements for Repurchase of Shares from Dealers and
Brokers" in the Statement of Additional Information for more details.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain Oppenheimer
funds at net asset value per share at the time of exchange, without sales
charge. To exchange shares, you must meet several conditions:
- Shares of the fund selected for exchange must be available for sale
in your state of residence
- The prospectuses of this Fund and the fund whose shares you want
to buy must offer the exchange privilege
- You must hold the shares you buy when you establish your account
for at least 7 days before you can exchange them; after the account is
open 7 days, you can exchange shares every regular business day
- You must meet the minimum purchase requirements for the fund you
purchase by exchange
- Before exchanging into a fund, you should obtain and read its
prospectus
Shares of a particular class may be exchanged only for shares of the
same class in the other Oppenheimer funds. For example, you can exchange
Class A shares of this Fund only for Class A shares of another fund. At
present, Oppenheimer Money Market Fund, Inc. offers only one class of
shares, which are considered Class A shares for this purpose. In some
cases, sales charges may be imposed on exchange transactions. Please
refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.
Exchanges may be requested in writing or by telephone:
- Written Exchange Requests. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the
Transfer Agent at the addresses listed in "How to Sell Shares."
- Telephone Exchange Requests. Telephone exchange requests may be
made either by calling a service representative at 1-800-852-8457 or by
using PhoneLink for automated exchanges, by calling 1-800-533-3310.
Telephone exchanges may be made only between accounts that are registered
with the same name(s) and address. Shares held under certificates may not
be exchanged by telephone.
You can find a list of Oppenheimer funds currently available for
exchanges in the Statement of Additional Information or by calling a
service representative at 1-800-525-7048. Exchanges of shares involve a
redemption of the shares of the fund you own and a purchase of shares of
the other fund.
There are certain exchange policies you should be aware of:
- Shares are normally redeemed from one fund and purchased from the
other fund in the exchange transaction on the same regular business day
on which the Transfer Agent receives an exchange request that is in proper
form by the close of The New York Stock Exchange that day, which is
normally 4:00 P.M. but may be earlier on some days. However, either fund
may delay the purchase of shares of the fund you are exchanging into if
it determines it would be disadvantaged by a same-day transfer of the
proceeds to buy shares. For example, the receipt of multiple exchange
requests from a dealer in a "market-timing" strategy might require the
disposition of securities at a time or price disadvantageous to the Fund.
- Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange request
that will disadvantage it, or to refuse multiple exchange requests
submitted by a shareholder or dealer.
- The Fund may amend, suspend or terminate the exchange privilege at
any time. Although the Fund will attempt to provide you notice whenever
it is reasonably able to do so, it may impose these changes at any time.
- If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for
exchange will be exchanged.
Shareholder Account Rules and Policies
- Net Asset Value Per Share is determined for each class of shares
as of the close of The New York Stock Exchange, which is normally 4:00
P.M. but may be earlier on some days, on each day the Exchange is open by
dividing the value of the Fund's net assets attributable to a class by the
number of shares of that class that are outstanding. The Fund's Board of
Directors has established procedures to value the Fund's securities to
determine net asset value. In general, securities values are based on
market value. There are special procedures for valuing illiquid and
restricted securities and obligations for which market values cannot be
readily obtained. These procedures are described more completely in the
Statement of Additional Information.
- The offering of shares may be suspended during any period in which
the determination of net asset value is suspended, and the offering may
be suspended by the Board of Directors at any time the Board believes it
is in the Fund's best interest to do so.
- Telephone Transaction Privileges for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Funds at any
time. If an account has more than one owner, the Fund and the Transfer
Agent may rely on the instructions of any one owner. Telephone privileges
apply to each owner of the account and the dealer representative of record
for the account unless and until the Transfer Agent receives cancellation
instructions from an owner of the account.
- The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not
use reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise neither it nor the Fund will be liable for
losses or expenses arising out of telephone instructions reasonably
believed to be genuine. If you are unable to reach the Transfer Agent
during periods of unusual market activity, you may not be able to complete
a telephone transaction and should consider placing your order by mail.
- Redemption or transfer requests will not be honored until the
Transfer Agent receives all required documents in proper form. From time
to time, the Transfer Agent in its discretion may waive certain of the
requirements for redemptions stated in this Prospectus.
- Dealers that can perform account transactions for their clients by
participating in NETWORKING through the National Securities Clearing
Corporation are responsible for obtaining their clients' permission to
perform those transactions and are responsible to their clients who are
shareholders of the Fund if the dealer performs any transaction
erroneously.
- The redemption price for shares will vary from day to day because
the value of the securities in the Fund's portfolio fluctuates, and the
redemption price, which is the net asset value per share, will normally
be different for Class A, Class B and Class C shares. Therefore, the
redemption value of your shares may be more or less than their original
cost.
- Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the shareholder
under the redemption procedures described above) within 7 days after the
Transfer Agent receives redemption instructions in proper form, except
under unusual circumstances determined by the Securities and Exchange
Commission delaying or suspending such payments. For accounts registered
in the name of a broker-dealer, payment will be forwarded within 3
business days. The Transfer Agent may delay forwarding a check or
processing a payment via AccountLink for recently purchased shares, but
only until the purchase payment has cleared. That delay may be as much
as 10 days from the date the shares were purchased. That delay may be
avoided if you purchase shares by certified check or arrange with your
bank to provide telephone or written assurance to the Transfer Agent that
your purchase payment has cleared.
- Involuntary redemptions of small accounts may be made by the Fund
if the account value has fallen below $500 for reasons other than the fact
that the market value of shares has dropped, and in some cases involuntary
redemptions may be made to repay the Distributor for losses from the
cancellation of share purchase orders.
- Under unusual circumstances, shares of the Fund may be redeemed "in
kind", which means that the redemption proceeds will be paid with
securities from the Fund's portfolio. Please refer to the Statement of
Additional Information for more details.
- "Backup Withholding" of Federal income tax may be applied at the
rate of 31% from dividends, distributions and redemption proceeds
(including exchanges) if you fail to furnish the Fund a certified Social
Security or taxpayer identification number when you sign your application,
or if you violate Internal Revenue Service regulations on tax reporting
of dividends.
- The Fund does not charge a redemption fee, but if your dealer or
broker handles your redemption, they may charge a fee. That fee can be
avoided by redeeming your Fund shares directly through the Transfer Agent.
Under the circumstances described in "How To Buy Shares," you may be
subject to a contingent deferred sales charges when redeeming certain
Class A, Class B and Class C shares.
- To avoid sending duplicate copies of materials to households, the
Fund will mail only one copy of each annual and semi-annual report to
shareholders having the same last name and address on the Fund's records.
However, each shareholder may call the Transfer Agent at 1-800-525-7048
to ask that copies of those materials be sent personally to that
shareholder.
- Transfer Agent and Shareholder Servicing Agent. The transfer agent
and shareholder servicing agent is Oppenheimer Shareholder Services.
Unified Management Corporation (1-800-346-4601) is the shareholder
servicing agent for former shareholders of the AMA Family of Funds and
clients of AMA Investment Advisers, L.P. who acquire shares of the Fund,
and for former shareholders of the Unified Funds and Liquid Green Trusts,
accounts which participated or participate in a retirement plan for which
Unified Investment Advisers, Inc. or an affiliate acts as custodian or
trustee, and other accounts for which Unified Management Corporation is
the dealer of record.
Dividends and Distributions
The Fund declares and pays dividends from net investment income on
an annual basis following the end of its fiscal year, November 30. The
Fund may at times make payments from sources other than income or net
capital gains. Payments from such sources would, in effect, represent a
return of each shareholder's investment. All or a portion of such payments
would not be taxable to shareholders.
Distributions from net long-term capital gains, if any, for the Fund
normally is declared and paid annually, subsequent to the end of its
fiscal year. Distributions from net short-term capital gains, if any, for
the Fund will be made annually. Short-term capital gains include the gains
from the disposition of securities held less than one year, a portion of
the premiums from expired put and call options written by the Fund and net
gains from closing transactions with respect to such options. If required
by tax laws to avoid excise or other taxes, dividends and/or capital gains
distributions may be made more frequently.
Dividends paid by the Fund with respect to Class A, B and C shares,
to the extent any dividends are paid, will be calculated in the same
manner at the same time on the same day, with each class bearing its own
distribution and other class-related expenses. Accordingly, the higher
distribution fees paid by Class B and C shares and the higher resulting
expense ratio will cause such shares to be paid lower per share dividends
than those paid on Class A shares. However, a Class B or C shareholder
will receive more shares at the time of purchase than a Class A
shareholder investing the same dollar amount since no sales charge is
deducted from the amount invested in Class B or C shares.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are reinvested.
For other accounts, you have four options:
- Reinvest All Distributions in the Fund. You can elect to reinvest
all dividends and long-term capital gains distributions in additional
shares of the Fund.
- Reinvest Capital Gains Only. You can elect to reinvest long-term
capital gains in the Fund while receiving dividends by check or sent to
your bank account on AccountLink.
- Receive All Distributions in Cash. You can elect to receive a check
for all dividends and long-term capital gains distributions or have them
sent to your bank on AccountLink.
- Reinvest Your Distributions in Another Oppenheimer Funds Account.
You can reinvest all distributions in another Oppenheimer funds account
you have established.
Taxes. If your account is not a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the
Fund. Long-term capital gains are taxable as long-term capital gains when
distributed to shareholders. It does not matter how long you held your
shares. Dividends paid from short-term capital gains and net investment
income are taxable as ordinary income. Distributions are subject to
federal income tax and may be subject to state or local taxes. Your
distributions are taxable when paid, whether you reinvest them in
additional shares or take them in cash. Every year the Fund will send you
and the IRS a statement showing the amount of each taxable distribution
you received in the previous year.
- "Buying a Dividend": When the Fund goes ex-dividend, its share
price is reduced by the amount of the distribution. If you buy shares on
or just before the ex-dividend date, or just before the Fund declares a
capital gains distribution, you will pay the full price for the shares and
then receive a portion of the price back as a taxable dividend or capital
gain.
- Taxes on Transactions: Share redemptions, including redemptions for
exchanges, are subject to capital gains tax. A capital gain or loss is
the difference between the price you paid for the shares and the price you
received when you sold them.
- Returns of Capital: In certain cases distributions made by the Fund
may be considered a non-taxable return of capital to shareholders. If
that occurs, it will be identified in notices to shareholders. A non-
taxable return of capital may reduce your tax basis in your Fund shares.
This information is only a summary of certain federal tax information
about your investment. More information is contained in the Statement of
Additional Information, and in addition you should consult with your tax
adviser about the effect of an investment in the Fund on your particular
tax situation.
Additional Information
- Organization of the Fund. The Fund is an open-end diversified
management investment company incorporated in Maryland on April 26, 1990.
The Fund is governed by a Board of Directors, which is responsible for
protecting the interests of shareholders under Maryland law. Although the
Fund is not required by law to hold annual shareholder meetings, special
meetings may be called for the Fund as required by applicable law or as
requested in writing by holders of 10% or more of the outstanding shares
of the Fund for the purpose of voting upon the question of removal of a
director. The Fund will assist shareholders in communicating with one
another in connection with such a meeting. Stock certificates for Class
B or Class C shares will not be issued. No stock certificates will be
issued for Class A shares unless specifically requested in writing.
Each class of shares represents identical interests in the Fund's
investment portfolio. As such, they have the same rights, privileges and
preferences, except with respect to the: (a) designation of each class,
(b) effect of the respective sales charges, if any, for each class,
(c) distribution fees borne by each class, (d) expenses allocable
exclusively to each class, (e) voting rights on matters exclusively
affecting a single class and (f) exchange privilege of each class.
- Performance Information. From time to time the Fund may advertise
yield and total return figures, based on historical earnings. The figures
are not intended to indicate future performance. "Yield" is calculated by
dividing the net investment income for the stated period (exclusive of
gains, if any, from options and futures transactions) by the value, at
maximum offering price on the last day of the period, of the average
number of shares entitled to receive dividends during the period. The
yield formula assumes that net investment income is earned at a constant
rate and reinvested semi-annually. "Total Return" refers to the average
annual compounded rates of return over some representative period that
would equate an initial amount invested at the beginning of a stated
period to the ending redeemable value of the investment, after giving
effect to the reinvestment of all dividends and distributions and
deductions of expenses during the period. The Fund also may advertise its
total return over different periods of time by means of aggregate,
average, year by year or other types of total return figures. In addition,
reference in advertisements may be made to ratings and rankings among
similar funds by independent evaluators such as Lipper Analytical
Services, Inc. or Morningstar and the performance of the Fund may be
compared to recognized indices of market performance. Performance data
will be computed separately for each Class of shares in accordance with
formulas specified by the Securities and Exchange Commission.
- Possible Conflicts of Interest Between Classes. The Board of the
Fund has determined that currently no conflict of interest exists between
Class A, B and/or C shares of the Fund. On an ongoing basis, the Board
will monitor the Fund for the existence of any material conflicts between
the interests of the classes of outstanding shares. The Board will take
such action as is reasonably necessary to eliminate any such conflicts
that may develop, up to and including establishing a new Fund.
- Custodian. The custodian of the assets for the Fund is State
Street Bank and Trust Company, whose principal business address is P.O.
Box 8505, Boston, Massachusetts 02266-8505. Cash balances of the Fund
with the Custodian in excess of $100,000 are unprotected by Federal
deposit insurance. Such uninsured balances may at times be substantial.
- Transfer Agent and Shareholder Servicing Agent. The transfer agent
and shareholder servicing agent is Oppenheimer Shareholder Services, a
subsidiary of the Manager, whose address is P.O. Box 5270, Denver,
Colorado 80217.
- Shareholder Servicing Agent for Certain Shareholders. Unified
Management Corporation (1-800-346-4601) is the shareholder servicing agent
for former shareholders of the AMA Family of Fund and clients of AMA
Investment Advisers, L.P. who acquire shares of the Fund, and for former
shareholders of the Unified Funds and Liquid Green Trusts, accounts which
participated or participate in a retirement plan for which Unified
Investment Advisers, Inc. or an affiliate acts as custodian or trustee,
accounts which have a Money Manager brokerage account, and other accounts
for which Unified Management Corporation is the dealer of record.
<PAGE>
APPENDIX A
Sales Charges and Waivers for Certain Former
Quest Shareholders, and for Certain Shares
Purchased Prior to the Date of this Prospectus
A. Class A Sales Charge
1. Class A Reduced Sales Charge for Certain Former Quest
Shareholders.
- Group and Association Purchases and Purchases by Certain Qualified
Retirement Plans. The following table sets forth the applicable sales
charge for purchases of Class A shares made through a single broker or
dealer by qualified retirement plans which, for purposes of this Appendix
A only, are 401(k) plans, 403(b) plans, and SEP/IRA and IRA plans of a
single employer, and by members of associations formed for any purpose
other than the purchase of securities that purchased shares of any former
Quest Fund or that received a proposal from OCC Distributors prior to the
date of this Prospectus:
<TABLE>
<CAPTION>
Front-End Front-End Commission as
Sales Charge Sales Charge Percentage
Number of Eligible as a as a of
Employees or Members Percentage of Percentage of Offering
Offering Price Amount Invested Price
<S> <C> <C> <C>
9 or less 2.50% 2.56% 2.00%
Between 10 & 49 2.00% 2.04% 1.60%
50 or more 0% See "Class A Contingent
Deferred Sales Charge,"
of the Prospectus.
</TABLE>
Purchases made under the Group Purchase provision will qualify for
the lower of the sales charge computed according to the table based on the
number of eligible employees in a plan or members of an association or the
sales charge level under the Rights of Accumulation described above.
Purchases by retirement plans covering 50 or more eligible employees or
by associations or groups with 50 or more members shall be entitled to the
sales charge waiver applicable to purchases of $1 million or more. In
addition, purchases by 401(k) plans can qualify for this sales charge
waiver if, in the opinion of OCC Distributors, the distributor of the
prior Quest funds, the initial purchase plus projected contributions to
be invested in the plan for the following 12 months will exceed
$1,000,000. Individuals who qualify for reduced sales charges as members
of associations, groups or eligible employees in plans as set forth in the
above table also may purchase shares for their individual or custodial
accounts at the same sales charge level, upon request to the Fund's
Distributor.
2. Rate of Class A Contingent Deferred Sales Charge. Class A
shares of the Fund purchased without a sales charge prior to July 1, 1994
are subject to a contingent deferred sales charge if they are redeemed
within 24 months of the end of the calendar month in which they were
purchased in an amount equal to 1% if the redemption occurs within the
first 12 months and equal to .5 of 1% if the redemption occurs in the next
12 months. Class A shares of the Fund purchased without a sales charge
on or after July 1, 1994 but prior to the date of this prospectus are
subject to a contingent deferred sales charge if they are redeemed within
12 months of the end of the calendar month of their purchase in an amount
equal to 1%.
3. Waiver of Class A Initial and Contingent Deferred Sales Charge
for Certain Former Quest Shareholders. Class A shares of the Fund
purchased by the following investors are not subject to any Class A sales
charges:
- Shareholders of the AMA Family of Funds who acquired shares of any
of the former Quest for Value Funds pursuant to a combination of a Quest
Fund with a portfolio of the AMA Family of Funds who were shareholders of
the AMA Family of Funds on February 28, 1991;
- Shareholders who acquired shares of any former Quest for Value Fund
pursuant to the combination of certain Quest Funds with portfolios of the
Unified Funds.
4. Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions Involving Former Quest Shareholders. The Class A contingent
deferred sales charge will not apply with respect to Class A shares of the
Fund purchased by certain investors who were shareholders of any former
Quest for Value Funds prior to the date of this Prospectus, as follows:
- Special Fiduciary Relationships. The contingent deferred sales
charge will not apply with respect to purchases of Class A shares for
which the selling dealer is not permitted to receive a sales load or
redemption fee imposed on a shareholder with whom such dealer has a
fiduciary relationship in accordance with provisions of the Employee
Retirement Income Security Act and regulations thereunder.
- Purchases by Strategic Alliances. The contingent deferred sales
charge will not apply with respect to purchases of Class A shares by
participants in qualified retirement plans that are part of strategic
alliances. No sales charge will be imposed on such purchases and the
Distributor will pay to the selling dealer a commission described above
in "Class A Contingent Deferred Sales Charge."
5. Waiver of Class A Initial and Contingent Deferred Sales Charge.
The Class A initial and contingent deferred sales charge will not apply
to qualified retirement plans that are part of strategic alliances that
purchase shares on or after the date of this Prospectus but prior to March
31, 1996.
B. Class A, Class B and Class C Contingent Deferred Sales Charge Waivers
1. Waivers for Redemptions with Respect to Purchases Prior to March
6, 1995. The contingent deferred sales charge will be waived in the case
of redemptions of Class A, B or C shares of the Fund purchased prior to
March 6, 1995 in connection with (i) distributions to participants or
beneficiaries of plans qualified under Section 401(a) of the Internal
Revenue Code ("IRC") or from custodial accounts under IRC
Section 403(b)(7), individual retirement accounts under IRC
Section 408(a), deferred compensation plans under IRC section 457 and
other employee benefit plans ("plans"), and returns of excess
contributions made to these plans, (ii) withdrawals under an automatic
withdrawal plan where the annual withdrawal does not exceed 10% of the
opening value of the account (only for Class B and C shares), and
(iii) liquidation of a shareholder's account if the aggregate net asset
value of shares held in the account is less than the required minimum.
2. Waivers for Redemptions with Respect to Purchases on or After
March 6, 1995 but Prior to Date of the Prospectus. The contingent deferred
sales charge will be waived in the case of redemptions of Class A, B or
C shares of the Fund purchased on or after March 6, 1995, but prior to the
date of this Prospectus in connection with (1) distributions to
participants or beneficiaries from individual retirement accounts under
Section 408(a) of the IRC and retirement plans under Section 401(a),
401(k), 403(b) and 457 of the IRC, which distributions are made either
(a) to an individual participant as a result of separation from service
or (b) following the death or disability (as defined in the IRC) of the
participant or beneficiary; (2) returns of excess contributions to such
retirement plans; (3) redemptions other than from retirement plans
following the death or disability of the shareholder(s) (as evidenced by
a determination of total disability by the U.S. Social Security
Administration); (4) withdrawals under an automatic withdrawal plan where
the annual withdrawals do not exceed 10% of the opening value of the
account (only for Class B and C shares); and (5) liquidation of a
shareholder's account if the aggregate net asset value of shares held in
the account is less than the required minimum. A shareholder will be
credited with any contingent deferred sales charge paid in connection with
the redemption of any Class A, B or C shares if within 90 days after such
redemption, the proceeds are invested in the same Class of shares in the
same and/or another Oppenheimer fund.
C. Dealer Arrangements
1. Dealers who previously sold Class B shares of the Fund to Quest
prototype 401(k) plan accounts maintained on the TRAC-2000 recordkeeping
system and whose accounts were transferred to the OppenheimerFunds
prototype 401(k) plan, shall be eligible for an additional payment by the
Distributor of 1% of the value of the assets so transferred, such payment
not to exceed $5,000.
2. Dealers who previously sold Class C shares of the Fund to Quest
prototype 401(k) plan accounts maintained on the TRAC-2000 recordkeeping
system and (i) which shares in such accounts were exchanged for Class A
shares, or (ii) whose accounts were transferred to the OppenheimerFunds
prototype 401(k) plan, shall be eligible for an additional payment by the
Distributor of 1% of the value of the assets so transferred, such payment
not to exceed $5,000.
<PAGE>
Oppenheimer Quest Global Value Fund, Inc.
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Sub-Adviser
OpCap Advisors
One World Financial Center
New York, New York 10281
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
State Street Bank and Trust Company
P.O. Box 8505
Boston, Massachusetts 02266-8505
Independent Auditors
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, broker, salesperson or any other person has been authorized to
give any information or to make any representations other than those
contained in this Prospectus or the Statement of Additional Information,
and if given or made, such information and representations must not be
relied upon as having been authorized by the Fund, Oppenheimer Management
Corporation, Oppenheimer Funds Distributor, Inc. or any affiliate thereof.
This Prospectus does not constitute an offer to sell or a solicitation of
an offer to buy any of the securities offered hereby in any state to any
person to whom it is unlawful to make such an offer in such state.
<PAGE>
OPPENHEIMER QUEST GLOBAL VALUE FUND, INC.
Two World Trade Center, New York, New York 10048
1-800-525-7048
Statement of Additional Information dated November 24, 1995
This Statement of Additional Information (the "Additional Statement")
is not a Prospectus. Investors should understand that this Additional
Statement should be read in conjunction with the Prospectus dated November
24, 1995 (the "Prospectus") of the Oppenheimer Quest Global Value Fund,
Inc. (the "Fund") which may be obtained by written request to Oppenheimer
Shareholder Services ("OSS"), P.O. Box 5270 Denver, Colorado 80217 or
by calling SSI at (800) 525-7048.
Contents
Page
INVESTMENT OF THE FUND'S ASSETS 2
OTHER RISK FACTORS AND SPECIAL CONSIDERATIONS 12
INVESTMENT RESTRICTIONS 14
DIRECTORS AND OFFICERS 15
INVESTMENT MANAGEMENT AND OTHER SERVICES 19
DETERMINATION OF NET ASSET VALUE 23
PERFORMANCE INFORMATION 24
DISTRIBUTION AND SERVICE PLANS 28
ADDITIONAL INFORMATION 30
Appendix A -- Ratings A-1
Financial Statements B-1
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INVESTMENT OF THE FUND'S ASSETS
The investment objective and policies of the Fund are described in
the Prospectus. A further description of the Fund's investments and
investment methods appears below.
Type of Securities in Which The Fund May Invest. As discussed in the
Prospectus, the Fund seeks to achieve its investment objective through
investment primarily in equity securities. In addition to investing
directly in equity securities, the Fund may invest in American Depository
Receipts ("ADRs") and European Depository Receipts ("EDRs"). Generally,
ADRs in registered form are U.S. dollar denominated securities designed
for use in the U.S. securities markets, which represent and may be
converted into the underlying foreign security. EDRs are typically issued
in bearer form and are designed for use in the European securities
markets. No more than 5% of the Fund's assets will be invested in ADRs
or EDRs sponsored by persons other than the underlying issuers. Issuers
of the stock of such unsponsored ADRs are not obligated to disclose
material information in the United States and, therefore, there may not
be a correlation between such information and the market value of such
ADRs. The Fund also may purchase shares of investment companies or trusts
which invest principally in securities in which the Fund is authorized to
invest. The return on a Fund's investments in investment companies will
be reduced by the operating expenses, including investment advisory and
administrative fees, of such companies. The Fund's investment in an
investment company may require the payment of a premium above the net
asset value of the investment company's shares, and the market price of
the investment company thereafter may decline without any change in the
value of the investment company's assets. The Fund will not invest in any
investment company or trust unless it is believed that the potential
benefits of such investment are sufficient to warrant the payment of any
such premium. Under the Investment Company Act of 1940, the Fund may not
invest more than 10% of its assets in investment companies or more than
5% of its total assets in the securities of any one investment company,
nor may it own more than 3% of the outstanding voting securities of any
such company. To the extent the Fund invests in securities in bearer form
it may be more difficult to recover securities in the event such
securities are lost or stolen.
If the Fund invests in an entity which is classified as a "passive
foreign investment company" ("PFIC") for U.S. tax purposes, the
application of certain technical tax provisions applying to such companies
could result in the imposition of federal income tax with respect to such
investments at the Fund level which could not be eliminated by
distributions to shareholders. The U.S. Treasury has issued proposed
regulations which establish a mark-to-market regime that allows a
regulated investment company ("RIC") to avoid most, if not all, of the
difficulties posed by the PFIC rules. In any event, it is not
anticipated that any taxes on the Fund with respect to investments in
PFIC's would be significant.
Private Placements. The Fund may invest in securities which are
subject to restriction on resale because they have not been registered
under the Securities Act of 1933, or which are otherwise not readily
marketable. These securities are generally referred to as private
placements or restricted securities. Limitations on the resale of such
securities may have an adverse effect on their marketability, and may
prevent the Fund from disposing of them promptly at reasonable prices.
The Fund may have to bear the expense of registering such securities for
resale and risk the substantive delays in effecting such registration.
However, as described in the Prospectus, the Fund may avail themselves of
recently adopted regulatory changes to the Securities Act of 1933 ("Rule
144A") which permit the Fund to purchase securities which have been
privately placed and resell such securities to certain qualified
institutional buyers without restriction. Since it is not possible to
predict with assurance exactly how this market for restricted securities
sold and offered under Rule 144A will develop, the Boards of Directors
will carefully monitor the Fund's investments in these securities,
focusing on such important factors, among others, as valuation, liquidity
and availability of information. This investment practice could have the
effect of increasing the level of illiquidity in the Fund to the extent
that qualified institutional buyers become, for a time, uninterested in
purchasing these restricted securities.
Securities of foreign issuers often have not been registered in the
U.S. Accordingly, if the Fund wishes to sell unregistered foreign
securities in the U.S. it will avail itself of Rule 144A.
Convertible Securities. The Fund may invest in fixed-income
securities which are convertible into common stock. Convertible
securities rank senior to common stocks in a corporation's capital
structure and, therefore, entail less risk than the corporation's common
stock. The value of a convertible security is a function of its
"investment value" (its value as if it did not have a conversion
privilege), and its "conversion value" (the security's worth if it were
to be exchanged for the underlying security, at market value, pursuant to
its conversion privilege).
To the extent that a convertible security's investment value is
greater than its conversion value, its price will be primarily a
reflection of such investment value and its price will be likely to
increase when interest rates fall and decrease when interest rates rise,
as with a fixed-income security (the credit standing of the issuer and
other factors may also have an effect on the convertible security's
value). If the conversion value exceeds the investment value, the price
of the convertible security will rise above its investment value and, in
addition, will sell at some premium over its conversion value. (This
premium represents the price investors are willing to pay for the
privilege of purchasing a fixed-income security with a possibility of
capital appreciation due to the conversion privilege.) At such times the
price of the convertible security will tend to fluctuate directly with the
price of the underlying equity security. Convertible securities may be
purchased by the Fund at varying price levels above their investment
values and/or their conversion values in keeping with the Fund's
objectives.
Foreign Currency Transactions. When the Fund agrees to purchase or
sell a security in a foreign market it will generally be obligated to pay
or entitled to receive a specified amount of foreign currency and will
then generally convert dollars to that currency in the case of a purchase
or that currency to dollars in the case of a sale. The Fund will conduct
its foreign currency exchange transactions either on a spot basis (i.e.,
cash) at the spot rate prevailing in the foreign currency exchange market,
or through entering into forward foreign currency contracts ("forward
contracts") to purchase or sell foreign currencies. The Fund may enter
into forward contracts in order to lock in the U.S. dollar amount it must
pay or expects to receive for a security it has agreed to buy or sell. The
Fund may also enter into forward currency contracts with respect to the
Fund's portfolio positions when it believes that a particular currency may
change unfavorably compared to the U.S. dollar. A forward contract
involves an obligation to purchase or sell a specific currency at a future
date, which may be any fixed number of days from the date of the contract
agreed upon by the parties, at a price set at the time of the contract.
These contracts are traded in the interbank market conducted directly
between currency traders (usually large, commercial banks) and their
customers. A forward contract generally has no deposit requirement, and
no commissions are charged at any stage for trades.
The Fund's custodian bank will place cash, U.S. Government securities
or debt securities in a separate account of the Fund in an amount equal
to the value of the Fund's total assets committed to the consummation of
any such contract in such account and if the value of the securities
placed in the separate account declines, additional cash or securities
will be placed in the account on a daily basis so that the value of the
account will equal the amount of the Fund's commitments with respect to
such forward contracts. If, rather than cash, portfolio securities are
used to secure such a forward contract, on the settlement of the forward
contract for delivery by the Fund of a foreign currency, the Fund may
either sell the portfolio security and make delivery of the foreign
currency, or it may retain the security and terminate its contractual
obligation to deliver the foreign currency by purchasing an "offsetting"
contract obligating it to purchase, on the same settlement date, the same
amount of foreign currency.
The Fund may effect currency hedging transactions in foreign currency
futures contracts, exchange-listed and over-the-counter call and put
options on foreign currency futures contracts and on foreign currencies.
The use of forward futures or options contracts will not eliminate
fluctuations in the underlying prices of the securities which the Fund
owns or intend to purchase or sell. They simply establish a rate of
exchange for a future point in time. Additionally, while these techniques
tend to minimize the risk of loss due to a decline in the value of the
hedged currency, their use tends to limit any potential gain which might
result from the increase in value of such currency. In addition, such
transactions involve costs and may result in losses.
Although the Fund values its assets daily in terms of U.S. dollars,
it does not intend to convert its holdings of foreign currencies into U.S.
dollars on a daily basis. It will, however, do so from time to time, and
investors should be aware of the costs of currency conversion. Although
foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the spread between the prices at which they are
buying and selling various currencies. Thus, a dealer may offer to sell
a foreign currency to the Fund at one rate, while offering a lesser rate
of exchange should the Fund desire to resell that currency to the dealer.
Under Internal Revenue Code Section 988, special rules are provided
for certain transactions in a currency other than the taxpayer's
functional currency (i.e., unless certain special rules apply, currencies
other than the U.S. dollar). In general, foreign currency gains or losses
from forward contracts, futures contracts that are not "regulated futures
contracts", and from unlisted options will be treated as ordinary income
or loss under Code Section 988. Also, certain foreign exchange gains or
losses derived with respect to fixed-income securities are also subject
to Section 988 treatment. In general, therefore, Code Section 988 gains
or losses will increase or decrease the amount of the Fund's investment
company taxable income available to be distributed to shareholders as
ordinary income, rather than increasing or decreasing the amount of the
Fund's net capital gain. Additionally, if Code Section 988 losses exceed
other investment company taxable income during a taxable year, the Fund
would not be able to make any ordinary income distributions.
Portfolio Trading. It is anticipated that the Fund's portfolio
turnover rate will not exceed 100% in any one year. However, as it is
difficult to anticipate actual portfolio turnover, no guarantee can be
given that the actual portfolio turnover rates of the Fund will not be
greater or less than these predictions. A 100% turnover rate would occur,
for example, if 100% of the securities held in the Fund's portfolio
(excluding all securities whose maturities at acquisition were one year
or less) were sold and replaced within one year.
Security Loans. Consistent with applicable regulatory requirements
and procedures adopted by the Board of Directors, the Fund may lend its
portfolio securities to brokers, dealers and other financial institutions,
provided that such loans are callable at any time by the Fund (subject to
notice provisions described below), and are at all times secured by cash
or cash equivalents, which are maintained in a segregated account pursuant
to applicable regulations and that are equal to at least the market value,
determined daily, of the loaned securities. The advantage of such loans
is that the Fund continues to receive the income on the loaned securities
while at the same time earning interest on the cash amounts deposited as
collateral, which will be invested in short-term obligations.
A loan may be terminated by the borrower on one business day's
notice, or by the Fund on five business days' notice. If the borrower
fails to deliver the loaned securities within five days after receipt of
notice, the Fund could use the collateral to replace the securities while
holding the borrower liable for any excess of replacement cost over
collateral. As with any extensions of credit, there are risks of delay
in recovery and in some cases, even loss of rights in the collateral
should the borrower of the securities fail financially. However, these
loans of portfolio securities will only be made to firms deemed by the
Fund's management to be creditworthy and when the income which can be
earned from such loans justifies the attendant risks. Upon termination
of the loan, the borrower is required to return the securities to the
Fund. Any gain or loss in the market price during the loan period would
inure to the Fund. A Fund will pay reasonable finder's, administrative
and custodial fees in connection with a loan of its securities. The
creditworthiness of firms to which the Fund lends its portfolio securities
will be monitored on an ongoing basis by its Board of Directors.
When voting or consent rights which accompany loaned securities pass
to the borrower, the Fund will follow the policy of calling the loaned
securities, to be delivered within one day after notice, to permit the
exercise of such rights if the matters involved would have a material
effect on the Fund's investment in such loaned securities. Neither Fund
will lend portfolio securities with a value in excess of one-third of its
total assets at the time of the loan.
Repurchase Agreements. When cash may be available for only a few
days, it may be invested by the Fund in repurchase agreements until such
time as it may otherwise be invested or used for payments of obligations
of the Fund. Repurchase agreements, which may be viewed as a type of
secured lending by the Fund, typically involve the acquisition by the Fund
of government securities or other securities from a selling financial
institution such as a bank, savings and loan association or broker-dealer.
The agreement provides that the Fund will sell back to the institution,
and that the institution will repurchase, the underlying security
("collateral") at a specified price and at a fixed time in the future,
usually not more than seven days from the date of purchase. The Fund will
accrue interest from the institution until the time when the repurchase
is to occur. Although such date is deemed by the Fund to be the maturity
date of a repurchase agreement, the maturities of securities subject to
repurchase agreements are not subject to any limits and may exceed one
year.
While repurchase agreements involve certain risks not associated with
direct investments in debt securities, the Fund follow procedures designed
to minimize such risks. These procedures include effecting repurchase
transactions only with large, well capitalized and well established
financial institutions under guidelines established and monitored by the
Directors of the Fund. In addition, the collateral will be maintained in
a segregated account and will be marked-to-market daily to determine that
the full value of the collateral, as specified in the agreement, does not
decrease below the purchase price plus accrued interest. If such decrease
occurs, additional collateral will be requested and, when received, added
to maintain full collateralization. In the event of a default or
bankruptcy by a selling financial institution, the Fund will seek to
liquidate such collateral. However, the exercise of the Fund's right to
liquidate such collateral could involve certain costs or delays and, to
the extent that proceeds from any sale upon a default of the obligation
to repurchase were less than the repurchase price, the Fund could suffer
a loss. It is the current policy of the Fund not to invest in repurchase
agreements that do not mature within seven days if any such investment,
together with any other illiquid assets held by the Fund, amount to more
than 15% of its total assets. The Fund's investments in repurchase
agreements may at times be substantial when, in the view of OpCap
Advisors, liquidity or other considerations warrant.
When-Issued and Delayed Delivery Securities and Forward Commitments.
As discussed in the Prospectus, from time to time, in the ordinary course
of business, the Fund may purchase securities on a when-issued or delayed
delivery basis and may purchase or sell securities on a forward commitment
basis. When such transactions are negotiated, the price is fixed at the
time of the commitment, but delivery and payment can take place a month
or more after the date of the commitment. The securities so purchased are
subject to market fluctuation and no interest accrues to the purchaser
during this period. While the Fund will only purchase securities on a
when-issued, delayed delivery or forward commitment basis with the
intention of acquiring the securities, the Fund may sell the securities
before the settlement date, if it is deemed advisable. At the time the
Fund makes the commitment to purchase securities on a when-issued or
delayed delivery basis, the Fund will record the transaction and
thereafter reflect the value, each day, of such security in determining
the net asset value of the Fund. At the time of delivery of the
securities, the value may be more or less than the purchase price. The
Fund will also establish a segregated account with the Fund's custodian
bank in which it will continuously maintain cash or U.S. Government
securities or other high grade debt portfolio securities equal in value
to commitments for such when-issued or delayed delivery securities;
subject to this requirement, the Fund may purchase securities on such
basis without limit. An increase in the percentage of the Fund's assets
committed to the purchase of securities on a when-issued or delayed
delivery basis may increase the volatility of the Fund's net asset value.
The Fund's management and Directors do not believe that the Fund's net
asset value or income will be adversely affected by its purchases of
securities on such basis.
Security Selection Process. The allocation of assets of the Fund
between U.S. and foreign markets will vary from time to time as deemed
appropriate by OpCap Advisors. It is a dynamic process based on an on-
going analysis of economic and political conditions, the growth potential
of the securities markets throughout the world, currency exchange
considerations and the availability of attractively priced securities
within the respective markets. In all markets, security selection is
designed to reduce risk through a value oriented approach in which
emphasis is placed on identifying well-managed companies which, represent
exceptional values in terms of such factors as assets, earnings and growth
potential.
While the U.S. securities markets represented more than 50% of the
capitalization of the global securities markets in the late 1970s, a
combination of factors reduced that percentage to approximately 33% as of
December 31, 1994. Moreover, the relative performance of the securities
markets of different countries, expressed in terms of United States
dollars, varies widely. A global portfolio provides U.S. investors with
the opportunity to participate in these markets, diversifying their
domestic portfolios so that their investments will not be influenced
solely by the political, economic and fiscal events affecting the U.S.
Hedging. As stated in the Prospectus, the Fund may engage in
transactions in options and futures. Information about the options and
futures transactions the Fund may enter into is set forth below.
Financial Futures. The Fund may purchase and sell futures contracts
that are currently traded, or may in the future be traded, on U.S. and
foreign commodity exchanges on common stocks, such underlying fixed-income
securities as U.S. Treasury bonds, notes, and bills and/or any foreign
government fixed-income security ("interest rate" futures), on various
currencies ("currency" futures) and on such indexes of U.S. or foreign
equity and fixed-income securities as may exist or come into being, such
as the Standard & Poor's 500 Index or the Financial Times Equity Index
("index" futures). No price is paid or received upon the purchase of a
financial future. Upon entering into a futures transaction, a Fund will
be required to deposit an initial margin payment equal to a specified
percentage of the contract value. Initial margin payments will be
deposited with the Fund's custodian bank in an account registered in the
futures commission merchant's name; however, the futures commission
merchant can gain access to that account only under specified conditions.
As the future is marked to market to reflect changes in its market value,
subsequent payments, called variation margin, will be made to or from the
futures commission merchant on a daily basis. Prior to expiration of the
future, if the Fund elects to close out its position by taking an opposite
position, a final determination of variation margin is made, additional
cash is required to be paid by or released to the Fund, and any loss or
gain is realized for tax purposes. Although financial futures by their
terms call for the actual delivery or acquisition of the specified debt
security, in most cases the obligation is fulfilled by closing out the
position.
Information on Puts and Calls. The Fund is authorized to write
covered put and call options and purchase put and call options on the
securities in which it may invest. When the Fund writes a call, it
receives a premium and agrees to sell the callable securities to a
purchaser of a corresponding call during the call period (usually not more
than 9 months) at a fixed exercise price (which may differ from the market
price of the underlying securities) regardless of market price changes
during the call period. If the call is exercised, the fund forgoes any
possible profit from an increase in market price over the exercise price.
The Fund may, in the case of listed options, purchase calls in "closing
purchase transactions" to terminate a call obligation. A profit or loss
will be realized, depending upon whether the net of the amount of option
transaction costs and the premium received on the call written is more or
less than the price of the call subsequently purchased. A profit may be
realized if the call lapses unexercised, because the Fund retains the
underlying security and the premium received. Sixty percent of any such
profits or losses are considered long-term and forty percent are
considered short-term gains for tax purposes. If, due to a lack of a
market, the Fund could not effect a closing purchase transaction, it would
have to hold the callable securities until the call lapsed or was
exercised. The Fund's custodian, or a securities depository acting for
the custodian, will act as the Fund's escrow agent, through the facilities
of the Options Clearing Corporation ("OCC") in connection with listed
calls, as to the securities on which the Fund has written calls, or as to
other acceptable escrow securities, so that no margin will be required for
such transaction. OCC will release the securities on the expiration of
the calls or upon the Fund's entering into a closing purchase transaction.
When the Fund purchases a call (other than in a closing purchase
transaction), it pays a premium and has the right to buy the underlying
investment from a seller of a corresponding call on the same investment
during the call period (or on a certain date for OTC options) at a fixed
exercise price. The Fund benefits only if the call is sold at a profit or
if, during the call period, the market price of the underlying investment
is above the call price plus the transaction costs and the premium paid
for the call and the call is exercised. If a call is not exercised or
sold (whether or not at a profit), it will become worthless at its
expiration date and the Fund will lose its premium payment and the right
to purchase the underlying investment.
With OTC options, such variables as expiration date, exercise price
and premium will be agreed upon between the Fund and the transacting
dealer, without the intermediation of a third party such as the OCC. If
a transacting dealer fails to make delivery on the securities underlying
an option it has written, in accordance with the terms of the option as
written, the Fund could lose the premium paid for the option as well as
any anticipated benefit of the transaction. The Fund will engage in OTC
option transactions only with primary U.S. Government securities dealers
recognized by the Federal Reserve Bank of New York. In the event that any
OTC option transaction is not subject to a forward price at which the Fund
has the absolute right to repurchase the OTC option which it has sold, the
value of the OTC option purchased and of the Fund assets used to "cover"
the OTC option will be considered "illiquid securities" and will be
subject to the 15% limit on illiquid securities. The "formula" on which
the forward price will be based may vary among contracts with different
primary dealers, but it will be based on a multiple of the premium
received by the Fund for writing the option plus the amount, if any, of
the option's intrinsic value, i.e., current market value of the underlying
securities minus the option's strike price.
A put option gives the purchaser the right to sell, and the writer
the obligation to buy, the underlying investment at the exercise price
during the option period (or on a certain date for OTC options). The
investment characteristics of writing a put covered by segregated liquid
assets equal to the exercise price of the put are similar to those of
writing a covered call. The premium paid on a put written by a Fund
represents a profit, as long as the price of the underlying investment
remains above the exercise price. However, the Fund has also assumed the
obligation during the option period to buy the underlying investment from
the buyer of the put at the exercise price, even though the value of the
investment may fall below the exercise price. If the put expires
unexercised, the Fund (as writer) realizes a gain in the amount of the
premium. If the put is exercised, the Fund must fulfill its obligation
to purchase the underlying investment at the exercise price, which will
usually exceed the market value of the investment at that time. In that
case, the Fund may incur a loss upon disposition, equal to the sum of the
sale price of the underlying investment and the premium received minus the
sum of the exercise price and any transaction costs incurred.
When writing put options, to secure its obligation to pay for the
underlying security, the Fund will deposit in escrow liquid assets with
a value equal to at least the exercise price of the option. As a result,
the Fund forgoes the opportunity of investing the segregated assets or
writing calls against those assets. As long as the Fund's obligation as
a put writer continues, the Fund may be assigned an exercise notice by the
broker-dealer through whom such option was sold, requiring the Fund to
purchase the underlying security at the exercise price. The Fund has no
control over when it may be required to purchase the underlying security,
since it may be assigned an exercise notice at any time prior to the
termination of its obligation as the writer of the put. This obligation
terminates upon the earlier of the expiration of the put, or the
consummation by the Fund of a closing purchase transaction by purchasing
a put of the same series as that previously sold. Once the Fund has been
assigned an exercise notice, it is thereafter not allowed to effect a
closing purchase transaction.
The Fund may effect a closing purchase transaction to realize a
profit on an outstanding put option it has written or to prevent an
underlying security from being put to it. Furthermore, effecting such a
closing purchase transaction will permit the Fund to write another put
option to the extent that the exercise price thereof is secured by the
deposited assets, or to utilize the proceeds from the sale of such assets
for other investments by the Fund. The Fund will realize a profit or loss
from a closing purchase transaction if the cost of the transaction is less
or more than the premium received from writing the option.
When the Fund purchases a put, it pays a premium and has a right to
sell the underlying investment at a fixed exercise price to a seller of
a corresponding put on the same investment during the put period if it is
a listed option (or on a certain date if it is an OTC option). Buying a
put on securities or futures held by it permits the Fund to attempt to
protect itself during the put period against a decline in the value of the
underlying investment below the exercise price. In the event of a decline
in the market, the Fund could exercise, or sell the put option at a profit
that would offset some or all of its loss on the portfolio securities.
If the market price of the underlying investment is above the exercise
price and as a result, the put is not exercised, the put will become
worthless at its expiration date and the purchasing Fund will lose the
premium paid and the right to sell the underlying securities; the put may,
however, be sold prior to expiration (whether or not at a profit).
Purchasing a put on futures or securities not held by it permits the Fund
to protect its portfolio securities against a decline in the market to the
extent that the prices of the future or securities underlying the put move
in a similar pattern to the prices of the securities in the Fund's
portfolio.
An option position may be closed out only on a market which provides
secondary trading for options of the same series, and there is no
assurance that a liquid secondary market will exist for any particular
option. The Fund's option activities may affect its turnover rate and
brokerage commissions. The exercise of calls written by a Fund may cause
that Fund to sell from its portfolio securities to cover the call, thus
increasing its turnover rate in a manner beyond the Fund's control. The
exercise of puts on securities or futures will increase portfolio
turnover. Although such exercise is within the Fund's control, holding
a put might cause the Fund to sell the underlying investment for reasons
which would not exist in the absence of the put. The Fund will pay a
brokerage commission every time it purchases and sells a put or a call or
purchases or sells a related investment in connection with the exercise
of a put or a call.
The Fund may purchase and write call and put options on futures
contracts which are traded on an exchange and enter into closing
transactions with respect to such options to terminate an existing
position. An option on a futures contract gives the purchaser the right
(in return for the premium paid) to assume a position in a futures
contract (a long position if the option is a call and a short position if
the option is a put) at a specified exercise price at any time during the
term of the option. Upon exercise of the option, the delivery of the
futures position by the writer of the option to the holder of the option
is accompanied by delivery of the accumulated balance in the writer's
futures margin account, which represents the amount by which the market
price of the futures contract at the time of exercise exceeds, in the case
of a call, or is less than, in the case of a put, the exercise price of
the option on the futures contract.
The Fund may purchase and write options on futures contracts for
hedging purposes. The purchase of a call option on a futures contract is
similar in some respects to the purchase of a call option on an individual
security. Depending on the pricing of the option compared to either the
price of the futures contract upon which it is based or the price of the
underlying securities, it may or may not be less risky than ownership of
the futures contract or underlying securities. As with the purchase of
futures contracts, when the Fund is not fully invested it may purchase a
call option on a futures contract to hedge against an anticipated increase
in securities prices.
The writing of a call option on a futures contract constitutes a
partial hedge against declining prices of the security which is
deliverable upon exercise of the futures contract. If the futures price
at expiration of the option is below the exercise price, the Fund will
retain the full amount of the option premium which provides a partial
hedge against any decline that may have occurred in the Fund's portfolio
holdings. The writing of a put option on a futures contract constitutes
a partial hedge against increasing prices of the security which is
deliverable upon exercise of the futures contract. If the futures price
at expiration of the option is higher than the exercise price, the Fund
will retain the full amount of the option premium which provides a partial
hedge against any increase in the price of securities which the Fund
intends to purchase. If a put or call option the Fund has written is
exercised, the Fund will incur a loss which will be reduced by the amount
of the premium it receives. Depending on the degree of correlation
between changes in the value of its portfolio securities and changes in
the value of its futures positions, the Fund's losses from existing
options may to some extent be reduced or increased by changes in the value
of portfolio securities.
The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on portfolio
securities. For example, the Fund may purchase a put option on a futures
contract to hedge the Fund's portfolio against the risk of a decline in
securities prices.
The amount of risk the Fund assumes when it purchases an option on
a futures contract is the premium paid for the option plus related
transaction costs. In addition to the correlation risks discussed above,
the purchase of an option also entails the risk that changes in the value
of the underlying futures contract will not be fully reflected in the
value of the option purchased
Regulatory Aspects of Hedging Instruments. Transactions in options
by the Fund are subject to limitations established (and changed from time
to time) by each of the exchanges governing the maximum number of options
which may be written or held by a single investor or group of investors
acting in concert, regardless of whether the options were written or
purchased on the same or different exchanges or are held in one or more
accounts or through one or more different exchanges or through one or more
brokers. Thus, the number of options which a fund may write or hold may
be affected by options written or held by other investment companies and
discretionary accounts of the manager, including other investment
companies having the same or an affiliated investment advisor. An
exchange may order the liquidation of positions found to be in violation
of those limits and may impose certain other sanctions.
Due to requirements under the Investment Company Act of 1940 (the
"1940 Act"), when the Fund sells a future, it will maintain in a
segregated account or accounts with its custodian bank, cash or readily
marketable short-term (maturing in one year or less) debt instruments in
an amount equal to the market value of such future, less the margin
deposit applicable to it, unless the Fund holds an offsetting position.
The Fund must operate within certain restrictions as to its long and
short positions in futures and options thereon under a rule ("CFTC Rule")
adopted by the Commodity Futures Trading Commission ("CFTC") under the
Commodity Exchange Act (the "CEA"), which excludes the Fund from
registration with the CFTC as a "commodity pool operator" (as defined
under the CEA). Under those restrictions a fund may not enter into any
financial futures or options contract unless such transactions are for
bona fide hedging purposes, or for other purposes only if the aggregate
initial margins and premiums required to establish such non-hedging
positions would not exceed 5% of the liquidation value of its assets. A
fund may use futures and options thereon for bona fide hedging or for
other purposes within the meaning and intent of the applicable provisions
of the CEA.
Tax Aspects of Hedging Instruments. The Fund intends to qualify as
a "regulated investment company" under the Internal Revenue Code. One of
the tests for such qualification is that at least 90% of its gross income
must be derived from dividends, interest and gains from the sale or other
disposition of securities. Another test is that less than 30% of its
gross income must be derived from gains realized on the sale of securities
held for less than three months. In connection with the 90% test, the
Internal Revenue Code specifies that income from options, futures and
other gains derived from investments in securities is qualifying income
under the 90% test. Due to the 30% limitation, the Fund will limit the
extent to which it engages in the following activities, but, except as
otherwise set forth herein or in the Prospectus, will not be precluded
from them: (i) selling investments, including futures, held for less than
three months, whether or not they were purchased on the exercise of a call
held by the Fund; (ii) writing calls on investments held less than three
months; (iii) effecting closing transactions with respect to calls or puts
purchased less than three months previously; and (iv) exercising puts or
securities held by the Fund for less than three months.
Regulated futures contracts, options on certain broad-based stock
indices, options on stock index futures, certain other futures contracts
and options thereon (collectively, "Section 1256 contracts") held by a
fund at the end of each taxable year may be required to be "marked to
market" for federal income tax purposes (that is, treated as having been
sold at that time at market value). Any unrealized gain or loss taxed
pursuant to this rule will be added to realized gains or losses recognized
on Section 1256 contracts sold by a fund during the year, and the
resulting gain or loss will be deemed to consist of 60% long-term capital
gain or loss and 40% short-term capital gain or loss. A fund may elect
to exclude certain transactions from the mark-to-market rule although
doing so may have the effect of increasing the relative proportion of
short-term capital gain (taxable as ordinary income) and/or increasing the
amount of dividends that must be distributed annually to meet income
distribution requirements.
It should also be noted that under certain circumstances, the
acquisition of positions in hedging instruments may result in the
elimination or suspension of the holding period for tax purposes of other
assets held by the Fund with the result that the relative proportion of
short-term capital gains (taxable as ordinary income) could increase.
Possible Risk Factors in Hedging. There is a risk in selling futures
that the prices of futures will correlate imperfectly with the behavior
of the cash (i.e., market value) prices of a fund's securities. The
ordinary spreads between prices in the cash and futures markets are
subject to distortions due to differences in the natures of those markets.
First, all participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting additional
margin deposit requirements, investors may close out futures contracts
through offsetting transactions which could distort the normal
relationship between the cash and futures markets. Second, the liquidity
of the futures market depends on participants entering into offsetting
transactions rather than making or taking delivery. To the extent
participants decide to make or take delivery, liquidity in the futures
market could be reduced, thus producing distortion. Third, from the point
of view of speculators, the deposit requirements in the futures market are
less onerous than margin requirements in the securities market.
Therefore, increased participation by speculators in the futures market
may cause temporary price distortions.
If OpCap Advisors' investment judgment about the general direction
of securities prices is incorrect, the Fund's overall performance would
be poorer than if it had not entered into a Hedging Transaction. For
example, if the Fund has hedged against the possibility of a decrease in
securities prices which would adversely affect the price of securities
held in its portfolio and securities prices increase instead, the Fund
will lose part or all of the benefit of the increased value of its
securities which it has hedged because it will have offsetting losses in
its futures positions. In addition, in such situations, if the Fund has
insufficient cash, it may have to sell securities from its portfolio to
meet daily variation margin requirements. Such sales of securities may
be, but will not necessarily be, at increased prices which reflect the
rising market. The Fund may have to sell securities at a time when it may
be disadvantageous to do so. Also when an options or futures position is
a temporary substitute for the purchase of individual securities (long
hedging) by buying futures and/or calls on such futures or on a particular
security, it is possible that the market may decline. If the Fund then
concludes not to invest in such securities at that time because of
concerns as to possible further market decline or for other reasons, it
will realize a loss on the position that is not offset by a reduction in
the price of the securities purchased.
OTHER RISK FACTORS AND SPECIAL CONSIDERATIONS
Investments in Eastern Europe. The Fund is authorized to invest in
Eastern European countries; however, the Fund presently intends not to
invest more than 5% of its assets in such securities. Investments in
Eastern Europe are speculative and involve a high degree of risk of loss.
With the change in power and restructuring of the Soviet Union there is
no assurance that such markets will continue to constitute a viable
investment opportunity for the Fund and there may be a high degree of risk
of expropriation without compensation. The governments of a number of
Eastern European countries previously expropriated large quantities of
private property. The claims of many property owners against those
governments were never finally settled. There is no assurance that such
expropriation will not occur again. If such expropriation were to recur,
the Fund could lose all or a substantial portion of its investments in
such countries. Further, no accounting standards comparable to those in
the U.S. exist in Eastern European countries. Finally, even though
certain Eastern European currencies may be convertible into United States
dollars, the conversion rates may be artificial to the actual market
values and may be adverse to the shareholders of the Fund.
The governments of certain Eastern European countries may require
that a governmental or quasi-governmental authority act as custodian of
the Fund's assets invested in such countries. These authorities may not
be qualified to act as foreign custodians under the 1940 Act and as a
result, the Fund would not be able to invest in the countries in the
absence of exemptive relief from the Securities and Exchange Commission.
In addition, the risk of loss through government confiscation may be
increased in such countries.
Risks of Debt Securities. The Fund is authorized to invest, to the
extent specified in the Prospectus, in bonds rated below Baa by Moody's
Investor Service Inc. ("Moody's) or BBB by Standard & Poor's Corporation
("S&P") ("high yield bonds," commonly known as "junk bonds"). Securities
rated less than Baa by Moody's or BBB by S&P are classified as non-
investment grade securities and are considered speculative by those rating
agencies. Such bonds may be issued as a consequence of corporate
restructurings, such as leveraged buyouts, mergers, acquisitions, debt
recapitalizations, or similar events or by smaller or highly leveraged
companies. Although the growth of the high yield securities market in the
1980s had paralleled a long economic expansion, recently many issuers have
been affected by adverse economic and market conditions. It should be
recognized that an economic downturn or increase in interest rates is
likely to have a negative effect on (i) the high yield bond market, (ii)
the value of high yield securities and (iii) the ability of the
securities' issuers to service their principal and interest payment
obligations, to meet their projected business goals or to obtain
additional financing. When economic conditions appear to be
deteriorating, these bonds may decline in market value regardless of
prevailing interest rates due to heightened investor concerns over credit
quality. In such periods the ability of highly leveraged issuers to
service principal and interest payments, to meet their business goals or
obtain additional financing could be adversely affected. These bonds may
also be affected by legislative and regulatory developments. The market
for these bonds may, therefore, be less liquid than for investment grade
bonds and their prices more volatile. In addition, there may at times be
significant disparities in the prices quoted for such bonds by various
dealers, making it difficult for the Fund to rely on such quotes. Also,
prices for high yield bonds may be affected by legislative and regulatory
developments. For example, federal rules require that savings and loans
gradually reduce their holding of high-yield securities. Also, from time
to time, Congress has considered legislation to restrict or eliminate the
corporate tax deduction for interest payments or to regulate corporate
restructurings such as takeovers, mergers or leveraged buyouts. Such
legislation, if enacted, may depress the prices of outstanding high yield
bonds. Debt securities rated in the lowest category by Moody's are of
poor standing and there may be present elements of danger with respect to
principal or interest. Debt securities rated in the lowest category by
S&P have a currently identifiable vulnerability to default and are
dependent upon favorable business, financial and economic conditions to
meet timely payment of interest and repayment of principal. In the event
of adverse business conditions they are not likely to have the capacity
to pay interest and repay principal.
Rights and Warrants. As mentioned in the Prospectus, the Fund may
invest in rights and warrants which entitle the holder to buy equity
securities at a specified price for a specific period of time. Such
securities do not entitle a holder to dividends or voting rights with
respect to the securities which may be purchased, nor do they represent
any rights to the assets of the issuing company. The value of a right or
warrant may be more volatile than the value of the underlying securities.
Also, their value does not necessarily change with the value of the
underlying securities and a right or warrant ceases to have value if it
is not exercised prior to the expiration date. Rights and warrants
purchased by the Fund which expire without being exercised will result in
a loss to the Fund.
Foreign Custody. Rules adopted under the 1940 Act permit the Fund
to maintain its securities and cash in the custody of certain eligible
banks and securities depositories. The Fund's portfolios of securities
of issuers located outside of the U.S. will be held by their sub-
custodians who will be approved by the directors in accordance with such
Rules. Such determination will be made pursuant to such Rules following
a consideration of a number of factors, including, but not limited to, the
reliability and financial stability of the institution; the ability of the
institution to perform custodial services for the Fund; the reputation of
the institution in its national market; the political and economic
stability of the country in which the institution is located; and the
risks of potential nationalization or expropriation of the Fund's assets.
However, no assurances can be given that the directors' appraisal of the
risks in connection with foreign custodial arrangements will always be
correct or that expropriation, nationalization, freezes (including
currency blockage), or confiscations of assets that would affect assets
of the Fund will not occur, and shareholders bear the risk of losses
arising from those or other similar events.
Borrowing. As discussed in the Prospectus, the Fund will not borrow
money except as a temporary measure for extraordinary or emergency
purposes. Such borrowing shall not exceed 33 1/3% of the value of the
Fund's assets, provided that a Fund will make no additional investments
while such borrowing exceeds 5% of its assets. Borrowing may exaggerate
the effect of any increase or decrease in the value of the portfolio
securities on the Fund's net asset value and money borrowed will be
subject to interest and other costs (which may include commitment fees
and/or the cost of maintaining average balances) which may or may not
exceed the income received from the securities purchased with borrowed
funds.
Additional Risks. Securities in which the Fund may invest are
subject to the provisions of bankruptcy, insolvency or other laws
affecting the rights and remedies of creditors, such as the federal
Bankruptcy Code, and laws, if any, which may be enacted by Congress or the
state legislatures extending the time for payment of principal or
interest, or both or imposing other constraints upon enforcement of such
obligations.
INVESTMENT RESTRICTIONS
The Fund's significant investment restrictions are described in the
Prospectus. The following are also fundamental policies and, together
with the restrictions and other fundamental policies described in the
Prospectus, cannot be changed without the vote of a majority of the
outstanding voting securities of the Fund, as defined in the 1940 Act.
Such a majority is defined as the lesser of (a) 67% or more of the shares
of the Fund present at a meeting of shareholders of the Fund, if the
holders of more than 50% of the outstanding shares of the Fund are present
or represented by Proxy or (b) more than 50% of the outstanding shares of
the Fund. For purposes of the following restrictions and those contained
in the Prospectus: (i) all percentage limitations apply immediately after
a purchase or initial investment; (ii) any subsequent change in any
applicable percentage resulting from market fluctuations or other changes
in the amount of total assets does not require elimination of any security
from the Fund; and (iii) the term "industry" does not include the U.S.
Government and agencies and instrumentalities of the U.S. Government,
although a foreign government is deemed to be an "industry." Unless
otherwise noted, the restrictions apply to the Fund.
Under these additional restrictions, the Fund cannot: (a) Invest in
physical commodities or physical commodity contracts or speculate in
financial commodity contracts, but may purchase and sell financial futures
contracts and options on such futures contracts exclusively for hedging
and other non-speculative purposes; (b) Invest in real estate; however,
the Fund may purchase securities of issuers which engage in real estate
operations and securities which are secured by real estate or interests
therein; (c) Purchase securities on margin (except for such short-term
loans as are necessary for the clearance of purchases of portfolio
securities) or make short sales of securities. (Collateral arrangements
in connection with transactions in futures and options are not deemed to
be margin transactions.) (d) Underwrite securities of other companies
except insofar as the Fund may be deemed to be an underwriter under the
Securities Act of 1933 in disposing of a security; (e) 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 by the
Fund are inapplicable to acquisitions in connection with a merger,
consolidation, reorganization or acquisition of assets; (f) Invest in
interests in oil, gas or other mineral exploration or development
programs; (g) Invest in securities of any issuer if, to the knowledge of
the Fund, any officer or director of the Fund or any officer or director
of Oppenheimer Management Corporation or OpCap Advisors owns more than 1/2
of 1% of the outstanding securities of such issuer, and such officers and
directors who own more than 1/2 of 1% own in the aggregate more than 5%
of the outstanding securities of such issuer; (h) 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
Prospectus; (i) Invest for the purpose of exercising control or management
of another company; (j) 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: (1) entering into any repurchase agreement; (2)
borrowing money in accordance with restrictions described in the
Prospectus; or (3) lending portfolio securities. In addition, the Fund
may not, with respect to 75% of its assets, invest more than 5% of the
value of its total assets in the securities of any one issuer. In
addition, as a non-fundamental investment restriction, the Fund (i) may
not purchase warrants if as a result the Fund would then have either more
than 5% of its total assets (determined at the time of investment)
invested in warrants or more than 2% of its total assets invested in
warrants not listed on the New York or American Stock Exchange; (ii) may
not invest in real estate limited partnership programs; (iii) may not
invest in oil, gas or mineral leases; (iv) may not invest more than 15%
of its assets in restricted securities, foreign equity securities not
listed on an exchange, illiquid securities, securities for which market
quotations are not readily available and repurchase agreements in excess
of seven days; and (v) more than 5% of its assets in unseasoned issues.
In addition, to comply with a state's securities laws, the Fund may not
make loans to any person or individual (except that portfolio securities
may be loaned within the limitations set forth in the Prospectus).
To the knowledge of the Fund, the following shareholders held as
beneficial or record owners 5% or more of each specified class of shares
of the Fund as of November 13, 1995:
Percentage
Name and Address of 5% Owner of Ownership
Class A
Opp Group Prof Sha PL Indiv A/ 5.41%
Omnibus Account
Attn: 401-K Unit
Oppenheimer Tower
World Financial Center
New York, NY 10281
Unified Management Corp. 51.83%
Omnibus Account - Global Equity
Attn: Control Dept.
429 N. Pennsylvania St.
Indianapolis, IN 46204-1873
DIRECTORS AND OFFICERS
The directors and officers of the Fund, and their principal
occupations during the past five years, are set forth below. Directors
who are "interested persons", as defined in the 1940 Act, are denoted by
an asterisk. The address of each is Two World Trade Center, New York, New
York 10048, except as noted. As of November 13, 1995 the Directors and
Officers of the Fund owned less than 1% of the outstanding shares of the
Fund.
Bridget A. Macaskill, Chairman of the Board of Directors, Vice
President; Age: 47.
Chief Executive Officer of Oppenheimer Management Corporation (the
"Manager"); President and Chief Operating Officer of the Manager; prior
thereto, Chief Operating Officer of the Manager and Executive Vice
President of the Manager. Vice President and a Director of Oppenheimer
Acquisition Corp., Director of Oppenheimer Partnership Holdings, Inc.,
Chairman and a Director of Shareholder Services, Inc., Director of Main
Street Advisers, Inc., and Director of HarbourView Asset Management
Corporation, all of which are subsidiaries of the Manager; a Trustee of
certain Oppenheimer funds.
Paul Y. Clinton, Trustee; Age: 64
946 Morris Avenue, Bryn Mawr, Pennsylvania 19010
Director, External Affairs, Kravco Corporation, a national real estate
owner and property management corporation; formerly President of Essex
Management Corporation, a management consulting company; Trustee of
Capital Cash Management Trust, Prime Cash Fund and Short Term Asset
Reserves, each of which is a money-market fund; Director of Oppenheimer
Quest Value Fund, Inc., Oppenheimer Quest Global Value Fund, Inc., and
Quest Cash Reserves, Inc. and Trustee of Quest For Value Accumulation
Trust, all of which are open-end investment companies. Formerly a general
partner of Capital Growth Fund, a venture capital partnership; formerly
a general partner of Essex Limited Partnership, an investment partnership;
formerly President of Geneve Corp., a venture capital fund; formerly
Chairman of Woodland Capital Corp., a small business investment company;
formerly Vice President of W.R. Grace & Co.
Thomas W, Courtney, Trustee; Age: 62
P.O. Box 580, Sewickley, Pennsylvania 15143
Principal of Courtney Associates, Inc., a venture capital firm; former
General Partner of Trivest Venture Fund, a private venture capital fund;
former President of Investment Counseling Federated Investors, Inc.;
Trustee of Cash Assets Trust, a money market fund; Director of Quest Cash
Reserves, Inc., Oppenheimer Quest Value Fund, Inc. and Oppenheimer Quest
Global Value Fund, Inc. and Trustee of Quest for Value Accumulation Trust,
all of which are open-end investment companies; former President of Boston
Company Institutional Investors; Trustee of Hawaiian Tax-Free Trust and
Tax Free Trust of Arizona, tax-exempt bond funds; Director of several
privately owned corporations; former Director of Financial Analysts
Federation.
Lacy B. Herrmann, Trustee; Age: 66
380 Madison Avenue, Suite 2300, New York, New York 10017
President and Chairman of the Board of Aquila Management Corporation, the
sponsoring organization and Administrator and/or Sub-Adviser to the
following open-end investment companies, and Chairman of the Board of
Directors and President of each: Churchill Cash Reserves Trust, Short Term
Asset Reserves, Pacific Capital Cash Assets Trust, Pacific Capital U.S.
Treasuries Cash Assets Trust, Pacific Capital Tax-Free Cash Assets Trust,
Prime Cash Fund, Narragansett Insured Tax-Free Income Fund, Tax-Free Fund
For Utah, Churchill Tax-Free Fund of Kentucky, Tax-Free Fund of Colorado,
Tax-Free Trust of Oregon, Tax-Free Trust of Arizona, Hawaiian Tax-Free
Trust, and Aquila Rocky Mountain Equity Fund; Vice President, Director,
Secretary, and formerly Treasurer of Aquila Distributors, Inc.,
distributor of the above funds; President and Chairman of the Board of
Directors of Capital Cash Management Trust ("CCMT"), and an Officer and
Director/Trustee of its predecessors; President and Director of STCM
Management Company, Inc., sponsor and adviser to CCMT; Chairman, President
and a Director of InCap Management Corporation, formerly sub-adviser and
administrator of Prime Cash Fund and Short Term Asset Reserves; Director
or Trustee of Quest Cash Reserves, Inc., Oppenheimer Quest Global Value
Fund, Inc. and Oppenheimer Quest Value Fund, Inc. and Trustee of Quest for
Value Accumulation Trust and The Saratoga Advantage Trust, each of which
is an open-end investment company; Trustee of Brown University.
George Loft, Director; Age: 80
51 Herrick Road
Sharon, Connecticut 06069
Private Investor; Director of Quest Cash Reserves, Inc., Oppenheimer Quest
Value Fund, Inc. and Oppenheimer Quest Global Value Fund, Inc. and Trustee
of Quest for Value Accumulation Trust and The Saratoga Advantage Trust,
all of which are open-end investment companies, and Director of the Quest
for Value Dual Purpose Fund, Inc., a closed-end investment company.
Robert C. Doll, Jr., Vice President; Age: 41
Executive Vice President and Director of Equity Investments of the
Manager; an officer and Portfolio Manager of other Oppenheimer Funds.
Andrew J. Donohue, Secretary; Age: 45
Executive Vice President and General Counsel of the Manager and the
Distributor; an officer of other Oppenheimer funds; formerly Senior Vice
President and Associate General Counsel of the Manager and the
Distributor, partner in Kraft & McManimon (a law firm), an officer of
First Investors Corporation (a broker-dealer) and First Investors
Management Company, Inc. (broker-dealer and investment adviser), and a
director and an officer of First Investors Family of Funds and First
Investors Life Insurance Company.
George C. Bowen, Treasurer; Age: 59
3410 South Galena Street Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President and
Treasurer of the Distributor and HarbourView Asset Management Corporation;
Senior Vice President, Treasurer, Assistant Secretary and a director of
Centennial Asset Management Corporation, an investment advisory subsidiary
of the Manager; Vice President, Treasurer and Secretary of the Transfer
Agent and Shareholder Financial Services, Inc., a transfer agent
subsidiary of the Manager; an officer of other Oppenheimer funds.
Robert Bishop, Assistant Treasurer; Age: 37
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an officer
of other OppenheimerFunds; formerly a Fund Controller for the Manager,
prior to which he was an Accountant for Yale & Seffinger, P.C., an
accounting firm, and previously an Accountant and Commissions Supervisor
for Stuart James Company Inc., a broker-dealer.
Scott Farrar, Assistant Treasurer; Age: 30
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an officer
of other OppenheimerFunds; formerly a Fund Controller for the Manager,
prior to which he was an International Mutual Fund Supervisor for Brown
Brothers, Harriman Co., a bank, and previously a Senior Fund Accountant
for State Street Bank & Trust Company.
Robert G. Zack, Assistant Secretary; Age: 47
Senior Vice President and Associate General Counsel of the Manager,
Assistant Secretary of SSI, SFSI; an officer of other OppenheimerFunds.
- Remuneration of Directors. All officers of the Trust and Ms.
Macaskill, a Trustee, are officers or directors of the Manager and receive
no salary or fee from the Fund. The following table sets forth the
aggregate compensation received by the non-interested Trustees during the
fiscal year ended November 30, 1994 from the Fund and in the aggregate
from the five funds (Oppenheimer Quest Small Cap Value Fund, Oppenheimer
Quest Growth & Income Value Fund, Oppenheimer Quest Opportunity Value
Fund, Oppenheimer Quest Value Fund, Inc. and Oppenheimer Quest Global
Value Fund, Inc.) for which OpCap Advisors is currently the Sub-Adviser
and for which it was the investment manager during that period.
Oppenheimer Quest Officers Value Fund, the sixth fund for which OpCap
Advisors is the Sub-Adviser, commenced operations after October 31, 1994.
<TABLE>
Pension or
Retirement
Aggregate Benefits Estimated Total
Compensation Accrued as Annual Compensation
from the Part of Fund Benefits Upon From Fund
Name of Person Fund Expenses Retirement Complex
<S> <C> <C> <C> <C>
Paul Y. Clinton $4,200 None None $19,800
Thomas W. Courtney 4,200 None None $19,800
Lacy B. Herrmann 4,200 None None $19,800
George Loft 4,200 None None $19,800
</TABLE>
- AMA Family of Funds Indemnification. In connection with the
combination of each of the U.S. Government Income Fund and the Growth and
Income Fund with a portfolio of AMA Family of Funds, Inc., each Fund has
agreed to assume the obligation of such portfolio of the AMA Family of
Funds to indemnify the directors of the AMA Family of Funds, Inc. to the
fullest extent permitted by law and the By-Laws of the AMA Family of
Funds, Inc.
- Unified Funds Indemnification. In connection with the combination
of Growth and Income Fund with Unified Income Fund and Unified Mutual
Shares, Growth and Income Fund has agreed to assume the obligation of
Unified Income Fund and Unified Mutual Shares to indemnify the directors
of such Unified Funds to the fullest extent permitted by law and the By-
Laws of such Unified Funds.
INVESTMENT MANAGEMENT AND OTHER SERVICES
The Manager and its Affiliates. The Manager is wholly-owned by Oppenheimer
Acquisition Corp. ("OAC"), a holding company controlled by MassMutual.
OAC is also owned in part by certain of the Manager's directors and
officers, some of whom also serve as officers of the Fund and one of whom
(Ms. Macaskill) also serves as Director of the Fund.
The Manager and the Fund has a Code of Ethics. It is designed to
detect and prevent improper personal trading by certain employees,
including portfolio managers, that would compete with or take advantage
of the Fund's portfolio transactions. Compliance with the Code of Ethics
is carefully monitored and strictly enforced by the Manager.
The Investment Advisory Agreement. The Manager acts as investment
adviser to the Fund pursuant to the terms of an Investment Advisory
Agreement dated as of November , 1995. Under the Investment Advisory
Agreement, the Manager acts as the investment adviser for the Fund and
supervises the investment program of the Fund.
Expenses not assumed by the Manager under the Investment Advisory
Agreement or paid by the Distributor will be paid by Fund including
interest, taxes, brokerage commissions, insurance premiums, compensation,
expenses and fees of non-interested Directors, legal and audit expenses,
transfer agent and custodian fees and expenses, registration fees,
expenses of printing and mailing reports and proxy statements to
shareholders, expenses of shareholders meetings and non-recurring expenses
including litigation. The Investment Advisory Agreement contains no
expense limitation. However, independently of the Investment Advisory
Agreement, the Manager has undertaken to reimburse the Fund to the extent
that the total expenses of the Fund in any fiscal year (including the
investment advisory fee but exclusive of taxes, interest, brokerage
commissions, distribution plan payments and any extraordinary non-
recurring expenses, including litigation) exceeds the most stringent state
regulatory limitation application to the Fund. At present, that
limitation is imposed by California and limits expenses (with specified
exclusions) to 2.5% of the first $30 million of average annual net assets,
2% of the next $70 million and 1.5% of average annual net assets in excess
of $100 million.
The payment of the management fee at the end of any month will be
reduced or eliminated such that there will not be any accrued but unpaid
liability under this expense limitation. The Manager reserves the right
to terminate or amend the undertaking at any time. Any assumption of the
Fund's expenses under this undertaking would lower the Fund's overall
expense ratio and increase its total return during any period in which
expenses are limited.
The Investment Advisory Agreement provides that in the absence or
willful misfeasance, bad faith, or gross negligence in the performance of
its duty, or reckless disregard for its obligations and duties under the
advisory agreement, the Manager is not liable from any loss resulting from
a good faith or omission on its part with respect to any of its duties
thereunder. The Investment Advisory Agreement permits the Manager to act
as investment adviser for any other person, firm or corporation and to use
the name "Oppenheimer" in connection with its other investment companies
for which it may act as an investment advisor or general distributor. If
the Manager shall no longer act as investment adviser to the Fund, the
right of the Fund to use "Oppenheimer" as part of its name may be
withdrawn.
For the services and facilities to be provided by the Manager under
the Investment Advisory Agreement the Fund will pay a monthly fee computed
as a percentage of the Fund's average daily net assets. The fee
applicable to the Fund will be an annual fee, payable monthly, at the rate
of 0.75% of the first $400 million of net assets, .70% of the next $400
million of net assets and .65% of net assets over $800 million.
Fees Paid Under the Prior Investment Advisory Agreement
OpCap Advisors served as investment adviser to the Fund from its
inception until November 22, 1995. The following fees were paid by the
Fund to OpCap Advisors for services under the prior Investment Advisory
Agreement: For the fiscal year ended November 30, 1992, the total
advisory fees accrued or paid by the Fund were $943,392, of which $103,795
was waived by OpCap Advisors. For the fiscal year ended November 30,
1993, the total advisory fees accrued or paid by the Fund were $940,930,
of which $187,345 was waived by OpCap Advisors. For the fiscal year ended
November 30, 1994, the total advisory fees accrued or paid by the Fund
were $1,166,949, of which $15,349 was waived by OpCap Advisors
Expenses not expressly assumed by the Manager under the Investment
Advisory Agreement or by the Distributor are paid by the Fund. The Fund
is responsible for bearing certain expenses attributable to the Fund but
not to a particular class ("Fund Expenses"), including deferred
organization expenses; taxes; registration fees; typesetting of
prospectuses and financial reports required for distribution to
shareholders; brokerage commissions; fees and related expenses of trustees
or directors who are not interested persons; legal, accounting and audit
expenses; custodian fees; insurance premiums; and trade association dues.
Fund Expenses will be allocated based on the total net assets of each
class. Each class of shares of the Fund will also be responsible for
certain expenses attributable only to that class ("Class Expenses").
These Class Expenses may include distribution and service fees, transfer
and shareholder servicing agent fees, professional fees, printing and
postage expenses for materials distributed to current shareholders, state
registration fees and shareholder meeting expenses. Such items are
considered Class Expenses provided such fees and expenses relate solely
to such Class. A portion of printing expenses, such as typesetting costs,
will be divided equally among the Fund, while other printing expenses,
such as the number of copies printed, will be considered Class Expenses.
The Investment Advisory Agreement was approved by the Board of
Directors, including a majority of the Directors who are not "interested
persons" of the Fund (as defined in the 1940 Act) and who have no direct
or indirect financial interest in such Agreement, on June 22, 1995 and
by the shareholders of the Fund at a meeting held for that purpose on
November 3, 1995..
The Investment Advisory Agreement provides that the Manager may enter
into sub advisory agreements with other affiliated or unaffiliated
registered investment advisers in order to obtain specialized services for
the Fund provided that the Fund is not required to pay any additional fees
for such services. The Manager has retained OpCap Advisors (previously
called Quest for Value Advisors) pursuant to a Subadvisory Agreement dated
as of November 22, 1995 with respect to the Fund.
The Subadvisory Agreement
The Subadvisory Agreement provides that OpCap Advisors shall
regularly provide investment advice with respect to the Fund and invest
and reinvest cash, securities and the property comprising the assets of
the Fund. Under the Subadvisory Agreement, OpCap Advisors agrees not to
change the Portfolio Manager of the Fund without the written approval of
the Manager and to provide assistance in the distribution and marketing
of the Fund. The Subadvisory Agreement was approved by the Board of
Directors, including a majority of the Directors who are not "interested
persons" of the Fund (as defined in the 1940 Act) and who have no direct
or indirect financial interest in such agreements on June 22, 1995 and by
the shareholders of the Fund at a meeting held for that purpose on
November 3, 1995.
Under the Subadvisory Agreement, the Manager will pay OpCap Advisors
an annual fee payable monthly, based on the average daily net assets of
the Fund, equal to 40% of the investment advisory fee and administration
fee collected by the Manager of the Fund based on the total net assets of
the Fund as of the effective date of the Subadvisory Agreement (the "base
amount") plus 30% of the investment advisory fee and administration fee
collected by the Manager based on the total net assets of the Fund that
exceed the base amount.
The Subadvisory Agreement provides that in the absence of willful
misfeasance, bad faith, negligence or reckless disregard of its duties or
obligations, OpCap Advisors shall not be liable to the Manager for any act
or omission in the course of or connected with rendering services under
the Subadvisory Agreement or for any losses that may be sustained in the
purchase, holding or sale of any security.
Portfolio Transactions. Portfolio decisions are based upon
recommendations of the portfolio manager and the judgment of the portfolio
managers. The Fund will pay brokerage commissions on transactions in
listed options and equity securities. Prices of portfolio securities
purchased from underwriters of new issues include a commission or
concession paid by the issuer to the underwriter, and prices of debt
securities purchased from dealers include a spread between the bid and
asked prices.
The Investment Advisory Agreement contains provisions relating to
the selection of broker-dealers ("brokers") for the Fund's portfolio
transactions. The Manager and the Subadvisor may use such brokers as may,
in their best judgment based on all relevant factors, implement the policy
of the Fund to achieve best execution of portfolio transactions. While
the Manager or the Subadvisor need not seek advance competitive bidding
or base its selection on posted rates, it is expected to be aware of the
current rates of most eligible brokers and to minimize the commissions
paid to the extent consistent with the interests and policies of the Fund
as established by its Board and the provisions of the Investment Advisory
Agreement.
The Investment Advisory Agreement also provides that, consistent with
obtaining the best execution of the Fund's portfolio transactions, the
Manager and the Subadvisor, in the interest of the Fund, may select
brokers, because they provide brokerage and/or research services to the
Fund and/or other accounts of the Manager or any Subadvisor. The
commissions paid to such brokers may be higher than another qualified
broker would have charged if a good faith determination is made by the
Manager or the Subadvisor that the commissions are reasonable in relation
to the services provided, viewed either in terms of that transaction or
the Manager's or the Subadvisor's overall responsibilities to all its
accounts. No specific dollar value need be put on the services, some of
which may or may not be used by the Manager or the Subadvisor for the
benefit of the Fund or other of its advisory clients. To show that the
determinations were made in good faith, the Manager or any Subadvisor must
be prepared to show that the amount of such commissions paid over a
representative period selected by the Board was reasonable in relation to
the benefits to the Fund. The Investment Advisory Agreement recognizes
that an affiliated broker-dealer may act as one of the regular brokers for
the Fund provided that any commissions paid to such broker are calculated
in accordance with procedures adopted by the Fund's Board under applicable
SEC rules.
The Subadvisory Agreements permit OpCap Advisors to enter into "soft
dollar" arrangements through the agency of third parties to obtain
services for the Fund. Pursuant to these arrangements, OpCap Advisors
will undertake to place brokerage business with broker-dealers who pay
third parties that provide services. Any such "soft dollar" arrangements
will be made in accordance with policies adopted by the Board of the Fund
and in compliance with applicable law.
Transactions may be directed to dealers during the course of an
underwriting in return for their brokerage and research services, which
are intangible and on which no dollar value can be placed. There is no
formula for such allocation. The research information may or may not be
useful to one or more of the funds and/or other accounts of the Manager
or OpCap Advisors; information received in connection with directed orders
of other accounts managed by the Manager or OpCap Advisors or its
affiliates may or may not be useful to one or more of the Fund. Such
information may be in written or oral form and includes information on
particular companies and industries as well as market, economic or
institutional activity areas. It serves to broaden the scope and
supplement the research activities of the Manager or OpCap Advisors, to
make available additional views for consideration and comparison, and to
enable the Manager or OpCap Advisors to obtain market information for the
valuation of securities held in a Fund's assets.
Sales of shares of the Fund, subject to applicable rules covering the
Distributor's activities in this area, will also be considered as a factor
in the direction of portfolio transactions to dealers, but only in
conformity with the price, execution and other considerations and
practices discussed above. A Fund will not purchase any securities from
or sell any securities to an affiliated broker-dealer including
Oppenheimer & Co., Inc. ("Opco"), an affiliate of OpCap Advisors, acting
as principal for its own account. OpCap Advisors currently serves as
investment manager to a number of clients, including other investment
companies, and may in the future act as investment manager or advisor to
others. It is the practice of OpCap Advisors to cause purchase or sale
transactions to be allocated among the Fund and others whose assets it
manages in such manner as it deems equitable. In making such allocations
among the Fund and other client accounts, the main factors considered are
the respective investment objectives, the relative size of portfolio
holdings of the same or comparable securities, the availability of cash
for investment, the size of investment commitments generally held and the
opinions of the persons responsible for managing the portfolio of the Fund
and other client accounts. When orders to purchase or sell the same
security on identical terms are placed by more than one of the funds
and/or other advisory accounts managed by OpCap Advisors or its
affiliates, the transactions are generally executed as received, although
a fund or advisory account that does not direct trades to a specific
broker ("free trades") usually will have its order executed first.
Purchases are combined where possible for the purpose of negotiating
brokerage commissions, which in some cases might have a detrimental effect
on the price or volume of the security in a particular transaction as far
as the Fund is concerned. Orders placed by accounts that direct trades
to a specific broker will generally be executed after the free trades.
All orders placed on behalf of the Fund are considered free trades.
However, having an order placed first in the market does not necessarily
guarantee the most favorable price.
The following table presents information as to the allocation of
brokerage commissions paid by the Fund for the fiscal years ended November
30, 1992, 1993 and 1994:
<TABLE>
<CAPTION> Total Amount of Transactions
Brokerage Commissions Where Brokerage Commissions
Paid to Opco Paid to Opco (1)
Fiscal Year Total Brokerage Dollar Dollar
Ended Commissions Paid Amounts % Amounts %
<S> <C> <C> <C> <C> <C>
11/30/92 275,868 85,751 31.08 57,807,717 40.90
11/30/93 200,029 18,503 9.25 102,916,572 15.91
11/30/94 566,615 16,402 2.89 13,811,383 8.3
</TABLE>
(1) The Fund does not effect principal transactions with Opco. When the
Fund effects principal transactions with other broker-dealers,
commissions are imputed.
During the fiscal year ended November 30, 1994, the Fund directed
$65,558,341 of brokerage transactions to brokers because of research
services provided. The commissions related to such transactions were
$234,399.
The Distributor. Under a General Distributor's Agreement with the
Fund dated as of November 22, 1995, the Distributor acts as the Fund's
principal underwriter in the continuous public offering of the Class A,
Class B and Class C shares of the Fund but is not obligated to sell a
specific number of shares. Expenses normally attributable to sales,
including advertising and the cost of printing and mailing prospectuses,
other than those furnished to existing shareholders, are borne by the
Distributor. For additional information about distribution of the Fund's
shares and the expenses connected with such activities, please refer to
"Distribution and Service Plans" below.
The Administration Agreement. The Manager acts as the Fund's
administrator pursuant to an Administration Agreement as of November 22,
1995. The Administration Agreement was approved by the Fund's directors
on June 22, 1995 and by the shareholders at a meeting called for that
purpose on November 3, 1995. The Administration Agreement will remain in
effect for two years from the date of its execution and may be continued
annually thereafter if approved by a majority vote of the Directors who
are neither interested persons of the Fund nor have any direct or indirect
financial interest in the Administration Agreement, cast in person at a
meeting called for the purpose of voting on such approval. From the
inception of the Fund until November 22, 1995, OpCap Advisors served as
administrator for the Fund. For the fiscal years ended November 30, 1992,
1993 and 1994, the total administrative fees accrued or paid by the Fund
to OpCap Advisors under the Prior Administration Agreement were $314,464,
313,644 and $388,983, respectively.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Fund is determined each day the
New York Stock Exchange (the "Exchange") is open, as of the close of the
regular trading session of the Exchange that day (currently 4:00 p.m.
Eastern Time), by dividing the value of the Fund's net assets by the
number of its shares outstanding. Although the legal rights of Class A,
B and C shares are identical, the different expenses borne by each class
may result in differing net asset values and dividends for each class.
The Exchange's most recent annual announcement (which is subject to
change) states that it will close on New Year's Day, Presidents' Day, Good
Friday, Memorial Day, July 4, Labor Day, Thanksgiving and Christmas Day.
It may also close on other days.
Securities listed on a national securities exchange or on the
national market system are valued at the last reported sale price on that
day. If there has been no sale on such day or on the previous day on
which the Exchange was open (if a week has not elapsed between such days),
then the value of such security is taken to be the reported bid price at
the time as of which the value is being ascertained. Securities traded
in the over-the-counter market but not listed on the national market
system are valued at their last quoted bid price. Any securities or other
assets for which current market quotations are not readily available are
valued at their fair value as determined in good faith under procedures
established by and under the general supervision and responsibility of the
Fund's Board of Directors. The value of a foreign security is determined
in its national currency and that value is then converted into its U.S.
dollar equivalent at the foreign exchange rate in effect on the date of
valuation.
The Fund's Board of Directors has approved the use of nationally
recognized bond pricing services for the valuation of the Fund's debt
securities. The service selected by the Manager creates and maintains
price matrices of U.S. Government and other securities from which
individual holdings are valued shortly after the close of business each
trading day. Debt securities not covered by the pricing service are
valued based upon bid prices obtained from dealers who maintain an active
market therein or, if no readily available market quotations are available
from dealers, such securities (including restricted securities and OTC
options) are valued at fair value under the Board's procedures. Short-
term (having a maturity of 60 days or less) debt securities are valued at
amortized cost.
Puts and calls are valued at the last sales price thereof, or, if
there are no transactions, at the last reported sales price that is within
the spread between the closing bid and asked prices on the valuation date.
Futures are valued based on their daily settlement value. When the Fund
writes a call, an amount equal to the premium received is included in the
Fund's statement of Assets and Liabilities as an asset, and an equivalent
amount is included in the liability section. The liability credit is
adjusted ("marked-to-market") to reflect the current market value of the
call. If a call written by the Fund is exercised, the proceeds on the
sale of the underlying securities are increased by the premium received.
If a call or put written by the Fund expires on its stipulated expiration
date or if a Fund enters into a closing transaction, it will realize a
gain or loss, depending on whether the premium was more or less than the
transaction costs, without regard to unrealized appreciation or
depreciation on the underlying securities. If a put held by the Fund is
exercised by it, the amount the Fund receives on its sale of the
underlying investment is reduced by the amount of the premium paid by the
Fund.
PERFORMANCE INFORMATION
As discussed in the Prospectus, the Fund may quote its total return
in advertisements and sales literature.
The Fund's average annual total return represents an annualization
of the Fund's total return ("T" in the formula below), over a particular
period and is computed by finding the current percentage rate which will
result in the ending redeemable value ("ERV" in the formula below). Of
a $1,000 investment, ("P" in the formula below) made at the beginning of
a one, five or ten year period, or for the period from the date of
commencement of the Fund's operation, if shorter ("N" in the formula
below). The following formula will be used to compute the average annual
total return for the Fund:
P (1 + T)N = ERV
Average Annual Total Return
From commencement of operations* to November 30, 1994(1)
<TABLE>
<CAPTION>
From commencement of Operations* For the Fiscal Year Ended
to November 30, 1994(1) November 30, 1994(1)
Reflecting Without Reflecting Without
Deduction of Deduction of Deduction of Deduction of
Maximum Maximum Maximum Maximum
Sales Charge Sales Charge Sales Charge Sales Charge
<S> <C> <C> <C> <C>
Class A 5.43%(2) 6.85% 2.14%(2) 8.37%
Class B 1.63 4.82 2.84 7.84
Class C 4.76 4.76 6.77 7.77
</TABLE>
*The Fund commenced operations on July 2, 1990. Class B and C shares of
the Fund were initially offered on September 2, 1993.
(1) Reflects the waiver of certain advisory fees. Without such waivers
the average annual total returns would have been lower.
(2) These numbers have been restated to reflect the maximum sales charge
of 5.75% as if it had been in effect throughout the above periods.
The preceding table assumes that a $1,000 payment was made at the
beginning of the period shown, that no further payments were made, that
any distributions from the assets of the Fund were reinvested. The table
reflects the historical rates of return and deductions for all charges,
expenses and fees of the Fund.
In addition to the foregoing, the Fund may advertise its total return
over different periods of time by means of aggregate, average, year by
year or other types of total return figures.
Total returns quoted in advertising reflect all aspects of the Fund's
return, including the effect of reinvesting dividends and capital gain
distributions, and any change in the Fund's net asset value per share over
the period. Average annual returns are calculated by determining the
growth or decline in value of a hypothetical investment in a fund over a
stated period, and then calculating the annually compounded percentage
rate that would have produced the same result if the rate of growth or
decline in value had been constant over the period. For example, a
cumulative return of 100% over ten years would produce an average annual
return of 7.18%, which is the steady annual return that would equal 100%
growth on a compounded basis in ten years.
In addition to average annual returns, the Fund may quote unaveraged
or cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount and may be
calculated for a single investment, a series of investments and/or a
series of redemptions over any time period. Total returns and other
performance information may be quoted numerically or in a table, graph or
similar illustration. Total returns may be quoted with or without taking
the Fund's sales charge into account. Excluding a Fund's sales charge
from a total return calculation produces a higher total return figure.
The total return on an investment made in Class A, B and C shares of
the Fund for the period from commencement of public sale through November
30, 1994 is as follows:
Aggregate Total Return
From commencement of operations* to November 30, 1994(1)
<TABLE>
<CAPTION>
Reflecting Deduction of Without Deduction of
Maximum Sales Charge Maximum Sales Charge
<S> <C> <C>
Class A 26.33%(2) 34.04(2)
Class B 2.04% 6.04%
Class C 5.97% 5.97%
</TABLE>
*The Fund commenced operations on 7/2/90. Class B and C shares of the
Fund were initially offered on 9/2/93.
(1) Reflects the waiver of certain advisory fees and the reimbursement
of certain expenses. Without such waiver, the inception to date total
return for the Fund would have been lower.
(2) This number has been restated to reflect the maximum sales charge of
5.75% as if it has been in effect throughout the above period.
From time to time the Fund may refer in advertisements to rankings
and performance statistics published by (1) recognized mutual fund
performance rating services including but not limited to Lipper Analytical
Services, Inc. and Morningstar, Inc., (2) recognized indexes including but
not limited to the Standard & Poors Composite Stock Price Index, Dow Jones
Industrial Average, Consumer Price Index and EAFE Index and (3) Money
Magazine and other financial publications including but not limited to
magazines, newspapers and newsletters. Performance statistics may include
total returns, measures of volatility or other methods of portraying
performance based on the method used by the publishers of the information.
In addition, comparisons may be made between yields on certificates of
deposit and U.S. government securities and corporate bonds, and may refer
to current or historic financial or economic trends or conditions.
The performance of the Fund may be compared to the performance of
other mutual funds in general, or to the performance of particular types
of mutual funds. These comparisons may be expressed as mutual fund
rankings prepared by Lipper Analytical Services, Inc. ("Lipper"), and
Morningstar, Inc. ("Morningstar"), independent services located in Summit,
New Jersey and Chicago, Illinois, respectively, that monitor the
performance of mutual funds. Lipper and Morningstar generally rank funds
on the basis of total return, assuming reinvestment of distributions, but
do not take sales charges or redemption fees into consideration, and are
prepared without regard to tax consequences. In addition to the mutual
fund rankings, performance may be compared to mutual fund performance
indices prepared by Lipper.
From time to time, the Fund's performance also may be compared to
other mutual funds tracked by financial or business publications and
periodicals. For example, the Fund may quote Morningstar in its
advertising materials . Morningstar rates mutual funds on a one star to
five star scale on the basis of risk-adjusted performance.
The Distributor may provide information designed to help individuals
understand their investment goals and explore various financial strategies
such as general principles of investing, such as asset allocation,
diversification, risk tolerance, goal setting, and a questionnaire
designed to help create a personal financial profile.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides
historical returns of the capital markets in the United States, including
common stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on CPI), and combinations of
various capital markets. The performance of these capital markets is
based on the returns of different indices.
The Distributor may use the performance of these capital markets in
order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with the
security types in any capital market may or may not correspond directly
to those of the Fund. The Fund may also compare performance to that of
other compilations or indices that may be developed and made available in
the future.
In advertising materials, the Distributor may reference or discuss
its products and services, which may include: other Oppenheimer funds;
retirement investing; brokerage products and services; the effects of
dollar-cost averaging and saving for college; and the risk of marketing
timing. In addition, the Distributor may quote financial or business
publications and periodicals, including model portfolios or allocations,
as they relate to fund management, investment philosophy, and investment
techniques. The Distributor may also reprint, and use as advertising and
sales literature, articles from a quarterly magazine provided free of
charge to Oppenheimer fund shareholders. The Fund may present its fund
number, Quotron symbol, CUSIP number, and discuss or quote its current
portfolio manager.
Volatility. The Fund may quote various measures of volatility and
benchmark correlation in advertising. In addition, the Fund may compare
these measures to those of other funds. Measures of volatility seek to
compare a fund's historical share price fluctuations or total returns to
those of a benchmark. Measures of benchmark correlation indicate how
valid a comparative benchmark may be. All measures of volatility and
correlation are calculated using averages of historical data.
Momentum Indicators indicate the Fund's price movements over specific
periods of time. Each point on the momentum indicator represents the
Fund's percentage change in price movements over that period.
The Fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a
program, an investor invests a fixed dollar amount in a fund at periodic
intervals, thereby purchasing fewer shares when prices are high and more
shares when prices are low. While such a strategy does not assure a
profit or guard against a loss in a declining market, the investor's
average cost per share can be lower than if fixed numbers of shares are
purchased at the same intervals. In evaluating such a plan, investors
should consider their ability to continue purchasing shares during period
of low price levels.
The Fund may be available for purchase through retirement plans or
other programs offering deferral of or exemption from income taxes, which
may produce superior after-tax returns over time. For example, a $1,000
investment earning a taxable return of 10% annually would have an after-
tax of $1,949 after ten years, assuming tax was deducted from the return
each year at a 28% rate. An equivalent tax-deferred investment would have
an after-tax value of $2,100 after ten years, assuming tax was deducted
at a 31% rate from the tax-deferred earnings at the end of the ten-year
plan.
DISTRIBUTION AND SERVICE PLANS
The Fund entered into an Amended and Restated Distribution and
Service Plan and Agreement as of November 22, 1995 (a "Plan") with
Oppenheimer Funds Distributor, Inc. (the "Distributor") with respect to
each Class of shares (the "Plans"). The Plans were approved on June 22,
1995 by the Directors, including the non-interested Directors, and by the
shareholders of each class of shares of the Fund at a meeting held for
that purpose on November 3, 1995.
The fees under each Plan consist of a service fee at the annual rate
of .25% of the average net assets of the shares and a distribution fee at
the annual rate of .25% of the average net assets of Class A shares of the
Fund and at the annual rate of .75% of the average net assets of Class B
and Class C shares of the Fund.
The Distributor will be authorized under the Plans to pay broker
dealers, banks or other entities (the "Recipients") that render assistance
in the distribution of shares or provide administrative support with
respect to shares held by customers. The service fee payments made under
the Plans will compensate the Distributor and the Recipients for providing
administrative support with respect to shareholder accounts. The
distribution fee payments made under the Plans will compensate the
Distributor and the Recipients for providing distribution assistance in
connection with the sale of Fund shares.
The Plans provide that payments may be made by the Manager or by the
Distributor to the Recipients from their own resources or from borrowings.
The Distributor and the Manager may, in their sole discretion, increase
or decrease the amount of payments they make from their own resources to
Recipients.
The Plans may not be amended to increase materially the amount of
payments to be made without the approval of the relevant class of
shareholders of the Fund. In addition, because Class B shares of the Fund
automatically convert into Class A shares after six years, the Fund is
required to obtain the approval of Class B as well as Class A shareholders
for the proposed amendment to the Class A Plan that would materially
increase the amount to be paid by Class A shareholders under the Class A
Plan. Such approval must be by a "majority" of the Class A and Class B
shares (as defined in the Investment Company Act), voting separately by
class. All material amendments must be approved by the Independent
Directors.
While the Plans are in effect, the Treasurer of the Fund shall
provide separate written reports to the Fund Board of Directors at least
quarterly on the amount of all payments made pursuant to each Plan, the
purpose for which the payment was made and the identity of each Recipient
that received any such payment. Those reports, including the allocations
on which they are based, will be subject to the review and approval of the
Independent Directors in the exercise of their fiduciary duty. Each Plan
further provides that while it is in effect, the selection and nomination
of those Directors of the Fund who are not "interested persons" of the
Fund is committed to the discretion of the Independent Directors. This
does not prevent the involvement of others in such selection and
nomination if the final decision on any such selection or nomination is
approved by a majority of such Independent Directors.
Under the Plans, no payment will be made to any Recipient in any
quarter if the aggregate net asset value of all Fund shares held by the
Recipient for itself and its customers does not exceed a minimum amount,
if any, that may be determined from time to time by a majority of the
Fund's Independent Directors. Initially, the Board of Directors has set
the fee at the maximum rate and set no minimum amount.
Each Plan will remain in effect only if its continuance is
specifically approved at least annually by the vote of both a majority of
the Directors and a majority of the non-interested Directrors who have
no direct or indirect individual financial interest in the operation of
the Plans or any agreements related thereto (the "Qualified Directors").
The Plans may be terminated at any time by vote of a majority of the
Qualified Directors or by a vote of a majority of the relevant class of
Shares of the Fund. In the event of such termination, the Board including
the Qualified Directors shall determine whether the Distributor is
entitled to payment by the Fund of all or a portion of the service fee
and/or the distribution fee with respect to shares sold prior to the
effective date of such termination.
The service fee and the distribution fee payable under the Plans are
subject to reduction or elimination under the limits imposed by the Rules
of Fair Practice of the National Association of Securities Dealers, Inc.
("NASD Rules"). The Plans are intended to comply with NASD Rules and Rule
12b-1 adopted under the 1940 Act. Rule 12b-1 requires that the selection
and nomination of Directors who are not "interested persons" of the Fund
be committed to the discretion of the Qualified Directors and that the
Directors receive quarterly reports on the payments made under the Plans
and the purposes for those payments.
The Prior Plans. From the inception date of the Fund through November 22,
1995, OpCap Distributors (formerly known as Quest for Value Distributors)
served as Distributor to the Fund and provided distribution services
pursuant to plans adopted under the Investment Company Act (the "Prior
Plans").
OpCap Distributors has estimated that it spent approximately the
following amounts with respect to Class A, B and C shares of the Fund for
the fiscal year ended November 30, 1994.
<PAGE>
<TABLE>
<CAPTION>
Printing and
mailing of
Sales Prospectuses
Material to than Compensation
and than current Compensation to Sales
Advertising shareholders to Dealers Personnel Other(1)
<S> <C> <C> <C> <C> <C>
Class A $154,958 $94,017 $590,774 $360,944 $204,049
Class B 40,559 26,237 343,744 97,485 55,223
Class C 28,114 17,762 17,122 37,844
</TABLE>
(1)Includes costs of telephone and overhead.
During the fiscal year ended November 30, 1994, OpCap Distributors
advised the Fund that it received the following compensation with respect
to the Fund:
Portion of Sales Charge Compensation on
on Class A Shares Redemptions (CDSC's)
$84,018 $7,300
For the fiscal year ended November 30, 1994, OpCap Distributors paid
$141,383 in distribution and service fees to OpCo with respect to the
Fund.
ADDITIONAL INFORMATION
Description of the Fund. The Fund is a corporation formed under the
laws of Maryland on April 25, 1990. It is not contemplated that regular
annual meetings of shareholders of the Fund will be held; however, a
meeting will be held if requested by the holders of 10% of each
corporation's voting securities. In addition, 10 shareholders holding the
lesser of shares having a net asset value of at least $25,000 or 1% of a
Fund's outstanding shares may advise the Board of Directors in writing
that they wish to communicate with other shareholders of that Fund for the
purpose of requesting a meeting to remove a director. The Board of
Directors will then either give the applicants access to the Fund's
shareholder list or mail the applicant's communication to all other
shareholders at the applicant's expense.
When issued, the shares of each class of the Fund are fully paid and
have no preemptive, conversion, or other subscription rights. Each class
of shares represents identical interests in the applicable Fund's
investment portfolio. As such, they have the same rights, privileges and
preferences, except with respect to: (a) the designation of each class,
(b) the effect of the respective sales charges, if any, for each class,
(c) the distribution fees borne by each class, (d) the expenses allocable
exclusively to each class, (e) voting rights on matters exclusively
affecting a single class and (f) the exchange privilege of each class.
Upon liquidation of the Fund, shareholders are entitled to share pro rata
in the net assets available for distribution to shareholders after all
debts and expenses have been paid. The shares do not have cumulative
voting rights.
Reduced Sales Charges. Sales are made at reduced sales charges to
certain persons described under "Reduced Sales Charges" in the Prospectus
because of economies of scale and/or because there is little or no sales
effort required to make sales to such persons.
Possible Additional Portfolio Series. The Board of Directors is
empowered to create additional portfolios of the Fund. If additional
portfolios are created by the Board of Directors, shares of each such
portfolio will be entitled to vote as a class only to the extent permitted
by the 1940 Act (see below) or as permitted by the Board of Directors.
Expenses not otherwise identified with a particular portfolio will be
allocated fairly among two or more portfolios by the Board of Directors.
Under Rule 18f-2 of the 1940 Act, any matter required to be submitted
to a vote of shareholders of any investment company which has two or more
series outstanding is not deemed to have been effectively acted upon
unless approved by the holders of a "majority" (as defined in that Rule)
of the voting securities of each series affected by the matter. Such
separate voting requirements do not apply to the election of directors or
the ratification of the selection of accountants. Approval of an
investment management or distribution plan and a change in fundamental
policies would be regarded as matters requiring separate voting by each
portfolio. The Rule contains special provisions for cases in which an
advisory contract is approved by one or more, but not all, series. A
change in investment policy may go into effect as to one or more series
whose holders so approve the change even though the required vote is not
obtained as to the holders of other affected series.
Distribution Agreement. Under the Distribution Agreement between the
Fund and the Distributor, the Distributor acts as the Fund's agent in the
continuous public offering of its shares. Expenses normally attributable
to sales, other than those paid under the Distribution and Service Plan,
are borne by the Distributor.
Independent Accountants. Price Waterhouse LLP, 1177 Avenue of the
Americas, New York, New York, are the independent accountants of the Fund;
their services include examining the annual financial statements of the
Fund as well as other related services.
Custodian. State Street Bank and Trust Company acts as custodian of
the assets of the Fund.
The Transfer Agent. Shareholder Services, Inc., the Fund's transfer
agent, is responsible for maintaining the Fund's shareholder registry and
shareholder accounting records, and for shareholder servicing and
administrative functions.
Distribution Options. Shareholders may change their distribution
options by giving the Transfer Agent three days prior notice in writing.
Shareholder Servicing Agent for Certain Shareholders. Unified
Management Corporation (1-800-346-4601) is the shareholder servicing agent
for former shareholders of the AMA Family of Funds and clients of AMA
Investment Advisers, Inc. (which acted as the investment advisor to the
AMA Family of Funds) who acquire shares of any former Quest Fund, and for
former shareholders of the Unified Funds and Liquid Green Trusts, accounts
which participated or participate in a retirement plan for which Unified
Investment Advisers, Inc. or an affiliate acts as custodian or trustee,
accounts which have a Money Manager brokerage account, and other accounts
for which Unified Management Corporation is the dealer of record.
Tax Information. The Federal tax treatment of the Fund's dividends
and distributions is explained in the Prospectus under the heading "Tax
Status." The Fund will be subject to a nondeductible 4% excise tax to the
extent that it fails to distribute by the end of any calendar year
substantially all of its ordinary income for that year and capital gains
net income for the one year period ending on October 31 of that year.
Retirement Plans. The Distributor may print advertisements and
brochures concerning retirement plans, lump sum distributions and 401-k
plans. These materials may include descriptions of tax rules, strategies
for reducing risk and descriptions of the 401-k program offered by the
Distributor. From time to time hypothetical investment programs
illustrating various tax-deferred investment strategies will be used in
brochures, sales literature, and omitting prospectuses. The following
examples illustrate the general approaches that will be followed. These
hypotheticals will be modified with different investment amounts,
reflecting the amounts that can be invested in different types of
retirement programs, different assumed tax rates, and assumed rates of
return. They should not be viewed as indicative of past or future
performance of any Oppenheimer Fund product.
<TABLE>
<CAPTION>
Benefits of Long Term Tax-Free Benefits of Long Term Tax-Free
Compounding - Single Sum Compounding - Periodic Investment
Amount of Contribution: $100,000 Amount Invested Annually: $2,000
Rates of Return Rates of Return
<S> <C> <C> <C> <C> <C> <C> <C>
Years 8.00% 10.00% 12.00% Years 8.00% 10.00% 12.00%
Value at End Value at End
5 $ 146,933 $ 161,051 $ 176,234 5 $ 12,672 $ 13,431 $ 14,230
10 $ 215,892 $ 259,374 $ 310,585 10 $ 31,291 $ 35,062 $ 39,309
15 $ 317,217 $ 417,725 $ 547,357 15 $ 58,649 $ 69,899 $ 83,507
20 $ 466,096 $ 672,750 $ 964,629 20 $ 98,846 $126,005 $161,397
25 $ 684,848 $1,083,471 $1,700,006 25 $157,909 $216,364 $298,668
30 $1,006,266 $1,744,940 $2,995,992 30 $244,692 $361,887 $540,585
Comparison of Taxable and Tax-Free Investing - Periodic Investments (Assumed Tax Rate: 28%)
Amount of Annual Contribution (Pre-Tax): $2,000 Annual Contribution (After Tax): $1,440
Tax Deferred Rates of Return Fully Taxed Rates of Return
Years 8.00% 10.00% 12.00% Years 5.76% 7.20% 8.64%
Value at End Value at End
5 $ 12,672 $ 13,431 $ 14,230 5 $ 8,544 $ 8,913 $ 9,296
10 $ 31,291 $ 35,062 $ 39,309 10 $ 19,849 $ 21,531 $ 23,364
15 $ 58,649 $ 69,899 $ 83,507 15 $ 34,807 $ 39,394 $ 44,654
20 $ 98,846 $126,005 $161,397 20 $ 54,598 $ 64,683 $ 76,874
25 $157,909 $216,364 $298,668 25 $ 80,785 $100,485 $125,635
30 $244,692 $361,887 $540,585 30 $115,435 $151,171 $199,492
</TABLE>
Comparison of Tax Deferred Investing -- Deducting Taxes at End
(Amount of Tax Rate as End: 28%)
Amount of Annual Contribution: $2,000
<TABLE>
<CAPTION>
Tax Deferred Rates of Return
<S> <C> <C> <C>
Years 8.00% 10.00% 12.00%
Value at End
5 $ 11,924 $ 12,470 $ 13,046
10 $ 28,130 $ 30,485 $ 33,903
15 $ 50,627 $ 58,728 $ 68,525
20 $ 82,369 $101,924 $127,406
</TABLE>
<PAGE>
APPENDIX A -- RATINGS
Description of Moody's corporate ratings
Aaa. Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa. Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities,
or fluctuation of protective elements may be of greater amplitude, or
there may be other elements present which made the long-term risks appear
somewhat larger than in Aaa securities.
A. Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to impairment
sometime in the future.
Baa. Bonds which are rated Baa are considered as medium grade
obligations, (i.e.; they are neither highly protected nor poorly secured).
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.
Ba. Bonds which are rated Ba are judges to have speculative elements
and their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate, and
therefore not well safeguarded during both good and bad times.
Uncertainty of position characterizes bonds in this class.
B. Bonds which are rated B generally lack the characteristics of a
desirable investment. Assurance of interest and principal payments or of
other terms of the contract over long periods may be small.
Caa. Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be elements of danger present with respect to
principal or interest.
Ca. Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked shortcomings.
C. Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Description of S&P's corporate ratings
AAA. Debt rated AAA has the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely strong.
AA. Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the highest rated issues only in small
degree.
A. Debt rated A has a strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
BBB. Debt rated BBB is regarded as having adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category.
BB. Debt rated BB has less near-term vulnerability to default than
other speculative grade debt. However, it faces major ongoing
uncertainties or exposure to adverse business, financial or economic
conditions which could lead to inadequate capacity to meet timely interest
and principal payment. The BB rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BBB-
rating.
B. Debt rated B has a greater vulnerability to default but presently
has the capacity to meet interest and principal payments. Adverse
business, financial or economic conditions would likely impair capacity
or willingness to pay interest and repay principal. The B rating category
is also used for debt subordinated to senior debt that is assigned an
actual or implied BB or BB- rating
CCC. Debt rated CCC has a current identifiable vulnerability to
default and is dependent upon favorable business, financial and economic
conditions to meet timely payments of principal. In the event of adverse
business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied CCC rating.
CC. The rating CC is typically applied to debt subordinated to
senior debt that is assigned an actual or implied CCC rating.
C. The rating C is typically applied to debt subordinated to senior
debt that is assigned an actual or implied CCC- debt rating. The C rating
may be used to cover a situation where a bankruptcy petition has been
filed, but debt service payments are continued.
CI. The rating CI is reserved for income bonds on which no interest
is being paid.
D. Debt rated D is in payment default. The D rating category is
used when interest payments or principal payments are not made on the date
due even if the applicable grace period has not expired, unless S & P
believes that such payments will be made during such grace period. The
D rating also will be used upon the filing of a bankruptcy petition if
debt service payments are jeopardized.
Description of Commercial Paper Ratings
Commercial paper rated Prime-1 by Moody's are judged by Moody's to
be of the best quality. Their short-term debt obligations carry the
smallest degree of investment risk. Margins of support for current
indebtedness are large or stable with cash flow and asset protection well
assured. Current liquidity provides ample coverage of near-term
liabilities and unused alternative financing arrangements are generally
available. While protective elements may change over the intermediate or
longer term, such changes are most unlikely to impair the fundamentally
strong position of short-term obligations.
Issuers (or related supporting institutions) rated Prime-2 have a
strong capacity for repayment of short-term promissory obligations. This
will normally be evidenced by many of the characteristics cited above but
to a lesser degree. Earnings trends and coverage ratios, while sound,
will be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample
alternate liquidity is maintained.
Commercial paper rated A by S&P have the following characteristics.
Liquidity ratios are better than industry average. Long-term debt rating
is A or better. The issuer has access to at least two additional channels
of borrowing. Basic earnings and cash flow are in an upward trend.
Typically, the issuer is a strong company in a well-established industry
and has superior management. Issuers rated A are further refined by use
of numbers 1, 2, and 3 to denote relative strength within this highest
classification. Those issuers rated A-1 that are determined by S&P to
possess overwhelming safety characteristics are denoted with a plus (+)
sign designation.
Fitch's commercial paper ratings represent Fitch's assessment of the
issuer's ability to meet its obligations in a timely manner. The assess-
ment places emphasis on the existence of liquidity. Ratings range from
F-1+ which represents exceptionally strong credit quality to F-4 which
represents weak credit quality.
Duff & Phelps' short-term ratings apply to all obligations with
maturities of under one year, including commercial paper, the uninsured
portion of certificates of deposit, unsecured bank loans, master notes,
bankers acceptances, irrevocable letters of credit and current maturities
of long-term debt. Emphasis is placed on liquidity. Ratings range from
Duff 1+ for the highest quality to Duff 5 for the lowest, issuers in
default. Issues rated Duff 1+ are regarded as having the highest
certainty of timely payment. Issues rated Duff 1 are regarded as having
very high certainty of timely payment.
<PAGE>
NOVEMBER 30, 1994
SCHEDULES OF INVESTMENTS
- ----------------------------------
GLOBAL EQUITY FUND
- ----------------------------------
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C>
COMMON STOCKS--86.6%
ARGENTINA--1.3%
- ---------------------------------------------------------------------------
ENERGY--0.6%
40,000 YPF Sociedad Anonima ADR............... $ 905,000
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS--0.7%
46,000 Quilmes Industrial SA ADR.............. 1,216,700
------------
Total Argentinean Common Stocks............................ 2,121,700
------------
AUSTRALIA--2.7%
- ---------------------------------------------------------------------------
METALS/MINING--1.9%
405,000 Comalco Ltd............................ 1,510,381
280,000 Western Mining Corp.
Holdings Ltd......................... 1,593,233
------------
3,103,614
------------
PUBLIC SERVICES--0.8%
250,000 Mayne Nickless Ltd..................... 1,207,228
------------
Total Australian Common Stocks............................. 4,310,842
------------
AUSTRIA--1.5%
- ---------------------------------------------------------------------------
BUILDING & CONSTRUCTION
35,000 Flughafen Wien AG...................... 1,503,504
2,800 Wienerberger
Baustoffindustrie AG.................. 964,522
------------
Total Austrian Common Stocks............................... 2,468,026
------------
DENMARK--2.1%
- ---------------------------------------------------------------------------
CONGLOMERATES--1.1%
20,000 Sophus Berendsen AS.................... 1,667,074
------------
TELECOMMUNICATIONS--1.0%
31,200 Tele Danmark AS (Class B).............. 1,630,476
------------
Total Danish Common Stocks................................. 3,297,550
------------
FINLAND--2.6%
- ---------------------------------------------------------------------------
EXPORTING--1.7%
20,000 Oy Nokia AB............................ 2,730,263
------------
RETAIL--0.9%
30,700 Oy Stockmann AB........................ 1,439,063
------------
Total Finnish Common Stocks................................ 4,169,326
------------
FRANCE--4.5%
- ---------------------------------------------------------------------------
AEROSPACE--0.7%
2,410 Sagem.................................. 1,184,394
------------
AUTOMOTIVE--0.6%
27,000 Renault SA............................. 909,368
------------
ENERGY--1.8%
38,340 Elf Aquitaine, Inc. ADS................ $1,303,560
24,710 Total SA............................... 1,547,820
------------
2,851,380
------------
MACHINERY & ENGINEERING--1.4%
30,000 Michelin (CGDE)........................ 1,154,275
15,300 Schneider SA........................... 1,103,420
------------
2,257,695
------------
Total French Common Stocks................................. 7,202,837
------------
GERMANY--4.3%
- ---------------------------------------------------------------------------
BANKING--1.6%
4,000 Deutsche Bank AG....................... 1,889,583
2,700 Dresdner Bank AG....................... 704,004
------------
2,593,587
------------
COMPUTER SERVICES--0.9%
2,500 SAP AG................................. 1,467,073
------------
HEALTH & PERSONAL CARE--1.1%
2,700 Schering AG............................ 1,692,018
------------
MACHINERY & ENGINEERING--0.7%
2,000 Linde AG............................... 1,142,420
------------
Total German Common Stocks................................. 6,895,098
------------
INDONESIA--0.9%
- ---------------------------------------------------------------------------
TELECOMMUNICATIONS
37,500 Indonesian Satellite ADR............... 1,425,000
------------
ITALY--1.9%
- ---------------------------------------------------------------------------
TELECOMMUNICATIONS--0.9%
690,000 Telecom Italia......................... 1,430,118
------------
TEXTILES/APPAREL--0.7%
170,000 Marzotto & Figli.......... 1,167,481
------------
UTILITIES--0.3%
114,000 Edison S.p.A........................... 476,087
------------
Total Italian Common Stocks................................ 3,073,686
------------
JAPAN--17.2%
- ---------------------------------------------------------------------------
AEROSPACE--1.1%
250,000 Mitsubishi Heavy
Industries Ltd....................... 1,855,597
------------
APPLIANCES & HOUSEHOLD DURABLES--2.0%
101,000 Sharp Corp............................. 1,756,699
29,000 Sony Corp.............................. 1,539,590
------------
3,296,289
------------
AUTOMOTIVE--0.9%
145,000 Mitsubishi Motors...................... 1,373,900
------------
</TABLE>
B-1
<PAGE>
NOVEMBER 30, 1994
SCHEDULES OF INVESTMENTS
- ----------------------------------
GLOBAL EQUITY FUND (CONT'D)
- ----------------------------------
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C>
JAPAN (CONT'D)
- ---------------------------------------------------------------------------
BANKING--1.0%
160,000 The Mitsui Trust &
Banking Co., Ltd..................... $ 1,634,139
------------
BUILDING & CONSTRUCTION--0.8%
114,000 Sekisui House Ltd...................... 1,325,716
------------
CONSUMER PRODUCTS--0.9%
91,000 Yakult Honsha Co....................... 1,407,928
------------
DRUGS & MEDICAL PRODUCTS--1.0%
150,000 Fujisawa Pharmaceutical Co............. 1,638,184
------------
Electronics--3.6%
80,000 Hitachi Maxell Co...................... 1,391,445
24,000 Kyocera Corp........................... 1,781,373
88,000 NEC Corp............................... 1,023,359
75,000 Nippondenso Co., Ltd................... 1,532,005
------------
5,728,182
------------
INSURANCE--1.1%
150,000 Tokio Marine & Fire
Insurance Co., Ltd................... 1,729,194
------------
MERCHANDISING--2.1%
45,000 Ito Yokado Co., Ltd.................... 2,389,018
85,400 Simree Co., Ltd........................ 1,001,760
------------
3,390,778
------------
MISCELLANEOUS FINANCIAL SERVICES--1.5%
8,000 Japan Associated
Finance Co., Ltd.................... 1,100,212
85,000 Toyo Tec Co., Ltd..................... 1,246,334
------------
2,346,546
------------
RECREATION--1.2%
110,000 Canon, Inc............................ 1,902,114
------------
Total Japanese Common Stocks.............................. 27,628,567
------------
MEXICO--0.9%
- ---------------------------------------------------------------------------
MISCELLANEOUS FINANCIAL SERVICES--0.3%
125,000 Grupo Finance
Del Norte (Class B).................. 494,330
------------
RETAIL--0.2%
120,000 Cifra SA de CV......................... 324,513
------------
TELECOMMUNICATIONS--0.4%
13,000 Telefonos De Mexico
SA ADR............................... 689,000
------------
Total Mexican Common Stocks................................ 1,507,843
------------
NETHERLANDS--5.5%
- ---------------------------------------------------------------------------
BUILDING & CONSTRUCTION--1.0%
19,500 Kondor Wessels Groep NV................ $ 505,296
46,000 NBM Amstelland NV...................... 484,652
22,500 Sphinx Kon
Gustavsberg--CVA..................... 694,516
------------
1,684,464
------------
ELECTRONICS--1.0%
50,833 Getronics NV........................... 1,676,195
------------
INSURANCE--1.3%
44,127 International Nederlanden.............. 2,075,796
------------
MISCELLANEOUS FINANCIAL SERVICES--1.0%
19,855 Hagemeyer.............................. 1,566,101
------------
PUBLISHING--1.2%
26,844 Wolters Kluwer......................... 1,895,698
------------
Total Netherlands Common Stocks............................ 8,898,254
------------
SINGAPORE--0.3%
- ---------------------------------------------------------------------------
Electronics
700,000 IPC Corp............................... 497,268
------------
SPAIN--1.7%
- ---------------------------------------------------------------------------
BUILDING & CONSTRUCTION--1.1%
17,000 Fomento de Construcione
Y Contra............................. 1,684,082
------------
UTILITIES--0.6%
200,000 Sevillana De Electric.................. 970,762
------------
Total Spanish Common Stocks................................ 2,654,844
------------
SWEDEN--3.8%
- ---------------------------------------------------------------------------
DRUGS & MEDICAL PRODUCTS--1.0%
60,000 ASTRA AB............................... 1,616,757
------------
MACHINERY & ENGINEERING--2.8%
20,000 ASEA AB................................ 1,422,958
125,000 Atlas Copco AB......................... 1,609,456
130,000 Kalmar Industries...................... 1,527,158
------------
4,559,572
------------
Total Swedish Common Stocks................................ 6,176,329
------------
SWITZERLAND--1.9%
- ---------------------------------------------------------------------------
BANKING--0.8%
2,900 Bil GT Gruppe AG....................... 1,345,023
------------
BUILDING & CONSTRUCTION--1.1%
2,300 Holderbank Financiere
Glaris AG............................ 1,784,842
------------
Total Swiss Common Stocks.................................. 3,129,865
------------
</TABLE>
B-2
<PAGE>
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------------------
<S> <C>
UNITED KINGDOM--3.1%
- ---------------------------------------------------------------------------
PUBLIC SERVICES--1.2%
240,000 British Airport
Authority PLC........................ $ 1,892,807
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS--1.0%
221,000 Guinness PLC........................... 1,582,777
------------
UTILITIES--0.9%
187,400 National Power PLC..................... 1,456,675
------------
Total United Kingdom Common Stocks......................... 4,932,259
------------
UNITED STATES--30.4%
- ---------------------------------------------------------------------------
AEROSPACE--3.5%
35,000 McDonnell Douglas Corp................. 4,882,500
15,300 Sundstrand Corp........................ 654,075
------------
5,536,575
------------
BANKING--6.4%
20,000 First Interstate Bancorp............... 1,410,000
169,215 Mellon Bank Corp....................... 5,605,247
23,000 Wells Fargo & Co....................... 3,320,625
------------
10,335,872
------------
CHEMICALS--2.9%
21,000 Hercules, Inc.......................... 2,401,875
31,000 Monsanto Co............................ 2,232,000
------------
4,633,875
------------
CONGLOMERATES--1.1%
20,000 General Electric Co.................... 920,000
10,000 ITT Corp............................... 796,250
------------
1,716,250
------------
CONSUMER PRODUCTS--1.3%
35,000 Avon Products, Inc..................... 2,165,625
------------
DRUGS & MEDICAL PRODUCTS--3.7%
70,000 Becton, Dickinson & Co................. 3,307,500
34,000 Warner-Lambert Co..................... 2,630,750
------------
5,938,250
------------
ENERGY--0.6%
20,000 MAPCO, Inc............................. $1,002,500
------------
INSURANCE--3.4%
70,000 EXEL Ltd............................... 2,625,000
61,000 Transamerica Corp...................... 2,889,875
------------
5,514,875
------------
METALS/MINING--0.8%
875 Freeport McMoRan
Copper & Gold (Class A).............. 17,609
70,000 Freeport McMoRan, Inc.................. 1,198,750
------------
1,216,359
------------
MISCELLANEOUS FINANCIAL SERVICES--4.7%
110,000 American Express Co.................... 3,258,750
87,000 Federal Home Loan
Mortgage Corp........................ 4,339,125
------------
7,597,875
------------
TECHNOLOGY--1.2%
30,000 Intel Corp............................. 1,893,750
------------
TELECOMMUNICATIONS--0.8%
44,000 Sprint Corp............................ 1,314,500
------------
Total United States Common Stocks.......................... 48,866,306
------------
Total Common Stocks
(cost--$121,902,041)..................................... $139,255,600
------------
------------
- ---------------------------------------------------------------------------
WARRANTS VALUE
- ---------------------------------------------------------------------------
WARRANTS--0.0%
SWITZERLAND
- ---------------------------------------------------------------------------
BUILDING & CONSTRUCTION
11,500 Holderbank Financiere
Glaris AG, 12/20/94,
strike @ CHF 620 *................... $17,779
------------
</TABLE>
B-3
<PAGE>
NOVEMBER 30, 1994
SCHEDULES OF INVESTMENTS
- ----------------------------------
GLOBAL EQUITY FUND (CONT'D)
- ----------------------------------
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------
<S> <C>
CONVERTIBLE BONDS--0.3%
SWEDEN
- ---------------------------------------------------------------------------
MISCELLANEOUS FINANCIAL SERVICES
2,200,000 SEK Investor AB
8.00%, 6/21/01
(cost--$359,464)..................... $ 385,473
------------
REPURCHASE AGREEMENT--13.0%
- ---------------------------------------------------------------------------
20,800,000 US$ Prudential Securities, 5.65%,
12/01/94, (proceeds at maturity:
$20,803,264, collateralized by
$21,445,000 par, $21,219,828
value, U.S. Treasury Notes 3.875%,
8/31/95) (cost--$20,800,000)......... $20,800,000
------------
- ---------------------------------------------------------------------------
LOCAL
CURRENCY VALUE
- ---------------------------------------------------------------------------
FOREIGN CURRENCY
CALL ACCOUNTS**--0.5%
- ---------------------------------------------------------------------------
STATE STREET BANK & TRUST CO.
966,524,112 Italian Lira 7.25%..................... $597,986
159,642 Pound Sterling 4.25%................... 250,183
9,431 Australian Dollar 5.50%................ 7,252
11,966 Danish Krone 3.50%..................... 1,948
------------
Total Foreign Currency Call Accounts
(cost--$856,895)......................................... $857,369
------------
Total Investments
(cost--$143,918,400)............................. 100.4% $161,316,221
Other Liabilities in Excess of
Other Assets..................................... (0.4) (589,606)
----- ------------
TOTAL NET ASSETS................................... 100.0% $160,726,615
----- ------------
----- ------------
</TABLE>
* Non-income producing security.
**Variable rate accounts have interest rates reset twice a week.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
B-4
<PAGE>
- ----------------------------------
GLOBAL INCOME FUND
- ----------------------------------
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------
<S> <C>
AUSTRALIA--11.3%
- ---------------------------------------------------------------------------
GOVERNMENT NOTES--4.7%
100,000 A$ Queensland Treasury Corp.
8.00%, 5/14/97..................... $ 73,673
1,000,000 Western Australia Treasury
Corp.
10.00%, 1/15/97.................... 769,753
------------
843,426
------------
EURONOTES--6.6%
500,000 Mobil Australia Finance, Ltd.
12.00%, 4/18/97...................... 398,164
1,000,000 Unilever Australia, Ltd.
12.00%, 4/08/98...................... 802,576
------------
1,200,740
------------
Total Australia............................................ 2,044,166
------------
BELGIUM--3.0%
- ---------------------------------------------------------------------------
GOVERNMENT NOTE
17,000,000 BEL Kingdom of Belgium
9.00%, 6/27/01 (A)................ 551,169
------------
CANADA--4.8%
- ---------------------------------------------------------------------------
GOVERNMENT NOTE
1,200,000 CD$ Government of Canada
8.50%, 3/01/00 (A)................ 861,670
------------
DENMARK--7.1%
- ---------------------------------------------------------------------------
GOVERNMENT NOTE
7,750,000 DKK Kingdom of Denmark
9.00%, 11/15/98 (A)............... 1,295,136
------------
GERMANY--5.6%
- ---------------------------------------------------------------------------
GOVERNMENT NOTES
1,000,000 DM German Unity Fund
8.50%, 2/20/01 (A)................. 674,487
500,000 Republic of Germany
8.50%, 8/21/00 (A)................. 337,881
------------
Total Germany.............................................. 1,012,368
------------
IRELAND--2.5%
- ---------------------------------------------------------------------------
GOVERNMENT NOTE
325,000 IEP Irish Treasury Bond
6.25%, 4/01/99.................... 460,151
------------
NEW ZEALAND--4.3%
- ---------------------------------------------------------------------------
GOVERNMENT NOTE
1,250,000 NZD Government of New Zealand
9.00%, 11/15/96................... $779,042
------------
PORTUGAL--5.3%
- ---------------------------------------------------------------------------
GOVERNMENT NOTE
950,000 ECU Republic of Portugal
6.00%, 2/16/04.................... 970,283
------------
SPAIN--9.8%
- ---------------------------------------------------------------------------
GOVERNMENT NOTES
Government of Spain
95,000,000 Pt 9.00%, 2/28/97 (A)................. 709,459
137,000,000 11.85%, 8/30/96 (A)................. 1,076,836
------------
Total Spain................................................ 1,786,295
------------
UNITED KINGDOM--4.5%
- ---------------------------------------------------------------------------
GOVERNMENT NOTE
500,000 L U.K. Exchequer
9.50%, 1/15/99 (A)................. 813,205
------------
UNITED STATES--39.0%
- ---------------------------------------------------------------------------
CORPORATE NOTES--5.3%
500,000 US$ Healthtrust, Inc.
10.25%, 4/15/04................... 527,500
500,000 Wheeling-Pittsburg Corp.
9.375%, 11/15/03.................. 433,750
------------
961,250
------------
GOVERNMENT NOTE--4.7%
900,000 U.S. Treasury Note
4.75%, 2/15/97....................... 850,077
------------
EURONOTES--28.0%
500,000 Colombia Financiera
Energetica Nacional
6.625%, 12/13/96..................... 480,500
500,000 Grupo Industrial Durango
12.00%, 7/15/01...................... 487,500
500,000 Minas Gerais
7.875%, 2/10/99...................... 407,500
500,000 National Power Corp.
(Philippines)
7.625%, 11/15/00..................... 440,000
500,000 Philippine Long Distance
Telephone
10.625%, 6/02/04..................... 496,875
</TABLE>
B-5
<PAGE>
NOVEMBER 30, 1994
SCHEDULES OF INVESTMENTS
- ----------------------------------
GLOBAL INCOME FUND (CONT'D)
- ----------------------------------
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------------
<S> <C>
EURONOTES (CONT'D)
1,000,000 US$ Republic of Argentina
6.50%, 3/31/05 (B)................... $ 710,625
490,000 Republic of Brazil (IDU's)
6.0625%, 1/01/01 (B)................. 414,050
500,000 Republic of the Philippines
5.25%, 12/01/17 (C).................. 310,625
500,000 Telefonica de Argentina
11.875%, 11/01/04.................... 486,250
United Mexican States
500,000 5.8125%, 12/31/19
Series D (B)........................ 433,125
500,000 6.76563%, 12/31/19
Series B (B)........................ 433,125
------------
5,100,175
------------
REPURCHASE AGREEMENT--1.0%
184,000 US$ Prudential Securities,
5.65%, 12/01/94,
(proceeds at maturity:
$184,029, collateralized
by $195,000 par, $191,685
value, U.S. Treasury Notes,
5.125%, 3/31/96)..................... $ 184,000
------------
Total United States........................................ 7,095,502
------------
Total Investments
(cost--$17,865,440).............................. 97.2% $ 17,668,987
Other Assets in Excess of
Other Liabilities................................ 2.8 508,032
----- ------------
TOTAL NET ASSETS................................... 100.0% $ 18,177,019
----- ------------
----- ------------
</TABLE>
(A) Securities segregated (full or partial) as collateral for open forward
currency contracts. The market value of such segregated
securities is $6,319,844.
(B) Represents a floating interest rate bond, subject to change on respective
semi-annually coupon dates, based on the current six
month LIBOR rate plus 81.25 basis points.
(C) Coupon will pay quarterly at 5.25% until 12/94, then will "step-up" and
pay semi-annually at the following annual rates; 5.75% until 12/95, 6.25%
until 12/97 and 6.50% until maturity.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
B-6
<PAGE>
NOVEMBER 30, 1994
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
------------- -------------
GLOBAL EQUITY GLOBAL INCOME
FUND FUND
------------- -------------
<S> <C> <C>
ASSETS
Investments, at value (cost--$123,118,400 and $17,865,440, respectively) $140,516,221 $17,668,987
Repurchase Agreement (cost--$20,800,000 and $0, respectively)........... 20,800,000 --
Cash.................................................................... 31,774 467
Receivable for fund shares sold......................................... 266,353 2,815
Dividends receivable.................................................... 201,011 --
Withholding taxes reclaimable........................................... 146,744 7,029
Deferred organization expenses.......................................... 22,859 48,826
Interest receivable..................................................... 13,453 537,677
Receivable from adviser................................................. -- 8,493
Deposits for securities loaned.......................................... 7,186,089 --
Other assets............................................................ 83,662 75,301
----------- ------------
Total Assets........................................................ 169,268,166 18,349,595
----------- ------------
LIABILITIES
Payable for investments purchased....................................... 1,162,467 --
Payable for fund shares redeemed........................................ 96,431 70,515
Investment advisory fee payable......................................... 16,487 --
Withholding taxes payable............................................... 13,929 2,928
Distribution fee payable................................................ 11,858 763
Administration fee payable.............................................. 5,496 620
Net unrealized depreciation on forward currency contracts............... -- 34,888
Deposits for securities loaned.......................................... 7,186,089 --
Other payables and accrued expenses..................................... 48,794 62,862
----------- ------------
Total Liabilities................................................... 8,541,551 172,576
----------- ------------
NET ASSETS
Capital stock........................................................... 113,533 21,411
Paid-in-surplus......................................................... 130,055,046 20,502,349
Accumulated undistributed net investment income......................... 44,024 --
Accumulated undistributed net realized gain (loss) on
investments........................................................... 14,611,225 (1,129,077)
Accumulated net realized loss on foreign currency
transactions.......................................................... (1,391,636) (989,174)
Distributions in excess of net realized gains........................... (110,149) --
Net unrealized appreciation (depreciation) on investments and
translation of other assets and liabilities denominated in
foreign currencies.................................................... 17,404,572 (228,490)
------------ ------------
Total Net Assets.................................................... $160,726,615 $18,177,019
------------ ------------
------------ ------------
CLASS A:
Fund shares outstanding................................................. 10,451,819 1,976,697
------------ ------------
Net asset value per share............................................... $14.16 $8.49
------------ ------------
------------ ------------
Maximum offering price per share*....................................... $14.98 $8.75
------------ ------------
------------ ------------
CLASS B:
Fund shares outstanding................................................. 729,671 138,425
------------ ------------
Net asset value and offering price per share............................ $14.07 $8.49
------------ ------------
------------ ------------
CLASS C:
Fund shares outstanding................................................. 171,805 25,963
------------ ------------
Net asset value and offering price per share............................ $14.06 $8.49
------------ ------------
------------ ------------
<FN>
* Sales charges decrease on purchases of $50,000 or higher for the Global Equity Fund
and $100,000 or higher for the Global Income Fund.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
B-7
<PAGE>
YEAR ENDED NOVEMBER 30, 1994
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
-------------- -------------
GLOBAL EQUITY GLOBAL INCOME
FUND FUND
-------------- -------------
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $123,756 and $0,
respectively)......................................................... $2,432,732 $ --
Interest (net of foreign withholding taxes of $0 and $5,395,
respectively)......................................................... 642,446 1,613,541
------------- -----------
Total investment income............................................ 3,075,178 1,613,541
------------- -----------
OPERATING EXPENSES
Investment advisory fees (note 2a)...................................... 1,166,949 99,506
Distribution fees (note 2d)............................................. 813,628 58,795
Administration fees (note 2c)........................................... 388,983 49,753
Transfer and dividend disbursing agent fees (note 1k)................... 215,541 37,527
Custodian fees.......................................................... 186,082 59,220
Registration fees....................................................... 76,349 78,747
Auditing, consulting and tax return preparation fees.................... 58,509 35,551
Reports and notices to shareholders..................................... 58,063 21,071
Amortization of deferred organization expenses (note 1c)................ 39,179 24,356
Directors' fees and expenses............................................ 17,219 --
Legal fees.............................................................. 14,973 11,229
Miscellaneous........................................................... 11,028 2,400
------------- -----------
Total operating expenses........................................... 3,046,503 478,155
Less: Investment advisory fees waived and expense
reimbursements (note 2a)...................................... (15,349) (139,836)
------------- -----------
Net operating expenses........................................ 3,031,154 338,319
------------- -----------
Net investment income......................................... 44,024 1,275,222
------------- -----------
------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS--NET
Net realized gain (loss) on investments.................................. 14,460,917 (654,971)
Net realized loss on foreign currency transactions....................... (1,391,636) (989,174)
Net realized gain (loss) on futures transactions......................... 150,308 (33,622)
------------- -----------
Net realized gain (loss) on investments and foreign currency
transactions....................................................... 13,219,589 (1,677,767)
Net change in unrealized appreciation (depreciation) on investments
and translation of other assets and liabilities denominated in
foreign currencies.................................................... (1,833,491) (267,788)
------------- -----------
Net realized gain (loss) and change in unrealized appreciation
(depreciation) on investments and translation of other assets and
liabilities denominated in foreign currencies..................... 11,386,098 (1,945,555)
------------- -----------
Net increase (decrease) in net assets resulting from operations......... $11,430,122 $ (670,333)
------------- -----------
------------- -----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
B-8
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
---------------------------- --------------------------------
GLOBAL EQUITY FUND GLOBAL INCOME FUND
---------------------------- --------------------------------
Year Ended November 30, Year Ended November 30,
---------------------------- --------------------------------
1994 1993* 1994 1993
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income............................ $ 44,024 $ 46,115 $ 1,275,222 $ 1,423,757
Net realized gain (loss) on investments.......... 14,611,225 5,952,817 (688,593) 252,205
Net realized loss on foreign currency
transactions................................... (1,391,636) (107,988) (989,174) (748,097)
Net change in unrealized appreciation
(depreciation) on investments and translation
of other assets and liabilities denominated in
foreign currencies............................. (1,833,491) 15,536,595 (267,788) 1,082,353
------------ ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations................................ 11,430,122 21,427,539 (670,333) 2,010,218
------------ ----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Net investment income -- Class A................. -- (1,133,661) (179,857) (378,564)
Net investment income -- Class B................. -- -- (8,671) (974)
Net investment income -- Class C................. -- -- (1,531) (372)
Net realized gain -- Class A..................... (4,944,320) (7,944,237) -- --
Net realized gain -- Class B..................... (66,298) -- -- --
Net realized gain -- Class C..................... (10,738) -- -- --
Distributions in excess of net realized gains --
Class A........................................ -- (179,902) -- --
Distributions in excess of net realized gains --
Class B........................................ -- -- -- --
Distributions in excess of net realized gains --
Class C........................................ -- -- -- --
Tax return of capital -- Class A................. -- -- (1,026,915) (1,158,775)
Tax return of capital -- Class B................. -- -- (49,507) (2,983)
Tax return of capital -- Class C................. -- -- (8,741) (1,139)
------------ ----------- ----------- -----------
Total dividends and distributions to
shareholders............................... (5,021,356) (9,257,800) (1,275,222) (1,542,807)
------------ ----------- ----------- -----------
FUND SHARE TRANSACTIONS
CLASS A
Net proceeds from sales.......................... 30,817,260 30,701,048 2,641,672 5,441,056
Reinvestment of dividends and distributions...... 4,682,941 8,963,937 1,088,618 1,341,142
Cost of shares redeemed.......................... (29,503,784) (27,477,571) (7,582,775) (4,259,950)
------------ ----------- ----------- -----------
Net increase (decrease) -- Class A........... 5,996,417 12,187,414 (3,852,485) 2,522,248
------------ ----------- ----------- -----------
CLASS B
Net proceeds from sales......................... 9,192,969 1,868,775 745,568 762,602
Reinvestment of dividends and distributions..... 64,143 -- 45,001 3,572
Cost of shares redeemed......................... (659,275) (146,699) (217,068) (61,617)
------------ ----------- ----------- -----------
Net increase -- Class B..................... 8,597,837 1,722,076 573,501 704,557
------------ ----------- ----------- -----------
CLASS C
Net proceeds from sales.......................... 2,476,331 249,911 91,369 150,714
Reinvestment of dividends and distributions...... 10,736 -- 9,804 1,510
Cost of shares redeemed.......................... (299,932) -- (15,084) --
------------ ----------- ----------- -----------
Net increase -- Class C...................... 2,187,135 249,911 86,089 152,224
------------ ----------- ----------- -----------
Total increase (decrease) in net
assets from fund share transactions.... 16,781,389 14,159,401 (3,192,895) 3,379,029
------------ ----------- ----------- -----------
Total increase (decrease) in net assets...... 23,190,155 26,329,140 (5,138,450) 3,846,440
NET ASSETS
Beginning of year................................ 137,536,460 111,207,320 23,315,469 19,469,029
------------ ----------- ----------- -----------
End of year (including undistributed net
investment income (loss) of $44,024, ($344,025),
$0 and $1,341,754, respectively)............... $160,726,615 $137,536,460 $18,177,019 $23,315,469
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
<FN>
* Dividends and Distributions to Shareholders has been restated to reflect
Statement of Position 93-2. See note 1e in the notes to financial statements.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
B-9
<PAGE>
NOVEMBER 30, 1994
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Quest for Value Global Funds (collectively, the "Funds") are registered
under the Investment Company Act of 1940 as diversified, open-end management
investment companies. The Quest for Value Global Equity Fund, Inc. ("Global
Equity") commenced investment operations on July 2, 1990. The Global Income
Fund ("Global Income"), a series of Quest for Value Global Funds, Inc.,
commenced investment operations on December 2, 1991. Quest for Value
Advisors (the "Adviser") serves as the Funds' investment adviser and
administrator. Quest for Value Distributors (the "Distributor") serves as the
Funds' distributor. Both the Adviser and Distributor are majority-owned
(99%) subsidiaries of Oppenheimer Capital. Clay Finlay, Inc. (the
"Sub-Adviser") had primary responsibility for non-U.S. investment decisions
for Global Equity through December 31, 1993. Effective January 1, 1994, the
Adviser assumed responsibility for all non-U.S. investment decisions for
Global Equity.
Prior to September 1, 1993, the Funds issued only one class of shares
which were redesignated Class A shares. Subsequent to that date, the Funds
were authorized to issue Class A, Class B and Class C shares. Shares of each
Class represent an identical interest in the investment portfolio of their
respective fund and generally have the same rights, but are offered under
different sales charge and distribution fee arrangements. Furthermore, Class
B shares will automatically convert to Class A shares of the same fund eight
years after their respective purchase.
The following is a summary of significant accounting policies
consistently followed by the Funds in the preparation of their financial
statements:
(A) VALUATION OF INVESTMENTS
Investment securities listed on a U.S. or foreign stock exchange and
securities traded in the over-the-counter National Market System are valued
at the last reported sale price on the valuation date; if there are no such
sales, the securities are valued at their last quoted bid price. Other
investments traded over-the-counter and not part of the National Market
System are valued at the last quoted bid price. Investment debt securities
(other than short-term obligations) are valued each day by an independent
pricing service (approved by the Board of Directors) using methods which
include current market quotations from a major market maker in the securities
and trader reviewed "matrix" prices. Short-term debt securities having a
remaining maturity of sixty days or less are valued at amortized cost or
amortized value, which approximates market value. Any security or other asset
for which market quotations are not readily available is valued at its fair
value as determined under procedures established by the Funds' Board of
Directors. Investments in countries in which the Funds may invest may involve
certain considerations and risks not typically associated with domestic
investments as a result of, among others, the possibility of future political
and economic developments and the level of governmental supervision and
regulation of foreign securities markets.
(B) FEDERAL INCOME TAXES
It is the Funds' policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of their taxable income to their shareholders; accordingly,
no Federal income tax provision is required.
(C) DEFERRED ORGANIZATION EXPENSES
Costs incurred by Global Equity and Global Income in connection with
their organization approximated $194,000 and $122,000, respectively. These
costs have been deferred and are being amortized to expense on a straight
line basis over sixty months from commencement of the Funds' operations.
(D) INVESTMENT TRANSACTIONS AND OTHER INCOME
Investment transactions are accounted for on the trade date. In
determining the gain or loss from the sale of investments, the cost of
investments sold is determined on the basis of identified cost. Dividend
income and other distributions are recorded on the ex-dividend date, except
certain dividends or other distributions from foreign securities which are
recorded as soon as the information is available after the ex-dividend date.
Interest income is accrued as earned. Discounts on debt securities purchased
are accreted to interest income over the lives of the respective securities.
B-10
<PAGE>
(E) DIVIDENDS AND DISTRIBUTIONS
Each fund records dividends and distributions to its shareholders on the
ex-dividend date.The following table summarizes the Funds' income dividend
and capital gain declaration policy:
<TABLE>
<CAPTION>
INCOME SHORT-TERM LONG-TERM
DIVIDENDS CAPITAL GAINS CAPITAL GAINS
--------- ------------- -------------
<S> <C> <C> <C>
Global Equity....................... annually annually annually
Global Income....................... daily* annually annually
<FN>
* paid monthly.
</TABLE>
During the fiscal year ended November 30, 1994, the Funds' adopted
Statement of Position 93-2: Determination, Disclosure and Financial Statement
Presentation of Income, Capital Gain and Return of Capital Distributions by
Investment Companies. The amount of dividends and distributions from net
investment income, net realized foreign currency gains and net realized
capital gains are determined in accordance with Federal income tax
regulations, which may differ from generally accepted accounting principles.
These "book-tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the capital accounts based on their Federal tax-basis
treatment; temporary differences do not require reclassification. Dividends
and distributions which exceed net investment income, net realized foreign
currency gains and net realized capital gains for financial reporting
purposes but not for tax purposes are reported as dividends in excess of net
investment income, dividends in excess of net realized foreign currency gains
or distributions in excess of net realized capital gains, respectively. To
the extent distributions exceed current and accumulated earnings and profits
for Federal income tax purposes, they are reported as distributions of
paid-in-surplus or tax return of capital. Accordingly, permanent book-tax
differences relating to shareholder distributions have been reclassified to
paid-in-surplus. Net investment income(loss), net realized foreign currency
gain(loss), net realized gain(loss) and net assets were not affected by this
change. The following table discloses the cumulative effect of such
differences reclassified from accumulated undistributed net investment
income(loss), accumulated undistributed net realized foreign currency
gain(loss) and accumulated undistributed net realized gain(loss) on
investments to paid-in-surplus:
<TABLE>
<CAPTION>
ACCUMULATED ACCUMULATED ACCUMULATED
UNDISTRIBUTED NET REALIZED UNDISTRIBUTED PAID
NET INVESTMENT FOREIGN CURRENCY NET REALIZED IN
INCOME LOSS GAIN (LOSS) SURPLUS
-------------- ---------------- -------------- ----------
<S> <C> <C> <C> <C>
Global Equity........ $344,025 $397,015 ($83,763) ($657,277)
Global Income........ (1,341,754) 1,310,676 -- 31,078
</TABLE>
(F) FOREIGN CURRENCY TRANSLATION
The books and records of the Funds are maintained in U.S. dollars as
follows: (1) the foreign currency market value of investment securities,
other assets and liabilities and forward contracts stated in foreign
currencies are translated at the exchange rates at the end of the period; and
(2) purchases, sales, income and expenses are translated at the rate of
exchange prevailing on the respective dates of such transactions. The
resultant exchange gains and losses are included in the Funds' Statements of
Operations. Since the net assets of the Funds are presented at the foreign
exchange rates and market prices at the close of the period, the Funds do not
isolate that portion of the results of operations arising as a result of
changes in the exchange rates from fluctuations arising from changes in the
market prices of securities.
(G) FORWARD CURRENCY CONTRACTS
As part of its investment program, the Funds may utilize forward currency
contracts for hedging purposes. The use of these contracts involves, to
varying degrees, elements of market risk. Risks arise from the possible
movements in foreign exchange rates and security values underlying these
instruments. In addition, credit risk may arise from the potential inability
of counterparties to meet the terms of their contracts. Forward currency
contracts are recorded at market value. Realized gains and losses arising
from such transactions are included in net realized gain or loss on foreign
currency transactions in the results of operations. At November 30, 1994,
there were no forward currency contracts outstanding for Global Equity.
Outstanding contracts at November 30, 1994 for Global Income are as follows:
B-11
<PAGE>
NOVEMBER 30, 1994
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
CONTRACT TO
SETTLEMENT ----------------------------------------- UNREALIZED
DATE DELIVER RECEIVE GAIN (LOSS)
---------- ------------------- ------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
12/09/94 DM 1,000,000 US$ 644,870 US$ 7,249
12/14/94 DM 1,300,000 US$ 847,126 US$ 18,135
01/09/95 CD$ 700,000 US$ 515,806 US$ 6,585
01/27/95 DM 1,500,000 US$ 944,912 US$ (4,170)
01/27/95 US$ 653,240 DM 1,000,000 US$ (23,299)
02/06/95 DM 1,000,000 US$ 658,892 US$ 20,450
02/17/95 Ffr 2,900,000 US$ 546,345 US$ 6,638
02/27/95 DM 460,000 US$ 296,315 US$ 2,449
02/28/95 ESP 90,000,000 US$ 685,767 US$ 714
02/28/95 Ffr 4,000,000 US$ 746,129 US$ 1,555
04/20/95 DM 1,140,000 US$ 660,985 US$ (8,455)
04/20/95 US$ 642,550 DM 1,000,000 US$ (62,739)
--------------
US$ (34,888)
--------------
--------------
</TABLE>
Net unrealized depreciation of $34,888 on these contracts at November 30,
1994 is included in the accompanying financial statements.
(H) FUTURES ACCOUNTING POLICIES
Futures contracts are agreements between two parties to buy and sell a
financial instrument at a set price on a future date. Upon entering into such
a contract, a fund is required to pledge to the broker an amount of cash or
U.S. Government securities equal to the minimum "initial margin" requirements
of the exchange. Pursuant to the contract, a fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in the
value of the contract. Such receipts or payments are known as "variation
margin" and are recorded by the fund as unrealized appreciation or
depreciation. When a contract is closed, the fund records a realized gain or
loss equal to the difference between the value of the contract at the time it
was opened and the value at the time it was closed and reverses any
unrealized appreciation or depreciation previously recorded.
(I) REPURCHASE AGREEMENTS
The Funds' custodian takes possession of the collateral pledged for
investments in repurchase agreements. The underlying collateral is valued
daily on a mark-to-market basis to ensure that the value, including accrued
interest, is at least equal to the repurchase price. In the event of default
of the obligor to repurchase, the Funds have the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. Under
certain circumstances, in the event of default or bankruptcy by the other
party to the agreement, realization and/or retention of the collateral or
proceeds may be subject to legal proceedings.
(J) SECURITY LENDING PROCEDURES
Global Equity periodically lends securities through a lending program run
by its custodian, State Street Bank and Trust Company, for its participating
clients. Under the program, the bank makes available to select qualified
brokerage firms or other borrowing institutions the use of the participants
securities for a period of time. Security loans are collateralized with U.S.
Government securities or cash equal to at least 105% of the market value of
the securities at the time of the loan. The securities loaned are
marked-to-market daily and collateral is adjusted daily to reflect any
fluctuations in value.
Global Equity earns income from the borrower which is generally the
difference between the interest earned on the collateral and the rebate paid
to the borrower. Global Equity pays State Street Bank and Trust Company 35%
of the net interest earned as a fee for administering the security lending
program. For the year ended November 30, 1994, Global Equity earned $2,247
from security lending. At November 30, 1994, Global Equity had the following
securities on loan:
B-12
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE MARKET VALUE
SECURITY SHARES OF SHARES COLLATERAL OF COLLATERAL
- ----------------------------- -------- ------------ --------------- --------------
<S> <C> <C> <C> <C>
Linde Ag (Germany) 1,960 $1,119,572 U.S. Dollars $1,174,530
Mitsubishi Motors (Japan) 142,000 1,345,474 U.S. Dollars 1,420,000
Nippondenso Co., Ltd. (Japan) 30,000 612,802 U.S. Dollars 645,000
Scheinder SA (France) 14,994 1,081,352 U.S. Dollars 1,135,796
Telecom Italia (Italy) 676,200 1,401,516 U.S. Dollars 1,521,450
Total SA (France) 19,677 1,232,556 U.S. Treasuries 1,289,313
---------- ----------
$6,793,272 $7,186,089
---------- ----------
---------- ----------
</TABLE>
(K) ALLOCATION OF EXPENSES
Expenses specifically identifiable to a particular fund or class are
borne by that fund or class. Other expenses are allocated to each fund or
class based on its net assets in relation to the total net assets of all
applicable funds or classes or on another reasonable basis. For the year
ended November 30, 1994, transfer and dividend disbursing agent fees accrued
to classes A, B and C were $198,935, $12,410 and $4,196, respectively, for
Global Equity, and $34,699, $1,941 and $887, respectively, for Global Income.
2. INVESTMENT ADVISORY FEE, SUB-ADVISORY FEE, ADMINISTRATION FEE AND OTHER
TRANSACTIONS WITH AFFILIATES
(a) The investment advisory fee is payable monthly to the Adviser and is
computed as a percentage of each fund's net assets as of the close of
business each day at the following annual rates: .75% for Global Equity and
.50% for Global Income. For the year ended November 30, 1994, the Adviser
voluntarily waived $15,349 and $99,506 in investment advisory fees for Global
Equity and Global Income, respectively. The Adviser also reimbursed Global
Income $40,330 in other operating expenses. Effective January 7, 1994, the
Adviser discontinued its voluntary waiver of investment advisory fees for
Global Equity.
(b) The Adviser paid the Sub-Adviser fees through December 31, 1993 at an
annual rate of .375% of Global Equity's average net assets.
(c) The administration fees are payable monthly to the Adviser and are
computed on each fund's average daily net assets at the annual rate of .25%.
(d) The Funds have adopted a Plan and Agreement of Distribution (the
"Plan") pursuant to which they are permitted to compensate the Distributor in
connection with the distribution of fund shares. Under the Plan, the
Distributor has entered into agreements with securities dealers and other
financial institutions and organizations to obtain various sales-related
services in rendering distribution assistance. To compensate the Distributor
for the services it and other dealers under the Plan provide and for the
expenses they bear under the Plan, the Funds pay the Distributor
compensation, accrued daily and payable monthly, on the daily net assets for
Class A shares at the following annual rates: .25% for Global Equity and .05%
for Global Income. The Funds' Class A shares also pay a service fee at an
annual rate of .25%. Although Global Income's Plan for Class A shares
authorizes it to pay a maximum service fee of .25% and a distribution fee of
.05%, the Board of Directors has set a maximum .25% total fee under the Plan.
Compensation for Class B and Class C shares of each fund is at an annual rate
of .75% of average daily net assets. Each fund's Class B and Class C shares
also pay a service fee at the annual rate of .25% of average daily net
assets. Distribution and service fees may be paid by the Distributor to
broker-dealers or others for providing personal service, maintenance of
accounts and ongoing sales or shareholder support functions in connection
with the distribution of fund shares. While payments under the plan may not
exceed the stated percentage of average daily net assets on an annual basis,
the payments are not limited to the amounts actually paid or expenses
actually incurred by the Distributor. For the year ended November 30, 1994,
distribution and service fees charged to classes A, B and C were $742,304,
$59,822 and $11,502, respectively, for Global Equity, and $46,739, $10,182
and $1,874, respectively, for Global Income.
B-13
<PAGE>
NOVEMBER 30, 1994
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(e) Total brokerage commissions paid by Global Equity during the year
ended November 30, 1994 amounted to $566,615, of which $16,402 was paid to
Oppenheimer & Co., Inc., an affiliate of the Adviser.
(f) Oppenheimer & Co., Inc. has informed the Funds that it received
approximately $252,000 and $24,000, from Global Equity and Global Income,
respectively, in connection with the sale of Class A shares for the year
ended November 30, 1994.
(g) The Distributor has informed the funds that it received contingent
deferred sales charges on the redemption of Class B and Class C shares of
approximately $7,300 and $600 for Global Equity and Global Income,
respectively, for the year ended November 30, 1994.
3. FUND SHARE TRANSACTIONS
The following table summarizes the fund share activity for the two years
ended November 30, 1994:
<TABLE>
<CAPTION>
GLOBAL EQUITY FUND GLOBAL INCOME FUND
--------------------------- ---------------------------
YEAR ENDED NOVEMBER 30, YEAR ENDED NOVEMBER 30,
--------------------------- ---------------------------
1994 1993 1994 1993
------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
CLASS A
Issued.................................... 2,167,814 2,374,953 290,147 585,048
Dividends and distributions reinvested.... 344,081 758,804 123,568 144,981
Redeemed.................................. (2,079,717) (2,156,199) (837,949) (458,116)
---------- ---------- -------- --------
Net increase (decrease)--Class A........ 432,178 977,558 (424,234) 271,913
---------- ---------- -------- --------
CLASS B *
Issued.................................... 647,583 134,395 82,174 80,836
Dividends and distributions reinvested.... 4,716 -- 5,164 381
Redeemed.................................. (46,590) (10,433) (23,568) (6,562)
---------- ---------- -------- --------
Net increase--Class B................... 605,709 123,962 63,770 74,655
---------- ---------- -------- --------
CLASS C *
Issued.................................... 174,051 18,037 10,411 15,993
Dividends and distributions reinvested.... 789 -- 1,118 161
Redeemed.................................. (21,072) -- (1,720) --
---------- ---------- -------- --------
Net increase--Class C.................... 153,768 18,037 9,809 16,154
---------- ---------- -------- --------
Total net increase (decrease)......... 1,191,655 1,119,557 (350,655) 362,722
---------- ---------- -------- --------
---------- ---------- -------- --------
<FN>
* Initial offering September 2, 1993.
</TABLE>
B-14
<PAGE>
4. DIVIDENDS AND DISTRIBUTIONS
The following table summarizes the per share dividends and distributions
made for the two years ended November 30, 1994:
<TABLE>
<CAPTION>
GLOBAL EQUITY FUND GLOBAL INCOME FUND
--------------------------- ---------------------------
YEAR ENDED NOVEMBER 30, YEAR ENDED NOVEMBER 30,
--------------------------- ---------------------------
1994 1993 1994 1993
------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
NET INVESTMENT INCOME:
Class A.................................. -- $0.119 $0.085 $0.168
Class B *................................ -- -- 0.075 0.030
Class C *................................ -- -- 0.072 0.031
NET REALIZED GAINS:
Class A.................................. $0.494 0.900 -- --
Class B *................................ 0.494 -- -- --
Class C *................................ 0.494 -- -- --
TAX RETURN OF CAPITAL:
Class A.................................. -- -- 0.485 0.513
Class B *................................ -- -- 0.426 0.091
Class C *................................ -- -- 0.411 0.095
<FN>
* Initial offering September 2, 1993.
</TABLE>
5. PURCHASES AND SALES OF SECURITIES
For the year ended November 30, 1994, purchases and sales of investment
securities, other than short-term securities, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
Global Equity........................ $97,066,487 $98,504,257
Global Income........................ 26,188,485 28,990,912
</TABLE>
6. UNREALIZED APPRECIATION (DEPRECIATION) AND COST OF INVESTMENTS FOR FEDERAL
INCOME TAX PURPOSES
At November 30, 1994, the composition of unrealized appreciation
(depreciation) of investment securities and the cost of investments for
Federal income tax purposes were as follows:
<TABLE>
<CAPTION>
APPRECIATION (DEPRECIATION) NET TAX COST
------------ -------------- ----------- ------------
<S> <C> <C> <C> <C>
Global Equity........... $20,499,912 ($3,260,543) $17,239,369 $144,076,852
Global Income........... 178,922 (375,375) (196,453) 17,865,440
</TABLE>
7. AUTHORIZED FUND SHARES AND PAR VALUE PER SHARE
<TABLE>
<CAPTION>
AUTHORIZED PAR VALUE
FUND SHARES PER SHARE
------------- ------------
<S> <C> <C>
Global Equity...................... 100,000,000 $0.01
Global Income...................... 100,000,000 0.01
</TABLE>
B-15
<PAGE>
NOVEMBER 30, 1994
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. CAPITAL LOSS CARRYFORWARDS
For the year ended November 30, 1994, Global Income had net capital loss
carryfowards of $1,077,004, of which $204,539, $214,944 and $657,521 will be
available to offset future net capital gains realized through fiscal years
ending 1998, 2001 and 2002, respectively, to the extent provided by
regulations. Capital and currency losses incurred after October 31, 1994 are
deemed to arise on the first business day of the following tax year.
Accordingly, for the fiscal year ended November 30, 1994, Global Income
incurred and elected to defer $52,073 and $127,100 in net capital and net
currency losses, respectively.
9. SUBSEQUENT EVENTS
On December 5, 1994, Global Equity declared net realized short-term and
long-term capital gain distributions of $0.3296 and $0.8985, respectively,
per share, for each class, payable December 5, 1994 to shareholders of record
on the opening of business December 5, 1994.
B-16
<PAGE>
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS DIVIDENDS AND
DISTRIBUTIONS
-------------------------------------- -------------------------------------------------------
NET REALIZED DIVIDENDS TO DISTRIBUTIONS TO
NET ASSET NET AND SHAREHOLDERS SHAREHOLDERS TAX
TOTAL
VALUE, INVESTMENT UNREALIZED TOTAL FROM FROM NET FROM NET
RETURN DIVIDENDS
BEGINNING INCOME GAIN (LOSS) INVESTMENT INVESTMENT REALIZED GAIN
OF AND
OF PERIOD (LOSS) ON INVESTMENTS OPERATIONS INCOME ON INVESTMENTS
CAPITAL DISTRIBUTIONS
<S> <C> <C> <C> <C> <C> <C> <C>
<C>
GLOBAL EQUITY FUND
CLASS A
YEAR ENDED
NOVEMBER 30,
1994 $13.54 $ 0.01 $1.10 $1.11 -- ($0.49) -- ($0.49)
1993 12.30 -- 2.26 2.26 ($0.12) (0.90) -- (1.02)
1992 11.25 0.12 0.93 1.05 -- -- -- --
1991 10.57 (0.04) 0.85 0.81 (0.05) (0.80) -- (0.13)
JULY 2, 1990 (3)
TO NOV. 30, 1990 12.05(4) 0.05 (1.53) (1.48) -- -- -- --
CLASS B
YEAR ENDED
NOV. 30, 1994 13.52 (0.06) 1.10 1.04 -- (0.49) -- (0.49)
SEPT. 2, 1993 (5)
TO NOV. 30, 1993 13.75(4) (0.02) (0.21) (0.23) -- -- -- --
CLASS C
YEAR ENDED
NOV. 30, 1994 13.52 (0.08) 1.11 1.03 -- (0.49) -- (0.49)
SEPT. 2, 1993 (5)
TO NOV. 30, 1993 13.75(4) (0.02) (0.21) (0.23) -- -- -- --
RATIOS
-----------------------------------------
RATIO OF NET RATIO OF NET
NET ASSET NET ASSETS OPERATING INVESTMENTS
VALUE, END OF EXPENSES INCOME (LOSS) PORTFOLIO
END OF TOTAL PERIOD TO AVERAGE TO AVERAGE TURNOVER
PERIOD RETURN* (000'S) NET ASSETS NET ASSETS RATE
<S> <C> <C> <C> <C> <C> <C>
GLOBAL EQUITY FUND
CLASS A
YEAR ENDED
NOVEMBER 30,
1994 $14.16 8.37% $148,044 1.92%(1,2) 0.05%(1,2) 70%
1993 13.54 19.72% 135,616 1.76% 0.04%(2) 46%
1992 12.30 9.33% 111,207 1.76%(2) 0.72%(2) 62%
1991 11.25 7.72% 46,937 2.09% (0.27%) 41%
JULY 2, 1990 (3)
TO NOV. 30, 1990 10.57 (12.28%) 58,087 2.11%(6) 0.92% 2%
CLASS B
YEAR ENDED
NOV. 30, 1994 14.07 7.84% 10,268 2.50%(1,2) (0.44%)(1,2) 70%
SEPT. 2, 1993 (5)
TO NOV. 30, 1993 13.52 (1.67%) 1,676 2.26%(2,6) (0.76%)(2,6) 46%
CLASS C
YEAR ENDED
NOV. 30, 1994 14.06 7.77% 2,415 2.66%(1,2) (0.59%)(1,2) 70%
SEPT. 2, 1993 (5)
TO NOV. 30, 1993 13.52 (1.67%) 244 2.26%(2,6) (0.69%)(2,6) 46%
<FN>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED NOVEMBER 30, 1994 FOR CLASS A, CLASS
B AND CLASS C WERE $148,460,823, $5,982,186 AND $1,150,224, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED A
PORTION OF ITS FEES. IF SUCH WAIVERS HAD NOT BEEN IN EFFECT, THE RATIOS
OF NET OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET
INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS FOR CLASS A WOULD HAVE
BEEN 1.93% AND 0.04%, RESPECTIVELY, FOR THE YEAR ENDED NOVEMBER 30, 1994,
1.91% AND (0.11%), RESPECTIVELY, FOR THE YEAR ENDED NOVEMBER 30, 1993 AND
1.84% AND 0.64%, RESPECTIVELY, FOR THE YEAR ENDED NOVEMBER 30, 1992. THE
RATIOS OF NET OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF
NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS WOULD HAVE BEEN 2.51%
AND (0.45%), RESPECTIVELY, FOR CLASS B AND 2.66% AND (0.59%), RESPECTIVELY,
FOR CLASS C, FOR THE YEAR ENDED NOVEMBER 30, 1994 AND 2.32% AND (0.82%),
ANNUALIZED, RESPECTIVELY, FOR CLASS B AND 2.35% AND (0.78%), ANNUALIZED,
RESPECTIVELY, FOR CLASS C, FOR THE PERIOD SEPTEMBER 2, 1993 (INITIAL
OFFERING) TO NOVEMBER 30, 1993.
(3) COMMENCEMENT OF OPERATIONS.
(4) INITIAL OFFERING PRICE.
(5) INITIAL OFFERING OF CLASS B AND CLASS C SHARES, RESPECTIVELY.
(6) ANNUALIZED.
- ----------------
* Assumes reinvestment of all dividends and distributions, but does not reflect
deductions for sales charges. Aggregate (not annualized) total return is
shown for any period shorter than one year.
</TABLE>
B-17
<PAGE>
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
(CONTINUED)
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
------------------------------------- ------------------------------------------------------
NET DISTRIBUTIONS
REALIZED TO
NET AND DIVIDEND TO SHAREHOLDERS
ASSET NET UNREALIZED SHAREHOLDERS FROM NET TAX
TOTAL
VALUE, INVESTMENT GAIN (LOSS) TOTAL FROM FROM NET REALIZED RETURN
DIVIDENDS
BEGINNING INCOME ON INVESTMENT INVESTMENT GAIN ON OF
AND
OF PERIOD (LOSS) INVESTMENTS OPERATIONS INCOME INVESTMENTS CAPITAL
DISTRIBUTIONS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GLOBAL INCOME FUND
CLASS A
YEAR
ENDED
NOVEMBER
30, 1994 $9.36 $0.57 ($0.87) ($0.30) ($0.08) -- ($0.49) ($0.57)
1993 9.14 0.63 0.27 0.90 (0.17) -- (0.51) (0.68)
DEC. 2.,
1991(3)
TO NOV.
30, 1992 10.00(4) 0.77 (1.00) (0.23) (0.63) -- -- (0.63)
CLASS B
YEAR
ENDED
NOV. 30,
1994 9.36 0.50 (0.87) (0.37) (0.07) -- (0.43) (0.50)
SEPT 2,
1993(5)
TO NOV.
30, 1993 9.42(4) 0.12 (0.06) (0.06) (0.03) -- (0.09) (0.12)
CLASS C
YEAR ENDED
NOV. 30,
1994 9.36 0.48 (0.87) (0.39) (0.07) -- (0.41) (0.48)
SEPT 2,
1993(5)
TO NOV.
30, 1993 9.42(4) 0.13 (0.06) 0.07 (0.03) -- (0.10) (0.13)
<CAPTION>
RATIOS
--------------------------------------
NET RATIO OF NET RATIO OF NET
ASSET NET ASSETS OPERATING INVESTMENT
VALUE, END OF EXPENSES INCOME (LOSS) PORTFOLIO
END OF TOTAL PERIOD TO AVERAGE TO AVERAGE TURNOVER
PERIOD RETURN* (000'S) NET ASSETS NET ASSETS RATE
<S> <C> <C> <C> <C> <C> <C>
GLOBAL INCOME FUND
CLASS A
YEAR
ENDED
NOVEMBER
30, 1994 $8.49 (3.24%) $16,781 1.65%(1,2) 6.45%(1,2) 144%
1993 9.36 10.20% 22,465 1.70%(2) 6.73 (2) 114%
DEC. 2.,
1991(3)
TO NOV.
30, 1992 9.14 (2.60%) 19,469 1.84%(2,6) 7.93%(2,6) 360%
CLASS B
YEAR
ENDED
NOV. 30,
1994 8.49 (3.99%) 1,176 2.41%(1,2) 5.71%(1,2) 144%
SEPT 2,
1993(5)
TO NOV.
30, 1993 9.36 0.65% 699 2.45%(2,6) 4.38%(2,6) 114%
CLASS C
YEAR ENDED
NOV. 30,
1994 8.49 (4.20%) 220 2.70%(1,2) 5.48%(1,2) 144%
SEPT 2,
1993(5)
TO NOV.
30, 1993 9.36 0.71% 151 2.45%(2,6) 5.16%(2,6) 114%
<FN>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED NOVEMBER 30, 1994 FOR CLASS A, CLASS
B AND CLASS C WERE $18,695,485, $1,018,251 AND $187,397, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED ALL OR A
PORTION OF ITS FEES AND REIMBURSED THE FUND FOR A PORTION OF ITS OPERATING
EXPENSES. IF SUCH WAIVERS AND REIMBURSMENTS HAD NOT BEEN IN EFFECT, THE RATIOS
OF NET OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS FOR CLASS A WOULD HAVE BEEN 2.35% AND 5.75%,
RESPECTIVELY, FOR THE YEAR ENDED NOVEMBER 30, 1994, 2.09% AND 6.34%,
RESPECTIVELY, FOR THE YEAR ENDED NOVEMBER 30, 1993 AND 1.88% AND 7.89%,
ANNUALIZED, RESPECTIVELY, FOR THE PERIOD DECEMBER 2, 1991 (COMMENCEMENT OF
OPERATIONS) TO NOVEMBER 30, 1992. THE RATIOS OF NET OPERATING EXPENSES TO
AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS
WOULD HAVE BEEN 3.12% AND 5.00%, RESPECTIVELY, FOR CLASS B AND 3.39% AND 4.79%,
RESPECTIVELY, FOR CLASS C, FOR YEAR ENDED NOVEMBER 30, 1994 AND 2.88% AND 3.95%,
ANNUALIZED, RESPECTIVELY, FOR CLASS B AND 2.84% AND 4.77%, ANNUALIZED,
RESPECTIVELY, FOR CLASS C, FOR THE PERIOD SEPTEMBER 2, 1993 (INITIAL OFFERING)
TO NOVEMBER 30, 1993.
(3) COMMENCEMENT OF OPERATIONS.
(4) INITIAL OFFERING PRICE.
(5) INITIAL OFFERING OF CLASS B AND CLASS C SHARES, RESPECTIVELY.
(6) ANNUALIZED.
- -------------------
* Assumes reinvestment of all dividends and distributions, but does not reflect
deductions for sales charges. Aggregate (not annualized) total return is shown
for any period shorter than one year.
</TABLE>
B-18
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
of Quest for Value Global Equity Fund, Inc.:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Quest for Value Global Equity Fund,
Inc. (the "Fund") at November 30, 1994, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the four years in the
period then ended and for the period July 2, 1990 (commencement of operations)
to November 30, 1990, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsiblilty of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at November 30, 1994 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of Americas
New York, New York
January 25, 1995
To the Shareholders and Board of Directors
of Global Income Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Global Income Fund (a series of
Quest for Value Global Funds, Inc. hereafter referred to as the "Fund") at
November 30, 1994, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended and
the financial highlights for each of the two years in the period then ended and
for the period December 2, 1991 (commencement of operations) to November 30,
1992, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsiblilty of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
November 30, 1994 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of Americas
New York, New York
January 25, 1995
B-19
<PAGE>
TAX INFORMATION
We are required by Subchapter M of the Internal Revenue Code of 1986, as
amended, to advise you within 60 days of the Funds' fiscal year end (November
30, 1994) as to the Federal tax status of dividends and distributions received
by shareholders during such fiscal year. Accordingly, we are advising you that
during the fiscal year ended November 30, 1994, the Funds paid per share
dividends and distributions to shareholders as follows:
<TABLE>
<CAPTION>
Taxable as Ordinary Income
------------------------------ Tax
Net Investment Short-term Long-term Return of
Income Capital Gains Capital Gains Capital
-------------- ------------- ------------- ---------
<S> <C> <C> <C> <C>
GLOBAL EQUITY FUND
Class A............... -- $0.0707 $0.4228 --
Class B............... -- 0.0707 0.4228 --
Class C............... -- 0.0707 0.4228 --
GLOBAL INCOME FUND
Class A............... $0.0850 -- -- $0.4853
Class B............... 0.0747 -- -- 0.4264
Class C............... 0.0719 -- -- 0.4106
</TABLE>
Since each fund's fiscal year is not the calendar year, another notification
will be sent in respect to calendar year 1994. In January 1995, you will be
advised on IRS Form 1099 DIV as to the Federal tax status of the dividends and
distributions received by you in calendar 1994. The amounts that will be
reported, will be the amounts to use on your 1994 Federal income tax return and
probably will differ from the amounts which we must report for each fund's
fiscal year ended November 30, 1994. Shareholders are advised to consult with
their own tax advisers as to the Federal, state and local tax status of each
funds' income and realized gain distributions received.
B-20
<PAGE>
May 31, 1995
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Global Equity Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------------------
<S> <C>
COMMON STOCKS--79.4%
ARGENTINA--0.3%
- --------------------------------------------------------------------------------
Tobacco/Beverages/Food Products
30,000 Quilmes Industrial SA ADR................. $ 622,500
------------
AUSTRALIA--2.9%
- --------------------------------------------------------------------------------
Metals/Mining--1.7%
405,000 Comalco Ltd............................... 1,500,970
280,000 Western Mining Corp.
Holdings Ltd........................... 1,490,196
------------
2,991,166
------------
Oil/Gas--0.8%
1,075,000 Novus Petroleum Ltd....................... 1,374,344
------------
Tobacco/Beverages/Food Products--0.4%
795,000 Foster's Brewing Group Ltd................ 702,327
------------
Total Australian Common Stocks................................. 5,067,837
------------
AUSTRIA--2.0%
- --------------------------------------------------------------------------------
Building & Construction--1.6%
35,000 Flughafen Wien AG......................... 1,736,877
2,800 Wienerberger
Baustoffindustrie AG................... 1,048,467
------------
2,785,344
------------
Electronics--0.4%
5,000 Austria Mikro Systeme
International AG....................... 654,789
------------
Total Austrian Common Stocks................................... 3,440,133
------------
BELGIUM--0.7%
- --------------------------------------------------------------------------------
Conglomerates
4,400 Colruyt SA................................ 1,180,516
------------
DENMARK--1.0%
- --------------------------------------------------------------------------------
Telecommunications
31,200 Tele Danmark AS (Class B)................. 1,769,451
------------
FINLAND--2.6%
- --------------------------------------------------------------------------------
Retail--0.8%
30,700 Oy Stockmann AB........................... 1,382,244
------------
Telecommunications--1.8%
68,000 Oy Nokia AB............................... $ 3,108,751
------------
Total Finnish Common Stocks.................................... 4,490,995
------------
FRANCE--3.7%
- --------------------------------------------------------------------------------
Machinery & Engineering--0.7%
15,300 Schneider SA.............................. 1,202,660
------------
Oil/Gas--1.7%
38,340 Elf Aquitaine, Inc. ADR................... 1,504,845
24,710 Total SA.................................. 1,531,955
------------
3,036,800
------------
Rubber Products--0.8%
30,000 Michelin (CGDE)........................... 1,368,336
------------
Utilities--0.5%
7,200 Compagnie Generale des
Eaux................................... 798,146
------------
Total French Common Stocks..................................... 6,405,942
------------
GERMANY--3.1%
- --------------------------------------------------------------------------------
Banking--0.6%
2,200 Deutsche Bank AG.......................... 1,077,196
------------
Computer Services--1.5%
2,000 SAP AG.................................... 2,504,776
------------
Drugs & Medical Products--1.0%
2,500 Schering AG............................... 1,737,069
------------
Total German Common Stocks..................................... 5,319,041
------------
HONG KONG--0.8%
- --------------------------------------------------------------------------------
Real Estate
675,000 Hong Kong Land Holdings
Ltd.................................... 1,397,250
------------
INDONESIA--0.5%
- --------------------------------------------------------------------------------
Agriculture
733,000 PT Bakrie Sumatra
Plantations............................ 839,501
------------
ITALY--1.5%
- --------------------------------------------------------------------------------
Telecommunications--0.8%
690,000 Telecom Italia............................ 1,408,163
------------
Textiles--0.7%
170,000 Marzotto & Figli.......................... 1,134,024
------------
Total Italian Common Stocks.................................... 2,542,187
------------
</TABLE>
B-21
<PAGE>
May 31, 1995
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Global Equity Fund (cont'd)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------------------
<S> <C>
JAPAN--3.4%
- --------------------------------------------------------------------------------
Casinos/Gaming--0.2%
16,000 Heiwa Corp................................ $ 381,920
------------
Electronics--1.1%
24,000 Kyocera Corp.............................. 1,823,575
------------
Healthcare Services--0.9%
120,000 SRL, Inc.................................. 1,630,724
------------
Insurance--0.2%
80,000 Fuji Fire & Marine
Insurance.............................. 432,024
------------
Jewelry--0.0%
8,000 Nagahori Corp............................. 57,666
------------
Machinery & Engineering--0.4%
21,000 Aoki Marine Co., Ltd...................... 177,430
32,000 Kyudenko Co., Ltd......................... 431,078
------------
608,508
------------
Merchandising--0.3%
36,000 Mutow Co.................................. 329,690
30,000 Simree Co., Ltd........................... 136,484
------------
466,174
------------
Security/Investigation--0.3%
52,000 Toyo Tec Co., Ltd......................... 546,883
------------
Total Japanese Common Stocks................................... 5,947,474
------------
MALAYSIA--2.5%
- --------------------------------------------------------------------------------
Conglomerates--2.1%
690,000 Boustead Holdings Bhd..................... 1,343,883
800,000 Renong Bhd................................ 1,480,219
255,000 Technology Resources
Industries Bhd.......................... 832,928
------------
3,657,030
------------
Paper Products--0.4%
250,000 Aokam Perdana Bhd......................... 674,579
------------
Total Malaysian Common Stocks.................................. 4,331,609
------------
NETHERLANDS--3.8%
- --------------------------------------------------------------------------------
Building & Construction--0.7%
19,500 Kondor Wessels Groep NV................... 581,869
46,000 NBM-Amstelland NV......................... 578,708
------------
1,160,577
------------
Computer Services--0.7%
28,417 Getronics NV.............................. $ 1,228,844
------------
Importing/Exporting--0.7%
29,580 Hagemeyer NV.............................. 1,280,965
------------
Miscellaneous Financial Services--0.7%
22,550 International Nederlanden
Groep.................................. 1,221,732
------------
Publishing--1.0%
20,294 Wolters Kluwer............................ 1,699,934
------------
Total Netherlands Common Stocks................................ 6,592,052
------------
SINGAPORE--1.4%
- --------------------------------------------------------------------------------
Conglomerates
685,937 Jardine Strategic Holdings
Ltd.................................... 2,400,779
------------
SOUTH KOREA--0.4%
- --------------------------------------------------------------------------------
Metals/Mining
25,500 Pohang Iron & Steel Co.,
Ltd. ADR............................... 720,375
------------
SPAIN--2.0%
- --------------------------------------------------------------------------------
Building & Construction--1.0%
17,000 Fomento de Construcciones y
Contratas SA........................... 1,701,041
------------
Oil/Gas--0.4%
20,000 Repsol SA................................. 646,927
------------
Utilities--0.6%
200,000 Compania Sevillana de
Electricidad........................... 1,137,023
------------
Total Spanish Common Stocks.................................... 3,484,991
------------
SWEDEN--4.7%
- --------------------------------------------------------------------------------
Conglomerates--1.0%
20,000 ASEA AB................................... 1,698,242
------------
Drugs & Medical Products--1.0%
60,000 ASTRA AB.................................. 1,758,212
------------
Machinery & Engineering--1.9%
125,000 Atlas Copco AB............................ 1,822,952
103,400 Kalmar Industries AB...................... 1,465,667
------------
3,288,619
------------
Paper Products--0.8%
63,000 AssiDoman AB.............................. 1,408,205
------------
Total Swedish Common Stocks.................................... 8,153,278
------------
</TABLE>
B-22
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------------------
<S> <C>
SWITZERLAND--1.9%
- --------------------------------------------------------------------------------
Banking--0.9%
2,900 Bil GT Gruppe AG.......................... $ 1,516,502
------------
Building & Construction--1.0%
2,357 Holderbank Financiere
Glaris AG.............................. 1,875,093
------------
Total Swiss Common Stocks...................................... 3,391,595
------------
TAIWAN--0.8%
- --------------------------------------------------------------------------------
Other
15,000 Taipei Fund Units IDR..................... 1,322,250
------------
UNITED KINGDOM--4.1%
- --------------------------------------------------------------------------------
Building & Construction--0.8%
250,000 Wolseley PLC.............................. 1,457,043
------------
Retail--1.1%
355,000 Argyll Group PLC.......................... 1,882,960
76,000 Booker PLC................................ 517,167
------------
2,400,127
------------
Textiles--0.3%
450,000 Readicut International PLC................ 460,934
------------
Tobacco/Beverages/Food Products--1.0%
221,000 Guinness PLC.............................. 1,681,102
------------
Utilities--0.6%
70,000 London Electricity PLC.................... 717,008
35,000 Midlands Electricity PLC.................. 355,725
------------
1,072,733
------------
Total United Kingdom Common Stocks............................. 7,071,939
------------
UNITED STATES--35.3%
- --------------------------------------------------------------------------------
Aerospace--5.6%
25,000 Lockheed Martin Corp...................... 1,487,500
105,000 McDonnell Douglas Corp.................... 7,586,250
10,000 Sundstrand Corp........................... 555,000
------------
9,628,750
------------
Banking--6.6%
169,215 Mellon Bank Corp.......................... 7,233,941
23,000 Wells Fargo & Co.......................... 4,232,000
------------
11,465,941
------------
Chemicals--2.6%
63,000 Hercules, Inc............................. $ 3,307,500
15,000 Monsanto Co............................... 1,248,750
------------
4,556,250
------------
Conglomerates--0.5%
8,000 ITT Corp.................................. 895,000
------------
Consumer Products--0.2%
10,000 Reebok International Ltd.................. 335,000
------------
Drugs & Medical Products--2.5%
33,000 Becton Dickinson & Co..................... 1,897,500
30,000 Warner-Lambert Co......................... 2,486,250
------------
4,383,750
------------
Electronics--2.3%
35,000 Intel Corp................................ 3,928,750
------------
Insurance--4.0%
70,000 EXEL Ltd.................................. 3,272,500
61,000 Transamerica Corp......................... 3,644,750
------------
6,917,250
------------
Metals/Mining--1.3%
25,937 Freeport McMoRan Copper
& Gold (Class A)....................... 531,708
100,000 Freeport McMoRan, Inc..................... 1,725,000
------------
2,256,708
------------
Miscellaneous Financial Services--5.5%
100,000 American Express Co....................... 3,562,500
87,000 Federal Home Loan
Mortgage Corp.......................... 5,926,875
------------
9,489,375
------------
Oil/Gas--1.5%
25,000 MAPCO, Inc................................ 1,471,875
25,000 Tenneco, Inc.............................. 1,200,000
------------
2,671,875
------------
Paper Products--0.8%
30,000 Champion International
Corp................................... 1,391,250
------------
Telecommunications--1.0%
50,000 Sprint Corp............................... 1,675,000
------------
Textiles--0.9%
100,000 Shaw Industries, Inc...................... 1,587,500
------------
Total United States Common Stocks.............................. 61,182,399
------------
Total Common Stocks
(cost--$109,752,675)........................................... $137,674,094
------------
</TABLE>
B-23
<PAGE>
May 31, 1995
- --------------------------------------------------------------------------------
Schedules of Investments (unaudited) (continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Global Equity Fund (cont'd)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
- --------------------------------------------------------------------------------
<S> <C>
PREFERRED STOCK--0.9%
SOUTH KOREA
- --------------------------------------------------------------------------------
Electronics
19,000 Samsung Electronics Co.
(cost--$1,609,426)..................... $ 1,514,284
------------
<CAPTION>
- --------------------------------------------------------------------------------
Warrants Value
- --------------------------------------------------------------------------------
WARRANTS--0.1%
SINGAPORE
- --------------------------------------------------------------------------------
Conglomerates
218,437 Jardine Strategic Holdings
Ltd. 5/02/98, strike @
HKD 3.57*.............................. $ 110,311
------------
<CAPTION>
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
<S> <C>
CONVERTIBLE BOND--0.5%
JAPAN
- --------------------------------------------------------------------------------
Drugs & Medical Products
80,000,000 JPY Yamanouchi Pharmaceutical
1.25%, 3/31/14
(cost--$945,864)....................... $ 939,439
------------
REPURCHASE AGREEMENT--19.1%
- --------------------------------------------------------------------------------
33,125,000 US$ J.P. Morgan, 6.05%, 6/01/95,
(proceeds at maturity:
$33,130,567, collateralized
by $33,085,000 par,
$33,788,056 value, U.S.
Treasury Notes 7.25%,
11/15/96)
(cost--$33,125,000).................... $ 33,125,000
------------
Total Investments
(cost--$145,432,965)............................ 100.0% $173,363,128
Other Liabilities in Excess of
Other Assets.................................... (0.0) (46,299)
----- ------------
Total Net Assets.................................. 100.0% $173,316,829
===== ============
</TABLE>
* Non-income producing security.
B-24
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Global Income Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
<S> <C>
AUSTRALIA--5.4%
- --------------------------------------------------------------------------------
Corporate Notes
250,000 A$ New South Wales Treasury Corp.
12.00%, 12/01/01 (A)................... $ 208,233
250,000 Queensland Treasury Corp.
8.00%, 5/14/03......................... 169,412
------------
Total Australia 377,645
------------
CZECH REPUBLIC--2.8%
- --------------------------------------------------------------------------------
Time Deposit
5,046,642 CZK ING Bank-Prague
9.50%, 6/14/95......................... 192,253
------------
DENMARK--7.7%
- --------------------------------------------------------------------------------
Government Note
3,000,000 DKK Kingdom of Denmark
8.00%, 3/15/06 (A)..................... 535,912
------------
FINLAND--3.5%
- --------------------------------------------------------------------------------
Government Note
1,000,000 FIN Government of Finland
9.50%, 3/15/04......................... 244,699
------------
FRANCE--2.9%
- --------------------------------------------------------------------------------
Government Note
1,000,000 FRF French Treasury Bond
7.50%, 4/25/05 (A)..................... 202,358
------------
GERMANY--10.2%
- --------------------------------------------------------------------------------
Government Notes
300,000 DM Bundesobligationen
7.00%, 12/22/97........................ 221,694
650,000 Treuhandanstalt
7.50%, 9/09/04 (A)..................... 485,442
------------
Total Germany 707,136
------------
IRELAND--2.9%
- --------------------------------------------------------------------------------
Government Notes
Ireland Treasury Bond (A)
75,000 Iep 8.00%, 10/18/00...................... $ 120,660
50,000 8.00%, 8/18/06....................... 79,507
------------
Total Ireland 200,167
------------
NEW ZEALAND--7.3%
- --------------------------------------------------------------------------------
Government Note
750,000 NZD$ Government of New Zealand
9.00%, 11/15/96........................ 502,933
------------
UNITED STATES--55.9%
- --------------------------------------------------------------------------------
Government Agency--3.4%
235,000 US$ Federal Home Loan Bank
6.10%, 6/01/95......................... 235,000
------------
Government Note--13.2%
900,000 U.S. Treasury Note
6.50%, 5/15/05......................... 913,779
------------
Corporate Note--8.3%
500,000 Healthtrust, Inc
10.25%, 4/15/04........................ 577,500
------------
Euronotes--31.0%
500,000 National Power Corp (Philippines)
7.625%, 11/15/00....................... 472,500
500,000 Philippine Long Distance Telephone
10.625%, 6/02/04....................... 521,250
500,000 Republic of Argentina
5.00%, 3/31/23......................... 250,312
485,000 Republic of Brazil (IDU's)
7.81%, 1/01/01 (B)..................... 389,212
500,000 Republic of South Africa
9.625%, 12/15/99....................... 513,125
------------
2,146,399
------------
Total United States............................................ 3,872,678
------------
Total Investments
(cost--$6,449,128)....................... 98.6% $ 6,835,781
Other Assets in Excess of
Other Liabilities........................ 1.4 95,681
---- ------------
Total Net Assets........................... 100.0% $ 6,931,462
===== ============
</TABLE>
(A) Securities segregated (full or partial) as collateral for open forward
currency contracts. The market value of such segregated securities is
$963,072.
(B) Represents a floating interest rate bond subject to change on the semi-
annual coupon dates, based on the current six month LIBOR rate plus 81.25
basis points.
See accompanying notes to financial statements.
B-25
<PAGE>
May 31, 1995
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
------------- -------------
Global Equity Global Income
Fund Fund
------------- -------------
<S> <C> <C>
Assets
Investments, at value (cost--$112,307,965 and $6,449,128, respectively)............ $140,238,128 $
6,835,781
Repurchase agreement (cost -- $33,125,000 and $0, respectively).................... 33,125,000 --
Cash............................................................................... 376,052 2,309
Dividends receivable............................................................... 423,226 --
Receivable for fund shares sold.................................................... 370,465 3,291
Withholding taxes reclaimable...................................................... 83,029 --
Receivable for investments sold.................................................... 17,244 --
Interest receivable................................................................ 7,569 137,959
Deferred organization expenses..................................................... 3,323 42,572
Receivable from adviser............................................................ -- 30,154
Deposits for securities loaned..................................................... 6,021,321 --
Other assets....................................................................... 49,852 51,490
------------ ------------
Total Assets.................................................................... 180,715,209 7,103,556
------------ ------------
Liabilities
Payable for investments purchased.................................................. 1,046,030 --
Payable for fund shares redeemed................................................... 125,877 --
Withholding taxes payable.......................................................... 41,262 --
Distribution fee payable........................................................... 26,989 8,492
Investment advisory fee payable.................................................... 24,770 --
Administration fee payable......................................................... 8,257 7,714
Net unrealized depreciation on forward currency contracts.......................... -- 107,076
Deposits for securities loaned..................................................... 6,021,321 --
Other payables and accrued expenses................................................ 103,874 48,812
------------ ------------
Total Liabilities............................................................... 7,398,380 172,094
------------ ------------
Net Assets
Capital stock...................................................................... 121,697 7,797
Paid-in-surplus.................................................................... 140,564,310 8,901,503
Accumulated net investment income.................................................. 874,828 --
Accumulated net realized gain (loss) on investments................................ 5,330,679 (1,560,467)
Accumulated net realized loss on foreign currency transactions..................... (1,405,075) (698,819)
Distributions in excess of net realized gains...................................... (110,149) --
Net unrealized appreciation (depreciation) on investments and translation of
other assets and liabilities denominated in foreign currencies..................... 27,940,539 281,448
------------ ------------
Total Net Assets................................................................ $173,316,829 $ 6,931,462
============
============
Class A:
Fund shares outstanding............................................................ 10,897,900 609,877
------------ ------------
Net asset value per share.......................................................... $ 14.26 $ 8.89
============
============
Maximum offering price per share *................................................. $ 15.09 $ 9.16
============
============
Class B:
Fund shares outstanding............................................................ 999,259 134,676
------------ ------------
Net asset value and offering price per share....................................... $ 14.12 $ 8.89
============
============
Class C:
Fund shares outstanding............................................................ 272,523 35,114
------------ ------------
Net asset value and offering price per share....................................... $14.09 $8.89
============
============
</TABLE>
* Sales charges decrease on purchases of $50,000 or higher for the Global Equity
Fund and $100,000 or higher for the Global Income Fund.
See accompanying notes to financial statements.
B-26
<PAGE>
Six Months Ended May 31, 1995
- --------------------------------------------------------------------------------
Statements of Operations (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
------------- -------------
Global Equity Global Income
Fund Fund
------------- -------------
<S> <C> <C>
Investment Income
Dividends (net of foreign withholding taxes of $109,638 and $0, respectively)............... $ 1,585,643 $
--
Interest (net of foreign withholding taxes of $0 and $2,759, respectively).................. 800,312 634,383
------------ ------------
Total investment income.................................................................. 2,385,955 634,383
------------ ------------
Operating Expenses
Investment advisory fees (note 2a).......................................................... 606,192 34,607
Distribution fees (note 2c)................................................................. 440,912 22,601
Administration fees (note 2b)............................................................... 202,064 17,304
Transfer and dividend disbursing agent fees (note 1k)....................................... 99,463 15,562
Custodian fees.............................................................................. 96,171 25,358
Auditing, consulting and tax return preparation fees........................................ 28,305 19,019
Registration fees........................................................................... 23,340 15,997
Reports and notices to shareholders......................................................... 19,895 3,839
Amortization of deferred organization expenses (note 1c).................................... 19,536 12,145
Directors' fees and expenses................................................................ 8,581 --
Legal fees.................................................................................. 4,986 5,599
Miscellaneous............................................................................... 5,706 6,284
------------ ------------
Total operating expenses................................................................. 1,555,151 178,315
Less: Investment advisory fees waived and expense
reimbursements (note 2a).............................................................. -- (54,892)
------------ ------------
Net operating expenses................................................................ 1,555,151 123,423
------------ ------------
Net investment income................................................................. 830,804 510,960
------------ ------------
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions--Net
Net realized gain (loss) on investments........................................................ 4,663,609 (394,711)
Net realized loss on option transactions....................................................... -- (36,679)
Net realized gain (loss) on foreign currency transactions...................................... (13,439) 290,355
------------ ------------
Net realized gain (loss) on investments, options and foreign currency transactions....... 4,650,170
(141,035)
Net change in unrealized appreciation (depreciation) on investments and
translation of other assets and liabilities denominated in foreign
currencies............................................................................... 10,535,967 509,938
------------ ------------
Net realized gain (loss) and change in unrealized appreciation (depreciation)
on investments and translation of other assets and liabilities denominated
in foreign currencies................................................................. 15,186,137 368,903
------------ ------------
Net increase in net assets resulting from operations........................................... $ 16,016,941 $ 879,863
============
============
</TABLE>
See accompanying notes to financial statements.
B-27
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
---------------------------------- --------------------------------
Global Equity Fund Global Income Fund
---------------------------------- --------------------------------
Six Months Year Ended Six Months Year Ended
Ended November 30, Ended November 30,
May 31, 1995* 1994 May 31, 1995* 1994
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Operations
Net investment income..................................... $ 830,804 $ 44,024 $ 510,960 $ 1,275,222
Net realized gain (loss) on investments................... 4,663,609 14,611,225 (431,390) (688,593)
Net realized gain (loss) on foreign currency
transactions............................................ (13,439) (1,391,636) 290,355 (989,174)
Net change in unrealized appreciation
(depreciation) on investments and translation
of other assets and liabilities denominated in
foreign currencies...................................... 10,535,967 (1,833,491) 509,938 (267,788)
------------ ------------ ----------- -----------
Net increase (decrease) in net assets resulting
from operations.................................... 16,016,941 11,430,122 879,863 (670,333)
------------ ------------ ----------- -----------
Dividends and Distributions to Shareholders
Net investment income -- Class A.......................... -- -- (465,412) (179,857)
Net investment income -- Class B.......................... -- -- (37,105) (8,671)
Net investment income -- Class C.......................... -- -- (8,443) (1,531)
Net realized gain -- Class A.............................. (12,834,813) (4,944,320) -- --
Net realized gain -- Class B.............................. (896,581) (66,298) -- --
Net realized gain -- Class C.............................. (212,761) (10,738) -- --
Tax return of capital -- Class A.......................... -- -- -- (1,026,915)
Tax return of capital -- Class B.......................... -- -- -- (49,507)
Tax return of capital -- Class C.......................... -- -- -- (8,741)
------------ ------------ ----------- -----------
Total dividends and distributions to
shareholders....................................... (13,944,155) (5,021,356) (510,960) (1,275,222)
------------ ------------ ----------- -----------
Fund Share Transactions
Class A
Net proceeds from sales................................... 15,571,099 30,817,260 832,213 2,641,672
Reinvestment of dividends and distributions............... 12,377,446 4,682,941 435,635 1,088,618
Cost of shares redeemed................................... (22,289,658) (29,503,784) (12,930,331) (7,582,775)
------------ ------------ ----------- -----------
Net increase (decrease) -- Class A...................... 5,658,887 5,996,417 (11,662,483) (3,852,485)
------------ ------------ ----------- -----------
Class B
Net proceeds from sales................................... 3,386,870 9,192,969 133,594 745,568
Reinvestment of dividends and distributions............... 832,752 64,143 27,577 45,001
Cost of shares redeemed................................... (675,446) (659,275) (189,894) (217,068)
------------ ------------ ----------- -----------
Net increase (decrease) -- Class B...................... 3,544,176 8,597,837 (28,723) 573,501
------------ ------------ ----------- -----------
Class C
Net proceeds from sales................................... 1,440,786 2,476,331 99,544 91,369
Reinvestment of dividends and distributions............... 210,836 10,736 8,141 9,804
Cost of shares redeemed................................... (337,257) (299,932) (30,939) (15,084)
------------ ------------ ----------- -----------
Net increase -- Class C................................. 1,314,365 2,187,135 76,746 86,089
------------ ------------ ----------- -----------
Total increase (decrease) in net assets
from fund share transactions...................... 10,517,428 16,781,389 (11,614,460) (3,192,895)
------------ ------------ ----------- -----------
Total increase (decrease) in net assets................... 12,590,214 23,190,155 (11,245,557) (5,138,450)
Net Assets
Beginning of period....................................... 160,726,615 137,536,460 18,177,019 23,315,469
------------ ------------ ----------- -----------
End of period (including undistributed
net investment income of $874,828,
$44,024, $0 and $0, respectively)....................... $173,316,829 $160,726,615 $ 6,931,462
$18,177,019
============ ============
=========== ===========
</TABLE>
* Unaudited.
See accompanying notes to financial statements.
B-28
<PAGE>
May 31, 1995
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Quest for Value Global Funds (collectively, the "Funds") are registered
under the Investment Company Act of 1940 as diversified open-end management
investment companies. The Quest for Value Global Equity Fund, Inc. ("Global
Equity") commenced investment operations on July 2, 1990. The Global Income Fund
("Global Income"), a series of Quest for Value Global Funds, Inc., commenced
investment operations on December 2, 1991. Quest for Value Advisors (the
"Adviser") serves as the Funds' investment adviser and administrator. Quest for
Value Distributors (the "Distributor") serves as the Funds' distributor. Both
the Adviser and Distributor are majority-owned (99%) subsidiaries of Oppenheimer
Capital.
Prior to September 1, 1993, the Funds issued only one class of shares which
were redesignated Class A shares. Subsequent to that date, the Funds were
authorized to issue Class A, Class B and Class C shares. Shares of each Class
represent an identical interest in the investment portfolio of their respective
fund and generally have the same rights, but are offered under different sales
charge and distribution fee arrangements. Futhermore, Class B shares will
automatically convert to Class A shares of the same fund eight years after their
respective purchase.
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements:
(a) Valuation of Investments
Investment securities listed on a U.S. or foreign stock exchange and
securities traded in the over-the-counter National Market System are valued at
the last reported sale price on the valuation date; if there are no such sales,
the securities are valued at their last quoted bid price. Other investments
traded over-the-counter and not part of the National Market System are valued at
the last quoted bid price. Investment debt securities (other than short-term
obligations) are valued each day by an independent pricing service (approved by
the Board of Directors) using methods which include current market quotations
from a major market maker in the securities and trader reviewed "matrix" prices.
Short-term debt securities having a remaining maturity of sixty days or less are
valued at amortized cost or amortized value, which approximates market value.
Any security or other asset for which market quotations are not readily
available is valued at its fair value as determined under procedures established
by the Funds' Board of Directors. Investments in countries in which the Funds
may invest may involve certain considerations and risks not typically associated
with domestic investments as a result of, among others, the possibility of
future political and economic developments and the level of governmental
supervision and regulation of foreign securities markets.
(b) Federal Income Taxes
It is the Funds' policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of their taxable income to their shareholders; accordingly, no
Federal income tax provision is required.
(c) Deferred Organization Expenses
Costs incurred by Global Equity and Global Income in connection with their
organization approximated $194,000 and $122,000, respectively. These costs have
been deferred and are being amortized to expense on a straight line basis over
sixty months from commencement of the Funds' operations.
(d) Investment Transactions and Other Income
Investment transactions are accounted for on the trade date. In determining
the gain or loss from the sale of investments, the cost of investments sold is
determined on the basis of identified cost. Dividend income and other
distributions are recorded on the ex-dividend date, except certain dividends or
other distributions from foreign securities which are recorded as soon as the
information is available after the ex-dividend date. Interest income is accrued
as earned. Discounts on debt securities purchased are accreted to interest
income over the lives of the respective securities.
B-29
<PAGE>
May 31, 1995
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
(e) Dividends and Distributions
Each fund records dividends and distributions to its shareholders on the
ex-dividend date. The following table summarizes the Funds' income dividend and
capital gain declaration policy:
<TABLE>
<CAPTION>
Income Short-Term Long-Term
Dividends Capital Gains Capital Gains
--------- ------------- -------------
<S> <C> <C> <C>
Global Equity.................... annually annually annually
Global Income.................... daily* annually annually
</TABLE>
* paid monthly.
The amount of dividends and distributions from net investment income, net
realized foreign currency gains and net realized capital gains are determined in
accordance with Federal income tax regulations, which may differ from generally
accepted accounting principles. These "book-tax" differences are either
considered temporary or permanent in nature. To the extent these differences are
permanent in nature, such amounts are reclassified within the capital accounts
based on their Federal tax-basis treatment; temporary differences do not require
reclassification. Dividends and distributions which exceed net investment
income, net realized foreign currency gains and net realized capital gains for
financial reporting purposes but not for tax purposes are reported as dividends
in excess of net investment income, dividends in excess of net realized foreign
currency gains or distributions in excess of net realized capital gains,
respectively. To the extent dividends and distributions exceed current and
accumulated earnings and profits for Federal income tax purposes, they are
reported as dividends or distributions of paid-in-surplus or tax return of
capital. Accordingly, permanent book-tax differences relating to shareholder
distributions have been reclassified to paid-in-surplus. Net investment income
(loss), net realized foreign currency gain (loss), net realized capital
gain (loss) and net assets were not affected by this change.
(f) Foreign Currency Translation
The books and records of the Funds are maintained in U.S. dollars as
follows: (1) the foreign currency market value of investment securities, other
assets and liabilities and forward contracts stated in foreign currencies are
translated at the exchange rates at the end of the period; and (2) purchases,
sales, income and expenses are translated at the rate of exchange prevailing on
the respective dates of such transactions. The resultant exchange gains and
losses are included in the Funds' Statements of Operations. Since the net assets
of the Funds are presented at the foreign exchange rates and market prices at
the close of the period, the Funds do not isolate that portion of the results of
operations arising as a result of changes in the exchange rates from
fluctuations arising from changes in the market prices of securities.
(g) Forward Currency Contracts
As part of its investment program, the Funds may utilize forward currency
contracts for hedging purposes. The use of these contracts involves, to varying
degrees, elements of market risk. Risks arise from the possible movements in
foreign exchange rates and security values underlying these instruments. In
addition, credit risk may arise from the potential inability of counterparties
to meet the terms of their contracts. Forward currency contracts are recorded at
market value. Realized gains and losses arising from such transactions are
included in net realized gain or loss on foreign currency transactions in the
results of operations. At May 31, 1995, there were no forward currency contracts
outstanding for Global Equity.
B-30
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Outstanding contracts at May 31, 1995 for Global Income are as follows:
<TABLE>
<CAPTION>
Settlement Contract to Unrealized
------------------------------------------------
Date Deliver Receive Gain (Loss)
-------- ---------------------- ------------------------ -------------
<S> <C> <C> <C> <C> <C>
06/06/95 AUS 1,500,000 US$ 1,100,400 US$ 23,300
06/06/95 US$ 936,833 AUS 1,284,000 (14,836)
06/06/95 DM 1,000,000 US$ 695,165 (12,892)
06/06/95 US$ 454,790 DM 631,350 (7,758)
06/08/95 FIN 1,940,000 US$ 448,089 104
06/08/95 US$ 456,040 FIN 1,940,000 (8,056)
06/08/95 GBP 410,000 US$ 657,600 6,542
06/08/95 US$ 658,393 GBP 410,000 (7,336)
06/09/95 CHF 850,000 US$ 647,471 (81,711)
06/09/95 US$ 663,301 CHF 850,000 65,881
07/03/95 BEL 20,550,000 US$ 649,905 (59,724)
07/03/95 US$ 660,984 BEL 20,550,000 48,645
07/07/95 CHF 520,000 US$ 461,443 14,407
07/07/95 US$ 465,075 CHF 520,000 (18,039)
07/10/95 ESP 51,270,000 US$ 380,652 (36,547)
07/10/95 US$ 396,765 ESP 51,270,000 20,434
07/24/95 JPY 45,000,000 US$ 551,673 16,059
07/24/95 US$ 521,890 JPY 45,000,000 13,724
08/02/95 DM 1,500,000 US$ 998,336 (65,841)
08/02/95 US$ 1,045,538 DM 1,500,000 18,640
08/10/95 FRF 1,550,000 US$ 293,116 (18,390)
08/10/95 US$ 112,596 FRF 550,000 (2,062)
08/17/95 DKK 792,960 US$ 140,297 (3,169)
09/01/95 IEP 125,000 US$ 204,075 1,549
-------------
US$ (107,076)
=============
</TABLE>
Net unrealized depreciation of $107,076 on these contracts at May 31, 1995
is included in the accompanying financial statements.
(h) Currency Options
When the Funds write a call or a put option on a foreign currency, an
amount equal to the premium received is included in the Funds' Statement of
Assets and Liabilities as an asset and an equivalent liability. The amount of
the liability is subsequently marked-to-market to reflect the current market
value of the option written. If the option expires on its stipulated expiration
date or if the fund enters into a closing purchase transaction, the fund will
realize a gain (or loss if the cost of a closing purchase transaction exceeds
the premium received when the option was written) without regard to any
unrealized gain or loss on the underlying foreign currency, and the liabilty
related to such option will be extinguished. If a call option which the fund has
written is exercised, the fund realizes a gain or loss from the sale of the
underlying foreign currency and the proceeds from such sale are increased by the
premium originally received. If a put option which the fund has written is
exercised, the amount of the premium originally received will reduce the cost of
the foreign currency which the fund purchases upon exercise of the option.
Written options involve elements of market risk in excess of the amount
reflected in the Statement of Assets and Liabilities. The Fund, as a writer of
an option, has no control over whether the option is exercised. The underlying
foreign currency may be purchased (put) or sold (called) and, as a result, the
Fund bears the market risk of an unfavorable change in the value of the foreign
currency underlying the written option. Currency options are traded in the
interbank and over-the-counter markets and counterparty credit risk can exist.
B-31
<PAGE>
May 31, 1995
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
(i) Repurchase Agreements
The Funds' custodian takes possession of the collateral pledged for
investments in repurchase agreements. The underlying collateral is valued daily
on a mark-to-market basis to ensure that the value, including accrued interest,
is at least equal to the repurchase price. In the event of default of the
obligor to repurchase, the Funds have the right to liquidate the collateral and
apply the proceeds in satisfaction of the obligation. Under certain
circumstances, in the event of default or bankruptcy by the other party to the
agreement, realization and/or retention of the collateral or proceeds may be
subject to legal proceedings.
(j) Security Lending Procedures
Global Equity periodically lends securities through a lending program run
by its custodian, State Street Bank and Trust Company, for its participating
clients. Under the program, the bank makes available to select qualified
brokerage firms or other borrowing institutions the use of the participants
securities for a period of time. Security loans are collateralized with U.S.
Government securities or cash equal to at least 105% of the market value of the
securities at the time of the loan. The securities loaned are marked-to-market
daily and collateral is adjusted daily to reflect any fluctuations in value.
Global Equity earns income from the borrower which is generally the
difference between the interest earned on the collateral and the rebate paid to
the borrower. Global Equity pays State Street Bank and Trust Company 35% of the
net interest earned as a fee for administering the security lending program. For
the six months ended May 31, 1995, Global Equity earned $14,273 from security
lending. At May 31, 1995, Global Equity had the following securities on loan:
<TABLE>
<CAPTION>
Market Value Market Value
Security Shares of Shares Collateral of Collateral
- -------------------------- ------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Deutsche Bank AG (Germany) 2,152 $1,053,694 U.S. Dollars $1,105,590
Holderbank Financiere
Glaris AG (Switzerland) 1,659 1,319,805 U.S. Dollars 1,385,680
Jardine Strategic
Holdings Ltd. (Singapore) 203,552 712,432 U.S. Dollars 763,320
Jardine Strategic Holdings
Ltd. Warrants (Singapore) 16,552 8,359 U.S. Dollars 8,276
Scheinder SA (France) 14,994 1,178,607 U.S. Dollars 1,237,005
Telecom Italia (Italy) 676,200 1,380,000 U.S. Dollars 1,521,450
------------ -------------
$5,652,897 $6,021,321
============ =============
</TABLE>
(k) Allocation of Expenses
Expenses specifically identifiable to a particular fund or class are borne
by that fund or class. Other expenses are allocated to each fund or class based
on its net assets in relation to the total net assets of all applicable funds or
classes or on another reasonable basis. For the six months ended May 31, 1995,
transfer and dividend disbursing agent fees accrued to Classes A, B and C were
$79,847, $13,666 and $5,950, respectively, for Global Equity and $12,975, $1,535
and $1,052, respectively, for Global Income.
2. Investment Advisory Fee, Administration Fee, Distribution Fee and Other
Transactions with Affiliates
(a) The investment advisory fees are payable monthly to the Adviser and is
computed as a percentage of each fund's net assets as of the close of business
each day at the following annual rates: .75% for Global Equity and .50% for
Global Income. For the six months ended May 31, 1995, the Adviser voluntarily
waived all of its investment advisory fee and reimbursed $20,285 in other
operating expenses for Global Income.
B-32
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(b) The administration fees are payable monthly to the Adviser and are
computed on each fund's average daily net assets at the annual rate of .25%.
(c) The Funds have adopted a Plan and Agreement of Distribution (the
"Plan") pursuant to which they are permitted to compensate the Distributor in
connection with the distribution of fund shares. Under the Plan, the Distributor
has entered into agreements with securities dealers and other financial
institutions and organizations to obtain various sales-related services in
rendering distribution assistance. To compensate the Distributor for the
services it and other dealers under the Plan provide and for the expenses they
bear under the Plan, the Funds pay the Distributor compensation, accrued daily
and payable monthly, on the daily net assets for Class A shares at the following
annual rates: .25% for Global Equity and .05% for Global Income. The Funds'
Class A shares also pay a service fee at an annual rate of .25%. Although Global
Income's Plan for Class A shares authorizes it to pay a maximum service fee of
.25% and a distribution fee of .05%, the Board of Directors has set a maximum
.25% total fee under the Plan. Compensation for Class B and Class C shares of
each fund is at an annual rate of .75% of average daily net assets. Each fund's
Class B and Class C shares also pay a service fee at the annual rate of .25% of
average daily net assets. Distribution and service fees may be paid by the
Distributor to broker-dealers or others for providing personal service,
maintenance of accounts and ongoing sales or shareholder support functions in
connection with the distribution of fund shares. While payments under the plan
may not exceed the stated percentage of average daily net assets on an annual
basis, the payments are not limited to the amounts actually paid or expenses
actually incurred by the Distributor.
For the six months ended May 31, 1995, distribution and service fees
charged to Classes A, B and C were $367,344, $58,407 and $15,161, respectively,
for Global Equity and $15,538, $5,679 and $1,384, respectively, for Global
Income.
(d) Total brokerage commissions paid by Global Equity during the six months
ended May 31, 1995 amounted to $318,699, of which $8,616 was paid to Oppenheimer
& Co., Inc., an affiliate of the Adviser.
(e) Oppenheimer & Co., Inc. has informed the Funds that it received
approximately $95,000 and $3,000, from Global Equity and Global Income,
respectively, in connection with the sale of Class A shares for the six months
ended May 31, 1995.
(f) The Distributor has informed the funds that it received contingent
deferred sales charges on the redemption of Class C shares of approximately
$1,000 and $150 for Global Equity and Global Income, respectively, for the six
months ended May 31, 1995.
(g) The Distributor has assigned the right to receive the compensation and
contingent deferred sales charge on the Class B shares to a bank in return for
the banks reimbursement to the Distributor of commissions paid by the
Distributor to broker/dealers on Class B shares.
3. Purchases and Sales of Securities
For the six months ended May 31, 1995, purchases and sales of investment
securities, other than short-term securities, were as follows:
<TABLE>
<CAPTION>
Purchases Sales
----------- -----------
<S> <C> <C>
Global Equity ............................ $46,360,050 $61,015,102
Global Income ............................ 11,351,905 23,002,020
</TABLE>
B-33
<PAGE>
May 31, 1995
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
4. Fund Share Transactions
The following table summarizes the fund share activity for the six
months ended May 31, 1995 and the year ended November 30, 1994:
<TABLE>
<CAPTION>
----------------------------- ------------------------------
Global Equity Fund Global Income Fund
----------------------------- ------------------------------
Six Months Year Ended Six Months Year Ended
Ended May 31, November 30, Ended May 31, November 30,
1995* 1994 1995* 1994
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Class A
Issued......................................... 1,167,015 2,167,814 98,678 290,147
Dividends and distributions reinvested......... 954,313 344,081 51,606 123,568
Redeemed....................................... (1,675,247) (2,079,717) (1,517,104) (837,949)
---------- ---------- ---------- ----------
Net increase (decrease) -- Class A............. 446,081 432,178 (1,366,820) (424,234)
---------- ---------- ---------- ----------
Class B
Issued......................................... 255,704 647,583 15,629 82,174
Dividends and distributions reinvested......... 64,705 4,716 3,250 5,164
Redeemed....................................... (50,821) (46,590) (22,628) (23,568)
---------- ---------- ---------- ----------
Net increase (decrease) -- Class B............. 269,588 605,709 (3,749) 63,770
---------- ---------- ---------- ----------
Class C
Issued......................................... 109,826 174,051 11,872 10,411
Dividends and distributions reinvested......... 16,395 789 957 1,118
Redeemed....................................... (25,503) (21,072) (3,678) (1,720)
---------- ---------- ---------- ----------
Net increase -- Class C........................ 100,718 153,768 9,151 9,809
---------- ---------- ---------- ----------
Total net increase (decrease).................. 816,387 1,191,655 (1,361,418) (350,655)
========== ========== ==========
==========
</TABLE>
5. Dividends and Distributions
The following table summarizes the per share dividends and distributions
made for the six months ended May 31, 1995 and the year ended November 30, 1994:
<TABLE>
<CAPTION>
------------------------------- --------------------------------
Global Equity Fund Global Income Fund
------------------------------- --------------------------------
Six Months Year Ended Six Months Year Ended
Ended May 31, November 30, Ended May 31, November 30,
1995* 1994 1995* 1994
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Net investment income:
Class A........................... -- -- $0.309 $0.085
Class B........................... -- -- 0.276 0.075
Class C........................... -- -- 0.260 0.072
Net realized gains:
Class A........................... $1.228 $0.494 -- --
Class B........................... 1.228 0.494 -- --
Class C........................... 1.228 0.494 -- --
Tax return of capital:
Class A........................... -- -- -- 0.485
Class B........................... -- -- -- 0.426
Class C........................... -- -- -- 0.411
</TABLE>
* Unaudited.
B-34
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. Unrealized Appreciation (Depreciation) and Cost of Investments for
Federal Income Tax Purposes
At May 31, 1995, the composition of unrealized appreciation (depreciation)
of investment securities and the cost of investments for Federal income tax
purposes were as follows:
<TABLE>
<CAPTION>
Appreciation (Depreciation) Net Tax Cost
------------ -------------- ----------- ------------
<S> <C> <C> <C> <C>
Global Equity................. $30,808,595 ($3,035,566) $27,773,029 $145,867,629
Global Income................. 391,446 (4,793) 386,653 6,449,128
</TABLE>
7. Authorized Fund Shares and Par Value Per Share
<TABLE>
<CAPTION>
Authorized Par Value
Fund Shares Per Share
----------- ---------
<S> <C> <C>
Global Equity................. 100,000,000 $0.01
Global Income................. 100,000,000 0.01
</TABLE>
B-35
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (For a share outstanding throughout each period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
------------------------------------------------- -----------------------------------------------------
Net Realized Dividends to Distributions to
Net Asset Net and Shareholders Shareholders Tax Total Net Asset
Value, Investment Unrealized Total from from Net from Net Return Dividends
Value,
Beginning Income Gain (Loss) Investment Investment Realized Gain of and End
of
of Period (Loss) on Investments Operations Income on Investments Capital Distributions
Period
Global Equity Fund
<S> <C> <C> <C> <C> <C> <C> <C>
<C> <C>
Class A
Six Months Ended
May 31, 1995 (7) $14.16 $0.07 $1.26 $1.33 $ -- ($1.23) -- ($1.23) $14.26
Year Ended
Nov. 30,
1994 13.54 0.01 1.10 1.11 -- (0.49) -- (0.49) 14.16
1993 12.30 0.00 2.26 2.26 (0.12) (0.90) -- (1.02) 13.54
1992 11.25 0.12 0.93 1.05 -- -- -- -- 12.30
1991 10.57 (0.04) 0.85 0.81 (0.05) (0.08) -- (0.13) 11.25
July 2, 1990 (3)
to Nov. 30, 1990 12.05(4) 0.05 (1.53) (1.48) -- -- -- -- 10.57
Class B
Six Months Ended
May 31, 1995 (7) 14.07 0.04 1.24 1.28 -- (1.23) -- (1.23) 14.12
Year Ended
Nov. 30, 1994 13.52 (0.06) 1.10 1.04 -- (0.49) -- (0.49) 14.07
Sept. 2, 1993 (5)
to Nov. 30, 1993 13.75(4) (0.02) (0.21) (0.23) -- -- -- -- 13.52
Class C
Six Months Ended
May 31, 1995 (7) 14.06 0.03 1.23 1.26 -- (1.23) -- (1.23) 14.09
Year Ended
Nov. 30, 1994 13.52 (0.08) 1.11 1.03 -- (0.49) -- (0.49) 14.06
Sept. 2, 1993 (5)
to Nov. 30, 1993 13.75(4) (0.02) (0.21) (0.23) -- -- -- -- 13.52
<CAPTION>
RATIOS
-----------------------------------------
Ratio of Net Ratio of Net
Net Assets Operating Investment
End of Expenses Income (Loss) Portfolio
Total Period to Average to Average Turnover
Return* (000's) Net Assets Net Assets Rate
<S> <C> <C> <C> <C> <C>
Class A
Six Months Ended
May 31, 1995 (7) 10.24% 155,369 1.87%(1,6) 1.07%(1,6) 34%
Year Ended
Nov. 30,
1994 8.37% 148,044 1.92%(2) 0.05%(2) 70%
1993 19.72% 135,616 1.76%(2) 0.04%(2) 46%
1992 9.33% 111,207 1.76%(2) 0.72%(2) 62%
1991 7.72% 46,937 2.09% (0.27%) 41%
July 2, 1990 (3)
to Nov. 30, 1990 (12.28%) 58,087 2.11%(6) 0.92%(6) 2%
Class B
Six Months Ended
May 31, 1995 (7) 9.93% 14,107 2.44%(1,2,6) 0.58%(1,2,6) 34%
Year Ended
Nov. 30, 1994 7.84% 10,268 2.50%(2) (0.44%)(2) 70%
Sept. 2, 1993 (5)
to Nov. 30, 1993 (1.67%) 1,676 2.26%(2,6) (0.76%)(2,6) 46%
Class C
Six Months Ended
May 31, 1995 (7) 9.78% 3,841 2.53%(1,2,6) (0.54%)(1,2,6) 34%
Year Ended
Nov. 30, 1994 7.77% 2,415 2.66%(2) (0.59%) (2) 70%
Sept. 2, 1993 (5)
to Nov. 30, 1993 (1.67%) 244 2.26%(2,6) (0.69%)(2,6) 46%
</TABLE>
(1) Average net assets for the six months ended May 31, 1995 for Class A, Class
B and Class C were $147,341,261, $11,713,425 and $3,040,585, respectively.
(2) During the periods noted above, the Adviser voluntarily waived a portion of
its fees. If such waivers had not been in effect, the ratios of net
operating expenses to average net assets and the ratios of net investment
income (loss) to average net assets for Class A would have been 1.93% and
0.04%, respectively, for the year ended November 30, 1994, 1.91% and
(0.11%), respectively, for the year ended November 30, 1993 and 1.84% and
0.64%, respectively, for the year ended November 30, 1992. The ratios of net
operating expenses to average net assets and the ratios of net investment
income (loss) to average net assets would have been 2.51% and (0.45%),
respectively, for Class B and 2.66% and (0.59%), respectively, for Class C,
for the year ended November 30, 1994 and 2.32% and (0.82%), annualized,
respectively, for Class B and 2.35% and (0.78%), annualized, respectively,
for Class C, for the period September 2, 1993 (initial offering) to November
30, 1993.
(3) Commencement of operations.
(4) Initial offering price.
(5) Initial offering of Class B and Class C shares.
(6) Annualized.
(7) Unaudited.
- ---------------
* Assumes reinvestment of all dividends and distributions, but does not reflect
deductions for sales charges. Aggregate (not annualized) total return is shown
for any period shorter than one year.
B-36
<PAGE>
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND
DISTRIBUTIONS
---------------------------------------------------- ---------------------------------------------------
Net Realized Dividends to Distributions to
Net Asset Net and Shareholders Shareholders Tax Total
Value, Investment Unrealized Total from from Net from Net Return Dividends
Beginning Income Gain (Loss) Investment Investment Realized Gain of and
of Period (Loss) on Investments Operations Income on Investments Capital Distributions
<S> <C> <C> <C> <C> <C> <C> <C>
<C>
Global Income Fund
Class A
Six Months Ended
May 31, 1995 (7) $8.49 $0.31 $0.40 $0.71 ($0.31) -- $-- ($0.31)
Year Ended
Nov. 30,
1994 9.36 0.57 (0.87) (0.30) (0.08) -- (0.49) (0.57)
1993 9.14 0.63 0.27 0.90 (0.17) -- (0.51) (0.68)
Dec. 2, 1991 (3)
to Nov. 30, 1992 10.00(4) 0.77 (1.00) (0.23) (0.63) -- -- (0.63)
Class B
Six Months Ended
May 31, 1995 (7) 8.49 0.28 0.40 0.68 (0.28) -- -- (0.28)
Year Ended
Nov. 30, 1994 9.36 0.50 (0.87) (0.37) (0.07) -- (0.43) (0.50)
Sept. 2, 1993 (5)
to Nov. 30, 1993 9.42(4) 0.12 (0.06) 0.06 (0.03) -- (0.09) (0.12)
Class C
Six Months Ended
May 31, 1995 (7) 8.49 0.26 0.40 0.66 (0.26) -- -- (0.26)
Year Ended
Nov. 30, 1994 9.36 0.48 (0.87) (0.39) (0.07) -- (0.41) (0.48)
Sept. 2, 1993 (5)
to Nov. 30, 1993 9.42(4) 0.13 (0.06) 0.07 (0.03) -- (0.10) (0.13)
<CAPTION>
RATIOS
-----------------------------------------
Ratio of Net Ratio of Net
Net Asset Net Assets Operating Investment
Value, End of Expenses Income (Loss) Portfolio
End of Total Period to Average to Average Turnover
Period Return* (000's) Net Assets Net Assets Rate
<S> <C> <C> <C> <C> <C> <C>
Global Income Fund
Class A
Six Months Ended
May 31, 1995 (7) $8.89 8.57% 5,422 1.70%(1,2,6) 7.49%(1,2,6) 90%
Year Ended
Nov. 30,
1994 8.49 (3.24%) 16,781 1.65%(2) 6.45%(2) 144%
1993 9.36 10.20% 22,465 1.70%(2) 6.73%(2) 114%
Dec. 2, 1991 (3)
to Nov. 30, 1992 9.14 (2.60%) 19,469 1.84%(2,6) 7.93%(2,6) 360%
Class B
Six Months Ended
May 31, 1995 (7) 8.89 8.17% 1,197 2.44%(1,2,6) 6.53%(1,2,6) 90%
Year Ended
Nov. 30, 1994 8.49 (3.99%) 1,176 2.41%(2) 5.71%(2) 144%
Sept. 2, 1993 (5)
to Nov. 30, 1993 9.36 0.65% 699 2.45%(2,6) 4.38%(2,6) 114%
Class C
Six Months Ended
May 31, 1995 (7) 8.89 7.96% 312 2.84%(1,2,6) 6.10%(1,2,6) 90%
Year Ended
Nov. 30, 1994 8.49 (4.20%) 220 2.70%(2) 5.48%(2) 144%
Sept. 2, 1993 (5)
to Nov. 30, 1993 9.36 0.71% 151 2.45%(2,6) 5.16%(2,6) 114%
</TABLE>
(1) Average net assets for the six months ended May 31, 1995 for Classes A, B
and C were $12,464,638, $1,138,777 and $277,617, respectively.
(2) During the periods noted above, the Adviser voluntarily waived all or a
portion of its fees and reimbursed the fund for a portion of its
operating expenses. If such waivers and reimbursements had not been in
effect, the ratios of net operating expenses to average net assets and
the ratios of net investment income to average net assets for Class A
would have been 2.48% and 6.71%, annualized, respectively for the six
months ended May 31, 1995, 2.35% and 5.75%, respectively, for the year
ended November 30, 1994, 2.09% and 6.34%, respectively, for the year ended
November 30, 1993 and 1.88% and 7.89%, annualized, respectively, for the
period December 2, 1991 (commencement of operations) to November 30,
1992. The ratios of net operating expenses to average net assets and the
ratios of net investment income to average net assets would have been 3.37%
and 5.60%, annualized, respectively, for Class B and 3.80% and 5.14%,
annualized, respectively, for Class C, for the six months ended May 31,
1995, 3.12% and 5.00%, respectively, for Class B and 3.39% and 4.79%,
respectively, for Class C, for the year ended November 30, 1994 and 2.88%
and 3.95%, annualized, respectively, for Class B and 2.84% and 4.77%,
annualized, respectively, for Class C, for the period September 2, 1993
(initial offering) to November 30, 1993.
(3) Commencement of operations.
(4) Initial offering price.
(5) Initial offering of Class B and Class C shares.
(6) Annualized.
(7) Unaudited.
- ------------------
* Assumes reinvestment of all dividends and distributions, but does not reflect
deductions for sales charges. Aggregate (not annualized) total return is shown
for any period shorter than one year.
B-37
<PAGE>
Oppenheimer Quest Global Value Fund, Inc.
Two World Trade Center
New York, NY 10048-0203
1-800-525-7048
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Sub-Adviser
OpCap Advisors
One World Financial Center
New York, New York 10281
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
State Street Bank and Trust Company
P.O. Box 8505
Boston, Massachusetts 02266-8505
Independent Auditors
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, broker, salesperson or any other person has been authorized to
give any information or to make any representations other than those
contained in this Prospectus or the Additional Statement, and if given or
made, such information and representations must not be relied upon as
having been authorized by the Fund, Oppenheimer Management Corporation,
Oppenheimer Funds Distributor, Inc. or any affiliate thereof. This
Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby in any state to any
person to whom it is unlawful to make such an offer in such state.
